[Congressional Record Volume 142, Number 122 (Monday, September 9, 1996)]
[Senate]
[Pages S10058-S10064]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       TAX RELIEF AND TAX REFORM

  Mr. COVERDELL. Mr. President, a little earlier today, the Senator 
from Massachusetts was talking about the tax relief proposal of our 
former colleague, Senator Dole, which, just to sketch it out, calls for 
replacing the current tax system with a simpler, flatter, fairer 
system; it cuts the personal income tax rates across the board by 15 
percent, it cuts the top capital gains tax rate for individuals in 
half, to 14 percent; creates the much-debated $500 per child tax 
credit, and much needed, I might add; and expands individual retirement 
accounts. It goes on to offer a 1-year tax amnesty during the 
transition to a new tax system, eliminates tax returns for 40 million 
low- and middle-income taxpayers, it shifts the burden of proof from 
individuals to the IRS, which I have long thought should be the case.
  We currently have two legal systems in the country. In most cases, 
you are innocent until you are proven guilty, but not if you are 
dealing with the IRS; then you are guilty unless you can somehow 
extract yourself from it. And it ends lifestyle audits, that is just 
speculation about, ``You are driving sort of an interesting car, maybe 
we ought to look into that.'' I do not know of any agency in the United 
States Government--which is a real reach, when you think about it--that 
shares a lower reputation among the American people than the IRS. 
Anybody who has visited with Americans anywhere in the country knows it 
immediately.
  I think that lowering the economic pressure on America's working 
families ought to be among our first priorities in this country. I have 
said many times here on the Senate floor that an average working family 
in my State is now forfeiting 53 percent of their earned wages to a 
government tax. It is absolutely unheard of.

  I thought this was an interesting quote from Cal Thomas, in a recent 
article that appeared in the Washington Times. He says:

       When government wants to spend your money it's doing 
     something noble. When you want to keep more of your money, 
     you are greedy.

  I think that perfectly defines what so much of the debate and 
language and rhetoric we hear here in Washington is. It is almost as if 
the Government owns all the fruits of your labor and once in a while 
allows you to keep some of it. I have to tell you, that is absolutely 
backward from what Thomas Jefferson had in mind. He warned us, time and 
time again, of governments that consume the fruits of labor and take it 
away from the laborer for their own purposes.
  Recently, there was a story that I think appeared in Readers Digest, 
and also the Wall Street Journal, that asked every strata of American 
life what they thought was a fair tax burden, male/female; income 
groups from $30,000 to $75,000 or more; Republicans, Democrats, 
independents, conservatives, moderates, liberals--what is a fair tax?
  It is almost stunning that it did not matter what their philosophy, 
what their gender, what their income strata was, they all had an almost 
identical answer. The appropriate tax burden on American citizens and 
workers should not exceed 25 percent. In other words, America believes 
the tax burden today, which is the highest level it has ever been, or 
the highest percentage of the gross domestic product, should be half 
what it is today; that the Government ought to be able to fulfill its 
responsibilities with half of what it is extracting from every working 
family.
  Of course, we are hearing a lot of moans and groans from the other 
side. ``Oh, my heavens, what is the Government going to do if it is 
unable to extract all these resources from our working families?'' As 
though the Government's priorities come ahead of every one of those 
mothers and fathers who are trying to feed their children, educate 
them, house them, and give them higher education, prepare them 
spiritually. It is just amazing to me. You would think it was the other 
way around, that this money all belonged to the Government and every 
now and then it passes a little favor out to you.
  I read over the weekend a story, the headline, ``France to Cut Taxes 
$5 Billion in Effort To Reduce Deficit.''

       Paris, September 5. France will follow Republican 
     Presidential nominee Robert J. Dole's prescription for 
     economic health and cut taxes to the help reduce its budget 
     deficit in the face of a shrinking economy.

  That is what happens. When the Government consumes too much it chokes 
the economy, it causes people to lose jobs, it causes new businesses 
not to be formed. I never thought the French would be ahead of us on 
this.
  It goes on to say they are adopting Senator Dole's prescription for 
economic health, cutting taxes to help reduce the budget deficit in the 
face of the shrinking economy.

       The Prime Minister announced tonight--[that is September 
     5]--the $5 billion tax cut for next year and further 
     reductions in following years will make France virtually the 
     only nation in Western Europe to reduce taxes so far this 
     decade.

  That is quite an amazing turn of events, that France would be 
following the advice of Senator Dole and we have nothing but rejection 
from the Senator from Massachusetts. That is a very, very interesting 
comparison.
  Then we see here the Senate minority leader Tom Daschle, South 
Dakota, said, ``* * * he detected very little desire in the Democratic 
caucus to act on a tax cut bill before this election.'' I guess it is 
understandable, considering that that caucus is who gave us the highest 
tax increase in American history, and little wonder--nor should we be 
surprised--they have very little interest in leaving these dollars in 
the checking accounts of America's families.
  As a matter of fact, this average family I was talking about just a 
few moments ago now has 2,600 fewer dollars in their checking account 
since the arrival of this administration in Washington. In just 4 
years, they are now consuming over $2,000 more out of these beleaguered 
working families in our country.
  Mr. President, I see we have been joined by my distinguished 
colleague from Minnesota. I would like, if he is agreeable, to extend 
up to 10 minutes to the Senator from Minnesota on this very, very 
important subject of tax relief and tax reform--much, much needed in 
our American economy. More important, around the kitchen table and in 
the checking accounts of just the poor average family trying to make 
it.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized for 
10 minutes.
  Mr. GRAMS. Mr. President, I wanted to add, as my colleague mentioned 
about the tax cuts that are being proposed for France, I think we note 
Germany is also proposing tax cuts because of the huge unemployment 
rate in that country. Again, the same thing, as more government taxes 
have begun to choke that economy as well as in Sweden, so other nations 
around the world are looking for ways to encourage economic growth 
through a reduction in their governments. Like the Senator from Georgia 
said, it is hard to believe they would be ahead of the United States 
making those determinations.
  But, Mr. President, America's working families, as we have been 
talking about, face greater hardships now than at any time in the last 
decade and the

