Congressional Record, Volume 143 Issue 43 (Monday, April 14, 1997)

[Congressional Record Volume 143, Number 43 (Monday, April 14, 1997)]
[Senate]
[Pages S3071-S3077]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

TAXES

Mr. THOMAS. I rise to speak about taxes and will be handling the time
that has been set aside for Senator Coverdell, if that is acceptable.
The PRESIDING OFFICER (Ms. Collins). Without objection, it is so
ordered.
Mr. THOMAS. Madam President, tomorrow is tax day. I guess every one
of us knows that. Certainly some of us are a little sleepless from
having dealt with it. So it is an appropriate time to talk, I think,
about taxes. There are lots of things to talk about in the area of
taxes, of course. One of them is the tax system. Obviously, most people
believe the tax system needs to be changed, needs to be made simpler,
needs to be made more fair. We could talk about the IRS. A lot of
people talk about that, particularly in April. There need to be changes
there, clearly. On the other hand, most believe, and I do as well, that
if we really expect something different from the enforcement and
collection agency for taxes, then we have to change the tax system
which they enforce.
But, today I wanted to take this time, along with a number of my
colleagues--and I appreciate very much Senator Coverdell setting aside
this time; I expect there will be six of us here over the next number
of minutes--to talk about taxes, what taxes mean to us and what they
mean to our constituents. It is an appropriate time, also, not only to
talk about taxes, but to talk about the agenda that we have in the
Senate, particularly the Republican agenda with respect to taxes: What
our plans are, what we have on our menu with regard to taxes, to
provide some tax relief for American families, provide an opportunity
for American families and American businesses to spend the money that
they earn themselves; to talk a little bit about the fact that, on the
average, American families spend almost 40 percent of their total
income on taxes, all kinds of taxes--Federal, State, local--40 percent.
That is an awful lot of our labor that is paid to the government. So,
let me make it clear that Republicans want tax relief, we want tax
relief soon, we want tax relief this year, and I am hopeful--we want
tax relief as part of this budget that is now being prepared.
We hear a lot--I hear it from my constituents and I am sure my
associate from Wyoming hears the same thing--that families are having
difficulties getting ahead, families are having difficulties in
savings, families are having difficulties paying their bills. Part of
the reason is the level of taxes. So, it seems to me that it is
necessary for us to respond. People in my State remind me that nearly
40 percent of their income is paid in State and local taxes, as well as
Federal taxes. That is an awful lot of our money.
Surveys have indicated that Americans are willing to pay taxes, but
they perceive that like 25 percent would be a more acceptable and
reasonable figure. My constituents want to know what we are doing about
taxes in this Congress. Frankly, there is a great deal of opposition to
doing very much of anything. I think, really, if you want to be serious
about tax relief, you have to go back to the basic issue, the really
basic issue. The talk about taxes and balanced budgets is more than
talking about arithmetic, more than talking about balancing numbers. It
represents a philosophy. It represents the point of view that people
have with respect to Government. There are those in this body who
believe--certainly in this country there are those who believe--the
Government spends money better than individuals, that more and more
money ought to be brought into the central Government so it can be
disbursed for all kinds of ideas. There is a legitimate point of view
that the Federal Government should be involved in almost everything
that is troublesome to people in this country. As a matter of fact, I
think one could say that has been the President's political philosophy,
to get involved in all kinds of things, some say the kinds of things
that ought to be done by the city council, that ought to be done by the
school board. But the President has found those to be politically
viable. So it is a philosophy.
Those who want more and more Government, of course need to have more
and more taxes. I do not agree with that point of view. I think our
efforts ought to be designed toward reducing the role of the central
Government in our lives. Those things that are inherently governmental,
and there are some, ought to be done by government at the level closest
to people. There is a role for the Federal Government. There are things
the Federal Government ought to be doing. But, conversely, there are
things that the Federal Government should not be doing. So my point is
that when you talk about budgets, when you talk about tax relief, the
response is always, we--you--cannot balance the budget; we cannot cut
spending enough to have tax relief for American families.
I suggest that we can. We have a $1.7 trillion budget, and in that
budget there are many things that could be reduced. There are many
things that could be combined. There are many things that could be, in
fact, eliminated. It is possible to balance the budget and have tax
relief. The other alternative, of course, which again is the one the
administration has taken over the last several years, is let us balance
the budget but let us do it by continuing to increase spending and
raise taxes. The President's budget that is out before us now raises
taxes by $23 billion. It has some tax relief in it but that is offset
by more tax increases.

