[Congressional Record Volume 143, Number 40 (Tuesday, April 8, 1997)]
[Senate]
[Pages S2805-S2807]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE SINKING OF THE ``TITANIC'', TAX DAY, AND OTHER MANMADE DISASTERS
Mr. GRAMS. Mr. President, 1 week from today, we will mark the
anniversary of two infamous, manmade disasters. One may slip by
unnoticed. I am certain the other will not.
The first disaster we will commemorate next Tuesday is the 85th
anniversary of the sinking of the Titanic, an event made all the more
tragic because it could have been prevented. The story of the Titanic
is a sad story of excess, of man's ongoing reach for something bigger,
something more powerful.
The second manmade disaster is the arrival of tax day. Now, I do not
mean to draw a direct comparison between the loss of life in the
Titanic incident and the plight of America's working men and women. But
for many Americans, April 15 is another potent symbol of man's ongoing
reach for something bigger and more powerful. The bigger and more
powerful entity in this case is not the world's largest ship, but the
largest government the world has ever known. And Washington's constant
need to expand its reach has imprisoned working families in a
disastrous cycle of taxation.
Look what our outrageous tax burden has done to families over the
past 40 years. Taxes today dominate the family budget. The annual tax
bill for a typical family now averages $21,365-- significantly more
than they spend on food, clothing, and shelter every year.
Factor in State and local taxes and the hidden taxes that result from
the high cost of government regulations, and a family today gives up
more than 50 percent of its annual income to the government. We pay an
especially high price in my home State of Minnesota--a study released
last year by Harvard University revealed that Minnesota taxpayers pay
the seventh highest taxes in the Nation.
Taxes are not merely an inconvenient fact of life. They are the
1990's version of highway robbery.
Who has borne the brunt of these ever-increasing taxes since the
1940's? Working families with children. No wonder these Americans shake
their heads in dismay each April.
Mr. President, when my colleagues and I in the sophomore class were
elected in 1994, we were sent here by our constituents on a promise
that we would balance the budget and cut taxes. That same promise was
made by the Members of the new freshman class. And we do not intend to
let 1 more year pass without delivering on those promises. Tax relief
and deficit reduction can and must go hand in hand. Any budget
presented in this Chamber that favors deficit reduction at the expense
of lower taxes--what Washington's big spenders like to call the save-
the-dessert-for-after-dinner approach--is nothing more than an exercise
in futility. Until the opponents of tax relief recognize that what they
call dessert is what most taxpayers consider their salary, we will
never reach agreement on a budget.
I would like to also add that I received a letter today from a mayor
back home who opposed tax relief. He didn't call it dessert, but he
called it political goodies that we would like to disperse to our
constituents. Allowing working men and women to keep more of their
money is what he calls political goodies.
[[Page S2806]]
This is the mindset of many who are serving in government today,
whether they be local, State, or Federal officials. Somehow the
people's money is somehow government's claim, and if we want to make
sure that they can keep some of it, it is somehow political goodies.
But it was later in his letter that I found what was really his real
concern. In the letter I think he felt that lower taxes could mean
fewer dollars to be sent from Washington to his town. So his concern
wasn't the political goodies, but it could mean fewer dollars if we
reduce the size and scope of the Federal Government. That is money that
would be allowed to be spent, or really the pork from Washington--not
political goodies but pork. Let the Federal Government raise the taxes
rather than having the local taxes support the programs for pork that
they want. So, in other words, provide for their residents. It is
really great that we can stand here and get credit for spending their
money--the taxpayers' money--for programs, for what really is pork that
the Government thinks that they should have, or that they need. It is
great that we have this great ability to figure out for the local
citizens what is best for them.
The American people have spoken very clearly on this point. A USA
Today-CNN-Gallup Poll released just last week confirms what many of us
have been saying all along: Tax cuts must be part of any budget
agreement we enact this year. When asked if they think the Republicans
should drop their attempts to include tax cuts in their overall plan to
reduce the budget deficit, or should they keep the tax cuts in their
plan, fully 70 percent of the respondents said the tax cuts should
stay. Seven out of ten Americans are calling on us to keep our tax-
cutting pledge. And a majority agreed that tax cuts and deficit
reduction can be accomplished at the same time.
