[Congressional Record Volume 143, Number 44 (Tuesday, April 15, 1997)]
[House]
[Pages H1521-H1527]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




[[Page H1521]]



            CITIZEN PROTEST OF THE INTERNAL REVENUE SERVICE

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from Louisiana [Mr. Tauzin] is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. TAUZIN. Mr. Speaker, tonight we gather in a special order on a 
special day. Today is of course April 15, the day the tax man cometh, 
and as I speak Americans across this land are scrambling to reach the 
post office by midnight tonight, scrambling to fill out those last 
forms and read those last instructions and those complicated booklets, 
trying to fulfill their duty as an American and to file their income 
taxes as required by law.
  Tonight I am joined in this special order by my dear friend and 
colleague from Colorado Dan Schaefer. Dan Schaefer and I just came back 
from Boston, MA earlier today. We traveled to Boston, MA, the site of 
this Nation's birth of freedom for a very special reason on this April 
15. Today in Boston Harbor Dan Schaefer and I were joined by three of 
our colleagues who came to Boston and have joined us in support of a 
very important idea that we wanted the Nation to begin thinking about 
and to begin debating this year.
  We journeyed to Boston, to Boston Harbor, in commemoration of an 
event that occurred on December 16, 1773 in that very same harbor, and 
we gathered at the site at Boston Harbor where in fact the birth of 
liberty, the birth of freedom, the idea of America first came to 
reality.
  In that harbor in Boston, Congressman Dan Schaefer and our colleagues 
literally reenacted that event of December 16, 1773. We got aboard the 
brig, the Beaver, which is a replica of the original brig, the Beaver, 
that was there along with two other ships, the Dartmouth and the 
Endeavor, both of which were there to--I am sorry, the Eleanor, the 
Dartmouth and the Eleanor, both of which were there docked at the 
harbor along with the brig, the Beaver, filled in tea shipped in by 
companies in Great Britain under a monopoly arrangement and subject to 
a tax on tea that the colonists found great fault with.
  As you know, on that fateful evening about 50 colonists, led in part 
by young Sam Adams and many other patriots including John Hancock and 
the likes of Paul Revere, gathered together as sons and daughters of 
liberty meeting at the Green Dragon there in Boston Harbor and 
determined to resist this foreign taxing power and determined to assert 
their rights as citizens of this country, citizens of colonial America 
then to determine their own destiny apart from this power in Great 
Britain that was determined to tax them without representation.
  On that fateful evening, dressed as Mohawk Indians, they docked those 
ships, boarded those ships rather, and tossed the tea into the harbor 
in an event that clearly led to Lexington, clearly led to Concord, 
clearly led to American independence, clearly began the process by 
which this great Nation was founded, founded on those principles of 
liberty and freedom and the fact that citizens of this country were 
indeed masters of their fate, that government would always be their 
servant.
  And so today we gathered in Boston Harbor, new sons and daughters of 
liberty, gathered there with citizens from across America to declare 
that on this day we begin the process of debating here in this country, 
here in this Congress, whether it is time indeed to take on the taxing 
power of this Government and declare our personal freedom again.
  Today we dumped the U.S. Tax Code in a tea box into Boston Harbor in 
a deliberate protest announcing our decision today to file the 
Schaefer-Tauzin bill which is the first bill filed along with the one 
we filed last year to repeal the income tax of America, to abolish the 
IRS, to repeal in fact all income taxes in this country, including gift 
and inheritance taxes, and replace them all with simple, 
straightforward national retail consumption tax.
  I am pleased to yield to my friend, the principal sponsor of the 
legislation, who joined me and our colleagues in Boston Harbor for this 
demonstration of citizen protest against the U.S. tax system and its 
taxing agency, Congressman Dan Schaefer.
  Mr. SCHAEFER of Colorado. I thank the gentleman for yielding, and 
this truly was an eventful moment, I feel, and four other Members also 
feel what happened.
  Some people have called this a radical move. I call it revolutionary, 
and if we started the revolution today, I am proud of it. It is going 
to take people all across this country joining us in this endeavor to 
get this Tax Code out of our hair once and for all and go to a very 
sensible tax that we now will allow the American people to decide on 
how they are going to pay their taxes, not the IRS and not Congress 
anymore. And I think when we start talking about this from coast to 
coast, north to south, people are beginning to come aboard.
  A year ago the debate had already begun, and since then we have been 
on talk shows, radio, TV, all of us have, and it is starting to gel, 
just the people who were there today that were holding up the placards 
were from California and from Texas and from Oregon and Florida and 
Arizona and everywhere, and they made a long trip. There was an 88-
year-old gentleman who came in from Houston into Virginia, drove 8 
hours to get up to Boston.
  Now that is dedication.
  Mr. TAUZIN. Mr. Speaker, I thank my friend.
  Also joining us tonight for this special order is another gentleman 
who joined us in Boston. In fact he preceded us. He went the night 
before, he was so excited to be a part of this event, the honorable 
Congressman from the great State of Georgia, Charlie Norwood.
  Mr. NORWOOD. I thank the gentleman from Louisiana [Mr. Tauzin] and I 
am delighted to be here tonight with the gentleman from Colorado [Mr. 
Schaefer] and the gentleman from Louisiana [Mr. Tauzin], and in fact I 
have been delighted to be with you all day. It has been one of those 
exciting and exhilarating days, and I agree with both of you. It was a 
little part of history today.