So that is really the issue. We will talk about all kinds of details
on the floor. Details are fine. We ought to talk about them. When you
really peel it all away, you are talking about a philosophical
difference of more Government versus less Government. Frankly, I think
it would be sort of interesting and honest if those who want more
Government would simply get up and say, ``Yes, I want more Government.
I think we ought to have more spending.'' Seldom do you hear that.
There are a million other reasons for it, but that is really the bottom
line.
So, that is what we talk about, I think, when we talk about the
budget. That is what we talk about when we talk about tax relief. It is
possible to balance the budget, reduce taxes and get tax relief at the
same time. The two are not mutually exclusive in a $1.7 trillion
budget. Can you imagine what $1.7 trillion is? There are plenty of
examples of waste and abuse. There are plenty of examples and
opportunities to create a smaller, more efficient Government. For a few
examples, the State Department has $500 million in unneeded real
estate. How to dispose of that? Repeal of Davis-Bacon would save $2.5
billion, so contracts in the Government sector are the same as they are
in the private sector. There are 160 employment and job training
programs in 15 different agencies--160. I cannot imagine that we could
not be more efficient than to have 160 programs aimed at the same
thing. In fact, we could get more money to the people who need the
money if we would consolidate those, in addition to spending

[[Page S3072]]

reductions. There are 73 Federal programs aimed at gathering
statistics.
I have introduced, along with a number of my associates, what we call
the Freedom From Government Competition Act. It is a simple idea, an
idea that has been policy for a very long time. It has not been
implemented. That is, to identify those activities within the Federal
Government that are commercial in nature and also those that are
inherently Government; and those that are commercial, put them out for
a bid in the private sector so they could be accomplished in the
private sector, substantially saving dollars, some say as much as $30
billion, in the private sector. That is really what we all say we want
to do, is to strengthen the private sector and limit the size of
Government. Here is an opportunity to do that. Yet the administration
drags its feet and says, ``Oh, we are doing all this.'' The fact is,
they are not. The fact is, there are lots of things that can be
contracted out that are commercial in nature.
I happen to be chairman of the Parks Subcommittee. We are entering
into a long-term study of strengthening the parks and seeing how we can
provide more resources to protect the resources there, more dollar
resources to protect the natural resources. One of the ways is to take
some of those functions and put them into the private sector. So, we
have introduced a bill to do that.
There are all kinds of ways in which efficiencies can be found, in
which Government can be smaller. The result of that can be a balanced
budget and a reduced tax burden on American families. There are two
that particularly come from my constituents when I am in Wyoming. One
of them has to do with the estate tax. As you might imagine, a lot of
our folks are ranchers and farmers and small business people, families
who have worked all their lives, perhaps several generations, to put
together a farm or a ranch which has asset value and, frankly, has
relatively little cash flow. Yet, quite often under our current estate
taxes, that family has to dispose of their assets, dispose of their
ranch, on the death of the senior person in order to pay the taxes. So
he or she cannot pass it on, that lifetime of work, to their family.
The fact is, we spend more money in this country avoiding estate taxes
than we do paying them--it is relatively minor.
Capital gains? We would like to have a good healthy economy, of
course, and it seems to me there is nothing that would provide more
strength to the economy than to provide an opportunity for people to
invest in businesses without having all their growth taken in capital
gains taxes. This is a direct result of reducing taxes, to have
investments, and, indeed, for the first several years it increases
revenue.
So that is what we are talking about here. Again, let me say I get
concerned sometimes, when we seem to kind of trivialize the debate,
whether this is going to produce that. We get very involved in the
numbers game when beyond that, in a much broader sense, is a
philosophical direction. Where are we going with the Federal
Government? Do we want more? Do we want less? Do we want people to have
more money to invest for themselves? Do we want to invest in the
private sector to create jobs and therefore increase revenues?
We always hear about the 1980's in which the deficit grew, and,
indeed, the deficit did grow. But if you take a look at it, revenue
grew exceedingly fast. It was the longest growth of revenue in history.
The problem was Congress continued to spend more. It was not a matter
of not having enough revenues; it was a spending issue, and that is
what we ought to face up to, it seems to me.

