[Congressional Record Volume 142, Number 61 (Monday, May 6, 1996)]
[Senate]
[Pages S4705-S4716]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAX FREEDOM DAY
Mr. COVERDELL. Mr. President, I was glad I had an opportunity to be
here for at least the last portion of the presentation by my good
colleague and friend from Virginia where he was admonishing us to be
courageous and to avoid the proposal to repeal the gas tax.
It is my intention to support the repeal of the gas tax, and,
frankly, I believe America is looking for a very different kind of
courage today.
I do not think they are looking for courage to keep adding another
burden, another tax burden, another regulatory burden on the backs of
the working families.
Most Americans--in fact, in survey data every social strata of our
country--feel that the appropriate tax burden should be 25 percent. It
does not matter whether you ask the very wealthy family or the poorest
family. It is fascinating; they all come to the same number, that the
burden of government, their willingness to contribute, is about 25
percent.
Tomorrow is May 7. It is an important day in America, because May 7,
believe it or not--I would never have believed I would be in the Senate
talking about this kind of crisis, but May 7 is the first day for which
an American family can earn money and resources for its own dreams.
Every other day from January 1 through March 15, April, you name it,
all of those wages that were earned on all of those working days are
taken from the family. They are taken by the Federal Government at
about 25 percent, some much higher, they are taken by the State and
local government 10 to 12 percent, and I might add May 7 does not
include the regulatory costs to every American family, which is now
about $6,800 a year.
I think of that fellow who gets up, his wife who gets up, and they
get the kids; they take them to school; they get to their two jobs,
which are necessary now primarily because of the new tax burden on the
American family; they go day after day like that working through the
struggles of life, and until May 7 not a dime is available to house
that family, to buy the home, to transport the family, to feed the
family, to educate the family --all the things we ask the American
family to do for America: Raise the country. Raise the country. But
until May 7, they do not have a dime for their own dreams. They are
sending all of those wages between January 1 and May 7 to some policy
wonk somewhere with the task of rededicating where that money ought to
go and what its priorities ought to be.
We just heard a presentation by my colleague on the other side of the
aisle that it would be the opposite of courageous if we were to repeal
this tax. We have a long way to go to get tax freedom day back from May
7 to where it appropriately ought to be. Every opportunity we have to
lower that burden, in my judgment, is appropriate. That gas tax costs
the average family of four about $100--$100 a year.
More importantly, the lowest 20 percent of taxpayers pay over 7
percent of their income on gasoline. If we are concerned about those
who are disadvantaged, we ought to be concerned about lowering the
burden on them, letting them keep those resources to do the things they
need to do. The wealthy only pay 1.6 percent of their income on
gasoline. This repeal of that gas tax
[[Page S4706]]
primarily helps the more disadvantaged in our society. It has some
auxiliary effect on those who have more resources. But we have such a
long way to go, Mr. President, to get this economic burden down. It is
already double what it ought to be when you add in the reg reforms.
A family should not be working until May 7 or June or July --
officially it is May 7--for the Government. So I take exception to the
suggestion that you lack some courage if you come to the floor and
fight for lowering the economic pressure on American families, American
communities, and American businesses. That is exactly what America is
asking us to do, to have the courage to shrink up this Federal
Government.
With that, Mr. President, I should like to yield up to 10 minutes to
my colleague from Washington.
The PRESIDING OFFICER. The Chair recognizes the Senator from
Washington for up to 10 minutes.
Mr. GORTON. Mr. President, as my distinguished friend from Georgia
has said, tomorrow, May 7, 1996, is tax freedom day.
What is tax freedom day? Stated simply, it is the day on which the
average American taxpayer stops working for the Government and begins
working for himself or herself. It is a dramatic way of pointing out
that if we divide the share of the income of each one of us as an
average American into parts, the share that goes to Government will
take us from January 1 to May 7 to earn and to pay to those governments
and that only after May 7 are we working for ourselves.
Again, this is an average. For some, tax freedom day comes a little
earlier; for others it comes a little later. I regret to say for the
citizens of Washington State whom I represent, it comes a little later.
It comes on May 10. Why? Because, of course, we are talking about the
burden imposed on the people of this country by all levels of our
Government, here in Washington, DC, and our State and local governments
as well.
Mr. President, does it not boggle the mind to think that governments
take this much of what we earn by our hard work for its own purposes?
It is vitally important that people learn we are already well through
the spring of 1996 before we have earned that portion of our income
which goes to our governments.
As my distinguished friend from Georgia also said, if we add the very
real burdens caused by higher interest rates, which are themselves the
result in part of our huge national debt and all the interest we must
pay on that national debt, and the cost of regulation, we go into early
July before we have discharged the real burden imposed on us by
Government and begin to work for ourselves.
This is a burden that is too great, even if we ignore interest and
regulation. The average citizen of the United States does not believe
he or she is getting his or her money's worth out of the money earned
until May 7 and turned over to Government.
That citizen is correct. Our citizens are not getting their money's
worth from this investment in Government, and the great struggle here
in the Congress of the United States and with this administration is
over whether or not those burdens, both from the perspective of taxes
and regulation, should be increased or decreased. This administration,
for all of its rhetoric about smaller Government, is a liberal
administration which believes that its judgments as to how we should
spend our money are better than our own; that Government bureaucrats
can set priorities for spending better than can individual citizens of
the United States. And I am convinced that that thought is perhaps the
single most important reason that people resent Government and do not
trust those whom they elect to govern them. People do not believe that
Washington, DC, bureaucrats are smarter than they are and know more
than they do about how their money ought to be spent. And the people
are right. The people are right. They do not.
There are, of course, many appropriate functions of Government. There
are a few functions, especially the closer Government gets to the
people, the more it is localized, that in fact are run effectively. But
the people do not believe that Washington, DC, is run efficiently and
effectively, and the people are right.
So, as we did last year, in spite of the frustrations of vetoes from
the President of the United States--we on this side of the aisle and
thinking Members on the other side of the aisle this year will attempt
to lower that burden of taxation on the American people. Whether
through a lowered gas tax or a family income tax credit or better
treatment of investments which create new jobs, we will attempt to
lower that burden. We will act on the philosophy that, by and large,
people as individuals know better how their money should be spent than
do the bureaucrats here in Washington, DC.
If we are able to come back to this floor next year, even to say that
tax freedom day is on the 3d of May rather than the 7th of May, or the
4th of May rather than the 7th of May, we will have done what the
American people want. We will have acted correctly. We will, not at all
incidentally, have overcome the objections of the President of the
United States, and we will at least be on the road toward an
appropriate balance between the impact of government on our pocketbooks
and on our day-to-day lives, in exactly the fashion that we were meant
to be when the people of the United States elected us to these offices.
May 7 is tax freedom day. May 7 is far too late a date in the year
for that notable event to take place.
The PRESIDING OFFICER. Who yields time?
Mr. COVERDELL. Mr. President, I compliment my colleague from
Washington for his remarks. I particularly agree with his context that
it had been the theory of this administration--and we saw this all too
clearly when they tried to federalize or create Government-run
medicine--that they believe that they know better how to manage the
relationship between an employer and employee; they know better how to
set the priorities for the local mayor or county commissioner. Now it
has gotten to the point that they know better how to manage the
financial resources of the American family. It is a very elitist point
of view, in my judgment. This country was founded on the belief in the
individual and the entrepreneurial spirit that comes from a free
individual. That is what made this country.
Look at countries around the world that have had central or statist
governments, like we have been working our way to here, and it is never
a pretty picture. I was Director of the U.S. Peace Corps for a
considerable period of time, during the Bush administration, and was
one of the first Americans over the wall. It was not a pretty picture.
It was a classic example of what central and statist governments do for
people.
I remember one night in particular I was in Sophia, Bulgaria. The
Ambassador asked if we wanted to go to a local opera, and I passed and
decided to walk through the city. They had been operating under this
central government for, I guess, nearly half a century. It is such a
vivid memory. First of all, when I went through the department store I
saw they had a shelf and it would have one glass on it, on the entire
shelf. And then I would move to the next display and it would have one
item on the entire shelf. They had no goods.
I walked probably 5 miles, and this is the key, I never saw a single
adult smile--not one. There was not a smile on the face of a single
person. They had a flea market, or a food market, and they had three
vegetables; and they had a line that was 4 blocks long so you could
line up and get the same piece of meat when you got to the window.
A planned government planned for everything. They planned for all
their businesses, all their communities, and they had gotten to the
point where they literally ran everybody's family. It was not a pretty
picture.
The American people are the most entrepreneurial, flexible, energetic
of any in the world. But we have lost some of our edge, because we have
been piling up one burden after another, to the point that we are now
asking these families that work from January 1 to May 7--it is actually
July 3, if you add in the regulatory costs they have to pay. Again, I
thank the Senator from Washington. It is actually July 3, but we take
deep note of May 7 because that is the actual day that you start
earning resources for your own family
[[Page S4707]]
and not the government, which takes me back to the snapshot of a
Georgia family.
I was curious, in all this debate we have, with regard to the
economic pressures on an average family, just what was the situation in
my own State. I have alluded to this several times. It is certainly
appropriate to talk about that family here today, when we are talking
about tax freedom day being May 7. That Georgia family earns about
$45,000--$45,093. Both parents work and they have a couple of children.