  As a school boy I always fantasized being one of those Indians that 
dumped the tea into Boston Harbor originally, and I have to tell you 
that I thoroughly enjoyed myself today as we made a statement across 
the country saying that the present tax system will not do any longer; 
the American people have had enough of it, it is unfair, it is too 
complex, too complicated, and we need to take a step like we took today 
in an effort to do the wonderful things we are doing.
  I mean, how can you not be for anything that will repeal the 
corporate income tax, the personal income tax, the inheritance tax, 
capital gains, gift tax? I mean, how can you not be for that, knowing 
that we are going to very nicely fund the country on a 15-cent sales 
tax, and I hope tonight we will talk about this a little bit and help 
explain to the American people more details in your fine bill.
  Mr. TAUZIN. I thank the gentleman, and let me first announce that 
what we started today was most importantly a debate on the current tax 
system. Most importantly what we did today was to say to all Americans 
that you ought to seriously consider and not trivialize, seriously 
consider whether or not the income tax system that we in this Congress 
vote on yearly and change every other Congress, the income tax system 
which is the basic funding mechanism for this government in Washington 
is a good system for this country or whether it is a bad one; and if it 
is a bad one, to seriously consider with us a national grassroots 
effort to educate America and, more importantly, the Members of this 
Congress and the Senate who are going to make the difference if they 
vote correctly to one day consider abolishing this system in favor of a 
better one. That is the first decision we have to talk about: Is the 
current income tax system good for this country or is it bad for this 
country?
  So I suggest we do that first. Let us have a discussion, if you will, 
about why the current income tax system is a bad tax system for a 
country in this century, about to enter a new century in an 
increasingly globally free trade economy. Is this a good tax system for 
citizens who are filling out those forms tonight? Is it a good tax 
system for workers who are out there struggling to feed their families, 
educate their kids and leave something for their grandchildren and 
others to enjoy

[[Page H1522]]

when they pass away? Is this a good system or is this a bad one?
  I yield to my friend from Colorado.
  Mr. DAN SCHAEFER of Colorado. I thank the gentleman for yielding very 
much, and I think when we all do town meetings out there we talk about 
a lot of different things, but I do tell you one thing. The issue that 
gets everybody going very, very quickly and very, very favorably is 
talking about this tax system.
  Now they know that when they go and make out those taxes and mail 
them in today that they should sprinkle holy water on it before they 
mail it because who knows what is going to happen? There have been a 
number of polls out. You take your taxes to a CPA. He figures them out. 
He figures them out, or she figures them out; then you take them to 15 
other CPA's, and they will all figure them out different. So who is 
wrong and who is right? And the IRS will tell you it is a different 
figure altogether.
  There is one thing right there, and, my colleagues, when you get on 
these talk shows, and the one thing that I continually say is how would 
you like to take all of that money that was withheld from you in your 
last check and put it in your pocket, and you could decide whether you 
want to spend it or save it or whatever you want to do? It is yours. If 
you consume it, if you buy a television set or if you buy a piece of 
furniture or a suit of clothes, sure you are going to pay a 15 percent 
tax. But everything else is gone, and I just say that the American 
people are the ones who are pushing this one and we have to be the 
catalyst to make it grow.
  Mr. TAUZIN. I yield to my friend from Georgia.
  Mr. NORWOOD. Mr. Speaker, I would also like to point out: Is this a 
good system? I note that I certainly do not understand the Tax Code or 
the system, and I am not sure that my taxes were right today. I have 
what I consider one of the best CPA's in Georgia, and he readily tells 
me, ``Well, I don't understand this tax code, I'm not sure if I have it 
right. I can call on the IRS and ask them if they know what the system 
is all about, and they say, `Well, I'll give you an answer, but I'm not 
sure if we have it right.' ''
  The IRS tried to correct that and purchased a $4 billion computer and 
after trashing a $4 billion computer they say, ``Well, the computer 
doesn't understand if we have it right,'' and I am struck by the quote 
from Albert Einstein: The hardest thing in the world to understand is 
our income tax system.
  Now if Mr. Albert Einstein cannot understand our system--and I do not 
think we have a lot of Mr. Einsteins over at the IRS--how do we expect 
the average person in the 10th District of Georgia to have submitted 
their taxes today without considerable fear?
  Mr. TAUZIN. I thank my friend. Let me point out that the IRS tax 
code, according to editorial IRS, the problem is power of Investors 
Business Daily, April 11, 1997. The IRS contains now in its code and 
regulations 5.5 million words, 17,000 pages. It was a pretty hefty 
chest we throw over into Boston Harbor today. It is so complex that it 
is a wonder anybody understands it.
  In fact in 1986, if you recall, Ronald Reagan offered us a plan 
called simplified income taxes, and that plan was passed. It reduced 
the rates of taxation from 14 down to about 2. Well, guess what has 
happened since 1986 again? Since 1986 this Congress made 4,000 
individual changes in that income tax code of 1986. It is now up to 
five rates and growing daily, and today we are told that Americans have 
to work on average until May 9 just to pay taxes in America--if they 
can figure them out and file their forms correctly.