So we are talking here a great deal about the philosophy--philosophy.
Do you want more Government? Do you want less? Do you want it more
efficient? Do you want to continue as it is? It makes some sense to
reduce the size of the budget and cause some of the agencies to have to
find some better ways to do things, and they can. Specific tax cuts, it
seems to me, that are most important have to do with capital gains,
which helps to increase jobs, helps to allow people to have a living
wage and to take care of their own families; and estate tax, which
allows people to work their lives to create an asset and to be able to
keep it; to provide $500 per youngster under 18 for families, so they
can take care of their own health insurance for young people. It seems
to me that is the direction we ought to go and this is the time to make
those kinds of decisions.
I am joined by my friend and associate, the Senator from Nebraska. I
would like now to yield to the Senator.
The PRESIDING OFFICER. The Senator from Nebraska is recognized.
Mr. HAGEL. Madam President, I wish to thank my distinguished
colleague and fellow tax cutter, the distinguished Senator from
Wyoming.
The people of the United States are drowning in a sea of taxes.
Reducing the tax burden on the American taxpayer was a principal reason
I ran for the U.S. Senate last year. Tax relief is a top priority for
my State, for Nebraskans, and I believe for all Americans. We must make
it a top priority in this Congress. We must make it a top priority in
this Congress for the American people.
American taxpayers are honest, hard-working people. They deserve to
reap and to keep the benefits of their labors. Yet, the typical
American family pays more in taxes than it spends on food, clothing and
shelter combined.
On average, nearly 40 percent of income goes for taxes; 28 percent
goes for those other necessities of life. I say other necessities
because it seems in America today taxes are considered a necessity, a
more important necessity than food, shelter, and clothing. These
numbers are according to the Tax Foundation.
That is not what our forebears envisioned for America. That is not
the freedom that so many of our people have fought, sacrificed, and
died to defend. That is not the America we want to leave our children
and our grandchildren. Our people, Madam President, deserve better. The
American people want less Government, less regulation, less spending,
and less taxes. It is time for our leaders, the leaders of this body,
the leaders of the Congress of the United States of America to act on
America's wishes. It is time for significant tax relief.
Tomorrow is tax day 1997. We must make change happen. We must provide
the leadership to make tax relief happen now. The heavy burden of taxes
must be taken off the American people so they can enjoy the life they
work hard to provide their families and not have to worry if they will
have enough to be able to survive financially.
As we look down the road into the next generation, we know by any
scoring of the budget that unless we make drastic changes in our
spending habits, spending habits that now have given this country a
$5.3 trillion debt, and we add $700 million a day to that debt, if we
do not change those spending habits and out of control fiscal policy in
this country, we know one thing: that within 10 years, every dollar in
the Federal budget will be consumed by four programs--interest on the
national debt and entitlements. There will be not $1 for national
defense, for roads, for scholarships, for the environment--not $1. It
will go to pay interest, not even the principal, interest on the
national debt and for entitlements.
This is the modern challenge. This is the modern challenge to our
ongoing quest to secure life, liberty and the pursuit of happiness for
all Americans. We need to look to the future, we need to look seriously
to the future, and we need to look to the future now. We need to
completely overhaul our present Tax Code. It is a sham, it is
ridiculous, it is an embarrassment.
Our system is too complicated, too punitive and too unfair. We need
to make it flatter, fairer and simple, and we need to get at it now. We
need to look at all the options as we tackle this issue, but we must
make sure that a new Tax Code eases the burden on the American taxpayer
and encourages--encourages--rather than inhibits or destroys growth,
investment, and savings. Growth, investment and savings, that is our
future. That is how we pay down this debt. That is how we continue to
give generation after generation in this country real opportunities,
like my generation has had and every preceding generation has had.
We have a very important stewardship here. This is a stewardship
about fiscal responsibility, that our children and our grandchildren
inherit something worth inheriting, not a mound of debt, not a concern
that they will not have an opportunity to buy a home or send their
children to college. We must

[[Page S3073]]

ensure that the American taxpayer is treated fairly and that any new
tax system is managed correctly. The people who enforce our tax system
must always--always--act with respect for taxpaying men and women. We
need a smaller, leaner, more responsive Government. Americans are
willing to pay for the Government they need, but they are not willing
to keep paying for the oversized, overreaching Government that we now
have.
The Omaha World Herald, the State daily newspaper in my State of
Nebraska, recently put the case very well, and I quote from the Omaha
World Herald:

Taxation isn't evil. Without it, the Constitution's mandate
of providing for the common defense and promoting the general
welfare might well go unfulfilled. But there's a point at
which too much taxation makes Government the master of the
people instead of their servant.

Let me repeat that.

There's a point at which too much taxation makes Government
the master of the people instead of their servant. That point
comes nearer each year that Government figuratively gobbles
up more of the workday for its own needs, leaving Americans
less time to support themselves and provide for their
families.

Today, the typical worker works 2 hours 49 minutes of each 8-hour
work day just to pay taxes at every level of government. That is almost
three times as high as it was in 1930 when it took only 1 hour each day
to earn enough to pay taxes at every level of government. This trend
will continue until something is done.
The time for tax relief is now. If we fail to provide that relief,
our economy will weaken--it surely will weaken--our people will suffer
and our role in a global economy will be lessened, and just at a time
when America should be leading the world into a grand hopeful new
century, a century that should be full of promise and hope and
opportunity. We will have to forfeit the leadership and the
opportunities that should be there for our young people. But if we meet
the challenge, we will open the door to an exciting new era in America
and the world.