Mr. President, if Congress intends to make the strongest possible
statement in support of working Americans, we will not do it by
building a bigger Federal Government that demands more taxpayer
dollars. We will do it by cutting taxes and leaving families a little
more of their own money at the end of the day.
Earlier this year, I was proud to join my colleagues, Senator
Hutchinson and Senator Coats, in reintroducing this desperately needed
tax relief in the form of the $500 per-child tax credit.
The $500-per-child tax credit takes power away from Washington and
puts it back with families, where it can do the most good. Once we
leave that money in the family bank account, taxpayers are empowered to
use it meeting the needs of their families, whether that is clothing,
medical and dental expenses, insurance, or even groceries, or
education.
Mr. President, there is no action Congress can take today that will
make next Tuesday, April 15, any easier for America's working families.
But we have before us unlimited opportunities to profoundly change
every other tax day, far into the future. Washington created the mess
we are in, and the taxpayers are now demanding that Washington get us
out of it. Thank you very much. I yield the floor.
Mr. THOMAS. Mr. President, I yield to the Senator from Arizona.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. KYL. Thank you, Mr. President. I thank my colleague from Wyoming
for putting this order together at this propitious time to discuss tax
policy in the country with April 15 looming on the horizon and
Americans all over the country concerned about the amount of money we
pay to the Federal Government in Federal income taxes.
Mr. President, I have an important announcement to make. I have been
authorized to announce that on tax day, April 15, the U.S. Senate will
have a historic opportunity to vote on a resolution which will express
the sense of the Senate that we support a requirement that Congress,
the House and the Senate, be required to raise taxes with a
supermajority. In other words, that we could not raise taxes with a
bare majority, that it would require a two-thirds vote for a tax
increase to go in effect, much like the requirement in States
throughout the United States, and a very successful requirement, I
might add. The full House is actually going to vote on tax day on the
actual constitutional amendment. Our resolution will be a sense of the
Senate in support of that same concept. Obviously, we are not prepared
yet to actually vote on the constitutional amendment.
The reason for this, Mr. President, is that the average family of
four back in 1948 paid about 5 percent of its income in Federal taxes.
But today that burden is about 24 percent. And, as our colleague from
Minnesota just noted, if you add the State and local taxes to the mix,
we are paying about 40 percent of our income in taxes to government.
The last tax increase to pass in the Congress in 1993 was the largest
in history. And, yet, it failed to even achieve a majority in the U.S.
Senate. There was a tie of 50-50. President Clinton's largest tax
increase in history only passed because Vice President Gore came to the
Chamber and cast the deciding vote. We believe that it ought to be at
least as difficult to raise taxes as it is to cut them. It is now
easier, sadly, to raise taxes than it is to cut them.
Consider this irony. This two-thirds majority would fix this problem,
by the way. When we passed the balanced budget amendment of 1995, the
President vetoed it. It included big tax cuts. The President vetoed it.
We had to have a two-thirds majority to overcome the veto, and we
couldn't do that. So it would have required a two-thirds vote for us to
reduce taxes. But, as I pointed out, the biggest tax increase in the
history of the country in 1993 passed without even a majority vote.
As I said, Mr. President, we think it ought to be at least as hard to
raise taxes as it is to cut them. That is why we are going to be voting
on April 15 to support the principle that there should be a
supermajority for Congress to raise taxes.
The Kemp commission, appointed by the Speaker of the House and the
previous majority leader of the Senate, came to this conclusion about
this requirement. I am quoting: ``The commission believes that a two-
thirds supermajority vote of Congress will earn Americans' confidence
in the longevity, predictability, and stability of any new tax
system.''
They made that point in recommending this two-thirds supermajority of
both Houses of Congress to raise taxes as a key component of our tax
policy. As I said, there are 14 States that currently have some form of
tax limitation in effect. There was an interesting study in 1994 by the
Cato Institute which found that a family of four in States with tax and
expenditure limits faces estate and tax burdens that are $650 lower on
average 5 years after the implementation than it would have been if the
State tax growth had not been slowed. In other words, the people who
live in States that have these supermajority requirements are better
off, pay less in taxes than those States which do not have such a
requirement.