                              {time}  2045

  And if the tax, if the tax forms are filed, and the IRS decides that 
you did something wrong, guess what happens in America? Unlike a 
Federal court, where you might be indicted and yet presumed innocent 
until a jury finds you guilty, with the IRS we created, you are guilty 
until you prove yourself innocent. It is the most un-American system I 
think we could ever devise in a country that was founded on the 
principles of liberty and freedom, as our forefathers who gathered in 
Boston Harbor thought about a country all those years back to 1773.
  In short, what we are saying is that the Income Tax Code is not only 
incomprehensible to most of us and to experts, it has become a burden 
on our society. In fact, in America, we spend nearly 300 billion of 
manhours preparing those tax forms.
  In the Kemp Commission report filed just recently, last year I think 
it was, the Kemp Commission reported that the small businesses in 
America, they will spend $4 for every $1 they send the Government 
tonight, just doing the paperwork, just doing the records and the 
procedures that lead to the filing of that tax form.
  In short, we have a system that is out of control; we have an agency 
that is un-American. It is time to seriously consider replacing it with 
a better system.
  I yield to my friend from Colorado.
  Mr. DAN SCHAEFER of Colorado. Mr. Speaker, I thank the gentleman for 
yielding.
  I took the liberty of going back and pulling up the 1913 tax forms. 
Now, this was a surprise. There were 14 pages of explanations. Now, 
only 14, my friend from Louisiana, and the forms that you fill out were 
withholding, deductions, and what you had to pay, three forms. Now, I 
do not know how many are in that Tax Code, but it was very, very heavy 
when we lifted them in that one single tea box with that chain around 
it today.
  So what has happened, and the gentleman is exactly right, we go back 
to that 1986 bill. We have over 8,000 pages now of codifications, 
rules, regulations, and everything else stuck in there, and I do not 
know how anybody can figure anything out of what we have.
  So that is what is bad with it. It is too complicated. It is just too 
complicated. That is what we want to do, is simplify it.
  Mr. TAUZIN. Mr. Speaker, I will give my friend a better reason why 
the Income Tax Code that we run this Government with is lousy for every 
working American.
  The Income Tax Code that we run this Government with, that only taxes 
your income, it taxes your spending, it taxes your saving, it taxes 
your investments. It taxes your gifts to your children, whether you are 
alive, or if you are trying to give it to them when you die through 
inheritance. It taxes you on the same money over and over and over 
again.
  Now, why does it tax you more than once? Let me explain that. It 
taxes you more than once because once you paid your taxes, once they 
have been withheld from your paycheck and you go out into the 
marketplace and try to buy something in this society, if you dare to 
buy anything made in America, if you can find anything made in America 
on the shelves of the store in your town, you are going to pay an IRS 
premium on that purchase.
  How much? Economists tell us that the cost of the IRS system, the 
cost of all of this filing of all of this paper, all of these manhours, 
all the taxes that are paid by the farmer, the miner, the forester, the 
manufacturer, the shipper, the wholesaler, the retailer, by the time 
that box of cereal reaches you at home, so much taxes and cost to the 
IRS have been applied to the manufacturer of that product that you paid 
10 percent to 15 percent more as a hidden IRS cost in everything made 
in America.
  Now, here is the real tragedy. If you buy something made foreign, if 
you buy an imported product, you do not pay that tax. So guess why we 
buy so many foreign products in America? Those foreign products coming 
in in a free trade GATT society come into America without having to pay 
the income tax load, because the countries where they are shipped 
exempt them from the VAT taxes they impose at home. Those taxes come in 
untaxed to America and compete on the shelf with a product made by 
American labor that bears a 10 to 15 percent hidden IRS tax on it.
  We wonder why so many jobs are leaving America. We wonder why so many 
Americans are buying foreign products, why so many retailers are 
reaching out across the globe to find products to bring into this 
country instead of manufacturing them here. We wonder why Pat Buchanan 
stirred up America, the peasants with pitchforks, to complain about the 
GATT Treaty. It was not the treaty that was at fault, it was our Tax 
Code that said in America

[[Page H1523]]