Their total Federal tax on that income, direct and indirect, is $9,511.
The total State and local taxes are $5,234, or $14,745 right off the
top of the $45,000 they are paying out in taxes.
The estimated cost of Federal regulation on that family is $6,615;
over $500 a month. That is more than a car payment or a student loan.
You are paying for your share of the growing regulatory apparatus.
This family in Georgia is paying excess family interest payments,
which are caused by excessive Federal borrowing. We have just lifted
the Federal debt ceiling to $5.5 trillion, so that pushes interest
rates up on everyone--the interest on their home, the interest on their
car, the student loan: $2,011.
So the net effect is, of the $45,000, $23,371 has been removed from
that family, taken by government or government action, leaving them
about 50 percent of the gross income to do all the things, as I said,
we ask them to do. It is no wonder that American families all across
our land, therefore, are saying this government spending and government
debt and government management has gotten out of hand. Indeed, it has.
I am going to yield to my colleague from Oklahoma in 1 second. I
would just say what is particularly important about this is this
administration has added about $200 to $225 a month in additional
economic burden on this Georgia family, and families all across the
country, which is why I find it very difficult to understand the
presentation that says you are courageous if you reinforce this burden
on the American family, as my colleague from Virginia said a moment
ago.
With that, Mr. President, I yield up to 10 minutes to the Senator
from Oklahoma.
The PRESIDING OFFICER (Mr. Gorton). The Senator from Oklahoma is
recognized.
Mr. NICKLES. Mr. President, I compliment my friend from Georgia for
his leadership on this and many other issues.
Today, we are announcing to the American people that tomorrow, May 7,
is tax freedom day. That means that the average American worker had to
work from January 1 through May 7 for government--for the Federal
Government, State government, and local government. May 7 is the latest
tax freedom day ever.
For the average American worker, 34.8 percent of their income goes to
government. I do not make this point to say that all government is
evil. Not all government is evil, but if workers are working for
government, they are not working for themselves. As government power
grows and increases, that means their freedom is diminished. If you
have individuals working a third of the time for government, then they
are not working for their families, and they are not able to take care
of their families.
It is a very important and, in my opinion, kind of a sad fact that as
government power continues to increase, people's freedom continues to
decrease. We need to reverse that.
Unfortunately, this President has made it worse. This President has
made tax freedom day later and later in the year because he vetoed a
tax reduction effort that Congress passed. But even more important than
that, he signed the largest tax increase in history. In 1993, President
Clinton signed a tax bill that increased taxes and user fees $265
billion over 5 years, the largest tax increase in history.
Keep in mind, President Clinton as a candidate said he was going to
cut taxes. I remember when he was campaigning in New Hampshire. He said
something like, ``Yes, we're going to have a tax reduction for
families; we're going to have a per-child tax credit.'' He did not
deliver.
He never said anything on the campaign trail in 1992 about increasing
gasoline taxes, but that is exactly what he did. As a matter of fact,
during his first year in office, not only did he pass the largest tax
increase in history, but passed a tax increase that hit all American
families. At the time they were playing class warfare and saying this
was just going to hit the rich--and it did, they hit the rich pretty
hard, but they also raised taxes on all Americans.
But also there is a gasoline tax. A gasoline tax is not just for the
wealthy; that is for anybody who drives a car. I have four kids, all of
whom are driving and paying that 4.3 cents a gallon. It is not
inexpensive. It makes a difference.
My point being, President Clinton's tax increase hit all American
families. He increased taxes on couples who receive Social Security.
Their Social Security used to be taxed at 50 percent. He increased it
to 85 percent, a big hit for individuals who had incomes above $34,000.
A big tax increase.
I remember listening to my father-in-law, who was adversely affected
by this. It cost him well over $1,000 a year. Thank you very much,
President Clinton. He did not ask for that with his vote, and he was
not told during the campaign that he was going to have a big tax
increase, and certainly he was middle-income America.
My point being, President Clinton, instead of reducing the tax burden
on American families, has increased the tax burden. Now today total tax
receipts will hit a record 19.4 percent of the gross domestic product,
the highest level of taxation since 1982. Ronald Reagan brought it
down. His tax cuts did not go into effect really until 1983. So now we
have taxes going up because of President Clinton, because of his tax
increase.
A lot of us believe President Clinton was right in Houston when he
said, ``You know, I think I raised taxes too much,'' or ``You might be
surprised to find I agree with you, I think I raised taxes too much.''
A lot of us agreed with him, and so we wanted to help correct that.
Last year, we did pass a balanced budget package that not only
balanced the budget but offered modest tax relief for American
families. We delivered on our promise. We said, ``We're going to give
tax relief to children. We're going to give a $500 tax credit for
families with children under the age of 18.''
President Clinton said he was going to do the same thing in 1992, but
he did not deliver. In his proposal before Congress, he said, ``I have
a children's tax credit too,'' but what he does not tell people is the
children only get the tax credit if they are up to age 12, not if they
are 13, 14, 15, 16. I hate to tell the President this, but they cost a
lot of money at those ages, too. As a matter of fact, it is at those
ages that you may start getting ready for college.
The Republican budget allowed individuals, if they have kids, to save
$500 per child, and the families get to keep it. So the families get to
make decisions on education. If the families want to, they can take the
$500 and put it into a savings account to save for that child's
education. President Clinton vetoed it.
President Clinton vetoed a tax bill that would have helped the
economy. We would have reduced the tax on capital gains, because we
know that not only will that raise more money for the Federal
Government, but it will help stimulate the economy. The capital gains
tax is really a tax on a capital transaction. If it is reduced--and the
United States has one of the highest taxes on capital gains of any of
the industrialized countries--if we reduce it, we are going to have
more transactions, more capital moving throughout the economy, more
capital going where it can be used most efficiently, most effectively
and it will help stimulate the economy.
President Kennedy did that in the early sixties, and it helped. It
raised more money. President Kennedy was right when he said a rising
tide will lift all boats, and the Republican majority wanted to do
that. But President Clinton vetoed it, and he was wrong in vetoing it.
Congress passed a reduction in the inheritance tax for farmers and
family business owners, and others, so they could keep more of their
hard-earned money, so they would not have to sell their estate to pay
an inheritance tax, a very positive provision, supported overwhelmingly
by this Congress.
[[Page S4708]]
President Clinton vetoed it, and he was wrong in doing so.
Congress passed enhanced IRA's, individual retirement accounts, so we
could encourage people to save. We would use the Tax Code to help
people start saving for their retirement: ``Don't depend solely on
Social Security; don't depend solely on a company retirement account;
save for your retirement.'' We enhanced that.
We doubled, basically, the income at which people would be eligible
to receive a tax deduction for their IRA contribution. This was really
a family benefit, and it was really a family benefit for middle-income
workers. The benefit right now applies to people with incomes of about
some $20,000. We doubled that amount. It would not help the very
wealthy, but it certainly would have helped the hard-working wage
earner who wanted to start saving more, and we do not save near enough
in this country.
Congress passed medical savings accounts, because we recognized that
a lot of people do not get benefits from the Tax Code to encourage
health care, and medical savings accounts would have allowed
individuals the opportunity to put in some before-tax dollars to help
pay for health care costs.
If you work for a big corporation, you do not need it because maybe
the big corporation pays for all your health care and the individual
gets it tax free.
Congress helped the self-employed. We increased the self-employed
deduction from 30 to 50 percent. Recently, we just passed legislation
to increase that to 80 percent.
But under our bill, we had medical savings accounts that also would
have helped the individual who does not work. They need some help too.
This would have helped them pay for their health care. It was good
policy. Unfortunately, the President vetoed it.
Congress passed a provision that would have phased out and eliminated
the so-called marriage penalty, where right now it is financially to a
couple's detriment, if you have two wage earners, to file a joint
return, to file as a married couple. It makes no sense. It is wrong. It
is inequitable. The Tax Code should not be encouraging divorce or
separate filings. Congress phased the penalty out. Unfortunately, the
President vetoed it.
Congress passed spousal IRA's, recognizing that spouses work, whether
it is at a job or at home--we know that they are working. So we had
spousal IRA's so the spouse could also accumulate some money and
savings in their own name, a very positive provision that would have
helped a lot of people all across the country. Unfortunately, President
Clinton vetoed it. Well, he was wrong in vetoing that.
Mr. President, taxes are too high. Government does spend too much
money. People should not have to work 34.8 percent of their time for
government. So we do need tax relief. We need to balance the budget.
Some people say, those are in contrary positions to each other. I do
not think so. Certainly not. If you take a position that we have to
balance the budget before we have any tax cuts you will never pass any
tax cuts because people in this Congress will keep spending more money.
There is no limit to the appetite of some people in Congress and this
administration for spending money. You are a lot more popular spending
money than you are taking it away.
So I do not agree with that philosophy--and I am probably as frugal
or as fiscally conservative as anybody--but I think we should give tax
relief and balance the budget and do it simultaneously. Let us balance
the budget. Let us limit the revenue of the Government. Let us pass a
constitutional amendment that says you cannot spend any more than you
take in. That makes sense. That is what most Americans do.