This country is great, not because of its Government, not because of
the country; the Government is great and the people are great and the
Nation is great because of our culture, because of our people. Let's
not hold our people back from their potential with a heavier and
heavier tax burden. But rather, let's allow our citizens to flourish,
prosper and soar, just as we have done in this country for over 200
years. Americans deserve tax relief. I intend to do all I can to make
that happen. We need tax cuts and spending cuts now.
Madam President, I thank you for the time, and I yield the floor.
Mr. GRAMS addressed the Chair.
The PRESIDING OFFICER. The Senator from Minnesota is recognized.
Mr. GRAMS. Madam President, I join my other colleagues this morning
in talking about the dubious date of April 15, which comes upon us
tomorrow. I rise today to speak briefly in support of what we call
profamily and progrowth tax relief. I will focus on two of the most
frequently asked questions, and that is: Why is it critical to provide
tax relief this year, and then, can we do it while still trying to
balance the budget?
You always hear the question asked of the people: ``Do you want a
balanced budget, or do you want tax relief,'' just like they are two
separate questions and they cannot be one. I believe they are dual
track and both have to be done at the same time.
Before I begin, let me set one fact straight, and that is, over the
next 5 years, the Federal Government will take away $8.6 trillion in
taxes from the pockets of working Americans. What we are asking is that
2 cents of every dollar that the Government takes from the taxpayers--
again, I repeat, just 2 cents of every dollar--be returned to them in
the form of tax relief. That is what S. 2, the Family Tax Relief Act is
all about. It is 2 cents worth of tax relief. Too much? Well, I don't
think so.
Madam President, tomorrow will be the cruelest day of the year for
millions of Americans as they rush to meet the April 15 tax filing
deadline, and cruel is not only an appropriate word to describe the tax
burden faced by working Americans, it is perhaps the best word. Taxes
imposed on American families are at an all-time high, as we have heard
from other colleagues this morning, and this year, tax freedom day--
that is the day when Americans stop working for the Government and
start working for themselves--will be announced by the Tax Foundation
this morning and it could come as late as May 9, which would be later
than ever before.
The average American family today spends more on taxes than it does
for food, clothing, and housing combined. A typical median-income
family can expect to pay nearly 40 percent of its income in Federal,
State, and local taxes. This means, again, more than 3 hours of every
8-hour working day are dedicated just to pay taxes. In 1996, an average
household with an annual income of between $22,500 and $30,000 paid an
average of about $9,073 for food, clothing and housing, but they paid
$11,311 in taxes. Households with incomes ranging from $45,000 to
$60,000 averaged about $16,000 for basic necessities but paid more than
$25,000 in taxes.
If the hidden taxes that result from the high cost of Government
regulations are factored in as well, a family today gives up more than
50 percent of its annual income to the Government. If you want to put
that in context, 50 percent to taxes, if you go back to the Boston Tea
Party, that was staged over a one-half of 1 percent tax when the
Revolutionary War started and people thought they were being taxed too
high at one-half of 1 percent.
When the Government takes more, families get less. Between 1989 and
1995, the typical American family's real income fell by about 5.2
percent. Most economists point out that the decrease in income was the
result of slow economic growth, and that is a direct result of higher
Federal taxes.
We all recognize the children are our future of our Nation and that
families are the foundation of our society, but Washington's deficit
spending and high-tax policies have systematically ignored our
children's future and severely have undermined the basic functions of
the family. We must abandon the policies and help restore the family to
an economic position that is capable of fulfilling its vital
responsibilities and, therefore, we should provide American families
with meaningful tax relief, allowing them to keep more of their hard-
earned money.
Again, S. 2, the Family Tax Relief Act, is truly a progrowth,
profamily tax-cut plan for working Americans. It will reduce taxes by
$172 billion and with 95 percent of that tax relief going directly to
middle-class families.

I am proud we have built our plan around the $500 per child tax
credit which the taxpayers in Minnesota have asked me to make a top
priority. The $500 per child tax credit means real relief and will
return nearly $500 million to overtaxed Minnesota families every year.
Our plan will also expand individual retirement accounts for spouses
and allow penalty-free withdrawal from an IRA for education, business
startup and emergency expenses. It promotes savings in investment by
lowering the antigrowth capital gains tax and takes on the damaging
estate tax, or the death tax, that jeopardizes so many family
businesses and farms.
By enacting these tax cuts, we can begin turning back the decades of
abuse that taxpayers have suffered at the hands of their own
Government, a Government that has been too often eager to spend the
taxpayers' money with reckless disrespect. As the Government takes
money out of the hands of private citizens, the Government itself keeps
expanding. Even though President Clinton has proclaimed otherwise, he
said the era of big Government is over, but the era of big Government
is far from over. Despite a shrinking Federal deficit, the Government
is getting bigger not smaller.
Total taxation is at an all-time high. So is total Government
spending. According to the Congressional Budget Office, the Government
will spend $9.4 trillion over the next 5 years, much of it going toward
wasteful or unnecessary Government programs, and tax relief is the
right solution because it takes power out of the hands of Washington's
big spenders and it puts it back where it can do the most good, and
that is with families.
By leaving $500 per child in the family bank account, taxpayers are
then empowered to use it to directly benefit

[[Page S3074]]

their household. If you wonder what kind of impact that could have on a
family budget, consider that for a family with two children, the $500
per child tax credit could pay for 3 months of groceries, nearly 20
months of clothing for the kids or your home mortgage for a month and a
half.
The President's tax cut proposal, on the other hand, includes a mini-
child-tax credit that only begins with $300 per child and increases to
$500 per child 2 years later, but only to be eliminated entirely after
that. Furthermore, the President's plan provides tax credit only to
families with children under the age of 13. So only up to the age of
12, again greatly diluting its value.
We have 18.3 million teenagers age 14 to 18 in this country. As we
all know, family expenses soar during those teenage years, so excluding
this age group from the benefits of family tax relief simply makes no
sense.
Let me focus for a moment also on the estate tax. Today, when a small
business owner or a farm owner dies, the Federal estate tax confiscates
37 percent of his or her assets valued between $600,000 and $1
million. That rises to 55 percent of assets valued at more than $3
million.