[[Page S10059]]

impact of the Clinton Presidency is being felt on all fronts: the 
economy is flat, taxes are on the rise, while take-home pay is not 
going anywhere at all.
  Despite his administration's claims to the contrary, the economy has 
merely slogged along since Bill Clinton took office, growing at a 
barely perceptible 2.4 percent and making this recovery the slowest of 
the past century. The projected growth for next year is only 1.9 
percent. At the same time, the Government's tax collectors are making 
new demands of working Americans and siphoning away more of their 
dollars than at any other time in history. In too many cases, workers 
are actually taking home less in their pay envelopes than they did 4 
years ago.
  It did not help when Bill Clinton vetoed the balanced budget 
legislation passed last year by Congress. Without a balanced budget to 
keep interest rates in line, families are paying significantly more to 
finance necessary expenditures: an extra $36,000 for a home mortgage, 
for example, or $1,400 more for a student loan and higher interest fees 
again because of a vetoed balanced budget by this President. Those are 
dollars that could have been spent saving for a child's education, or 
purchasing health care, insurance, and other basic family needs.

  If families feel as though they are being squeezed between high 
taxes, a White House that cannot stop spending, and a stagnant economy, 
they are right--and it is called the Clinton crunch.
  Under economic policies perpetuated by the Clinton administration, 
our cities are suffering as well. Since 1965, 15 of the 25 largest U.S. 
cities have together lost over 4 million residents, at the same time 
the Nation's population has grown by 60 million. As residents bail out 
in record numbers, America's job creators have joined the flight. 
Dozens of Fortune 500 companies, once headquartered in New York City 
have relocated since the 1970's, and the statistics are similarly grim 
in other major cities such as Cleveland, Detroit, Philadelphia, and St. 
Louis.
  The urban centers in my home State of Minnesota are no exception--
according to the U.S. Census Bureau, St. Paul and Minneapolis are 
shrinking, too. In the 4-year period between 1990 and 1994, the 
population in my State's two largest cities dropped by nearly 4 
percent. A study recently released by the Minnesota Planning Office 
revealed that even as the rest of the State is experiencing dramatic 
growth in the 1990's, its metropolitan hubs are not.

  Once the job creators are gone and employment opportunities vanish 
with them, the hearts of our once mighty economic centers wither away. 
Poverty and crime flourish like weeds in their place.
  Consider the alarming murder statistics now rocking the Twin Cities. 
St. Paul recorded 25 homicides in all of 1995; already this year, 25 
murders have been reported. The 71 homicides on the books this year in 
Minneapolis mean the city may match--or even exceed--last year's record 
number of killings.
  What is driving people away? Why are our cities no longer the 
powerful economic magnets of the past? Sadly, just as it is responsible 
for the state of the economy as a whole, the Government itself bears 
much of the responsibility.
  A recent study by the Cato Institute found excessive Government 
spending and high taxes to be a major cause, not just a consequence, of 
urban decline.
  Researchers have learned that cities that overspend and overtax lose 
population; cities with low spending and low taxes gain population.
  The Federal tax burden continues to rise. Today, a typical, two-
income family is paying nearly 40 percent of its income in Federal, 
State, and local taxes. That is devastating for urban families who 
struggle every day to keep a job, put food on the table, and make a 
decent home for themselves and their children--while Government 
continues to demand more.