The House passed a balanced budget constitutional amendment last
year. The Senate came one vote short. I hope that soon, maybe this
week, we will again be considering a constitutional amendment to
balance the budget. I hope some of my colleagues who voted against that
balanced budget amendment will reconsider. Some of our colleagues on
the Democrat side of the aisle said, ``Well, I'm not going to vote for
the balanced budget amendment until I see a real balanced budget
plan.'' I think we ought to do it anyway. We did it anyway in Congress,
but unfortunately the President vetoed it. I hope now they realize it
can be done.
I have heard President Clinton now say that he supports a balanced
budget. I hope that my colleagues on the Democrat side, most all of
whom voted against a balanced budget amendment, will reconsider. I want
to compliment Senator Simon, and others, who are working to try and
make that happen. It has to be a bipartisan vote to make it happen. We
have to have 67 votes. I hope my colleagues realize the gravity of the
situation. We cannot continue to pile up debt after debt.
We passed entitlement reform last year, but the President vetoed it.
I think he was wrong in doing so. I am afraid it is going to take a
constitutional mandate to tell us we cannot spend any more than we take
in and that we have sound fiscal policies in this country. I think at
the same time, we need to be cognizant of the fact that taxpayers are
taking it on the chin.
Taxpayers need relief. Taxpayers are kind of bothered by the fact
that they have to work over a third of the time, an average American
family has to work over a third of the year for Government; not for
themselves, not for their family and not for their family's future, but
for Uncle Sam and for State government and for local government. We
need to reverse that.
Mr. President, I am going to put a couple of tables into the Record
because I think a lot of times people are not aware of how fast
Government spending and taxation is growing. One of them that I am
going to allude to maybe surprises people, but it deals with payroll
taxes. Payroll taxes have been skyrocketing.
I heard some people say maybe it should be exempt from the
constitutional amendment or maybe we should not count Social Security
or Medicare because those are trust funds. Mr. President, those
programs are funded by payroll taxes. If you work, and you get your W-
2, you find Uncle Sam takes out individual income taxes, and he also
takes out payroll taxes for Social Security and for Medicare's hospital
fund.
Mr. President, I ask for an additional 2 minutes.
Mr. COVERDELL. I yield another 2 minutes to the Senator from
Oklahoma.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. I urge my colleagues to just look at the growth in these
taxes. The payroll taxes alone have just exploded. If I put in the
maximum total contribution under payroll taxes, in 1960 that total for
Social Security--this includes hospital or Medicare taxes--the maximum
tax that anybody put in 1960 was $144. Keep in mind, the system started
quite a bit earlier, but the maximum tax was $144.
In 1970, the maximum tax was $374. This is just for the employee. The
employer has to match this. In 1980, it really increased substantially
and went from $374 in 1970 to $1,588 in 1980. Wow, it went up about
four, five times. Between 1980 and 1990 it went from $1,588 to almost
$4,000--$3,924. Keep in mind, your employer is matching that. So for an
individual--that is maximum; in that case somebody was making $135,000,
I think--they were paying almost $4,000 and the employer was paying
almost $4,000. That is $8,000, a big increase.
It continues to explode. By the year 2000, for that person still
making $135,000 it goes up to $6,496, almost $6,500, with a total cost
of $13,000 put in for a person to pay these Social Security taxes. My
point being, this is just a payroll tax. But this tables shows, if you
look at it on a curve, that Social Security taxes have gone up
tremendously. The same thing for Medicare taxes, they just exploded.
Yet, the Medicare fund is still going broke. Yet, Social Security still
has a real funding problem. In the year 2013 it is estimated to pay out
more than it takes in.
So my point is, Mr. President, some people want to ignore payroll
taxes. I disagree. Ask any wage earner--ask my son; ask my daughter--
who are paying these taxes. These taxes are high and they are getting
higher. That means people have to work longer before they can take
enough home to take care of their needs and their family and their
future.
So, Mr. President, I think we have to be cognizant of the American
working
[[Page S4709]]
family. I am very critical of President Clinton for vetoing our tax
reduction effort and for pushing through the largest tax increase in
history. He is responsible for the fact that a lot of people have to
work a lot longer for Government instead of themselves. We need to
reverse that. I hope that Congress this year, soon, will pass tax
reduction for American families. I thank my colleague from Georgia and
I yield the floor.
The PRESIDING OFFICER. Did the Senator ask unanimous consent to have
material printed in the Record?
Mr. NICKLES. Mr. President, I ask unanimous consent to have a couple
of charts printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, follows:
PAYROLL TAX DATA FOR EMPLOYEES AND EMPLOYERS
------------------------------------------------------------------------
Maximum annual contribution--
-------------------------------
Total OASI DI HI
------------------------------------------------------------------------
1950.................................... 30 30 n/a n/a
1951.................................... 54 54 n/a n/a
1952.................................... 54 54 n/a n/a
1953.................................... 54 54 n/a n/a
1954.................................... 72 72 n/a n/a
1955.................................... 84 84 n/a n/a
1956.................................... 84 84 n/a n/a
1957.................................... 95 84 11 n/a
1958.................................... 95 84 11 n/a
1959.................................... 120 108 12 n/a
1960.................................... 144 132 12 n/a
1961.................................... 144 132 12 n/a
1962.................................... 150 138 12 n/a
1963.................................... 174 162 12 n/a
1964.................................... 174 162 12 n/a
1965.................................... 174 162 12 n/a
1966.................................... 277 231 23 23
1967.................................... 290 234 23 33
1968.................................... 343 259 37 47
1969.................................... 374 291 37 47
1970.................................... 374 285 43 47
1971.................................... 406 316 43 47
1972.................................... 468 365 50 54
1973.................................... 632 464 59 108
1974.................................... 772 578 76 119
1975.................................... 825 617 81 127
1976.................................... 895 669 88 138
1977.................................... 965 722 95 149
1978.................................... 1,071 757 137 177
1979.................................... 1,404 992 172 240
1980.................................... 1,588 1,171 145 272
1981.................................... 1,975 1,396 193 386
1982.................................... 2,171 1,482 267 421
1983.................................... 2,392 1,705 223 464
1984.................................... 2,646 1,966 189 491
1985.................................... 2,792 2,059 198 535
1986.................................... 3,003 2,184 210 609
1987.................................... 3,132 2,278 219 635
1988.................................... 3,380 2,489 239 653
1989.................................... 3,605 2,654 254 696
1990.................................... 3,924 2,873 308 744
1991.................................... 5,123 2,990 320 1,813
1992.................................... 5,329 3,108 333 1,888
1993.................................... 5,529 3,226 346 1,958
1994 \1\................................ 5,715 3,394 364 1,958
1995 \1\................................ 5,752 3,427 367 1,958
1996 \1\................................ 5,864 3,528 378 1,958
1997 \1\................................ 5,975 3,629 389 1,958
1998 \1\................................ 6,143 3,780 405 1,958
1999 \1\................................ 6,310 3,931 421 1,958
2000 \1\................................ 6,496 4,019 520 1,958
------------------------------------------------------------------------
\1\ HI wage base cap was eliminated in 1993, but this table assumes it
was continued at $135,000.
Source: Social Security Administration.
PAYROLL TAX DATA FOR EMPLOYEES AND EMPLOYERS
----------------------------------------------------------------------------------------------------------------
OASDI HI Tax rates (percent)--
-----------------------------------------------------------------------------
Wage base Wage base Total OASI DI HI
----------------------------------------------------------------------------------------------------------------
1950.............................. 3,000 n/a 1.000 1.000 n/a n/a
1951.............................. 3,600 n/a 1.500 1.500 n/a n/a
1952.............................. 3,600 n/a 1.500 1.500 n/a n/a
1953.............................. 3,600 n/a 1.500 1.500 n/a n/a
1954.............................. 3,600 n/a 2.000 2.000 n/a n/a
1955.............................. 4,200 n/a 2.000 2.000 n/a n/a
1956.............................. 4,200 n/a 2.000 2.000 n/a n/a
1957.............................. 4,200 n/a 2.250 2.000 n/a n/a
1958.............................. 4,200 n/a 2.250 2.000 .250 n/a
1959.............................. 4,800 n/a 2.500 2.250 .250 n/a
1960.............................. 4,800 n/a 3.000 2.750 .250 n/a
1961.............................. 4,800 n/a 3.000 2.750 .250 n/a
1962.............................. 4,800 n/a 3.125 2.875 .250 n/a
1963.............................. 4,800 n/a 3.625 3.375 .250 n/a
1964.............................. 4,800 n/a 3.625 3.375 .250 n/a
1965.............................. 4,800 n/a 3.625 3.375 .250 n/a
1966.............................. 6,600 6,600 4.200 3.500 .350 0.350
1967.............................. 6,600 6,600 4,400 3.550 .350 .500
1968.............................. 7,800 7,800 4.400 3.325 .475 .600
1969.............................. 7,800 7,800 4.800 3,725 .475 .600
1970.............................. 7,800 7,800 4.800 3.650 .550 .600
1971.............................. 7,800 7,800 5.200 4.050 .550 .600
1972.............................. 9,000 9,000 5.200 4.050 .550 .600
1973.............................. 10,800 10,800 5.850 4.300 .550 1.000
1974.............................. 13,200 13,200 5.850 4.375 .575 .900
1975.............................. 14,100 14,100 5.850 4.375 .575 .900
1976.............................. 15,300 15,300 5.850 4.375 .575 .900
1977.............................. 16,500 16,500 5.850 4.375 .575 .900
1978.............................. 17,700 17,700 6.050 4.275 .775 1.000
1979.............................. 22,900 22,900 6.130 4.330 .750 1.050
1980.............................. 25,900 25,900 6.130 4.520 .560 1.050
1981.............................. 29,700 29,700 6.650 4.700 .650 1.300
1982.............................. 32,400 32,400 6.700 4.575 .825 1.300
1983.............................. 35,700 35,700 6.700 4.775 .625 1.300
1984.............................. 37,800 37,800 7.000 5.200 .500 1.300
1985.............................. 39,600 39,600 7.050 5.200 .500 1.350
1986.............................. 42,000 42,000 7.150 5.200 .500 1.450
1987.............................. 43,800 43,800 7.150 5.200 .500 1.450
1988.............................. 45,000 45,000 7.510 5.530 .530 1.450
1989.............................. 48,000 48,000 7.510 5.530 .530 1.450
1990.............................. 51,300 51,300 7.650 5.600 .600 1.450
1991.............................. 53,400 125,000 7.650 5.600 .600 1.450
1992.............................. 55,500 130,200 7.650 5.600 .600 1.450
1993.............................. 57,600 135,000 7.650 5.600 .600 1.450
1994.............................. 60,600 no limit 7.650 5.600 .600 1.450
1995.............................. 61,200 no limit 7.650 5.600 .600 1.450
1996.............................. 63,000 no limit 7.650 5.600 .600 1.450
1997.............................. 64,800 no limit 7.650 5.600 .600 1.450
1998.............................. 67,500 no limit 7.650 5.600 .600 1.450
1999.............................. 70,200 no limit 7.650 5.600 .600 1.450
2000.............................. 73,200 no limit 7.650 5.490 .710 1.450
----------------------------------------------------------------------------------------------------------------
Source: Social Security Administration.
