[Congressional Record Volume 142, Number 62 (Tuesday, May 7, 1996)]
[Senate]
[Pages S4801-S4802]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            TAX FREEDOM DAY

  Mr. HATCH. Madam President, I rise today to join with many of my 
friends and colleagues in acknowledging a red letter day. Today is tax 
freedom day--the day the American family breaks the shackles placed on 
them by high taxes in this country, the day when Americans can stop 
working for the Government and start working for themselves.
  Not until May 7, 1996, do average families actually earn enough money 
to start paying their own bills instead of the Government's. Not until 
May 7 do average Americans have after-tax money to pay for their 
houses. Not until May 7 do average Americans have after-tax money to 
buy food and clothing for their families.
  And, never has tax freedom day occurred so late in the year. Look at 
the calendar: 1996 is more than one-third over. Americans work one-
third of the entire year just to support governments.
  I often wish the big spenders both in Congress and in the executive 
branch would stop thinking in terms of revenue and start thinking in 
terms of what revenue really is--taxes. We need to measure this burden 
and talk about it in personal terms, not just in vague budget-speak. 
You know, there are folks in America to whom $100 million is a lot of 
money--not just a mere point one on a computer printout.
  To help illustrate this problem, I would like to take a closer look 
at the tax burden of a family from my home State of Utah:
  A Utah family of four with an estimated median income of $44,871 pays 
approximately $8,800 in direct and indirect Federal taxes. On top of 
this outrageous amount, they must also pay over $5,700 in State and 
local taxes, bringing the total family tax burden to $14,538. This is 
an effective tax rate of 32.4 percent.
  Now, while a family income of about $45,000 might sound like quite a 
bit of money in some parts of the country, I think few people, besides 
possibly President Clinton, would venture to call this family of four 
rich.
  Madam President, as you can see, the tax burden of a family with this 
income is astronomical. However, the cost of the Federal Government to 
them does not end with these taxes. In order to accurately estimate the 
Government's true burden on Utah families, we must also calculate the 
regulatory costs and their effect on the prices of goods and services. 
We must factor in the higher interest rates that families must pay as a 
result of the Federal deficit.
  In essence, Federal, State, and local taxes on the family are all 
increased by excessive Federal borrowing. Excessive Federal regulation 
combined with the increase in interest payments raises the Government's 
cost by $8,600. Thus, the estimated total of Government costs to this 
typical Utah family is over $23,000. That is about 52 percent of their 
income. Utah families deserve better. Every American family deserves 
better.
  The Balanced Budget Act of 1995 was predicated in large part on the 
idea that the American public could spend their money more effectively 
than the Federal Government could spend it. Not only did the Balanced 
Budget Act contain a bona fide plan for balancing the budget within 7 
years, it also contained a number of tax reductions geared to helping 
American families and to spurring economic growth.
  A balanced budget is not a new idea. Until the mid-1930's, this 
Government regularly managed to balance its books every year except in 
wartime; and, even then, the debt was repaid as soon as possible after 
the crisis was over. But, in the 1960's, things really got out of hand. 
Entitlements flourished. And, of course, less and less restraint on 
spending meant more and more taxation. Big government means big taxes.
  However, President Clinton chose to veto the Balanced Budget Act. He 
chose to camouflage his reluctance to cut Government spending and taxes 
with demagoguery. He claimed that many of the tax cuts in this package 
were targeted to benefit the rich, regardless of the many studies that 
demonstrate why this is not true.
  He claimed that these tax cuts came at the expense of programs 
intended to aid the poor and the elderly. But, let's be clear about 
this: budget experts have made it very clear that these programs must 
be controlled independent of a tax cut package, not because of one.
  And, let's be clear about something else as well: Balancing the 
budget

[[Page S4802]]

should not provide the excuse for not enacting tax cuts. That has been 
a convenient rationale for those who want to spend and spend. For 
almost the last half century, Government has spent $1.59 for every new 
dollar in taxes. Government isn't taxing the American people to 
eliminate the deficit; it is taxing people in order to spend.
  In 1993, President Clinton worked hard to push through Congress--by a 
bare one-vote margin in the House and a tie-breaking vote in the Senate 
by Vice President Gore--one of the largest tax hikes in history.
  In 1994, Republican candidates for Congress pledged to cut taxes. In 
1995, they delivered. Today, the only thing that stands between the 
Utah family--as well as millions of other American households--and tax 
relief is Bill Clinton.
  One of the most misunderstood items of the tax cut package is the 
capital gains tax cut. The truth is that a capital gains tax cut is an 
investment incentive, and every American could gain from this tax 
reduction. Let me give you the facts, Mr. President.
  From 1985 to 1992, over 7 million taxpayers had a capital gain each 
year. And, 62 percent of these returns reporting capital gains came 
from taxpayers reporting $50,000 or less--$50,000 or less--of adjusted 
gross income. We are not talking about a millionaire's tax break. 
Capital gains relief will benefit millions of American taxpayers.
  Moreover, it is estimated that about 12 million lower and middle-
income workers participate in some sort of stock equity plan with their 
employers. Further, many millions more own investments in stocks, 
bonds, and mutual funds. In fact, 52 percent of the 30.2 million 
families that own mutual funds report incomes of $50,000 or below, and 
80 percent of these families report incomes of $75,000 or below.