  We have two workers in most households today. One is working to 
provide for the family, the other is working to provide for the 
Government.
  Most taxpayers do not realize that in recent years, 15 cents of every 
tax dollar they have contributed has gone toward paying the interest on 
our $5.2 trillion national debt.
  In 1995, more than $230 billion which could have been put to work 
meeting the Nation's needs was instead squandered on interest 
payments--payments amassed because for 40 years, Washington always got 
whatever it wanted when it visited the candy store, whether it had the 
money or not.
  Until Washington stops spending more than it takes in, the national 
debt will continue to swell, until we have left our grandchildren a 
bill even they will be hard pressed to pay off, if they have the 
ability at all to pay.
  America must do better, and so Republicans, along with Bob Dole, have 
unveiled a plan that will stimulate economic growth and restore 
opportunity to every American family.
  It is a comprehensive blueprint for our future built on three, 
interwoven themes: First, America's budget must be brought into 
balance; second, working families deserve tax relief, and third, the 
IRS, as we know it, must come to an end.
  And again Bob Dole, has detailed this plan and what it offers for 
individuals, for families, and for the country.
  Despite the arguments you hear from across the aisle who draw 
conclusions, irrespective of what is based on these plans, a balanced 
budget is at the heart of our economic plan. By boarding up the candy 
store and cutting Federal waste and inefficiency, we will balance the 
budget by the year 2002 while we protect and preserve Medicare, 
Medicaid, and other vital Federal programs upon which millions of 
Americans rely.
  At a time when nearly 1 out of every 4 dollars earned by working 
Americans goes to pay Federal taxes, we believe relief from Washington 
is long overdue.
  Our plan benefits every taxpayer by automatically cutting their taxes 
by 15 percent. That is a significant change from the policies of the 
past 4 years, when promises of tax relief were displaced by a 1993 tax 
increase of historic proportions.
  More than any other segment of society, America's middle-class 
families have borne the brunt of the Government's tax-happy ways. We 
have recognized their sacrifice by offering them a $500-per-child tax 
credit.
  As the Senate author of the child tax credit, I have long recognized 
the dramatic results we could achieve by cutting taxes for 24 million 
working households nationwide and allowing families to control more of 
the dollars that they work so hard to make. The $500-per-child tax 
credit is not peanuts--it is real help at a time when more Americans 
are working extra jobs or taking on overtime hours to keep from sinking 
under their tax burden.
  In my State alone, it means families in Minnesota would keep $500 
million in their pockets to spend on their families to decide how to 
spend rather than turning those dollars over to Washington for 
Washington to make those decisions.
  Our vision for America's economic future will confound those who 
continue to defend the failed policies of the past. Clinging 
desperately to their borrow-and-spend ways, they claim that tax relief 
and deficit reduction cannot go hand in hand. Yet our plan proves these 
are compatible goals. The tax cuts of the Reagan era ushered in 
America's longest peacetime expansion, helping to create 20 million new 
jobs and pushing incomes and living standards to record highs. As more 
Americans found work and earned higher salaries, they collectively paid 
more in taxes even though individually they were paying less.
  Yes, the deficit rose, but it was in the hands of a Democrat-
controlled Congress that failed to match tax cuts with spending cuts of 
its own and instead a Congress that spent $1.59 for every tax dollar it 
collected. They say we cannot have tax cuts and balance the budget, but 
we can if we have a Congress that is willing to cut the spending at the 
same time. A Congress and President committed to realizing a balanced 
budget in 6 years would achieve unparalleled growth in the economy and 
offer Americans unparalleled opportunities for success.
  Finally, we must untangle the deeply rooted IRS from the lives of the 
American people. If the IRS seems omnipresent, well, it is. Today, it 
is five times as big as the FBI and twice as large as the CIA. Just to 
comply with the jumble of laws it has imposed on the taxpayers it takes 
the annual equivalent of 3 million people, working full time, and the 
IRS continues to grow.
  But even as its budget has increased from $2.5 billion in 1979 to 
$7.5 billion

[[Page S10060]]

this year, IRS service to the taxpayers has steadily declined.
  An example: Working families have paid billions just to modernize the 
agency's tax collection system. The results, according to the GAO, have 
created chaos, and more importantly, the IRS remains hostile to the 
average American taxpayer.
  For example, every day, my State office received complaints from 
constituents who have been frustrated that they can't even get through 
to an IRS agent. The have been calling the IRS 1-800 lines. The lines, 
they say are constantly busy. In some cases, my constituents tried for 
3 or 4 days before they were actually able to get through.
  Another story I recently encountered was that of one Minnesotan who 
owes about $24,000 in back taxes because his building business had a 
few lean years. He said he built a spec house in 1994 and now he 
finally has a buyer for it.
  But here is the problem. He says he will be able to make $18,000 on 
the house if he sells it, which will all go to the IRS, but the IRS 
strapped a lien on the house and it will not release it because he 
can't pay the entire $24,000.
  So by holding him hostage and demanding it all, the IRS is shooting 
itself in the foot when it could have already collected at least 70 
percent of the debt and allowed this individual to go on and try to 
earn more money to pay his back taxes. And this is quite typical.
  The abusive power and the arrogance of the IRS must be brought to an 
end. Fundamental reform of the IRS must be part of any plan to help 
unleash the American economy--a reinvented IRS, a balanced budget, 
relief from high taxes, and an economy that frees, not entraps, 
American families.
  Mr. President, finally, that is the difference between another 4 
years of what we have called and what you have heard talked about as 
the Clinton Crunch and our vision for America's future. That is a 
vision of hope and opportunity, a vision that deserves a closer look by 
the American taxpayers. I hope they do that in the next couple of 
weeks. Mr. President, I thank you. I yield the floor.
  Mr. COVERDELL. Mr. President, I wonder if the Senator from Minnesota 
might comment. His discussion about American cities is most 
interesting. My home city since 1970-75 has lost 125,000 residents. My 
argument is that if these cities just continue to impose higher and 
higher financial burdens, the end result is they make the city richer 
and poorer, because every time they ratchet the tax up, they drive 
another big segment of the middle class right out of the city. You 
cannot destabilize the middle class. They are going to find the relief 
that they want. They vote with their feet. Does the Senator concur with 
that?
  Mr. GRAMS. Very much so. It is kind of a catch-22. Every time the 
city says they need more programs to encourage people to stay, they 
have to somehow have the revenues, so they raise taxes. And every time 
they raise taxes, they have an ever-increasing burden, not only on the 
people, but the businesses that support them. Once the businesses 
leave, it leaves a vacuum for crime and other problems. It is a catch-
22. The Government says they will put more money into it, so they have 
to raise taxes and generate more revenue. And it compounds the problem, 
as the Cato Institute said. The Government is a consequence, not just a 
contributing factor, but a consequence of this problem.
  Mr. COVERDELL. I thank the Senator for his remarks.
  In just a moment I am going to turn to our colleague from Alabama. 
But with regard to the IRS, when I was a youngster, I was always taught 
Government was our partner. I think some people have gotten confused 
and they now think it is our boss.
  Since 1954, the number of different penalties the IRS imposes on 
taxpayers has increased from 13 to 150--13 to 150. In 1992, the IRS 
imposed 33 million penalties on taxpayers. The amount of penalties the 
IRS assesses has soared from a total of $1.3 billion in 1978 to $12.5 
billion in 1992. You think we have a rage of criminality in our 
country? I think this is just absurd. The over 100 new penalties 
created in recent decades amounts to a deck of trump cards the 
Government can play against their own citizens. It is just totally 
inappropriate.
  Since 1980, the number of levies, the IRS seizures of bank accounts 
and paychecks, has increased fourfold, reaching 3.2 million in 1992. 
The U.S. General Accounting Office estimated in 1990 that the IRS 
imposes 50,000 incorrect and unjustified levies on citizens and 
businesses per year--50,000. GAO estimated that 6 percent of IRS levies 
on businesses were incorrect. It is time for a major overhaul there.