Mr. COVERDELL. Mr. President, I thank my colleague from Oklahoma for
his remarks and his expertise on this subject. He made a very, very
eloquent statement on the burden of taxation.
At this time I yield up to 10 minutes to the Senator from Utah.
The PRESIDING OFFICER. The Senator from Utah.
Mr. BENNETT. Thank you, Mr. President.
Mr. President, tomorrow is tax freedom day. It is an artificial
calculation, but it serves to focus our attention on how much of the
time we spend working as a Nation to pay our taxes, because on the 7th
of May, finally, if we had paid everything we had earned to the Federal
Government, we could begin taking something home.
As I say, that is an artificial calculation. We do it because it
focuses our attention on one question. This is the fundamental question
when you address the whole issue of taxes. Whom do you trust to spend
your money? Do you trust the people in Washington? Do you trust the
Federal Government to spend your money more wisely than you can or do
you decide in a free society that you want to hang on to more of it to
spend for yourself?
Obviously, we have to trust the Federal Government to spend some of
our
[[Page S4710]]
money. There are some things the Federal Government does that we cannot
do for ourselves.
The most obvious example that I can think of is the Interstate
Highway System. We could not go out as individuals and contract to
build the roads, to make the plans, to lay out the routes. All of those
things are appropriate activity of the Federal Government.
When the Interstate Highway System was first proposed back in Dwight
Eisenhower's time it was a Member of this body, Senator Harry Byrd of
Virginia, who made the decision that we would not pay for the
interstate highway system with debt. He said, we will pay as we go, and
that was the beginning of Federal gasoline taxes going into the
national highway trust fund to pay for the Interstate Highway System.
And it worked.
We trusted the Federal Government to spend our money more wisely on
highways than if we had spent it ourselves. We gave the Federal
Government that money, and the Interstate Highway System was created. I
find it interesting, Mr. President, to know that now the tax increase
that was pushed through by President Clinton 2\1/2\ years ago is a tax
on gasoline that does not get spent on our roads or on the interstate
highways. President Clinton is spending that money for something else.
I am supporting the repeal of the increase in the gas tax because I
think in this area I trust myself more than I trust the Government to
spend those extra few cents on gas. If I could be sure the Government
was going to spend it on roads, I would not be so anxious to be for
repeal of the gas tax. But we have broken away from that concept that
was established here in this Chamber by a Member of this body that said
the money that gets paid for gasoline taxes, gets spent on roads and
highways and bridges.
President Clinton has broken that link and said, ``No. Let's tax
gasoline, but let's trust the Federal Government more than we trust the
individuals on the issue of how that should be spent.''
Now, we have heard in this debate the whole discussion of tax rates
going up. The justification for tax rates going up is that we need more
tax revenue in order to pay down the deficit. That sounds fine, Mr.
President, but as Members of this body know--I come from a business
background and was a businessman until I ran for the Senate, and I
discovered very quickly what every businessman knows--raising prices
does not mean increased sales. Raising tax rates does not mean
increased tax revenue.
We have all seen the example where Ford Motor has brought out a new
version of its best-selling automobile, the Ford Taurus. The Ford
designers were so enthusiastic about how beautiful the Taurus was that
they raised the price on the Taurus. It stayed at that higher level for
something like 3 weeks when they discovered that people were not
willing to pay the higher price. What did they do to get sales moving?
They lowered the price. Lo and behold, when they lowered the price,
sales started going up. That is exactly the same principle that applies
to the Federal Government. If you lower the tax, we can see revenues
begin to go up.
Let me be personal about this, Mr. President. During the 1980's, I
was CEO of a company that started out literally in a basement in a
suburban town in Utah. It had four employees. Today that company is
listed on the New York Stock Exchange and has a market value
approaching three quarters of a billion dollars. It has 2,700
employees. We built that business at a time when our effective tax rate
was 28 percent. That meant we were able to make our choices as to how
the money would be spent in buying inventory, building buildings,
hiring new people, instead of having the Federal Government make the
choices as to how that money would be spent.
Today if we were to start that business again, the effective rate on
the money we would earn would not be 28 percent as it was in the
1980's, it would be 42 percent--a 50-percent increase. I say, Mr.
President, we would not have created those 2,700 jobs if we had been
facing a 42-percent effective tax rate.
Now, a study has been done on the impact of the tax increase that
President Clinton gave us in 1993. President Clinton talks about all
the new jobs that have been created since he has been President.
According to the study by the Heritage Foundation, that number would be
1.2 million higher than it is if President Clinton had not given us
that tax increase. Yes, we have had some increased jobs because we were
coming out of a recession. We would have 1.2 million more. From my
personal experience, the difference between paying 26 percent and 42
percent can account for that.
What it boils down to is this, Mr. President: Americans all want to
earn more, and they want to keep more of what they earn so that they
can do more with that money they are allowed to keep. In my own
personal experience, I saw that happen. We earned more as our business
was successful. We were able to keep more because we had a lower tax
rate, and we were able to do more, reflected in those 2,700 jobs that
we created.
Every one of the people that holds one of those jobs, Mr. President,
pays taxes. Every one of them is adding to the revenue of the Federal
Government by virtue of what we did creating that business. The Federal
Government was a winner all across the board when they allowed us to
earn more and then keep more that we earned so we could go out and do
more in creating those additional jobs.
It comes down, again, Mr. President, to the fundamental question that
I asked at the beginning. When you address the question of tax freedom
day, you are asking this fundamental issue: Whom do you trust to spend
your money? Do you trust the bureaucrats? Do you trust the regulators?
Do you trust the planners in Washington? Or do you trust individual
Americans all over this country, taking their money and making the
decisions as to where it will be invested, where it will be channeled,
where it will be spent, in a way to build the economy?
I, for one, Mr. President, think that government does many good
things. I think I can trust the Federal Government with a good chunk of
my money to do things like build roads and bridges, defend the country,
and take care of the other challenges that we have as a nation. But
when it comes to making the fundamental economic decisions as to what
will make this country grow, I trust individual Americans more than I
trust the planners in Washington.
For that reason, I am hoping that we can move the date back toward
the 1st of January when Americans can say, ``I have stopped working for
the government and now I am working for the growth of this country as a
whole.''
Mr. COVERDELL. Mr. President, I thank the Senator from Utah for his
remarks from a business perspective on these economic issues. I yield
up to 10 minutes to my good colleague from Texas.
Mrs. HUTCHISON. Mr. President, I am pleased to be able to talk about
the tax burden on American families, especially because tomorrow is a
red-letter day. Tomorrow we call national tax freedom day because
tomorrow is the day that Americans stop working for the government and
start working for their families. They will pay their taxes tomorrow,
and all of the work they have done between January 1 and May 7 will be
money that goes to the Federal, State, or local government. That is
about 40 cents of every dollar earned by the American family. To put it
another way, 3 hours of every working day goes to pay Federal, State,
and local taxes.
For most American families, making ends meet is getting harder and
harder. After paying the basics--food, clothing, shelter, and taxes--
there is not much left. With ever-higher costs for education, for
health insurance, and for retirement, most people have to work today.
Many families would like to have mom or dad at home taking care of
children, being home when they get home from school, but they cannot
afford it because they have to do the extra things to get the extras
beyond the taxes, the food, and the shelter.
President Clinton has not eased the burden on working families. He
raised taxes on seniors who depend on Social Security, on the self-
employed, and on everyone who drives a car. His tax increases in 1993
and the resulting slower economic growth has cost Americans $227 a
month in earnings.