we are only going to tax American labor, we are only going to tax 
American products, we will not tax foreign products coming in.
  How do we change that? We cannot change that with an Income Tax Code 
under the GATT Treaty. We can only change it if we get rid of the 
income tax and impose a common tax on the purchase of goods made in 
America and goods brought in, imported into this country.
  How serious is it? For every $1 billion that we lose in export trade, 
19,000 American jobs are lost; 19,000 Americans are out of work, 
because our Income Tax Code, for every $1 billion of foreign trade that 
we lose.
  How many of those billions could we attract back to home if we 
suddenly ended this 10 to 15 percent IRS cost on the products we make 
in America? How many families could have a job again? How many people 
could be productive again in this society? How many manufacturers could 
be hiring people instead of laying people off if we simply had a Tax 
Code that treated people fairly in America?
  In short, we are talking about an Income Tax Code that taxes us when 
we earn money; it punishes us when we save money, because it taxes our 
interest earnings; it punishes us when we invest, because it taxes our 
investment earnings and our capital gains; it punishes us if we buy 
America; and it rewards us only if we buy something imported into this 
country, manufactured in some foreign country.
  What a lousy Tax Code. Who would want to keep such a Tax Code? Who in 
this body, given a choice to substitute that Tax Code for one that 
treated American labor and American products fairly, that taxed both 
the import and the domestic product equally, like most other countries 
do, and that send our exports into the world without the cost of the 
IRS on their back? Who, given that choice, would not vote for it 
tonight, today?
  Well, the truth is, we have a lot of educating to do. We have a big 
job, starting this day, starting in that Boston Harbor to educate 
Americans about just how lousy this Income Tax Code is, how depressing 
it is to the U.S. economy, how it damages American workers, how it 
literally discriminates against American products, not only in our own 
market, but all over the world.
  A Tax Code like that deserves to get ripped out by its roots, it 
deserves to get dumped in Boston Harbor, and it deserves to get 
abolished by this Chamber.
  I yield to my friend from Georgia.
  Mr. NORWOOD. Mr. Speaker, if the gentleman would yield for a 
question, because I think he made a very good point, but if he will 
walk me through it a little bit where I can perhaps understand it a 
little better.
  What we are saying is an end-use consumption tax. That means, for 
example, the farmer goes out and buys a tractor and seeds, and he pays 
no tax under our bill. He plants his seeds and produces the wheat. He 
pays no tax. He ships the wheat to a miller. From the miller it goes to 
a baker, and from a baker it goes to the retail outlet. All the way 
along the line now, there has been no tax under our bill. Is that a 
correct statement?
  Mr. TAUZIN. Mr. Speaker, the gentleman from Georgia is accurate. So 
what the gentleman from Georgia is explaining is the alternative to the 
income tax, what we describe in the Schaefer-Tauzin bill as a national 
retail consumption tax.
  The gentleman is correct. Under our concept, there is no tax on the 
income earned by the individual or by the business. There is no tax on 
any of the processes that produce a product in America. The only time 
there is a tax is when the product is eventually sold for consumption, 
and it does not matter whether that product is made in America or 
imported into this country from foreign lands. When it is bought for 
consumption in America, our bill would provide a 15-percent retail 
consumption tax in the place of all those other taxes that currently 
burden us so badly.
  Mr. NORWOOD. Mr. Speaker, is the gentleman saying our consumption tax 
bill will increase jobs, so if we do the same scenario with a tire, and 
we get to the point where we are ready to export that tire, that tire 
then does not have that 15 cents' worth of taxes on it, does it?
  Mr. TAUZIN. Mr. Speaker, the gentleman is exactly right. The 
gentleman is exactly right.
  Under the current Income Tax Code, when we manufacture any product, 
let us take that box of cereal, all the way from the farmer all the way 
to the retailer, when that product is sold in foreign commerce today, 
it bears all the costs of the IRS in its price.
  That is why it fails to compete when it gets overseas, because guess 
what happens if you ship it to England? In England they put another tax 
on it, so it is taxed in England and it is taxed in America. When 
England sends a box of cereal to America, they exempt that box of 
cereal from their value-added tax. We do not tax it when it gets here, 
so it comes in tax-free.
  In short, our products are at a great disadvantage with our Income 
Tax Code, and, in short, if we changed it to what the gentleman from 
Colorado, [Mr. Dan Schaefer] and I have recommended, that box of cereal 
would enter the market in Great Britain, let us say, without a single 
IRS tax on its back. It would get the VAT tax when it got there, but it 
would compete fairly against the English box of cereal that also had a 
VAT tax on it. In short, we would equalize our products in the 
marketplace, establish a fair playing field in exports, and we would 
create American jobs the likes of which we have not seen in decades.
  Mr. NORWOOD. Mr. Speaker, what happens to the box of cereal produced 
in England then that is shipped to our country for sale?
  Mr. TAUZIN. If it is produced in England and shipped to America, the 
value-added taxes that would be imposed in England are exempted. They 
are actually rebated back to the producer, and that box of cereal 
enters America without the value-added tax on it, and it sits on the 
shelf right next to the box of cereal that was produced in America with 
all of those income taxes on it. So one has a 14- to 15-percent 
disadvantage. Which one is it? The American product.
  The same thing is true when we send that box of cereal to England. It 
carries that 14 and 15 percent IRS tax on its back, and it gets the 
English value-added tax on it, and it sits on the shelf next to the 
English product that only has a value-added tax. Guess who suffers a 
disadvantage? The American product again.
  So when Pat Buchanan was running around complaining about how free 
trade was damaging American workers and sending jobs overseas, he was 
right, but the real culprit is not the GATT Treaty, the real culprit is 
our tax laws which penalize every worker in this country, every 
American product, whether it is sold domestically or in foreign lands.
  Mr. NORWOOD. Mr. Speaker, the gentleman from Louisiana makes the 
point here then that if we go to the consumption tax, we have almost a 
30-percent spread in products that will be produced in this country 
going our way. That is what you mean by, it will increase jobs in this 
country, because we are better able to compete; therefore, we will have 
more jobs in this country.
  Mr. TAUZIN. Mr. Speaker, the gentleman is right. We do not have to 
penalize ourselves in a free trade global environment. What we ought to 
do is treat ourselves as well as we treat any foreign product, but we 
do not. We penalize ourselves at home, and then we penalize our 
products when we sell them abroad, and the penalty is 20- to 30-
percent.
  Now, I would ask my colleague to tell me how, with a 20 or 30 percent 
penalty, America cannot see its jobs continue to fly overseas and why, 
if we could get rid of that penalty, those jobs would come back home.
  I yield to my friend from Colorado.
  Mr. DAN SCHAEFER of Colorado. Mr. Speaker, the gentleman mentions in 
a couple of cases with this box of cereal, and I think it is very, very 
important that the American people understand, this is not a value-
added tax. A value-added tax is a terrible way of taxation. All along, 
every time a product changes hands, there is a new tax added on it. 
This is not a value-added tax.
  The second thing that is wrong with this system that we have is this 
lousy inheritance tax that is out there. People work all their lives to 
build a farm or a business or whatever it is, and

[[Page H1524]]

they want to finally give it to their children. The IRS steps in, takes 
50, 60 percent of that hard-earned money that people have labored over.
  Mr. TAUZIN. The gentleman forgot a step. It is hard-earned money that 
they have already paid taxes on.
  Mr. DAN SCHAEFER of Colorado. That is exactly right.
  I want to make one other point, and the gentleman from Louisiana 
already has, and this is bringing jobs in.