  Mr. President, I am going to yield up to 10 minutes to my colleague 
from Alabama.
  Mr. SHELBY. Thank you.
  The PRESIDING OFFICER (Mr. Campbell). The Senator from Alabama is 
recognized for 10 minutes.
  Mr. SHELBY. Mr. President, I wanted to come to the floor today and 
try to set the record straight on Senator Dole's tax relief plan. Over 
and over, Mr. President, the media pundits and the liberal Democrats, 
such as our President, have been telling the American people that 
Senator Dole's tax relief plan will ``balloon the deficit'' or result 
in ``extreme'' or ``draconian" spending cuts which will hurt our 
children and starve the poor.
  Mr. President, I believe these scare tactics are not only wrong, they 
are shameless, and it is time we start standing up here and telling the 
American people the truth. I want to briefly lay out in a few minutes 
today some of the facts to expose the myths put forth by the guardians 
of Big Government--yes, the guardians of Big Government.
  First, Mr. President, President Clinton, I believe, is wrong, wrong 
to claim that broad-based tax relief will increase the deficit. He 
often points to the 1980's as proof that cutting taxes results in 
higher deficits. However, the facts just do not support his claim. For 
example, when President Reagan, with the help of the Congress, cut the 
taxes in the early 1980's from a top rate of 70 percent down to 28 
percent, total revenues to the Treasury during that time increased by 
99.4 percent during the following decade.
  What was this due to? It was due to the record rates of economic 
growth which occurred during the 1980's, an average, Mr. President, as 
you will recall, of about 4 percent a year. These cuts stimulated the 
longest peacetime economic expansion in American history. More than 20 
million new jobs were created, and more people were paying taxes, 
increasing Government revenues at that time.
  The fact is, Mr. President, that the massive deficits of the 1980's 
did not result from tax cuts; they resulted from skyrocketing rates of 
Federal spending. For example, during the 1980's, Federal spending 
increased by 112 percent; it doubled in just 10 short years. This out-
of-control spending is the culprit for the deficits of the 1980's, not 
President Reagan's tax cuts.
  What this means for us today is that we should not hesitate to give 
the American people long overdue tax relief. History over and over, Mr. 
President, has proven that lower taxes generate economic growth and 
will increase every citizen's standard of living. But we need to make 
sure such relief is accompanied by cuts in spending. Cuts in spending 
is the issue.
  This is where the Democrats have tried to scare people. We have heard 
over and over that broad-based tax relief will result in extreme cuts 
in spending. Mr. President, the underlying assumption of this argument 
is that the Government has cut costs everywhere it can and that all 
wasteful Government programs have been eliminated and that the only 
Government programs which are left are ones that, if cut, would hurt 
children or starve the poor. That, Mr. President, is every bit as 
extreme as it is ridiculous.
  The idea that the Government simply cannot afford to let people keep 
more of the money that they earn is appalling. Whose money is it 
anyway, Mr. President?

  Since when did the Government have an entitlement to everything 
people earned? This is an important point here today because, by buying 
into the argument that the Government cannot afford to give Americans a 
tax cut, we lose title to our freedom every day, sort of by adverse 
possession, if you will. Congress should not have to justify broad-
based tax relief. Rather, Mr. President, it should justify every single 
dollar it takes out of the pockets of the American people who work 
every day to supply it.

[[Page S10061]]

  The White House should never again say that we cannot afford broad-
based tax relief.
  Let me give you just a small example of one way we could pay for tax 
relief. I think it is instructive. Robert Shapiro of the Progressive 
Policy Institute has identified, Mr. President, more than $100 billion 
of corporate welfare hidden in the current Tax Code, special interests' 
Tax Code. We should eliminate all corporate welfare, Mr. President, and 
enact immediate tax relief for individuals in America.
  I have introduced legislation which would do this by scrapping the 
entire Tax Code, eliminating all deductions and special tax breaks for 
special interests, and replacing it with a low, flat-rate tax system. 
The Tax Code should not be a tool, Mr. President, for Washington to 
maintain control over our citizens' private resources. Washington 
should not single out certain people or corporations in America to 
receive special treatment in the form of tax breaks, as they have done 
over the years.
  Everyone--everyone--in America should be on the same playing field. 
And they are not. The flat tax would rid this town of thousands of 
lobbyists who spend millions of dollars a year trying to get special 
tax breaks for corporate America. All in all, the Congressional Budget 
Office has identified thus far 64 provisions of the Tax Code which can 
be considered corporate welfare. This is increasing the tax burden of 
the average taxpayer by hundreds of billions of dollars.