Last year, the Republican Congress tried to do something unusual for
families. We tried to let them keep their
[[Page S4711]]
own money. We believe that with lower taxes, Americans will earn more
and they will most certainly keep the money they worked so hard to
earn.
The Republican Congress did the following things. We cut taxes for
families with children by providing a $500-per-child tax credit to help
parents raise their children and to offset the erosion of personal
exemption from inflation. With this tax cut, 28 million families would
pay fewer taxes. In my home State of Texas, 2 million families would
pay fewer taxes under the bill we passed last year.
We encouraged families in that bill to save for retirement, with my
homemaker IRA proposal that I have been working for 2 years to get put
forward, and other expanded individual retirement accounts. This
Congress believes in the expansion of IRA's because that is people
taking responsibility for their own retirement. It is our encouragement
for them to do so.
I want the homemakers of this country, Mr. President, to also have
the ability for their retirement security because I believe the work
done inside the home is every bit as important, and probably more so,
than the work done outside the home. We should not penalize the hard-
working family that has the ability for the mother to stay home and
raise the children or the family, if that is the choice. Many people
stretch to make that happen. The current Tax Code prevents married
couples who rely on the one income from equitably providing for their
retirement security by limiting homemaker deductions to $250.
I think it is an outrage in this country. In fact, here is what the
numbers show. If you work outside the home, you can set aside $2,000 a
year. If you work inside the home, you set aside $250 a year.
What this means is that under current law, a single-income married
couple saving $2,250 a year for 30 years will have $188,000 for their
retirement nest egg. With the bill we passed in Congress so that both
spouses are able to set aside $2,000 a year, after 30 years they would
have a nest egg of $335,000--$335,000, an increase in $150,000 for that
working family.
We also helped families by permitting tax-deferred savings in an IRA
for education costs, for medical expenses, for first-time home
purchases, and allowing penalty-free withdrawals during times of
unemployment. That encourages savings, and it also helps people with
emergency needs that they may have so that they know, if they do set
aside for their retirement security but they need a little bit extra to
educate their children, or if they become unemployed, or if they have a
bigger medical expense than they can afford, or to buy their first
home, they can take from that tax-free income that has built up without
the huge penalty that discourages them from providing for their
retirement.
That is what we do in the bill that we passed. And we stopped
penalizing young couples for getting married. We increased the standard
deduction for married couples filing jointly. In other words, by the
year 2005, under the bill we passed, the marriage penalty would be
eliminated for couples that do not itemize their deductions.
So we encouraged marriage and family rather than discouraging it by
saying you are going to pay more if you get married than you would have
to pay if you stay single.
We cut capital gains taxes to encourage and reward investment. We
wanted to create new businesses that create new jobs because we
understand that the small businesses create the jobs in this country.
It is not the giant corporations; it is the small businesses. A capital
gains tax reduction helps them to be able to buy that piece of
equipment or make that capital investment that will create the jobs
that will get this economy going again.
We cut estate taxes. We cut estate taxes so that years of hard work
would not be wiped out in a generation so that a family that inherits a
small family business or a small family farm will not have to sell
these unreadily salable assets in order to pay taxes to the Government.
Our tax cuts would reduce the tax burden on the people who actually
pay taxes, Mr. President. More than three-quarters of the cuts in the
first year in the bill we passed go to the middle class making under
$75,000 a year.
Who are those people? They are mothers and fathers who will get help
raising their children with a $500 child tax credit.
They are homemakers who will get the opportunity to contribute the
maximum amount to an IRA for retirement security so that, if the
homemaker loses her spouse, she will be able to have something that is
her own, that will help her in her retirement years.
They are married couples who will have the Tax Code's marriage
penalty reduced.
They are savers who are trying to buy a first home or pay for college
for their kids.
They are small business owners who have spent their lives building a
business and want to pass it to their children without the huge taxes
that sometimes require the sale of that small business by the heirs
because they do not have the cash to pay taxes.
They are investors who provide the capital to start businesses and
create jobs.
Our tax cuts helped all Americans. It would put more money in
people's pockets, and it would increase jobs. Together with a balanced
budget, it would lower interest rates and increase the standard of
living for millions of Americans.
So why do I keep talking about what the proposals would have done? I
talk about it as if it did not happen because it did not happen.
Congress passed everything I have talked about, and President Clinton
vetoed it. That is why I am still talking about it.
After running for President in 1992 on a middle-class tax cut, in
1993 President Clinton raised taxes on middle-class Americans while he
claimed to only hit the rich. His taxes took what could have been a
robust recovery and made it a weak, lackluster recovery.
The economic reports came out last week, and they said the economy is
getting better. I cannot remember a time when the economic reports were
coming out saying things were better when people do not feel it. If you
ask someone what their major concern is, they say job security. That is
what they say. I do not care what the numbers are showing. It is what
is in somebody's gut. They do not feel secure because they sense more
taxes, more regulation, and more encroachment on their freedom and
independence. They know things are not the way they used to be.
So why, Mr. President, do people not feel so good when all the
numbers say things are getting better? Big government. Big government.
Big government is costing jobs for the American people.
A report from the Rochester Institute of Technology estimates the
direct cost of complying with Federal regulations to be about $668
billion in 1995.
The bottom line is, Mr. President, tomorrow Americans are going to
stop working full time to pay taxes. But we have not even talked about
the hidden cost of regulations. They are going to work until July 3 to
finish their obligation for all of the cost of government--regulations,
as well as taxes.
So, hopefully, on July 3, we can talk about the cost of government.
But today we are just talking about the cost of taxes.
I do not think that Americans in general object to taxes. In fact,
the Reader's Digest poll taken recently shows that Americans believe
they should pay taxes to live in this great country for what this
country gives them back in services and freedom. But, Mr. President,
they believe about 25 percent for a family of four is the maximum that
government should take from them. They believe they should be able to
keep 75 percent of what they work every day to earn. In fact, however,
they are paying about 40 percent.
We are working every day in Congress to bring that number down. If we
could just get the President to work with us instead of just talking
about it, we could make a difference for the American family. We could
put government in the role that it should have, and we could give the
people of this country their buying power back. They work for this
country. They work for their families. We want them to keep what they
earn.
Thank you, Mr. President.
Mr. COVERDELL. Mr. President, I thank my colleague from Texas for her
remarks on the economic aspect of taxes on the American family.
I now yield up to 10 minutes to my distinguished colleague from Iowa.
[[Page S4712]]
The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. Mr. President, the Senator from Texas just gave a very
good explanation of what was in the bill that the President vetoed. I
think it is a good exercise once in a while to remind ourselves and the
public--because the public is cynical about whether or not we ever kept
our commitments of the last 15 years to pass a balanced budget--that we
passed a bill, a 1,800-page bill. This balanced budget legislation was
the product of 8 months of work by 13 different committees in this body
to balance the budget; not only balance the budget but to help lower
mortgage interest rates down by $2,300 a year, student loan interest
rates by $603 a year, and interest rates on a car loan by $150 a year.
You can go on and on about the benefits of balancing the budget by
reducing the interest rates by 2 percent, according to Greenspan, but
Congress also offered all of the things that the Senator from Texas
referred to--IRA's for homemakers, expanding IRA's for everybody, a
$1,000 tax cut for a family of four, and estate tax reductions, and
welfare reform that turns welfare over from the Federal bureaucracy to
the States to administer because the States are doing a better job of
it than we are in Washington, saving the taxpayers $58 billion, and
saving Medicare from bankruptcy in 6 years. Medicare is going to be
bankrupt in 6 years. We knew that a year ago. That is why we addressed
the issue in this bill. This is the bill that President Clinton vetoed.
It has been referred to by Senator Nickles and Senator Hutchison. I
think we ought to think of this as a document that people do not think
we passed because the President is on TV saying he is for balancing the
budget and making some citizens ask: Where are the Republicans?
Well, where was the President last year when we were balancing the
budget? Now, I will tell you that he was passing the buck. We do not
want to pass the buck. We just want to get down and get the job done
again.
Part of the issue that we are dealing with today, as everybody has
been hearing, is that we are recognizing tomorrow as national tax
freedom day. It is a sad commentary that we are to May 7 before people
are done paying their taxes and can start working for themselves and
their families. But also it is beneficial to remind people that this is
a day when they can start working for themselves, if they are average
Americans, because I think most people feel that Congress is so
irresponsible that average Americans never get done paying taxes. But
we have tax freedom day to bring people's attention to the fact that an
annual point arrives where our people stop toiling away to fund big
Government and begin toiling away to fund their families and their ways
of life.
I am happy to say that in my State of Iowa, our citizens are slight
winners in this year's tax freedom day lottery. For the people of my
State, tax freedom day was Saturday, May 4, instead of tomorrow, May 7.
As you can imagine, the people in my State find this 3-day victory to
be somewhat shallow in comparison to what others, including the Federal
Government, expect of them. The fact that we have 3 days more of tax
freedom than most people, I suppose, is a tribute to Iowa officials
being more fiscally responsible on State and local spending than we are
at the Federal level as opposed to other States. For Iowans, it took
125 days this year, including weekends, to make it to this mock Federal
holiday. For the first 18 weeks of 1996, working Iowans gave up their
hard-earned money to fund Federal, State and local coffers. Finally, on
May 4, Iowans began to keep what they might earn for the remainder of
1996. They only now begin to work to pay for the things that they must
to do and what their families want to do and what they have a
responsibility to do.