                              {time}  2100

  If we look at the people in this world, and we have talked to them, 
who are international marketeers, they say, do you realize what would 
happen if you passed a piece of legislation like this? Manufacturers in 
foreign countries would say, we can come over here, build a factory, 
create jobs, turn around and export, no taxes. But, the important thing 
is that we are creating a lot of jobs, and that is all good for the 
American economy.
  Mr. TAUZIN. Mr. Speaker, I think we have concluded and we should all 
conclude that the American income tax system is far more complicated 
than we could understand. Even Albert Einstein could not understand it. 
But it has reached a point in this historical setting where it has been 
amended and tinkered with so many times that it gets more complicated 
every time we see it; that it has become so incomprehensible that 
Americans tonight, I am sure, are struggling to fill out all those 
forms, as we struggle every year; that April 15 has become a day of 
tyranny in this country, a day in which we indeed wanted to celebrate 
the birth of our Nation's freedom in Boston Harbor by declaring that 
today we begin the process of educating Americans and the Members of 
this body on why the income tax is terrible for this country, and why 
we ought to seriously consider repealing it, removing it, and 
substituting an alternative in its place.
  We are not alone. We are not alone. There are many others who are 
joining in as cosponsors. Let me tell the Members the wonderful truth. 
The wonderful truth is that the person in this House most responsible 
for writing tax policy, the chairman of the Committee on Ways and 
Means, the honorable gentleman from Texas, [Mr. Bill Archer] is a 
supporter of this concept. He is a driving force behind all of our 
efforts to talk about repealing the United States Income Tax Code and 
the IRS and replacing it with a better model, one that works better for 
America and for every worker in this country, every family, every 
income earner.
  The gentleman from Texas, the chairman of the Committee on Ways and 
Means, today has started that process of examination. We hope that over 
time, as more and more Members become knowledgeable about how rotten 
this system is, and how there are better alternatives out there, then 
perhaps one day we can have a vote in this Chamber, the kind of vote I 
earlier described, where as patriots, new sons and daughters of 
liberty, we do in this Chamber what we illustrated could be done in 
Boston Harbor, we dump this income tax system and replace it with a 
much better, simpler, flatter rate system that Americans can live under 
with dignity and pride and a full exercise of the freedoms that those 
patriots so dearly fought for way back when our country was first 
thought of.
  Mr. Speaker, I yield to my friend, the gentleman from Georgia [Mr. 
Norwood].
  Mr. NORWOOD. Mr. Speaker, just a couple of thoughts, and what we 
might discuss. If we find this consumption tax bill is law and people 
are able to save once again, they are not penalized for doing so. In 
other words, their compounding of their money is not taxed, and they 
would have great incentives to save. If our saving dollars increased in 
this, I think it is pretty reasonable to suspect that interest rates 
come down.
  The other part of this bill that I think is so important that will 
prepare us for the 21st century is that people will have an incentive 
to invest in plants and factories and stores, because if they should 
happen to make a profit, they get to keep the profit, not send it all 
to Washington, at least until it is consumed. That, to me, is the 
answer for the 21st century as we compete with China and Asia and 
different parts of this globe, is give our own people incentives to 
build and invest, so we build our own plants and factories.
  Is that not what the gentleman's consumption bill is trying to do?
  Mr. TAUZIN. Mr. Speaker, the gentleman is abundantly correct. Let us 
talk about this alternative now. Let us talk about several alternatives 
that people have talked about to the United States Income Tax Code.
  We have heard a lot about the flat tax. It was proposed, of course, 
in the Presidential campaign by Mr. Forbes, and our colleague, the 
gentleman from Texas [Mr. Armey] has a flat tax proposal before this 
body. The flat tax is simply a flattening of all the IRS rates, the 
five rates we currently have, into a single flat rate. It also imposes 
a single flat rate on all businesses. I think it is a 17 percent, in 
that bill, on individuals, a 20 percent on businesses. So it is a vast 
improvement upon the current complex code.
  Is there a problem with that alternative? Yes; the problem with that 
alternative is that the 17-percent rate has to go up considerably when 
we start providing the necessary deductions for the home mortgage 
interest, perhaps for medicine and other things. The bottom line is 
that the real problem with the flat rate proposal is that it is still 
an income tax, and an income tax is an income tax is an income tax. It 
can become a fat, complicated tax after a few congressional sessions.
  Most importantly, it is still a double taxation system. It taxes 
personal income once when you earn it, and it taxes your spending on 
American products again, because it includes that 20 percent tax on 
American manufacturing and business. It is not a tax that is equally 
applied to foreign imported products. So it again discriminates against 
the American workers and the American product. So while it is an 
improvement over the current tax and the current income tax structure, 
it is not yet the best answer.
  So what is the best answer? I am not sure what the best answer is 
yet, but I will tell the Members what the best answer we have come up 
with so far, in my opinion, is: It is the Schaefer-Tauzin bill.
  What we have proposed in this bill is the complete elimination of the 
income tax, both on individuals and on businesses; the complete 
elimination of income taxes on savings accounts; the complete 
elimination of income taxes on capital gains and other investments; the 
complete elimination of taxes on gifts to our children, to charities, 
to anything; the complete elimination of taxes on inheritance, the kind 
of gifts we make to our children when we eventually pass away and want 
to leave them something which we have tried to build for them during 
our lifetime; and, finally, it is a tax that will apply to both 
domestic and foreign products.
  How do we do it? We do it by substituting all of those taxes that we 
repeal with a simple 15-percent tax on the final purchase for 
consumption in America of products and services.
  How does that work, and why did we come up with 15? We came up with 
15 percent because, according to the National Taxpayers Union, 12.9 
percent on goods and services consumed in America produces the same 
amount of money that the current income tax code produces, along with 
gift and inheritance taxes and a host of excise taxes, which we also 
repeal.
  At 12.9 percent, in other words, we could make this Government whole. 
It would be revenue-neutral. A 12.9-percent retail consumption tax 
would produce the same amount of money that the current taxes that I 
have described produce as a group.

  Why have we chosen 15 percent? We chose 15 percent because we thought 
it was important in a national retail consumption tax to do several 
things which were critical to our society.
  First, we wanted to make sure that no one who earned income below the 
poverty line would be adversely affected by a retail sales tax. So at 
15 percent, we have enough money collected so we can reduce FICA taxes 
for all citizens on their earnings up to and including the poverty line 
for their family.
  In short, we have taken the regressivity argument away. We have taken 
away the argument that this sales tax proposal will adversely affect 
those who earn below the poverty line. In fact, we hold people below 
the poverty line, in fact, all the earners, completely harmless from 
the effect of the tax on poverty-earned income.

