[Congressional Record Volume 143, Number 44 (Tuesday, April 15, 1997)]
[Senate]
[Pages S3160-S3167]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAX DAY 1997
Mr. BROWNBACK. Mr. President, I appreciate very much the opportunity
to be able to address the American people on a very difficult day. I
would like to recognize a couple of things that have been said by
previous speakers, to start off with.
I congratulate the President on the reduction of the overall deficit
that has taken place during the past 4 years, because the deficit has
gone down. But what I also want to point out to the American people is
there are a couple of ways of doing this. In the first 2 years of
President Clinton's time in office, with a Democratic Congress, they
did it by raising taxes. In the second 2 years, with a Republican
Congress, we lowered the deficit by cutting spending. Now, you can go
either way on this; you can raise taxes or cut spending. I happen to
believe that, in the long term, when you raise taxes, you are going to
cut your revenues and it is going to make things worse. The point of it
is, on tax day, we should be talking about the level of taxes; they are
too high in this country. The way to reduce the deficit is by cutting
spending. That is not the way it was done in the first 2 years--by
raising taxes.
The second thing I would like to respond to that has been raised by
the other side of the aisle is capital gains taxes. That certainly
needs to be cut, along with some others, and along with a $500 per
child tax credit for working and struggling families.
I find it interesting that, as we look forward to working with the
issue of Washington, DC, the District of Columbia, and rejuvenating the
District of Columbia, a metro area that has great difficulties in this
country, one that we have had a lot of problems with which are well
known to this Nation--do you know what the other side of the aisle is
proposing to rejuvenate Washington, DC? What Eleanor Holmes Norton,
along with Jack Kemp, is supporting to rejuvenate Washington, DC? They
are proposing a zero capital gains tax rate on real property. Both the
left and the progrowth ring on the right in this Congress are proposing
zero capital gains for Washington, DC. Why would they do that? If this
is such a bad thing to do, why are we doing it to Washington, DC?
Because they know it will stimulate growth, hope, and opportunity. That
is being put forth by Eleanor Holmes Norton and Jack Kemp.
These are things that I think people have to realize. When you make
those sorts of cuts, it stimulates the growth overall taking place in
the economy. Now, the month of April--particularly April 15--I think
serves as a powerful reminder of the size and scope of the Federal
Government. Even though America will pay its taxes today, Americans
will not be freed from taxation. They will not experience tax freedom
day until May 9. Last year, it was May 7. This year, it goes up 2 more
days, and it won't be until May 9. In other words, on May 9, ladies and
gentlemen, you finally start working for yourself instead of the
Government. Up until May 9, you are effectively working for the
Government, paying your taxes to carry this huge, large Federal
Government that is too big.
The issue is not that we should raise taxes to balance the budget;
the issue is, we should cut taxes and cut the size, the scope, and the
intrusiveness of the Federal Government to liberate the American
people.
Today, a family of four must send both parents into the workplace to
provide for the same standard of living that was once provided by only
one parent. Is that a way to support the family across America, that we
have to have both parents going out and working just to support the
family? Is that a way to have strong families across the country? I
don't think it is.
Unfortunately, even with both parents working, our families are still
often unable to get ahead. Living paycheck to paycheck has been the
norm for American families for as long as our Federal Government has
grown as large as it as, consuming more and more.
Taxes hurt America's families. They punish good investment, they
stifle entrepreneurial activity, and they hamper true economic growth.
That is why I support a tax limitation amendment and insist that any
budget deal must provide for meaningful tax relief.
Balancing the budget and cutting taxes are not mutually exclusive
goals, as some would have you believe. In fact, balancing America's
budget virtually requires that we cut taxes. In the long run, it will
be more difficult to balance the budget if we do not shrink the size of
our Federal Government with significant tax cuts. And what we are doing
today is happening across this country. We have a good economy that is
growing strong. We are having an economy that is producing more
revenues coming into the Federal Government. We need that to continue
to take place if we are going to be able to balance the budget. You
need to have growth taking place in the economy. That is the critical
nature of cutting taxes. It continues to stimulate growth so we can
have those revenues coming in and balance the budget, and it is not
enough to just balance the budget.
As my good colleague from South Carolina has pointed out, we need to
start paying the debt down so that interest levels can go down.
The tax limitation amendment is a simple amendment requiring a
supermajority in both Houses in order to raise taxes; in other words,
more than a majority. You have to have a supermajority. And we should
do that so that we don't just shift this Government from being debt
financed to being tax financed. We need to be able to, overall, force
the Government to be smaller and to live within its means instead of
taking more of those means from hard-working American families.