If you remember back to the 1992 Presidential campaign, Vice
President Gore traveled the country giving his now famous economic
speech in which he said:
Everything that should be up is down, and everything that
should be down is up.
I think this theme can also be applied to President Clinton's
budgetary policy.
Common sense tells us that when things go up, something else comes
down. So when the Government's budget for spending grows, obviously,
the family budget shrinks. Another way to describe this bloated
economic policy is by means of the Washington tax-and-spend syndrome.
Some folks in Washington fail to understand that most Americans are not
satisfied with the way their tax dollars are spent. Again, I should
like to remind my tax-and-spend colleagues that money does not grow on
trees.
Unlike the retail and service sectors of our private economy, the
dissatisfied taxpayer, in dealing with the Federal Government, cannot
demand a Government refund for poor services rendered. Many Americans
feel shortchanged for helping to support programs that they do not
believe in or use. When it comes to spending money on families, the
choice should belong to taxpayers, not to the Federal bureaucrats.
Washington deficit spending is the public's greatest outrage of all.
Taxpayers want to know why the Federal Government has spent more money
than it has collected for each of the last 27 years. Ending this trend
of 27 years of spending more than we take in is what balancing the
budget last year was all about--the budget that the President vetoed.
Because unlike the Federal Government, working families live on limited
budgets and balance a checkbook. Not the Federal Government. But those
same working families expect the same of Uncle Sam, to balance the
checkbook and to be in the business of life and operating profitably.
Because Iowans are economically conservative by nature, most of my
citizens are outraged by the fact that Washington cannot get its fiscal
house in order. The willingness to pay their share of Government
services becomes harder to swallow when wasteful and inefficient
Government programs continue to expand.
I should like to give you an example that I had something to do with
bringing to the public's attention last year. Consider the estimated
$200,000 expense for a flight from Naples, Italy, to Colorado Springs,
CO, U.S.A., last year by an Air Force general. About 36 taxpaying
families in Iowa worked all of last year just to pay for General Ashy,
an aide, and his cat to jet nonstop across the Atlantic with two
inflight refuelings. He could have taken a commercial airline flight
for $1,500.
This disconnect between elected officials and the public will
continue to widen if Washington clings to the fiscally irresponsible
status quo. Last fall, Republicans made many tough decisions in order
to pass the first Balanced Budget Act since 1969.
And again, I do not think we can hold this up too often to say,
``Here it is. We passed it.'' One person stands in the way of this
being law or not, and that is the President of the United States, Bill
Clinton, because he vetoed it.
When the smoke from last year's budget battle cleared, it was obvious
that no one won. We passed it, but we did not win. The President vetoed
it, and you might say he won the public relations battle because he is
on television having everybody believe that he thought of the balanced
budget. It was 6 months past the last election when we won an election
on a promise to balance the budget that the President said, ``Well, I
am for a balanced budget, but we will do it in 10 years.'' It has only
been since January 13 that he came around to doing it in 7 years as we
are doing it with this legislation that he vetoed.
The President still leaves about 87 percent of his expenditures to be
made in the years 2000, 2001, and 2002. That is a long way off and is
difficult to plan for.
The American people do not have a balanced budget, so I still have to
say even though we passed it, the public has not won yet. In fact, they
are losing every day that we do not balance it for next year. More
importantly, faith in Government suffers yet another setback.
As the Senator from Texas said, we have to work to restore the $500-
per-child tax credit. In addition, we are going to repeal Clinton's
1993 gas tax, and we are going to do that because the President ran on
a platform in 1992 in which he stated so often that an increase in the
gas tax is sticking it to the low- and middle-income working people of
America and the retirees. The President said that he is not for doing
[[Page S4713]]
that, and yet he did it within 6 months. We voted against it, so
obviously we are still sticking by our convictions not to be for the
President's gas tax increase because it is regressive. We have a chance
now with high gasoline prices to make the point and to repeal something
the President said in 1992 he was not going to do anyway. So that is
why we are doing it. But we are also in the process of trying to free
working poor and middle-income families from excessive tax burdens.
So Iowans, the people of my State, marked tax freedom day on May 4,
1996, and the rest of the country tomorrow, May 7.
During this period, and especially today, I believe it is the duty of
the President to agree with Congress to cut spending and to provide tax
relief so that Iowans, and their friends in every other State in the
Union, can commemorate this day earlier next year.
I yield the floor.
The PRESIDING OFFICER. The Senator from Georgia.
Mr. COVERDELL. Mr. President, I compliment my colleague, the Senator
from Iowa. He reminds me of what I said in my opening remarks when I
was rebutting the statement by the Senator from Virginia, who thought
the courageous thing to do was to keep the gas tax in place. And he
reminds us that the President himself came to the American people in
1992 and said, as you just heard from the Senator from Iowa, that a gas
tax is not the thing to do and it is particularly harmful to people
with low income, the middle class, and seniors. That whole episode is
interesting to me because it was such a center point of the President's
campaign, that he would lower taxes on America's middle class. The bags
were not unpacked before that promise was forgotten. Then, by August
1993, as the Senator from Iowa has alluded to, we were confronted with
the largest tax increase in American history.
So you go to the American people and say I am going to lower your
taxes. Then you come up here and raise them the highest they have ever
been raised. And no wonder a cynicism begins to set in across the land
about the way Washington works. The bottom line here is that Americans
are working 40 to 50-plus percent of a work year for a government. I
know Thomas Jefferson, if he were here today, would be astounded. If
you read back through his remarks, time and time again he warns and
points to the egregious behavior of governments when they consume too
much of the fruits of labor. He said it throughout his life and
throughout his working in the founding of the Government. He also
warned us that governments by their nature do just that. I do not
believe a single Founder could ever conceive that our Government would
be a government that sweeps half the earnings away from an American
family.
I have spent a good bit of my time talking about this average family
and what the burden of taxes does to them. I would like to visit on
this just a little bit more. I often refer to Ozzie and Harriet as the
quintessential family of the 1950's. When Ozzie and Harriet were
working in the workplace, Ozzie sent 2 cents out of every dollar he
earned to Washington. But if he were here today, he would send up to 24
cents; from 2 cents up to 24 cents out of every dollar of his wages
being sent to Washington.
That fact raised several questions in my mind. All of us in the
country are very concerned, deeply concerned about the behavior of our
families and the changes that have occurred. It created a deep worry.
We have heard Senators say here: If you ask parents today if they are
better off than their parents, they say yes. But for the first time in
American history if you ask them do you think your children will be
better off than you, they say no. That is the first time that has ever
happened in America.
What has been the force that created this sense of pessimism? My
argument is that there is no single institution or structure or force
on the American family that has so profoundly affected the way they
live and function as has had their government; more than Hollywood,
more than pop music stars--government. What other force sweeps through
the family and takes half of everything those bread earners earn?
When I was a kid I was told the largest single investment I would
ever make is my home. My guess is the Presiding Officer was told the
same thing. But that is not true anymore. We have to change the
rhetoric. We now have to tell America's children the single largest
investment you will ever make is government. It now surpasses housing;
your home, clothing, education, and transportation combined. So no
institution has had a more profound effect on the way the American
family functions than the government.
There is a lot of discussion in today's workplace about both parents
having to work and not, therefore, having the opportunity to spend
enough time with the family in setting the standards, in monitoring
what is going on in the family. I would allege that the single greatest
force in our country that has caused families to have both parents in
the workplace is the government, too. In fact, I was so curious I
wanted to know, from 1950--Ozzie and Harriet--to now, the increasing
number for which both parents work each succeeding year. Then I tracked
that scale or growth against the increased tax burden. Mr. President,
you will not be surprised, nor would anybody else, that those two lines
on a graph track each other almost simultaneously. In other words,
every year, as the Government added yet another gas tax or raised the
income tax or some other scheme to get more of the revenue of that
working family, each time they did that another so many thousands of
American families were forced to make the decision that both spouses
had to work.
In fact, both parents today work on each day longer earning taxes to
give to the government than they spend with their own family. They are
now investing more of their workday working to pay off this tax burden
and the debt and the interest on the debt and all the commensurate
effects of taxation and regulatory burdens--they are spending more time
doing that than they are raising their own families. Is there any
wonder, then, that the behavior of that family is changed? It should
not be a surprise to any of us.
If you ask the second spouses today if they are working on their own,
voluntarily, 85 percent say no. Mr. President, 85 percent would do
something differently. A third of them would stay home. If they had
their option, they would stay home. They cannot. They cannot make ends
meet without both of them being in the workplace. A third of them would
volunteer, they would like to be in the workplace as volunteers. And
another third would modify the amount of time that they are in the
workplace.
So I wonder, you almost wish that we could cause the Federal
Government or all governments to put on the tax form: ``This is how
many days your family has to work to meet this obligation,'' because I
am convinced that there are not many families who think they are
working from January 1 to May 7--or, as the Senator from Texas pointed
out, to July 3, if you add the regulatory burden in--that they work
until midyear before they have the opportunity to keep one dime for
themselves, one dime to pay for what they are responsible for
accomplishing for the country. This is a sad state of affairs and I
believe all of us need to be engaged in absolutely sound, fundamental
policy to push that burden back.