Gifts valued at more than $1 million to grandchildren are also taxed
at 55 percent. Many, if not most, businesses are severely crippled or
forced to close by this unfair tax hit.
Family-owned and closely held businesses are the backbone of
America's economy and a bedrock of the American culture. They must be
preserved.
I am reminded constantly by proud family farmers in my home State of
Minnesota--like Andy Quin, who is a corn farmer from Litchfield, and
Don Buhl, a pork producers from Tracy--that if we are to preserve our
proud, rural traditions, we must ensure that farming remains an
attractive and viable profession.
Making it easier to pass the farm from one generation to the next
should be a priority in Congress. I am also pleased that S. 2 includes
a meaningful estate tax cut for small family business owners and for
farmers.
Beyond the direct benefits to families, tax cuts can have a
substantial, positive impact on the economy as a whole.
It was John F. Kennedy who observed that ``an economy hampered with
high tax rates will never produce enough revenue to balance the budget
just as it will never produce enough output and enough jobs.'' It was
President Kennedy who said that.
And he was able to put his theories to work in the early 1960's, when
he enacted significant tax cuts that encouraged one of the few periods
of sustained growth we have experienced since the Second World War.
Twenty years later, President Ronald Reagan cut taxes once again. The
reinvigorated economy responded enthusiastically as 19 million new jobs
were created and take-home pay grew 13 percent between 1982 and 1989.
Madam President, let me now turn to the other question of whether we
are able to balance the budget and provide tax cuts at the same time.
The truth is we can absolutely do both at the same time, as long as we
have the political will to do it. Many States have already proved that
this can be done.
Some examples. While Washington was busy debating whether to give 2
cents of every dollar it collected back to working Americans, many
States took action to lower their taxes.
In the State of New York, Governor Pataki cut taxes 15 times,
returning more than $3.5 billion to New Yorkers in just 2 years. By the
end of Governor Pataki's term, $13 billion will be returned to New
Yorkers.
What is remarkable about New York is that the Governor provided tax
cuts while balancing the budget. What is more, New York ran a $400
million surplus and it put the money into the State's rainy day fund
for the first time since 1978.
Governor Rowland of Connecticut also cut taxes and balanced the
budget. He turned deficits into a $250 million budget surplus in only
the first full fiscal year of his term. Many other States, including
New Jersey, Mississippi, Michigan, Iowa, and Arizona, have done the
same.
My own State of Minnesota is another example. When Gov. Arne Carlson
was elected to office in 1990, he inherited a deficit greater than $1.8
billion and a government that was spending 15 percent faster than the
rate of inflation.
But the Governor cut spending by making the tough choices that
elected officials are supposed to make, decisions that cut wasteful
spending and cut taxes.
Thanks to that dedication, Minnesota today finds itself with a
stronger economy, more jobs, and an unemployment rate of just 3.8
percent--that is well below the national average--and a $2.3 billion
budget surplus. Now the Governor is planning to cut income taxes by 22
percent.
By balancing the budget and lowering taxes, those States have
produced remarkable economic results: The 10 States that cut taxes the
most have seen strong job growth, a 10.8-percent increase compared to a
national average of 5.9 percent.
And also the top 10 tax-hiking States, they registered a zero job
growth during that same period. No wonder even the State of Maryland
has recently adopted a plan to cut tax by 10 percent. Madam President,
I strongly believe we should follow the tax-cutting trend at the
Federal level.
By implementing profamily, progrowth tax relief and creating a tax
system that is more friendly to working Americans and more conducive to
economic growth, Congress and the President can make our economy more
dynamic, our businesses more competitive, and our families more
prosperous as we approach that 21st century.
I strongly disagree with those who insist the deficit cannot be
reduced as we simultaneously provide tax relief. The States have shown
us that the deficit can be reduced, the budget can be balanced, and
taxes can be cut at the same time.
After eliminating wasteful, redundant, and needless spending from the
Federal budget, we can still allow for a spending increase while
providing tax relief to working Americans.
To omit tax cuts from the budget resolution is not acceptable to
Republicans seeking to deliver on our commitment to return money to the
taxpayers.
Therefore, I support the alternative budget prepared by Senator
Gramm, a budget Democrats and President Clinton have supported that is
based on the President's own numbers. It is a compromise for us that
includes tax relief.
I also disagree with the suggestion that we should delay any tax cuts
or separate our budget agreement from tax relief. Again, the taxpayers
have been very clear on this: A recent USA Today/CNN/Gallup Poll shows
that 70 percent of Americans want us to keep tax relief in our budget
plan.
Despite what you hear from the arguments on the other side, 70
percent of Americans want us to keep our pledge to cut taxes.
Madam President, as I close, I am certain there is nothing we can
ever do to make tax day an occasion to celebrate. But it is within our
power to make it a great deal less painful. So we have made a promise.
We must keep that promise. And let us give back that 2 cents on every
dollar to America's hard-working families.
Madam President, thank you very much.
I yield the floor.
Mr. COVERDELL addressed the Chair.
The PRESIDING OFFICER. The Senator from Georgia.
Mr. COVERDELL. I thank the Senator from Minnesota. I would like to
get a copy of those remarks. They are very well stated.
I yield up to 10 minutes of my time to the distinguished Senator from
Michigan.
The PRESIDING OFFICER. The Senator from Michigan is recognized.
Mr. ABRAHAM. Thank you very much, Madam President.
Madam President, earlier this year I joined Senator Roth and 32 of
our colleagues in introducing Senate bill S. 2, legislation to provide
American taxpayers with a $500-per-child tax credit, a reduction in
capital gains taxes, an increase in the exemption from estate and gift
taxes, and full access to IRA's for nonworking spouses.
I support this and other efforts to reduce the tax burden on
Americans because, Madam President, we owe it to the American people.
We owe it to the hard-working families who have build this country, to
whom we owe our way of life and the honor and privilege of serving in
this House.