[[Page H1525]]

  Second, the 15 percent helps us to fund two important features of the 
bill. One is a continuation of the exemption of the home mortgage 
interest deduction, critical to a society that favors the purchasing 
and ownership of homes, in a society where family life and families are 
critical.
  We have also continued in this bill the exemption for moneys spent to 
purchase an education, for training and education, because we consider 
this just as we would consider purchases made to produce products, as 
part of the cost of being productive in our society.
  So at 15 percent we take care of the educational expenses of being a 
productive society, we take care of the home mortgage interest 
deduction, and we protect income below the poverty line, and yet we 
still produce, with the retail consumption tax, the same amount of 
money that the current income tax system produces to run this 
government, along with all the other taxes I mentioned: taxes on gifts 
and taxes on inheritance, taxes on capital gains and corporations in 
America.
  In short, we provide in this bill, which will become, very soon, H.R. 
2001, we provide the complete elimination of this income tax which so 
burdens America tonight, the abolishment of the IRS, and a simple, flat 
retail consumption tax that is fair to all Americans and that will 
increase the productivity of this country, and create for the first 
time parity, equal treatment, for American jobs, American labor, and 
American products in this import-export free market world.
  Is that a better alternative? I suggest it definitely is, but if 
Members have a better one, if they have an alternative that is even 
better than this one, we are anxious to hear it.
  What we wanted to do in Boston Harbor today, Charlie, was to begin 
this debate; to get Americans to focus tonight, on this awful day the 
tax man cometh, on whether or not we, as sons and daughters who have 
inherited this enormous land of liberty and freedom, are willing, 
indeed, to tackle the difficult job of dumping this American income tax 
system and replacing it with one that is fairer and better for our 
country and better for our economy.
  Is that worthwhile? Is that worth doing? I suggest to the Members 
that it is. I suggest that this alternative, the Schaefer-Tauzin retail 
consumption tax for America, is a much better alternative than any one 
you will hear about, any one you will read about, that I know of. If 
there is a better one out there, I am anxious to find it.
  Mr. Speaker, I yield to the gentleman from Georgia.
  Mr. NORWOOD. Mr. Speaker, I want to talk about the price of goods 
that could occur under the consumption tax.
  Presently, if a loaf of bread is a dollar, we have to generally earn 
$1.28 to go buy that loaf of bread. Now, under the consumption tax 
bill, we are going to eliminate 30 cents of that dollar that is in the 
process of getting to the loaf of bread that is in taxes that companies 
and farmers and retailers and millers normally pay, as well as the 
compliance part.
  What, I would ask the gentleman from Louisiana [Mr. Tauzin] is going 
to happen to the cost of bread when you eliminate that 30 cents out of 
the dollar?
  And I just use one example here. It is true in gasoline and many 
other products. But what is going to really happen to us now with that 
cost of bread when you take out 30 percent of the cost?
  What do we think that the American citizen would end up paying then 
for that same loaf of bread that previously they had to earn $1.28?
  Mr. TAUZIN. Well, let us start out with the notion, Charlie, that 
every citizen that buys that loaf of bread suddenly has more money to 
buy it with.
  I want you to look at your tax statement or look at your pay stub 
this week. Look at how much money is taken out in withholding taxes 
from your pay stub. I would like everyone in the chamber to do that. 
Look at the amount of money that you finally got as your salary. Look 
at how much money the Government took before you even saw your salary 
in the form of withholdings, and imagine tonight that instead of the 
Government withholding that money from you, imagine it all came to you, 
that you had all those withholding taxes now to spend to buy that loaf 
of bread. You would have a lot more disposable income in your pocket as 
a family to buy that loaf of bread.
  Second, the gentleman is right, when we repeal the income tax effect 
on products produced in America, we reduce that cost significantly. And 
if the cost of the income tax system is 15 or 30 percent of that loaf 
of bread, in a competitive marketplace, what quickly happens is that 
bread competitors, all of whom want you to buy their bread, start 
competing against one another; and because they have a big margin now 
with profit to work with, they tend to lower their prices to attract 
customers away from one another.
  So, in the normal course of events in the competitive marketplace, 
prices begin to fall, prices of American products begin to come down in 
our society. And as those prices come down, you have more money to buy 
those products with and you pay that 15 percent sales tax when you 
consume it, you are much better off than in this current system where 
you are paying taxes on your incomes paying for much higher products in 
the marketplace, and then also having to pay taxes on the interest 
earnings or the gifts or inheritance taxes that may come from whatever 
money you have left after you get through saving what little you can 
save in this society.
  In short, prices under our bill are likely to come down, are likely 
to moderate as competition weeds out this excess profit and as 
consumers take advantage of prices and competitors in a marketplace 
where costs are coming down instead of going up.
  Mr. NORWOOD. Mr. Speaker, today being tax day, everybody has at least 
a copy of their returns in their hand. Perhaps they still have their 
returns. But today might be a good day to look at what happened in last 
year's tax bill and compare it to what might happen under our 
consumption tax bill.
  I mean, would you not take your income, and then from that income you 
would deduct any state or local taxes that you paid, you would be able 
to deduct from that income the amount up to the poverty level because 
that is exempt, I think it is $15 or $16 thousand, any money that you 
might set aside out of that income for savings that would be deducted; 
and you simply multiply 15 percent times what is left.
  And I think it would be a neat exercise for every American in this 
country today to look at their tax bill today and see what the 
difference would mean to them and their families if we were doing a 
consumption tax in this country as opposed to income tax.
  Did I leave anything out?
  Mr. TAUZIN. Mr. Speaker, the gentleman left one thing out, the thing 
we just talked about, the fact that not only will that tax bill come 
down, every American at every income level does better under this plan, 
but the fact that the cost of American products also come down 
simultaneously.
  Mr. NORWOOD. I think we can show a difference even if you say the 
cost will not come down, but we all know it will.
  Mr. TAUZIN. Even if the cost did not come down, Americans would come 
out better.
  I am often asked, what about Americans who are not earning an income? 
What about Americans who are retired?
  First of all, most retired Americans are earning an income. They are 
collecting money that taxes were delayed upon and later on taxes are 
collected upon, pension incomes, what have you. All those taxes on that 
income are repealed under our bill.