It also matters, Mr. President, how we raise or lower taxes. Or I
should say, put it another way, how we increase revenues to the
Treasury matters because you can increase revenue to the Treasury not
by raising tax rates but actually by lowering certain tax rates.
We all agree that lower tax rates stimulate the economy, which
results in more taxable income and transactions and more revenue to the
Treasury as a result. In fact, the tax cuts out of the early 1980's
make this point. They spawned the longest peacetime economic expansion
in our Nation's history.
Revenues to the Treasury, the Federal Treasury, increased as a result
from $599 billion in fiscal year 1981 to $990 billion in fiscal year
1989, up about 65 percent.
On the other hand, higher tax rates discourage work and production
and savings and investment so there is ultimately less economic
activity to tax. That is exactly what Martin Feldstein, the former
Chairman of the President's Council on Economic Advisers, found when he
looked at the effect of President Clinton's 1993 tax increase. He found
that taxpayers responded to the sharply higher marginal tax rates
imposed by the Clinton tax bill by reducing their taxable incomes by
nearly $25 billion. They did that by saving less, investing less, and
creating fewer jobs, and the economy eventually paid the price in terms
of slower growth.
[[Page S2807]]
In other words, as I said, how Congress raises taxes is more
important than how much it can tax. The key is whether tax policy
fosters economic growth and opportunity. And that is why we believe, as
I said before, that it ought to be more difficult to raise tax rates.
It ought to be just as easy to cut taxes. We should raise tax rates
only if there is enough consensus on that to provide a two-thirds
majority of both Houses of Congress.
So on April 15, tax day, all of us in the Senate will have the
opportunity to go on record to tell our constituents where we stand. Do
we believe that it ought to be just as difficult to raise taxes as it
is to cut them? We will have the opportunity to vote on the principle
of requiring a supermajority in Congress to raise taxes. And I
certainly hope that my colleagues will support us in that vote.
I thank the Senator from Wyoming for this time.
Mr. THOMAS. Mr. President, I am pleased now to yield to my friend,
the Senator from Oklahoma, who has actually been chairman of our 1994
group. The Senator from Oklahoma.
Mr. INHOFE. I thank the Senator from Wyoming for having this time
devoted to such a significant issue.
Mr. President, I ask unanimous consent that the time which has been
allotted to Senator Thomas be extended until the hour of 11:15.
The PRESIDING OFFICER (Mr. Smith of Oregon). Without objection, it is
so ordered.
Mr. INHOFE. I think something that is very significant that has not
yet been said was touched upon by the distinguished Senator from
Arizona [Mr. Kyl], when he approached the economics of this issue.
Unfortunately, when we talk about tax reductions, there is a mindset
that if you reduce taxes, you reduce revenues. History has shown us
very clearly that is not the case.
In fact, it was a Democrat who first came up with the idea that you
could actually increase revenues by reducing taxes, and that was
President Kennedy back in the early 1970's when he said we have a
problem in this country; we have to increase revenues, but we also are
overtaxed, so the best way to increase revenues is to reduce the tax
rates.
Now, today, the Democrats do not think that way. The liberals in
Congress think that it is a static situation, and that if you raise
taxes nothing else happens.
That, of course, is not true. I remind my colleagues that in 1980,
the total amount of money used to run Government was $570 billion, the
total revenue that came in in 1980. In 1990, the total revenue that
came in to run Government was $1 trillion 30 billion. That is almost
exactly double what it was in 1980.
Well, what happened during that decade? During that decade, we had
the largest tax reductions we have ever had in this country's history.
So the same thing that happened back during the Kennedy administration
when he had the wisdom to say we have to increase revenues and the best
way to do this is to reduce taxes happened again in the 1980's.
Unfortunately, we have an administration in the White House that does
not understand this.
In fact, I was amazed early in this administration when Laura Tyson,
who is the chief economic adviser to the President of the United
States, President Clinton, back in 1992 said--and this is nearly a
direct quote--there is no relationship between the level of taxes a
nation pays and the amount of economic productivity of that nation.