  Thus, capital gains realizations are hardly the exclusive domain of 
the rich. And these examples do not even touch on the economic 
benefits--such as new job opportunities--that would result from the 
unlocking of this estimated $8 trillion of unrealized capital gains 
that now sit waiting for the right incentive to come along and unleash 
it.
  The list of other tax provisions that could reduce the burden of this 
average Utah family goes on.
  For instance, the Balanced Budget Act of 1995 included an extension 
of the research and experimentation tax credit. This credit is very 
important to the research-intensive high technology industries that 
supply my State with thousands of jobs. It is this type of tax 
incentive that ensures Americans that high-paying, high-skilled jobs 
will stay in the United States and not be exported to countries that 
are more tax-friendly. It is this type of treatment that allows 
businesses to be competitive and makes the United States an attractive 
base for many research-related companies.
  The Balanced Budget Act of 1995 also included a $5,000 credit for 
qualified adoption expenses. As anyone who has tried to adopt knows, 
adoptions are not cheap.
  Families that are willing to take a child into their home are often 
deterred by the initial legal and medical expenses that can easily cost 
over $20,000. This $5,000 credit would allow the typical Utah family 
some much-needed relief by allowing them to offset their adoption 
expenses with a dollar for dollar credit that could be carried forward 
for up to 5 years.
  One of the tax provisions that would have provided considerable 
relief to this same Utah family is the tax credit for children. The 
Balanced Budget Act of 1995 would have provided a $500 per child 
credit. Of course, because Utahns have larger than average families, 
the citizens of our State would have greatly benefited from this 
provision. But, most American families could benefit from this break as 
well.
  The credit would have reduced the tax burden for a family with two 
children by $1,000. I am sure this Utah family would have a million 
better ways to use this money.
  So, how much did President Clinton's veto of the Balanced Budget Act 
cost this Utah family, consisting of a mother, a father, and two 
children? Let's see how much:

       $1,000 in tax credits for children.
       $217 in marriage penalty corrections; and $5,000, if this 
     family had tried to adopt a child.
       And since this family would fall into the 15-percent tax 
     bracket, they would have only paid a 7.5-percent tax on any 
     capital gains that year--an additional 7.5-percent cut in 
     their tax burden.

  President Clinton's veto of the Balanced Budget Act cost this family 
a minimum of $1,217. And, this figure does not even take into account 
possible tax savings from capital gains tax rate reductions, the 
adoption credit, the enhanced IRA provisions, or the increase in the 
tax credit for health insurance for the self-employed.
  It also does not take into account the substantial savings that would 
accrue to this family on mortgage interest, auto loans, student loans, 
or other private borrowing given that a balanced Federal budget would 
lower interest rates an estimated 2 percent.
  Although President Clinton was unwilling to enact the Balanced Budget 
Act's program of tax relief, he now has the opportunity to repeal at 
least one of the taxes he placed on the American public in 1993--the 
4.3-cent-per-gallon gasoline tax.
  It is remarkable to me that the Clinton administration decried the 
Balanced Budget Act for its so-called harm to the poor and to seniors--
but exactly who does the White House think is paying the biggest price 
for this gas tax hike? The gas tax is a particularly regressive tax. 
Who pays the most? The working poor and those on fixed incomes, that's 
who.
  On Friday, the Finance Committee held hearings on the repeal of the 
4.3-cents-per-gallon gas tax. Although there is some debate regarding 
how much of an immediate drop there would be in the price of gas as a 
result of this repeal, many experts agree that the price of gasoline 
would be 4.3 cents per gallon less than what it would otherwise be. It 
is no secret that these excise taxes are passed on to the consumer.
  So, in observance of tax freedom day, I call upon the President to 
work with Congress not against it. It is time to for him to put down 
the veto pen and think about the American family--about this family of 
four struggling in Utah. It is time to lower the national tax burden 
and return this money to its rightful owners--American families. The 
current law is taxing us to death.

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