                              {time}  2115

  So that seniors who have taxes due on money that have not paid taxes 
yet, that are scheduled to pay taxes later, those taxes are repealed 
under our bill.
  The Social Security tax, the tax on Social Security earnings is 
repealed under our bill. The taxes earned in money markets or 
investments made by seniors for their later years are repealed under 
this bill. Most importantly, most seniors who are under Social Security 
or other subsidy programs, pensions, have COLA adjustments to protect 
them against any impacts this tax may have upon the price of anything. 
We think prices are going to go down but if they do not, CPI 
adjustments take care of that.

[[Page H1526]]

  In short, we think every income category from those who retire all 
the way to those who are earning in our society at full levels are 
going to be better off under this bill. And I invite Americans to do 
the exercise you talked about, look at what taxes you paid this year. 
Look at what taxes you paid under this income tax system. And look at 
what happens under this bill. If you need a copy of the bill, call our 
office or contact us here, we will make sure you get a copy. Examine it 
to see whether or not you are not better off under this bill.
  My idea is that you are going to find out you are not only better 
off, you are much better off. You do not have to keep forms anymore. 
You do not have to keep records anymore. You do not have to worry about 
the IRS audits anymore. You do not have to worry about April 15 
anymore. You do not have to file any forms.
  You decide how much taxes you pay by deciding how much spending you 
do above poverty for things you want. You decide how much taxes you 
will not pay by deciding to save or invest instead that money. You are 
masters of your own fate.
  This Government, this Congress is no longer telling you how to live, 
what to save, how to spend. It is not saying who is going to get a tax 
break and who will not. From now on under this proposal there is a 
simple rate. You decide how much you want to pay by deciding how much 
you want to spend instead of saving or investing above that poverty 
line.
  If you live below the poverty line, the bill protects you from the 
effects of this tax. You get all the benefits of lower prices and no 
income tax and you are protected from the effects of the sales tax. You 
are much better off if you are retired, as explained. I think you are 
better off, too.
  Let me tell you why America is better off. We are down to three 
people working in this country for every two people who are retired 
under Social Security. You wonder why Social Security is looking like 
it is going to be in trouble as we turn the century? You wonder why 
Medicare is going bankrupt in this society?
  We have got fewer and fewer workers supporting an aging population. 
That is a prescription for problems. That is a prescription for 
disaster. How do you change that? You change that by having more 
workers in your society, by encouraging jobs back into your country.
  How do you do it with an income Tax Code that breaks the back of 
anyone who wants to make anything in this country, that penalizes you 
at 10 or 15 percent against any product imported into this country? You 
change it by repealing that Tax Code and by substituting in its place a 
Tax Code that gives American products not a disadvantage but a real 
advantage in our marketplace and every export marketplace.
  Do you know what you do then? You start creating three and four and 
five workers for every retired American. And do you know what you do 
then? You stabilize Social Security and Medicare. You protect seniors 
in the future in a way that we cannot even think about protecting them 
today as we squabble over trying to balance the budget and save 
Medicare from bankruptcy.
  In short, changing the Tax Code is the best prescription for putting 
this country back on a growth economy where workers are protecting 
their seniors with contributions to pension funds and Social Security 
systems and Medicare trust funds.
  In short, this is the best medicine I know for America. On April 15, 
when we are all suffering because of this income tax system, when we 
are all suffering through having to meet these deadlines, this is the 
best prescription to make us well again. This is the best prescription 
to make this country strong again, to grow it again, to create the jobs 
every day we are sending overseas and to bring them back to America 
where this country can be strong. Is this worth debating? You betcha. 
Are we serious? You betcha. Do not dare not take us seriously.
  We are finally in this Chamber debating the real question of whether 
or not we are going to keep this income Tax Code or repeal it. What a 
wonderful day. What a wonderful start in Boston Harbor. What a 
wonderful night it will be when we stand in this Chamber one day and we 
get a chance to put our cards into those voting machines and actually 
vote on repealing the IRS and abolishing the income Tax Code for 
America and giving us a Tax Code that works for us instead of against 
us.
  Mr. Speaker, I yield to the gentleman from Georgia (Mr. Norwood).
  Mr. NORWOOD. Mr. Speaker, our time is coming to an end. I agree with 
the gentleman. It has been a wonderful and exciting day. I have been so 
pleased and honored to participate in that project.
  But in summary, I would simply say that our present tax system, and 
all Americans would agree, is simply too complex. It is too difficult. 
In addition to that, we spend way too many nonproductive hours in this 
country trying to prepare for taxes, trying to avoid taxes, just being 
caught up in the whole taxing system that this Congress for years has 
used to slowly but surely take away individual freedoms.
  I know, and I have not been here long, but I know my life often is 
driven by the Tax Code and what is done here in Congress to try to get 
me to do this or go that way, and to me it simply is taking away 
freedoms.
  In addition to that, the system is simply unfair. We have thousands 
and thousands of dollars tied up in a cash economy, not to speak of the 
money that the drug dealers do not pay at all in any kinds of taxes. 
Most Americans say today that they feel they are paying more of their 
hard-earned money than they really wish to pay for Congress. Yet 
tonight we sit here and we talk about a great opportunity to change our 
tax system and go to a very simple system that will increase and 
improve jobs in this country.
  It is going to let every American have more money in their own 
pocket, not because they are not having to pay so much up here, but 
because prices in this country can come down. And think how wonderful 
it is to think that April 15 could be just as fine a day as July 15. I 
mean that alone is worth a great deal of effort.
  What about the growth that you are talking about in our country and 
the investment that is going to occur when we quit penalizing 
capitalists. That is what we are, are we not, we are a capitalist 
country where people invest their dollars and hope to make a profit. 
And they do not want to make the profit for the Federal Government or 
either the banks. And we are talking about lowering the interest rate 
so people can keep more of their money. Then maybe more than anything 
else, we are talking about personal freedoms, and this bill gives us an 
opportunity to control our own lives without 535 people in Washington 
telling us what to do from the minute we get up to the minute we go to 
bed, not to speak of the 125,000 IRS agents out there that are 
constantly observing to make sure that we do all the things that they 
want us to do.