[[Page S3075]]

S. 2 is necessary for the well-being of our families, Madam President
for a number of reasons. Let me explain why.
To begin with, families today pay a higher proportion of their
incomes in taxes than ever before in our history--almost 40 percent.
That is more than food, clothing, and shelter combined. And it means
that families have less money to spend on necessities, and less to save
for their retirement and for their children's education.
S. 2 would address this tragedy through a $500-per-child tax credit.
It would allow the typical American family to live better, and to save
for a better future.
But there is much more to S. 2 than just these specific family fax
provisions.
Suppose, for example, that your family, like most, is trying to save
for retirement. This bill would make that task much easier. How? By
cutting our capital gains tax--one of the highest and most punitive in
the industrialized world.
By cutting the capital gains tax we would spur capital investment and
increase the value of the mutual funds in which so many Americans
invest, either directly or through their company pension plans.
Lest we forget, Madam President, well over half those who would
benefit from the capital gains tax cut in this bill earn under $50,000
per year. And all Americans would benefit from the increased economic
activity and competitiveness it would produce.
Now, let us say that your family owns a small business or a small
farm. Right now you probably live in fear that, when you die, your
family will have to sell the farm or business just to pay the estate
taxes.
This bill will allow you to rest easy. It would do so by increasing
the exemption from estate taxes on family-owned businesses from the
current $600,000 to a more realistic $1 million.
Madam President, the Government should not be in the business of
breaking up the family farm, or the family business. Under this bill we
help eliminate that problem.
Now, suppose you belong to a family in which you have small children.
Today, unfortunately, too many such families require two paychecks just
to make ends meet.
Mothers of young children too often are pushed into the workplace,
not by their own desire, but by economic necessity.
This bill would provide a full IRA deduction for nonworking spouses.
This will help some mothers who do not want to work outside the home
stay with their children. It also will provide much needed financial
security to homemakers currently discriminated against by the tax laws.
A child tax credit that directly lowers income taxes. A capital gains
tax cut that increases the value of retirement and other savings. An
increase in the estate and gift tax exemption to protect family farms
and family-owned businesses. A spousal IRA to provide financial
security to spouses working in the home.
This, Madam President, is what our tax bill would provide. It grants
much needed relief from a tax system that is out of control. It begins
the long road back toward frugal, manageable Government and toward
prosperity for our working families.
I urge my colleagues to give their full support to this much needed
legislation.
I can assure this body that reducing taxes does not drain a
government of its resource base. I also can assure this body that
reducing taxes will create prosperity.
In my own State of Michigan, over the last 6 years we have cut taxes
21 times. The result has been dramatic. Six years ago Michigan had a
deficit of $1.8 billion. Today it not only has a balanced budget, but
it has a rainy day fund in which $1 billion is available to our State
for tough times, should they come again.
Because of 21 tax cuts, we have an unemployment rate, for the first
time in 30 years, that is consistently below the national average and
below that of other industrialized States. In fact, last month our
unemployment rate in Michigan was the lowest it has ever been in the
history of our State as long as we have been keeping records of
unemployment.
That experience, to me, is the kind of model we ought to use in
Washington. For that reason, I believe S. 2 sets us in the proper
direction.
Today, I noticed in my office there arrived, amid all the mail that
comes to us, one piece of mail that I was not anxious to see. It was
the tax returns that have been sent by my accountants for my wife and
me. Our tax return is in there. I have not yet opened it. When I leave
the floor after my speech, I am going back to the office to do that. I
am going to be quivering as my hands reach for that envelope to open it
up, because I am not sure exactly what the consequences are going to
be.
But I am not going to be happy when I finally put in perspective
exactly what the bottom line is, because whether we have, through
withholding, satisfied our obligations for this year, I do not know.
But I do and will soon know exactly how much we will be paying in
taxes.
Our family is obviously not the average American family. But when I
travel around my State and talk to average working families, the same
kind of concerns, as April 15th approaches, are expressed to me time
after time; families who say, ``Look. We work hard. We play by the
rules. And every year it seems we have less to show for it.''
One reason that families have less to show for it is because the
basis on which their taxes are calculated has continued to go up. As I
indicated in my remarks, it is at an all-time high for the working
family. As a collective, our country now takes more dollars to
Washington as a percentage of gross domestic product than we ever have
in the history of America.
We do not have the crises of a world war. We do not have the Vietnam
war. We do not have a depression. We do not have the sorts of things
that might justify an unusually high demand for the hard-working
dollars of our taxpayers. But today we have 20.8 percent of the gross
domestic product sent to Washington. Madam President, that is too high.
It does not build the base for a strong economy in the long term.
The experiences in our State of Michigan, to me, make sense and ought
to be emulated here in Washington. For that reason, I am glad to be
here today, not just to support S. 2, but to speak at a very timely
moment about taxes that are too high. It is time, as my colleague from
Minnesota said, to balance the budget and do so in a way that lets the
working families of our country keep more of what they earn.
That is one of the reasons I came to Washington and is certainly
going to be something that I continue to speak out on as long as I am
here.
I thank my colleague from the State of Georgia for putting together
today's special order.
I yield the floor.
Mr. COVERDELL. I certainly thank the Senator from Michigan, not only
for the legislation he is proposing but for the common sense rationale
he brought to the floor today.
I would like to yield, if I might, Madam President, up to 10 minutes
of my time to the distinguished Senator from Wyoming.
The PRESIDING OFFICER. The Senator from Wyoming is recognized.
Mr. ENZI. Madam President, thank you.
I rise today to address an issue that is of great concern to the
people of the State of Wyoming as well as the citizens of America.
During my campaign last summer and fall, and again since I have taken
office, I have traveled all across the great State of Wyoming. I have
traveled from Cheyenne in the south to Sheridan in the north and from
Evanston in the west to Sundance in the east and all of the counties in
between. One message came through loud and clear from the citizens of
Wyoming: Our tax system is too complicated and our taxes are too high.
Working families are forced to pay too much for their income to a
bloated Federal Government. Small businesses, which are the backbone of
the American economy, are strangled by a complicated and often punitive
Tax Code. As the only accountant in the U.S. Senate, I have had to weed
through a Tax Code which is frustratingly complex. And as a small
businessman, I have experienced firsthand the Tax Code which all too
often discourages individual enterprise and penalizes ingenuity. As a
husband and a father, I