If America were picking the date, they would pick March 1; that they
would have worked from January 1 to March 1, and that is a fair deal
between that family and the Government: March 1. But, instead, because
of all these pressures--I guess courage has been alluded to by the
Senator from Virginia--they now work until May 7 instead.
Mr. President, we have just received a white paper from the
Manufacturing Institute called ``Improving the Economic Condition of
the American Worker.''
I would like to read just a small piece of what this report says. It
is entitled: ``Government Obstacles to Wage Growth and Job Creation.''
Taxes, particularly payroll taxes, account for much of the
slowdown in compensation growth.
We read every day articles concerning the anxiety in the American
family from economic pressures in the family. But this report says:
Taxes, particularly payroll taxes, account for the slowdown
in compensation growth.
It says:
[[Page S4714]]
Had the relative tax burden remained at the level of 40
years ago, today's typical family would have an extra $8,847
in disposable income each year.
Eight-thousand dollars. Now remember, Mr. President, a moment ago I
said that average family is earning about $40,000 a year. This is the
equivalent of a 20-percent pay increase, $8,847 in additional income.
Based on an analysis of Census Bureau figures by the Tax
Foundation, the median two-earner family paid about 20
percent of its income in 1955. In 1995, taxes took an
estimated 37 percent. The change is even more apparent when
it comes to payroll taxes which represent the largest tax on
many employees. Social Security and Medicare taxes are 45\1/
2\ times higher today than in 1955.
These are the reasons Ozzie was only sending 2 cents to Washington
and today he is sending 24 cents.
Median income, on the other hand, is only 10 times higher.
Companies today are burdened by heavy, nonproduction costs
largely created by government--
Just as we have been saying all afternoon.
The major ones are government regulations, legal services
and taxes. If these costs could be reduced significantly,
companies would have more resources available to expand and
hire more workers and pay higher wages. The current
regulatory system is too costly.
The Senator from Utah was talking about this very point.
In my closing minutes, I want to point out that elections have
consequences. President Clinton's efforts on the economy in 1993 really
had a major effect on the American family.
It is important to note that since this administration came to office
in January 1993, virtually everything they have done has pushed and
mounted the economic burden on the American family and American
business. In other words, with all the American people saying, ``We're
being taxed twice what we should be, we should be free to earn our own
money on March 1, not May 7,'' but this administration came here and
has pushed the tax burden higher, blocked regulatory reform by arguing
against it here on the floor, so the regulatory burden is mounting.
Since Clinton has been President, regulatory costs to the American
family have risen about $300 per year. Their taxes have gone up. They
are working even more for the government than they were when this
administration came to office, even though this administration said,
``You will be working less for the government. That's our promise to
you. You'll work less. It won't be May 7; we're going to go back the
other way.''
Wrong. Wrong. That promise was left at the doorstep of the White
House, Mr. President, and they work more than when this administration
came to office and they have more regulatory burden today than they had
then. As we said earlier, the largest tax increase in history--$255
billion in higher taxes--gas taxes, Social Security taxes, a $31
billion increase in the gas tax, and, as we have all alluded, that has
a particularly regressive effect on low-income Americans; less family
income.
According to the Joint Economic Committee, after-tax median family
income for a single-earner family has fallen $803 during the Clinton
Presidency. If real after-tax incomes had grown at the average rate of
the Reagan expansion, 1983 to 1989, single-earner median family income
would be $1,274 per year higher.
People are spending less time at home with their families and more
time working to pay for big Government. According to the Tax
Foundation, Americans will spend 2 hours, 47 minutes--3 hours--of each
working day laboring to pay taxes, and they will work this year until
tomorrow, May 7, just to pay Federal, State, and local taxes.
Mr. President, the 1993 budget has cost America dearly. It has cost
her 1.2 million in additional private sector jobs between 1993 and
1996; a total of $2,600 in after-tax income for every household in
America between 1993 and the end of 1996; roughly $465 in wages and
salaries in 1996 alone. The list goes on.
The point we are making is that American families work too long for
the government and not enough for themselves, and this administration
has made that situation worse, not better. They promised to make it
better. They did not. Worse yet, they made it worse.
Mr. President, I yield the floor.
Mr. THOMAS. Mr. President, I am sure there will be more conversations
today, as there should, about the fact that this is tax freedom day.
This is the day that has been determined that each of us on the average
has worked since the first of the year until now to pay our taxes to
this country.
A typical family of four pays 38.2 percent of their income in taxes.
That is for all governments.
In Wyoming, and this is the U.S. Census estimate, the median income
for families is about $47,000. Federal taxes are about $10,000; local
and State taxes are another $5,000 or $6,000, for a total of $16,000 in
direct taxes. The estimated cost of Federal regulation for a family is
about $6,600. Excess family interest payments caused by Federal
borrowing are approximately $2,000 for a total of $24,000 that goes to
taxation.
So, Mr. President, it is an appropriate day for us to take a look at
what we do with taxes. I would like to approach it from just a little
different angle. Of course, taxes are dollars, taxes are numbers when
we talk about those, but I think also there is a concern that we ought
to have that taxes also are related to the size of Government. They are
more than money. They have to do with the kind of Government we have.
They have to do with the number of Government programs that we expect,
and there is a relationship between spending and taxes.
Of course, we ought to be willing to pay for the programs that we
want. We have not done this. For 40 years, we have not balanced the
budget. What we have done is said, ``Yes, we want more programs, but we
are going to charge them to our kids; we're not going to pay for
them.'' We ought to be willing to pay for the programs that we want.
I think that the message in the election of 1994, and we are coming
up to another one in 1996, the message was, ``government is too big,
the Federal Government is too big, it costs too much and we are
overregulated.''
Too often in the past 40 years, we have said, ``Well, we have all
these programs. The question is, how do we pay for it,'' instead of
taking a look each time at what programs we have, how effective those
programs are, where should those programs be cared for, do they,
indeed, need to be there at all.
One of the problems is we have been sort of distanced from the idea
of paying for them. The best relationship between a taxpayer and his or
her Government is that as a taxpayer in a school district where the
proposition is we need a new school or we need a new science lab, we
say, ``All right, it costs x amount of dollars to have this new science
lab. It is going to cost you this much on your taxes next year,'' and
you make the decision whether or not you are willing to pay a cost-
benefit ratio. Is it worth it to you to pay for that program?
The Federal Government removes us from that. It removes us in several
ways. That is, most of us have our taxes withheld, and so we talk about
after-tax dollars, and for some it is really hard to understand how
many dollars we do pay in taxes.
I think it is great to have a tax day and say we have worked this
year until now with nothing for ourselves, paid entirely for taxes.
That is part of the problem.
The other, of course, is the Federal Government is removed to the
extent that seldom do we have a chance as taxpayers to say, ``Here's
the program, here's what it costs. Is it worth it to me? Am I willing
to pay what it costs?'' We do not have that same kind of cost-benefit
ratio opportunity that we have on the local level.
So I think it is appropriate that when we talk about taxes and we
talk about the burden and we talk about the debt and we talk about the
future, that we also take a look at government; take a basic, long
look, some introspection of you and me as taxpayers and citizens,
saying, ``I suspect in our form of government, those who put together
the Constitution did not envision that 40 percent of our earnings, of
everyone's earnings, on average, would go to pay taxes for government
functions.'' Do you think? I do not think so.
They so clearly defined in the Constitution those things that the
Federal Government should do, and there are many things, indeed, that
the Federal Government should do. There are many things that only the
Federal Government can do--defense, interstate commerce, highways--many
things.
[[Page S4715]]
They also put in the Constitution the 10th amendment which says that
only those things enumerated in the Constitution would, in fact, be
carried out by the Federal Government and others would be reserved to
the States and to the people. So we find ourselves with a great
relationship between the taxes we pay and the amount of Government that
we have.
Big spending and big taxes go together. We have done a number of
things this year to seek to work at this. When the Republicans came in
and took control of the House and Senate, they changed the debate. We
have changed the debate from talking about how do we get more money to
continue to grow, to taking a look at the programs that are there.
We have changed the debate to one of examining programs instead of
simply saying they are going to grow some more, how do you charge it or
how do you put it on the debt or how do you get some more taxes.
We have changed the debate to balancing the budget. The budget has
not been balanced in 25 years. For the first time, the conversation now
is toward balancing the budget. We presented a balanced budget
amendment to the Constitution which says, as it does in almost all
State constitutions, that you cannot spend more than you take in. It
lost by one vote. I hope we get another chance, Mr. President, to take
a look at that issue, and I think perhaps we will this week.
In that debate, frankly, we forced the President to deal with
balancing the budget. The President did not send up any balanced
budgets until this year. Now, of course, we do not agree with the way
it has been balanced. It does not do anything about those things that
drive it. But nevertheless, the discussion now is how do you balance
the budget, not if you are going to balance the budget. We have reduced
the number of programs in Government. We have to do that if we are
going to do anything about taxes. We sought to reduce taxes in a couple
of instances. We had regulatory reform.
Mr. President, I guess what I want to emphasize is we do pay a great
deal of taxes. I think we pay too many taxes. I think we expect too
much from the Federal Government; that there are other ways to
accomplish those things more efficiently either through local
government, State government, the private sector, that we ought to take
our taxes and orient them, direct them toward those things that only
the Federal Government can do.