  I hope the American people will take this very seriously. And if they 
believe in what we are doing or if they want more information or if 
they need to talk to their Congressman or Congresswoman or their 
Senator, just send them a tea bag. Just send them a simple little tea 
bag saying, yes, I want to change the tax code as we know it today. 
They do not even have to write them a note. They are going to know what 
they mean. They are going to know that they want an alternative taxing 
system to the present unfair system.
  It has been a great pleasure and a great honor to be with the 
gentleman from Louisiana [Mr. Tauzin] today.
  Mr. TAUZIN. Mr. Speaker, I thank the gentleman. I want to thank him 
for accompanying me and our colleagues to Boston and for being such a 
great voice on this issue tonight and, I am sure, as we go into future 
debates on it.
  I think you have really set the tone for us to conclude this special 
order because you talked about personal freedoms and liberty. That is 
what Boston Harbor was all about, and that is what this debate is all 
about.
  Congress is not going to repeal the income Tax Code easily. The 
income Tax Code is where the power in this place exists. It is where we 
reward our friends, punish our enemies, play the class warfare games. 
Give a tax credit to this group and take it away from this group. 
Reward you today; take it away from you tomorrow, 4,000 changes since 
1986 alone.

[[Page H1527]]

  Congress is not going to give up this power easily. What we are 
talking about is giving power back to the American people by abandoning 
this system where Government in Washington tells us how to live and 
where you instead would make the decisions in your own life by deciding 
how much taxes you pay dependent on how much you spend as opposed to 
how much you save and invest.
  And I think it is important, as we think about that notion of freedom 
and liberty, to again remember the contributions of those early 
patriots. Paul Revere met the night before the Boston Tea Party at the 
Green Dragon with his friends. He met knowing that what he was going to 
do the next day would be considered treason by the British.
  I want to tell you what that meant for these men. For treason a man 
could be hanged and then revived, this is awful, have his guts drawn 
from him like a chicken's and be cut into four quarters to be hung in 
the drying wind and sun. This is awful but I quote it only because that 
is the risk those patriots took in Boston Harbor, December 16, 1773. 
They risked their lives, their liberty, their personal fortunes to make 
a statement that this place, which eventually became America, was a 
very special place on earth where people counted first, where they were 
the masters and government was the servant, where a taxing authority 
had to answer to them, where their family and their futures were more 
important than the wishes and whims of a government authority somewhere 
far away.
  So they entered those ships that next day and dumped that tea into 
the harbor, covered with paint and war paint, dressed like Mohawk 
Indians. They did it to protect themselves from discovery. We found out 
later who many of them were.
  Today, as we met in Boston Harbor, we did not have to put on war 
paint and dress up like Mohawk Indians. We went as citizens of this 
country, some of us Members of this Congress. We went as citizens in 
front of the cameras, proud to show who we were in a country where our 
freedoms and liberty have already been protected for us by so many who 
have given their lives for us to have that chance today to stand in 
Boston Harbor and to demonstrate against this Tax Code.
  And today I think it only fitting that we remember them, that we were 
able to stand in that harbor and stand on that boat and throw the U.S. 
income Tax Code into the Boston Harbor in our protest today without 
having to be covered with war paint because we have inherited a country 
of freedoms and liberty.
  If we are true stewards of that wonderful inheritance, if we are true 
sons and daughters of freedom in this country, do we dare less than 
enter this debate with the same kind of fervor and commitment that 
those early patriots gave to the effort? Do we do less than preserve 
for every American that sacred gift of freedom and liberty handed down 
to us?
  Can we do less than urge Americans to join with us in a new 
revolutionary spirit to become new sons and daughters of liberty in 
this great society and to demand that this Government in Washington 
stop its burdensome tax practices that hurt so many American workers 
and so many American families and abolish an income tax system that is 
not right for this country, that is abundantly wrong for us, and to 
substitute in its place a simple, fair, flat rate that Americans can 
live with and that we can grow with and that we can expand our personal 
freedoms and liberties rather than seeing them constantly contracted by 
constant revisions and adaptations of that awful code?
  Tonight on this tax day, we call upon this body to begin the 
deliberation, to begin the discussion and to take on the task of 
preserving and enlarging those liberties and freedoms that those men 
and women in Boston Harbor put on the line for the rest of us who have 
followed them.
  Earlier tonight we heard a special order about Jackie Robinson and 
the enormous contributions he made to opening up this country. It is 
fitting that we always look back at those who sacrificed for the rest 
of us. For every American tonight suffering under this income tax 
system that is oppressing this Nation and oppressing every job and 
every worker in this country and every family who is struggling to 
survive as jobs continue to leave our society to go to foreign shores, 
for every one of us, we look back upon those patriots with admiration. 
And we look upon their efforts as in some way urging ourselves to begin 
to emulate them, thinking of how we can perfect those liberties and 
those freedoms.
  I suggest to you tonight the most important contribution we can make 
to the continued success of this country and to the enlargement of 
those freedoms and liberties would be to do in legal terms what we did 
physically today. We would dump that Tax Code into Boston Harbor. Yes, 
we had to retrieve it back because to leave it down there would be 
awful pollution of that harbor. We had to pick it back up. But we 
dumped it symbolically in that harbor today as we asked Congress to 
consider to begin the debate on realistically passing a bill to dump 
the U.S. income Tax Code and the IRS in favor of something that is 
fairer and better for our country.

                              {time}  2130

  We start this debate on tax day, but this is not the last my 
colleagues have heard of us. Americans are going to rally across this 
country, I predict. There will be tea parties across America before we 
finish, and there will be citizens organized as sons and daughters of 
liberty in this modern age who will assist us, and eventually we will 
have that vote. We will have that chance to speak for those patriots 
and for every American patriot who believes that it is time for us to 
end this awful and oppressive tax system.

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