[[Page S3076]]

have felt the burden of working for nearly half a year to pay all the
taxes levied by the Federal, State, and local governments. I promised
the people of Wyoming that I would work to make the tax system simpler
and fairer so that the taxpayers of Wyoming and America could keep more
of their hard-earned money.

I should note that it has been the Republicans who have long been
sounding the battle cry for lower taxes and smaller Federal Government.
It was the Republicans who led the charge on the balanced budget
constitutional amendment. And it is the Republicans who have shown the
determination to provide meaningful tax relief for America's families.
I was proud to be an original cosponsor of the balanced budget
constitutional amendment. I am also proud to be a cosponsor of several
bills that would get us closer to a simpler and fairer tax system.
With tax day now upon us, we are reminded of the impact our current
tax system has on all of us. We are paying the price for a Government
that has too long lived beyond its means. Like a child in a candy shop,
the Federal Government hasn't met a sugar-coated spending project it
did not like. To pay for its appetite, Congress has left the American
people holding the tab with higher and higher taxes. It's time for
Congress to rein in the Federal Government and ease the burden it
places on America's taxpayers.
Since I was sworn in as a Member of the U.S. Senate, I have joined my
Republican colleagues in cosponsoring legislation that would allow
America's families to keep more of what they earn. The American Family
Tax Relief Act includes a $500-per-child tax credit, substantial cuts
in the capital gains rate, and sizable reductions in the punitive
estate tax. This legislation helps families with children by returning
some of their hard-earned money to them. The American Family Tax Relief
Act encourages investment and frees up creative capital by lessening
the penalty of the capital gains transactions.
I have cosponsored legislation that would help small businesses by
allowing them a 100-percent deduction on health insurance coverage for
their employees. This home-based business tax relief would put small
businesses on a similar footing with the larger competitors who
currently enjoy full deductibility of their employee's health care
costs. It would also broaden the home office deduction so that parents
and other individuals who choose to operate businesses out of their
homes can receive more benefit from their expenses. This legislation
encourages economic growth and creativity and lessens the tax burden on
America's families. It would also take us another step closer to a Tax
Code which sparks ingenuity and encourages family-owned business.
There remains little doubt in the minds of the American people that
the Tax Code is in need of serious surgery. The present Tax Code is
needlessly complicated and treats American businesses and individuals
unfairly. One example of this is the alternative minimum tax. This tax
system, first instituted in 1986, has imposed substantial hardships on
capital-intensive businesses, like mining and manufacturing, in Wyoming
and across America. These businesses are forced to compute their taxes
under both the regular corporate method and the alternative minimum tax
method. This affects the farms and ranches as well. And they have to
pay the greater of the two amounts. This compliance is expensive for
businesses, and it ties up valuable capital that could be used to
expand their operations and provide new jobs.
The alternative minimum tax is a punitive tax because it effectively
penalizes businesses that invest in equipment and structures necessary
for the operation of their businesses. The current alternative minimum
tax system is yet another example of why it is time to inject some
common sense into the Internal Revenue Code.
Reform of the alternative minimum tax would simplify the Tax Code and
make the accounting method more consistent with the regular corporate
tax rules. This legislation would make the Tax Code fairer for
thousands of businesses that are now at a serious tax disadvantage. It
marks an important step toward restoring simplicity and integrity to
America's tax system.
Reforming the alternative minimum tax depreciation allowance would
work wonders for the American economy. One recent study estimates that
the investment resulting from AMT reform would increase America's gross
domestic product by $15 billion over an 8-year period. This would spur
a surge in employment. Total jobs would roughly increase by 100,000 per
year during a 5-year period. These jobs would be largely concentrated
in the high-paying manufacturing sector of the economy. That is why
this reform is needed so badly. The new high-paying jobs that would be
available in my home State of Wyoming and throughout America will do
wonders to improve our economy and the strength of our families. It is
high time we give the American people the commonsense tax relief they
so strongly desire.