But I hope that we do not simply talk about the amount, because taxes
have a great deal to do with the concept, with the principle of what
you do in the Federal Government. I think that is a legitimate debate
that each of us ought to undertake as we move into this election
season. Each of us ought to evaluate in our judgment what role we think
the Government ought to have at the Federal level, what role should the
centralized Government have, how much money should we spend, how do we
become responsible morally, physically to balance the budget, and that
seems to me is what tax day is about. I am delighted that there will be
discussions about it, there will be considerable interest in it.
I think one of the things sometimes we do not even recognize
ourselves is the amount that taxes have increased. Corporate tax
increases between 1992 and 1995 have gone up 55 percent. Who pays
corporate taxes? Corporations? I do not think so. It is the people who
use their products, of course. They are passed on.
Personal taxes have gone up 25 percent. Total receipts have gone up
23 percent. At the same time total receipts and taxes have gone up 23
percent, the GDP has only gone up 16 percent.
So tax increases have outstripped our growth by at least 1.5 times.
Payroll taxes have gone up 15 percent, and indirect taxes up 11
percent.
I am not opposed to taxes. Taxes are how we fund our Government. We
have to pay taxes, should pay taxes. We should pay them fairly. The
real issue is, what do you want to pay for? What are you willing to
pay? What should we pay for? How do we do it efficiently? Tax day ought
to cause us to consider those things and consider them as we come into
this election cycle. Mr. President, I yield the floor.
Mr. ABRAHAM. Mr. President, I rise today to recognize tax freedom
day; a day marking the people's emancipation from government taxation;
a day after which the American people begin working for themselves and
their families instead of for the Government; a day which continues to
recede further and further every year.
This year, Mr. President, America's tax freedom day arrives on May 7.
In my own State of Michigan it arrives even later--on May 9. Michigan,
thanks to its friendly atmosphere for economic growth and investment,
is relatively affluent. Thus Michigan pays a significantly higher
portion of its income in Federal taxes than do other States. We are
13th in the Nation in total taxes paid, again in large measure because
the Federal Government takes more from our citizens' paychecks than
from those of citizens of other States.
But let us look at the overall tax picture.
As tax freedom day approaches, Mr. President, I believe it is
appropriate for us to ask ourselves how much of their time, what
proportion of their paychecks the American people feel it is fair for
them to be asked to pay to the government.
When I first saw the results of the Roper Poll on this subject I was
surprised to note that Americans of all stripes--whatever their race,
sex, income level, or political persuasion--felt it was fair for them
to pay a full 25 percent or one quarter of their income taxes. More
astounding, however, is the proportion they actually must pay in
taxes--over 38 percent.
Americans are willing to pay a quarter of their incomes in taxes, Mr.
President, but that is not enough for our government. No, our
government taxes away over 38 percent of the income of the average
American family.
And the trend is toward more, not less. The government imposes ever-
higher taxes on America's working families. Commerce Department data
reveal that in 1995 total taxes as a share of the gross domestic
product were the highest in U.S. history. Federal, State, and local
government receipts consumed a record 31.3 percent of GDP.
Mr. President, this figure is simply astounding. Even at the height
of World War II, with America fighting for her very existence, total
taxes only consumed 25 percent of GDP. In 1992, only 4 years ago, taxes
consumed 30 percent of GDP.
What does this mean? It means that taxes have risen by 1.3 percent of
GDP--of the size of our entire domestic economy--since Bill Clinton
became President.
And what does our President propose to do about this deplorable
situation, in which our economy is operating under the highest tax
burden in history?
Recent experience does not provide much hope for relief. In 1993
President Clinton signed into law the largest tax increase in history:
$241 billion. The President raised taxes on gasoline. He raised taxes
on Social Security recipients. He also hit our senior citizens by
reinstating the highest estate and gift tax rate of 55 percent. He
raised taxes on small business owners. And he passed a retroactive tax
increase on the incomes of America's working families--not only
increasing taxes on their future incomes, but actually taking a portion
of the incomes they already had earned.
The President's tax hikes directly and indirectly increased the tax
burden on millions of middle-class taxpayers. Small wonder he recently
admitted that he ``may have'' raised taxes too much.
But President Clinton's contribution to higher taxes does not end
there. When we Republicans sought to emancipate American families from
some of their tax burden--to make their tax freedom come earlier in the
year--President Clinton was ready, with his veto.
Americans should judge for themselves the effects of Clinton tax
policies on their ability to keep what they earn for themselves and
their families. They should ask themselves a few simple questions.
First, do you have children?
If so, President Clinton's veto of our Balanced Budget Act is costing
you $500 per child in tax savings--the amount of the tax credit we
attempted to give you.
[[Page S4716]]
Second, are you married?
If so, President Clinton's veto is denying you tax savings from a
higher joint standard deduction. Married couples with average incomes
of $50,000 who claim the standard deduction are paying $217 more than
they would otherwise, because of the President's veto.
Third, are you trying to save for your retirement?
If so, and you earn more than $40,000 a year or have a nonworking
spouse, President Clinton's veto cost you $1,120 in IRA tax savings.
Fourth, are you planning to adopt a child?
If so, President Clinton's veto cost you a credit of up to $5,000 to
defray adoption expenses.
Fifth, do you care for an elderly parent at home?
If so, President Clinton's veto is denying you savings from a $1,000
eldercare deduction--that's between $150 and $280 out of your pocket
and into the Government's.
Sixth, do you plan to earn taxable capital gains--for example by
selling your house when you retire?
If so, President Clinton's veto is preventing you from keeping more
of your profits. The GOP reforms would have seen that you were taxed on
only half of your net capital gain.
And finally, are you paying off a student loan?
If so, President Clinton's veto is costing you savings from a maximum
$2,500 deduction on the interest paid for the first 5 years of
repayment.
This veto delayed tax freedom day to May 7--the latest date ever.
This veto extended to 3 hours, out of the typical 8-hour workday, the
time Americans must work just to pay taxes, the longest ever. This veto
means that the value of the dependent exemption continues to decline.
Our families are having a harder time supporting their children, in
part because the exemption has lost much of its value. For the
dependent exemption to be worth the same it was worth in 1960, it would
have to be $3,800 today--$1,300 more than the current $2,500.
In short, President Clinton's policies have chained America's working
families to ever-higher taxes, making it harder and harder for them to
support themselves.
His policies have cut the growth of Americans' real personal
disposable income. They have hurt the economy, increased taxes and
reduced by nearly $2,600 the amount of money every American household
can use to support itself. They have contributed to a situation in
which more and more families have two working parents not out of choice
but out of economic necessity. At the same time these policies have
reduced the size of parents' paychecks--even as parents face increased
costs for their children's education, worries over their own retirement
and concern that they are spending enough time with their kids.
Americans today are, and have every right to be worried about their
jobs, concerned about their future, and angry that the American Dream
of moving up through hard work seems to be slipping out of reach.
In one generation, Mr. President, the Government has doubled the
amount of money it takes from the American people. It has severely
restricted our freedom from taxation. And what have we gotten in
return? Certainly not safer and better schools. Certainly not safer and
cleaner streets. Certainly not reduced drug-use and juvenile crime.
Certainly not lower levels of welfare dependency and hopelessness.
No, Mr. President, what Americans have bought with their tax freedom
is nothing more than increased Government control over their lives. And
this must end.
We must free our people from the chains of overtaxation and
overregulation.
We must see to it that Americans earn more and keep more of what they
earn so that they can do more for their families and communities.
We must institute reforms that will encourage economic growth, lower
tax burdens, and empower America's working families to once again take
charge of their own lives, helping themselves and their neighbors.
What does this mean in practice?
To begin with, Mr. President, it means relieving American families of
the burden imposed by the Clinton tax increases. This is why we must
pass the $500 exemption for all children under the age of 18.
It also means reducing the amount Americans must pay for gasoline by
rolling back the 1993 Clinton gas tax increase that unfairly burdens
lower income working families.
It also means we must create more and better paying jobs through
incentives like a capital gains tax cut that will encourage businesses
to invest in resources that create jobs.
And it means helping people save for the future by encouraging
retirement savings and portability.
Finally, Mr. President, it means balancing the budget and stopping
Government from overspending. It means regaining control over the cost
and size of Government so that the tax burden and regulatory burden
both may be lifted from the shoulders of the American people.
America always has been the land of freedom and opportunity. In large
measure this has been true because we have recognized that
opportunity--the chance to build a decent and rewarding life for
yourself and your family--depends on freedom.
Only with the freedom to work, move, and invest as we see fit can we
make the most of our capacities.
It is our job, Mr. President, to restore Americans' opportunity by
freeing them from a Government that taxes too much and prevents them
from pursuing their own good, and the good of their families and
neighbors.
Tax cuts, growth incentives, and renewed responsibility in government
spending and regulation will emancipate the American people from the
chains of taxation and overregulation.
More than this government cannot provide. Less than this, Mr.
President, we dare not provide.
Mr. HATCH addressed the Chair.
The PRESIDING OFFICER. The distinguished Senator from Utah.
Mr. HATCH. Mr. President, before we get into the Billy Dale bill,
because it is a very important piece of legislation, as far as I am
concerned, I thought I would spend a few minutes, as chairman of the
Judiciary Committee, talking about habeas corpus reform because of the
extraordinary action taken by the Supreme Court last Friday, and then I
will launch into the Billy Dale legislation.
____________________