  Mr. President, I reject the notion that we cannot afford broad-based 
tax relief for the American people. That view is simply a smokescreen 
used by the President and the Democrats to safeguard their sacred 
social programs and maintain Federal control over the economy. There is 
plenty of room in the Federal budget, I believe, if we look hard 
enough, to provide broad-based tax relief and still balance the budget.
  Republicans have already done it once and I think we can do it again. 
I just hope the next time we do, Mr. President, we will have a 
President who will not protect the status quo and veto our proposal but 
look to help the working people of America.
  I yield the floor.
  Mr. COVERDELL. Mr. President, I certainly want to thank and commend 
the Senator from Alabama for his remarks on the current economic burden 
on America's working families. We have just been joined by my colleague 
from Oklahoma. We have been talking about the IRS and the way it almost 
functions out of a system of fear and as an arrogant bully. I know the 
Senator has come to speak on that.
  I yield up to 10 minutes to the Senator from Oklahoma.
  Mr. INHOFE. I thank the Senator from Georgia. I am glad to have an 
opportunity to talk about this. I certainly agree with the Senator from 
Alabama when he talks about the situations that come up.
  I do not know why it is that people will not read a little history. 
In three decades in the last 100 years we have dramatically increased 
our revenues by reducing marginal tax rates. Of course, the last one 
that was the most obvious, the first one in our lifetime, was John 
Kennedy when he said we have to have more revenue, and to get more 
revenues we will reduce the tax rates. It worked. Of course, it 
happened again in the 1980's.
  Again, the problem we have with a number of bureaucracies, and 
certainly the IRS is probably the best example to use, is they have so 
much power and they are able to use that power to whip people into 
submission.
  I have several cases I will share with you, Mr. President. An IRS 
case, one William Pell Thompson, an Air Force captain based in Montana 
was expecting a modest $104 tax refund for 1995. Instead he was told by 
the IRS that his $104 had been seized for back child support payments 
in North Carolina where he was accused of owing $6,700 that soon would 
be taken from his wages. Captain Thompson has never lived in North 
Carolina, had only two children by his first and only wife, to which he 
was still happily married. Captain Thompson was awaiting transfer to 
Colorado Springs in which he was unable to get the credit to buy a home 
and a number of things that happened that really were destructive in 
his life.
  Here is a story that was testimony before a Senate subcommittee. 
Rather than go into the details, I will read the letter, a suicide note 
that was given by a man named Council. His wife's name was Kay. This is 
the letter:

       My Dearest Kay: I have taken my life in order to provide 
     capital for you. The IRS and its liens which have been taken 
     against our property illegally by a runaway agency of 
     our government have dried up all sources of credit for us. 
     So I have made the only decision I can. It is purely a 
     business decision. You will find my body on the lot of the 
     north side of the house.

  She eventually won a Federal court ruling and she and her husband 
owed the IRS nothing.
  I got off the phone a few minutes ago and there is a guy in Tulsa, 
Mr. President, named Iliff. He rebuilds airplanes. In fact, a couple 
years ago I flew an airplane around the world emulating the flight of 
Wiley Post. He is the one who rebuilt the aircraft for me that had been 
previously wrecked.
  In 1994--and I know this guy real well, and his family--we were 
contacted by Chuck Iliff regarding a problem his mother, Edna Faye 
Iliff, a 90-year-old widow from Muskogee, OK, was having with the IRS. 
The IRS was pursuing a case against his brother, a self-employed 
boilermaker.
  What had happened here was Mrs. Iliff, who is a widow, had failing 
health. She had a small savings of some $3,600 she put in her account, 
but she allowed her two sons to have their names on the account in the 
event something happened to her so they could get at the money without 
having serious problems.
  The IRS came along and seized her account because they felt they had 
a case against the son of failing to pay withholding taxes. They 
actually got that money from Mrs. Iliff, a 90-year-old widow. Later on 
they found they were wrong, and they were able to get back--at a cost 
to the Iliffs of $1,600--that $3,600 back, and there is no interest 
that was paid.
  What I can say is there are a lot of people in Government that are 
very good people. Unfortunately, the more power you give to someone, 
the greater the propensity to abuse that power. As Lord Acton said, 
``absolute power corrupts absolutely.''
  It is not just the IRS. We have a case in Tulsa, Jimmy Dunn, Mill 
Creek Lumber Co., called and said, ``Inhofe, the EPA has put me out of 
business.'' I said, ``What did you do wrong?'' And he said, ``I don't 
think I did anything wrong. I have been selling in our small family-
owned lumber company, our used crankcase oil to the same contractor for 
20 years.'' He said that contractor was licensed by the Federal 
Government, the State of Oklahoma, the county of Tulsa, and yet they 
have traced some of that oil from 10 years ago that went to the Double 
Eagle Superfund site, and now I have a letter in front of me which he 
read from the Administrator of the EPA that said, ``We are going to 
come after you for fines of $25,000 a day.''
  Now, obviously, they did not do it, but the whole idea is many people 
in the bureaucracy consider it their job and they seem to enjoy abusing 
normal, honest, taxpaying citizens. These cases with the IRS just point 
out that not only are we an overtaxed society, we are paying too much 
in taxes, the American families are having to pay too much, but the way 
in which it is collected is also abusive.
  I am hoping--and we have made several proposals, Mr. President, the 
Republican Party, some call it a flat tax, some talk about having a VAT 
tax to replace income taxes altogether--something will come along and 
we will be able to propose and pass that. We know if we pass it with 
this Republican Congress that now the President will veto it. We have 
heard that over and over again. I am hoping we will be able to be 
successful in changing the personality in the White House so we can get 
real tax reform and the abusive practices of many of the bureaucracies 
off the backs of the honest taxpaying American citizens.
  I yield the floor.
  Mr. COVERDELL. I thank the Senator from Oklahoma. I, too, had noted 
the case where the husband committed suicide in order to protect the 
financial interests.
  Another case noted that way, ``The IRS had claimed that my parents 
Jack and Wanda Biggars owed $90,000 in back taxes. On February 10, 
1988, the agency

[[Page S10062]]

was going to auction off their home. On the morning of the auction my 
mother shot my father and then turned the gun on herself.''
  Some of these cases are just absolutely beyond belief. One of them I 
was reading earlier this afternoon, about a day care center. And this 
woman, Sue Stoya, had gone to Englewood World to pick up her 7-year-old 
daughter, Katherine. Before they could leave with their children, the 
parents said they had to sign a form pledging to pay the Government 
what they owed the day care center, because the day care center was in 
arrears. They indicated that you could not take your child out of the 
building--get this--the Federal agent said, ``You cannot have your 
child until you sign this document.''