Right now, we tax anything that moves, we tax what doesn't move, we
tax it when you buy it, we tax it when you sell it, we tax you for
living. One of the worst taxes of all is that we tax you for dying. We
want you to be able to keep more of your own money to do what you know
how to do best. As tax day quickly approaches, I urge my colleagues in
the U.S. Senate to join me in giving the American people meaningful tax
reform.
I thank the Chair and yield the floor.
Mr. COVERDELL. Madam President, how much time do I have remaining?
The PRESIDING OFFICER. The Senator has until 12 noon remaining.
Mr. COVERDELL. I believe that will be sufficient time.
I thank the Senator from Wyoming and all the others that have visited
with America this morning from the Senate floor about the consequences
of tomorrow, April 15. I think perhaps that day resonates among more
Americans than even our more famous holidays.
I want to comment for a moment about the consequences of the data
that was presented this morning by the Senator from Minnesota. He was
talking about the impact of current taxation on American families and
inferring that an average family forfeits about half of their income to
taxation and the cost of Government. Specifically, we have taken a good
look at this in Georgia. If you add up direct taxation--Federal
Government, State and local government--and if you add on top of that
the share that each family pays for the cost of regulation today, which
is now approaching $7,000 per family, and if you add in the cost that
an average family pays because of higher interest rates due to the
national debt, which was created by the Federal Government over the
last 30 years, which has spent 5-trillion-plus more dollars than it
has, that adds up to 55 percent of their income. That is just stunning.
And you wonder what is causing so much stress and behavioral changes in
the American family? I suggest that before you look to Hollywood, you
look to Washington. What else marches through their checking accounts
and takes over half of what they earn?
To put it another way, I figure if somebody is taking over half of
what I earn, they probably have more to do with my life than I do. And
you can see the impact on those families in the number of families that
have both spouses working and the fact that the average family isn't
saving any money--what would they have to save--and the fact that
bankruptcies are up; the fact that consumer debt is at an all-time
high; the fact that we find more children without adult supervision;
that the teenage suicide rate has quadrupled from 1960 to 1990; that
SAT scores have plummeted, and the fact that families are smaller.
These are all phenomena that are as a result of an oppressive economic
policy from their own Government.
If you ask the American family what they think is a fair burden, it
is real interesting that, no matter what economic strata they
represent, they all come forward with the same answer: They think that
a fair contribution for the services they receive from Government is 25
percent. So, in other words, it is over double what they think is fair.
Madam President, let's, for a moment, say that it is at least
reasonable that, at a minimum, an American family worker would be able
to keep two-thirds of their paycheck. Most people think that is a
minimum. But given today's circumstances, that is a large

[[Page S3077]]

reach. Let's put this into real dollars. An average family in the State
of Georgia--and this would equate pretty much across the country--makes
about $40,000. So it makes it a lot more clear what our goal is. If we
were going to adopt as a principle that we need to return to the worker
at least two-thirds of the fruits of their labor to manage his or her
family, that means that the goal for the U.S. Congress is to return or
let them keep $8,000 more a year. That is a pretty significant
undertaking. But if we set out to accomplish that, we will do enormous
good.

If we can figure out how to leave another 20 percent of that paycheck
in their checking account to be talked about at their kitchen table, we
will see many, many positive results. We will see larger savings. We
will see new companies forming because there is capital to invest in
them. The job lines will be shorter. Interest payments will be less.
The family will have an opportunity to make sound judgments about
educating their families. They won't have as high a consumer debt on
their credit cards because they will have their own cash in their
accounts. The list just goes on and on.
I want to reiterate, what do all these numbers mean? They mean that
for an average family in America, the Government is taking $8,000 out
of their checking account that it really can't rationally claim and
that is doing severe damage to these families--severe damage. They
can't prepare for the future, for education, or retirement, or a health
crisis. There is nothing left. They can barely get through the ABC's of
running that family. There is no margin. You can't pick up a newspaper
without reading about the distress in middle America. This is what
causes it. We are choking the resources necessary for them to make
healthy decisions about running their families.
Madam President, I hope that more and more Members of Congress will
just write a very simple goal on their ledger: Let's go to work and
fight to ensure that an American worker can keep two-thirds of what he
or she makes. Let's resolve that the fact that they keep less than half
today is unconscionable. If we could line up our forefathers here and
they could see what we have done to the fruits of labor, they would be
stunned and they would admonish us all.
Now is the time, in this 105th Congress, to start turning that around
and leaving those resources in the checking accounts of American
families.
Madam President, I see that the hour of noon has arrived. I yield the
floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. WELLSTONE. Madam President, I ask unanimous consent that the
order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

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