That is saying they believe if you tax everybody 100 percent, they
are going to work as hard as if you taxed them 10 percent. This is what
Senator Kyl was getting to, that there is a relationship between the
level of taxation and the productivity of a nation. In fact, to be
specific, for each 1-percent increase in economic activity of a country
it increases new revenue $24 billion.
So those of us who are conservative, those of us who believe that
what history has taught us is very factual are standing here saying we
want to lower taxes, we want to do as Senator Kyl suggested and make it
more difficult for people to raise taxes. I suggest, if you go back and
look at the votes that took place to raise taxes, at least in the 10
years I have been here, it has always passed by maybe 1 or 2 percent.
If you put a supermajority on that, I believe we can accomplish a lot.
And so as the speakers before me have indicated, there are a lot of
advantages here to get this machine working and to become more
productive, and if for no other reason than the distinguished Senator
from Minnesota said--we who are elected to the Senate, that is, those
of us in the Chamber right now, in 1994 committed and promised that we
would vote for a balanced budget and reduce taxes, and we are going to
do that.
I yield the floor.
Mr. THOMAS. Mr. President, let me just sort of wind up on our tax
thing and say that if you are like me--a weekend from now it will be
April 15 and all of us I hope are beginning to think about preparing
our tax returns. It is a headache, of course, and so we tend to
procrastinate. We are taxed too high, I am sure. And I am sure also
that people out there look at Washington and wonder if all that talk
about tax relief is just talk.
We are here to say that it is not. Tax relief for families in
America, for small business, is alive and well and one of the good
ideas that is coming out of Washington, I hope soon. By next year, it
is our hope that as we begin to think about compiling tax returns we
will have accomplished what Americans deserve and expect from
Washington as a matter of fact--reforms that let families keep more of
their money. Republicans want to lower the tax burden and provide some
common sense to the tax system.
Currently, according to the Census Bureau, a typical family of four
spends more than 3 hours of every 8-hour day working for dollars that
are dedicated to Federal, State and local taxes. That is an average of
almost 40 percent of income--40 percent of our income to continue to
grow a central government. You get big government and you get a bloated
bureaucracy. Instead, we ought to be able to use those dollars to
increase our businesses, to feed our kids, to send them to school. So
we need reform, smart reform, smart tax reform. That has a nice ring to
it, doesn't it?
I hear also in town meetings more and more about the IRS. Let me tell
you that at least to some extent you cannot do much about the IRS until
you change the system and make it simpler. Which taxes to reform? Where
should we start? The inheritance tax for one. We have already talked
about that. Here is one that makes no sense at all. We spend more time
avoiding inheritance taxes than we do paying them. People who have
spent time in business and farms cannot pass it on to their own
families. The current tax penalizes the development of wealth and
business. That is wrong. It is really a matter of freedom. Citizens own
their property and families should not be compelled to sell it if the
head of the household passes away. In the West it is an environmental
problem. The view of the West, the mountains will be subdivided unless
we act.
How about capital gains reduction? Entrepreneurs and small business
investors take substantial risks when they open or invest in
businesses. Cutting capital gains will increase economic growth. Add to
that tax credits for our families with children. Grant a $500-per-child
tax credit and give families the opportunity to do some things.
When it is all wrapped up, tax reform should have to pass a simple
commonsense test. Does it impose the lowest possible compliance and
enforcement? Does it encourage growth? Does it work to help strengthen
families? By anyone's measure, our current system does not pass this
test. So we deserve a Saturday in April with our family instead of
sitting with a stack of receipts and the Tax Code. We want tax
simplicity. We want tax relief.
The President's proposed budget, according to the Joint Committee on
Taxation, the President's fiscal year 1998 budget contains a net tax
increase of $23 billion over 10 years. That is not tax relief. That is
more burden. That is not what we need in the future. The President
needs to come to the snubbing post and join with us on taxes and reform
in balancing the budget. We can do that, and our opportunity is now.
Mr. President, I yield the floor.
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, I would like to yield myself time that is
allocated to the minority leader.
The PRESIDING OFFICER. The Senator is recognized for 15 minutes.
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