  This whole thing has gone way too far. We have been joined by the 
Senator from Wyoming. I would like to yield up to 10 minutes to him for 
his presentation this afternoon.
  The PRESIDING OFFICER. The Senator from Wyoming is recognized.
  Mr. THOMAS. Mr. President, I thank the Senator for arranging for time 
to talk about taxation. It seems to me that it is one of the things 
that all of us talk about most of the time in various ways, and we need 
to talk about it. I would like to move away a little bit from the 
specifics of the amount that we talk about and the specifics of even 
how it is done and, rather, talk a little more about the philosophy of 
taxation. I will talk a little bit about the strategy of taxation. I 
think it is important, over time, that we really take a look at where 
we want to go, what the choices are with respect to Government, with 
respect to taxation, where you and I will be, where our kids will be, 
and where our grandkids will be in terms of the strategy and philosophy 
of taxation over a period of time. It is a broad question.
  The numbers I have seen now, Mr. President, indicate that, on the 
average, American families pay 38 percent of their income in total 
taxes. Now, that is a lot of money. That is a lot. Think about how long 
you work out of the year in order to pay your taxes. I believe in May, 
or late May, is tax day. So without the detail, I think that is a 
philosophy of taxes.
  Obviously, there have to be taxes paid in a democracy, in a civilized 
society, to cover those kinds of things that clearly have to be done by 
Government, whether it be defense, interstate commerce, or whatever. 
There is no question about that. But it seems to me what we really 
ought to be thinking about, as we are into an election cycle, and 
indeed into an election, is the fact that there are choices. There are 
fairly clear choices as to where we go with Government and where we go 
with taxes. And there is a direct relationship between the two things. 
We are not just talking here about numbers, about arithmetic, and we 
are not just talking about addition; we are talking about Government. 
Obviously, the more Government that we ask for, the more Government 
that we want, and if we are going to be fiscally responsible, of 
course, the more taxes we have to come up with to pay for that. So 
there are choices. That is what elections ought to be about.
  I must tell you that I am a little concerned that over the years--and 
this campaign is more so than any that I think I have ever seen, where 
the choices are pretty badly blurred. We don't really have spelled out, 
as we should have, the clear choices that voters have to make. That is 
what elections are for--making choices. Taxes, of course, is one of 
them. But it is really secondary to how much Government you are going 
to have. And that is a choice that we make.
  Some people want more Government; others choose less. I happen to, as 
you can tell from my comments, be on the less side. But it is choice. 
You have to talk about the role of government. What do you think the 
Federal Government ought to be doing? What are the roles? What are the 
roles of the State and local governments? I have just come back, as 
most of you have, from my State--in my case, Wyoming--where you get 
involved in lots of things. Most recently, frankly, was a fundraiser 
for the museum at the University of Wyoming honoring Alan and Ann 
Simpson. An effort was made, voluntarily, to do something in our town, 
in our State, for the museum for the university. I spoke earlier to the 
emergency medical people in Cheyenne, people who volunteer to do things 
in their communities. These are very important, life or death matters 
in small towns. There is no hospital there. So if something happens, 
you use the emergency medical service. It's done by local government 
and voluntarism.

  It has to do with choices and the role of government. Federal 
involvement? Obviously, some things are inherently Federal, such as 
interstate commerce, and many of those things. So I guess I am taking a 
very difficult topic and trying to make it simple for myself. There is 
a strategy of where we go, where you want to be in a number of years, 
and in terms of the size and role of government and, consequently, the 
taxes that are paid with it. Too often, it seems to me, we get involved 
with the details--and they are important--of how you tax, who you tax, 
how you enforce it, and all those kinds of things, which are critical. 
But overshadowing all that and overriding that is a strategy and a 
philosophy.
  There are different philosophies, and they are legitimate. 
Unfortunately, they are not altogether clear. There is a gentleman at 
the University of Wyoming who is very clear. He is a very liberal man, 
and it is a legitimate view. He thinks there ought to be more 
Government and there ought to be more taxes. He believes government can 
spend the money better than you and I can in families. That is a 
legitimate view. But it is a choice. Quite often, right here, those 
basic differences are sort of submerged and we begin to talk about 
details when we really ought to start with the question of philosophy, 
of where you want to go.
  I think it is important to recognize that there are differences. One 
of the things that we need to think about, strategically, of course, is 
what is the impact of high taxes? What is the impact on the economy? 
Clearly, if there is less money taken in taxes, more money is invested 
in the system, more money is invested in the economy, more money is 
invested to create jobs, more people are able to earn and take care of 
themselves. That is inherently clear. It is a very efficient way of 
allocating funds in the market system.
  The other question you have to ask yourself, of course, is whether 
money is spent better by being collected in taxes and then spent by the 
Government on behalf of the people, or is it indeed spent better when 
you and I and our families in this country decide for ourselves where 
to spend our money?
  A further question, of course, is, what are the incentives? This is a 
system of economic incentives. We work and we invest because there is a 
chance to be successful, there is a chance to be profitable, there is a 
chance to do well. That is what the system is about. That is what the 
incentives are. So taxes seek to take away some of that.
  I guess I want to stress again that taxes are a legitimate thing, but 
we have to decide what it is we want. It is very key, I believe, to 
where we go in the future. So there will be a great debate around tax 
relief. I think maybe, in the case of tax relief, it will be fairly 
clear. The differences are fairly clear and people can make the choice. 
One of the things, of course, inherent is that, at least to some 
degree--and I am not a economist and I know it only goes so far--
reducing tax levies and tax percentages increases the total taxes that 
come in, because it encourages the investment and more and more 
activity.
  So, Mr. President, I hope that as we talk about our choices, you and 
me, as citizens, as we come to making the decisions that are inherent 
in an election, that we take a look at the philosophy of taxes. Are we 
better off if we could reduce that 38 percent, have some tax relief, 
have more money to invest, have more money to spend, and more money to 
generate for the economy, or not?

  Mr. President, I suggest that one of the real issues for us is--and 
my philosophy obviously is that we ought to have less government--that 
we ought to do more closer to the people, and more in the States and 
localities where we can do it more efficiently. Our real task is to 
look forward to the future as to where we go with young people, where 
they will be, where they will be paying taxes, and whether they will 
have the freedom to choose to spend vis-a-vis other questions that we 
face.
  Mr. President, I appreciate the opportunity. I appreciate my friend 
from

[[Page S10063]]

Georgia providing for this debate, this discussion, about an issue that 
affects all of us and that we will decide in November.
  I yield the floor.
  Mr. COVERDELL. Mr. President, I appreciate very much the remarks by 
the Senator from Wyoming.
  In a moment I am going to turn to the Senator from Florida. But just 
let me say very quickly that we know that virtually every segment of 
American life deals with the tax burden today, and it is about what 
they think it should be. You would be hard pressed to find a segment of 
our country that believes the IRS is not a threatening institution 
today. That is the majority of American people--the vast majority of 
American people--think this agency needs an overhaul. By staggering 
numbers, the American people feel the tax system is utterly too 
complicated. In fact, it takes the average taxpayer 11 hours to do 
their taxes. That adds up to 5.4 billion man-hours per year. The 
statistics are alarming. It is too high. It is too intrusive, and it is 
too complicated. It ought to be at the core of the work of this 
Congress and the next Congress to get these things corrected.
  I yield the remainder of my time to the distinguished Senator from 
Florida. That will be about 7 minutes.
  The PRESIDING OFFICER. The Senator from Florida, Mr. Mack, is 
recognized.
  Mr. MACK. I thank the Senator from Georgia for yielding. That should 
be plenty of time.
  Mr. President, I would like to take this opportunity to lay the 
groundwork about why it is important that the Dole-Kemp economic plan 
be embraced by the Nation and eventually passed into law.
  There are two points that I want to talk about. One has to do with 
the growth of the economy, and the other has to do with the tax relief 
that is really needed for the American family.
  But I want to start from a premise that the discussion here really is 
motivated by the opportunity over the years to talk to people in my 
State about the burden that they feel the Government has imposed on 
them in the form of taxes. They believe that there is too much 
Washington interference in their lives, that Washington spends too 
much, that Washington wastes too much of the money, that Washington 
taxes them too much, and that they really want Washington off their 
backs. You have to think about the perspective that they have. If you 
stop and think about individuals that you know, or individuals that you 
have met when you have been out to town meetings, or wherever, that 
have told you stories about their lives, then it becomes real. It 
becomes something other than a debate about economics. It becomes 
something other than a debate about Democrats versus Republicans, or 
conservatives versus liberals. It becomes a debate about what is in 
their best interest, about what we can do, in essence, to allow 
America's families to become stronger. As America's families become 
stronger, the Nation becomes stronger as well.

  So the kind of people who I think about are those individuals who 
come to me and tell me that both husband and wife are working and that 
they are working long, long hours; that they get up before sunrise, and 
they probably don't get back to their home until after the sun has set. 
They get up on Tuesday and do it over again; on Wednesday and do it 
over again; on Thursday and do it over again; and on Friday and do it 
over again. Some do it on Saturdays.
  I know of a family where the husband works two jobs during the week, 
goes home Friday night, and the wife begins work for the weekend. He 
takes care of the children over the weekend, and she works over the 
weekend. Those are the kinds of people that I am talking about that are 
paying--as the Senator from Georgia indicated--almost 40 percent of 
their earnings in taxes. That is, when they pick up their paycheck at 
the end of the week, or every 2 weeks, or at the end of the month, like 
everybody else, they immediately look at the deductions. ``How much is 
being taken out of my pay?'' That number is getting larger and larger 
every year.
  What it means is that they are having to work longer and longer. In 
fact, I think the tax freedom day is now occurring sometime in May. For 
those who do not know what tax freedom day is, tax freedom day is the 
day, when it arrives, where you no longer have to be working to pay 
your taxes. Everything from that day forward is free of taxes. You paid 
for the Government in Washington, the government in Tallahassee, or the 
government in Lee County, or whatever it might happen to be. That tax 
freedom day is taking each of us individually longer and longer and 
longer through each year to get to the point where the worker actually 
is doing it for their families--to be able to see that our children 
have an opportunity for a better education, that they are better 
clothed, that their housing is in better condition.
  In fact, that brings to mind one of the things that the Dole-Kemp 
folks are talking about--that today in America the typical family in 
America is paying more in taxes to Washington, to Tallahassee, to Lee 
County, Fort Myers--more in taxes than they are spending on food, 
clothing, and shelter. There is just something fundamentally wrong when 
government has gotten to that size.
  Again, without getting into the debate about liberal versus 
conservative, I think when people pick up those paychecks and look to 
see what their deductions are, they are realizing that they are paying 
for a government, frankly, that they believe is wasting their money. So 
it is from that premise that I make these remarks.
  Again, two points: There is economic growth and the burden of taxes 
on the American family. There are those who are going to say, ``Connie, 
you know, you are going to be talking about weak economic growth in the 
country, but President Clinton has told us that this is the strongest 
economic growth in three decades, I think.'' That is just fundamentally 
wrong. Yes, we had a good month or a good quarter last quarter. I am 
delighted about that. We saw the unemployment rate drop, and we saw the 
growth rate in the country go to 4.8 percent. That is good. But the 
problem is that every economist, that I am aware of anyway--or I should 
probably should say almost all economists are predicting that the 
growth rate in the economy is going to slow down again. The year 1997 
is projected by the Federal Reserve, I believe, which is saying 1.75 to 
2.25 for 1997. The administration's own forecast is 2.3.

  Again, let me put into context where we have been with the Clinton 
administration. The average growth in the economy now during the 
Clinton administration is 2.35 percent. How does that compare with 
other periods of time? For the 10 years preceding President Clinton, 
the average growth was 3.2 percent; the year immediately preceding 
President Clinton, 3.7 percent. The five economic expansions since 
World War II, 4.4 percent. If you take every year since the end of 
World War II, it is 3.2 percent. I mean the economy is moving along at 
a snail's pace.
  What does that mean to that family I was referring to a minute ago? 
It means the loss of production in the country that amounts to about 
$308 billion. If you convert that into what that means to the family, 
if we had been growing, let us say, at the average of 3.2 over these 
last 3\1/2\ years compared to what we have been, the average family in 
America would be $3,116 better off; $260 a month better off as a 
result.
  Some of the other statistics that I have developed: The typical 
household income is about $1,000 less than the average of the decade 
before President Clinton. Real hourly wages and real weekly wages are 
both lower now than they were in 1992. After-tax incomes are growing at 
about roughly half the rate prior to President Clinton. They are 
growing at a rate now of about 1.8 percent compared to the decade 
before President Clinton of 3.2 percent. Median family income has 
declined 4 out of the last 5 years. As I said a moment ago, families 
are paying more in taxes than they are for food, clothing, and shelter.
  The Dole-Kemp--I think it is important that people focus on it as an 
economic plan, not just as a tax plan, but an economic plan--has a 
number of components to it.
  One is the requirements to pass a balanced budget constitutional 
amendment which would make it a constitutional requirement that we 
balance the budget.
  What does that mean? Let us say that the critics are right, that the 
growth, the return, if you will, the recapture that comes as a result 
of the

[[Page S10064]]

lower tax rates is not 27 percent but 20 percent. That means we are 
going to have to find more spending to make the reductions or we are 
going to have to put off some tax relief for the American family. I 
happen to believe that we can do the 15-percent reduction in marginal 
tax rates and that we can give a $500 per child tax credit and still 
meet that goal. So, No. 1, balance the budget, constitutional 
amendment, a balanced budget plan to balance the budget by the year 
2002.
  The second component--I think the first most important--reduce the 
taxes, a 15 percent reduction in the marginal tax rate. I would ask 
people to focus on the marginal tax rate. What we are saying to 
individuals with these lower rates is you get to keep more of what you 
save, earn, invest, work for. You get to keep more of it.
  Most people believe that if you get to keep more of what you are 
earning, you are more inclined to try to figure out ways to earn more 
because you get to keep more of it.
  In addition to that, the plan calls for a cutting in half of the 
capital gains tax rate. I know there are people who say this is just 
nothing but a giveaway to the wealthy. I adamantly disagree with that. 
I think there is statistical data which indicates that is not an 
accurate statement. The issue here is about America's future. Are we 
going to have the capital necessary to invest in the new technologies 
of the 21st century?
  I give a little bit different perspective. Think of capital gains 
taxes as a wall that has been built around old investment. If that wall 
is too high, you are not going to be able to get that capital to move 
from the old investments to the new investments because people are 
going to say the rate on that tax is too high; I just will not sell the 
asset. If it is not sold, A, there is no revenue to the Federal 
Government and, B, there is no ability to transfer that capital from 
the old technologies into the technologies of the future. So I think 
they are right on target in saying we need to find a way to allow this 
capital to flow.
  Third, it is time that we gave American families, middle-income 
America, a break; that we say to them, yes, there is something in this 
for them in the sense if we are going to reduce the size, the scope and 
the involvement of Washington, DC, clearly there ought to be a benefit 
to the taxpayer and we think that that benefit ought to be directed 
more at the low income, at the families of America, and that happens as 
a result of a $500 per child tax cut.
  The next element of the plan is to look at areas like litigation and 
regulation. We all know that the area of too much legal attack on 
business today has slowed down and reduced our productivity. So we 
believe that we have to make changes with respect to regulation and 
litigation.
  Equally important, Senator Dole and Jack Kemp have pointed out the 
importance of education and training. If we do those combinations of 
things, balancing the budget, reducing the tax burden, providing 
opportunities for education, training, and changing the laws with 
respect to litigation and regulation, we can get this economy moving 
again.
  I for one--and I think the American people--believe that accepting 
the notion that this country can only grow at 2.5 percent is a tragedy. 
We are taking away the opportunities for American families and for our 
children.
  The last point I mention is that I believe President Clinton's 
economic policies are robbing America and our families and our children 
of their economic future, and we have to change that.
  I thank the Chair.
  Mrs. BOXER addressed the Chair.
  The PRESIDING OFFICER. Under the previous order, the hour of 5:30 
having arrived, all time is expired.
  The Senator from California is recognized in morning business.
  Mrs. BOXER. I do ask to speak in morning business.

                          ____________________