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Later today the House will vote on the tax limitation amendment. I
believe this vote will send a strong message to the American people
that the Republicans in the House are committed to truly reducing the
tax burden in America. The Senate had an opportunity to unify with the
House and show their support for this amendment but balked at the
opportunity late last week. I think that is an unfortunate reality that
too many people lack the wherewithal to stand up to the tax-and-
spending regimes of this Government and say no--just say no--to future
tax increases.
Because Congress has lacked the will in the past on both sides of the
aisle to stand up to a flawed Keynesian economic principle that our
Government has used in its fiscal policy, that has hurt economic growth
and that has hurt our families.
I think what we have to do clearly in the future is we just have to
stand up and say no to more big Government programs, to put policies in
place that reduce that tax burden, that release the American people,
their opportunities, their entrepreneurial spirit, and their families
to grow and to prosper. Government must be cut. Taxes must be cut.
Mr. President, I want to quote the President of the United States
who, a couple of years ago, made a very clear statement to the American
people. It was resonating very clearly, which the American people
wanted to believe. But they know it is just not true yet. And it may
end up being the signature statement of this President. ``The era of
big Government is over.'' Well, the era of big Government unfortunately
is only over in rhetoric. In practice, it remains, and more is even
being proposed by the President.
To end the era of big Government, we must end the era of big taxes
and a big Tax Code. I want to point out to you, Mr. President, and
others about the size of the Tax Code. This is something that Steve
Forbes has made us familiar with. But I think it is pretty good on a
graphic.
Just look at the words that govern our lives and the important
documents that have taken place. You can see that they do not
necessarily have to be documents with a lot of words to have a great
deal of meaning. The Declaration of Independence--1,300 words--which
declared our independence and more vision of a National Government.
The Holy Bible--773,000 words are in this document that so many
people read and go to with reverence.
The U.S. Tax Code--this is just the code; this is not the regulations
that underpin the code that direct all of our lives. But the Tax Code
itself is 2.8 million words. If you add the regulations to it that go
forward with setting out what this code actually means and interpreting
it, we are up to 10 million words governing our lives.
The truth of the matter is, on the Tax Code, not only are taxes too
high, but the code is so intrusive anymore that it is more about trying
to cause you to do something or your business not to do something
rather than being about raising revenue for the Federal Government. The
Tax Code is about social engineering out of Washington instead of about
what it raises for the Federal Government. You can see that, just by
the sheer number of words and the volume of words that are involved in
the Tax Code.
Mr. President, April 15 is a tough day for a lot of Americans, and
people aren't to happy about it. They should not be, because their
level of taxes are too high.
I have had people call in on radio call-in shows. I had one in
Saline, KS, that was so memorable to me. A gentleman called in and he
said, ``You know, Mr. Brownback, I believe in serving my country. I
have done everything I could to serve my country. I served in the
military. I am married. I have two children. I am doing everything I
can to work hard. But let me tell you, you guys are just taxing me out
of my family's existence. I can't continue to support my family off of
what you are taking for taxes. I believe in America and I believe in
this country. But I just can't keep carrying this burden. It is too
heavy. It is too much. Can you lift it off of me?''
If we will help that man in Saline, KS, he will not only start
working harder and earning more and taking care of that family better,
which is at the core of the cultural renewal that we need to take place
in the family, but he is going to be even more of a patriot if we just
release him a little bit instead of requiring him to work until May 9
just to pay his taxes. Let's let him work a little bit more to raise
his family.
This day should focus on tax policies, on the failings of tax
policies across the United States, on what its impact is, and on the
theory that if you tax something, you get less of it, and if you
subsidize something, you get more of it.
We have too much tax which is hurting too many people. It is hurting
us in growth. It is hurting families. It is hurting us in the
opportunity to create an era after era of big Government. And an era
after the era of big Government, I think, is one of an unlimited
America. But it is one in which we have to reduce the tax monster to be
able to get to that.
I am happy to be able to speak about the issue of tax freedom which
is not with us yet. But it is a day I hope people will recognize the
importance of--of what tax policy has done, how much needs to be
changed, and how we need to limit taxation taking place in this Nation.
I yield the floor.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Enzi). The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DOMENICI. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMENICI. Mr. President, parliamentary inquiry? Is there an order
for people to speak at this point?
The PRESIDING OFFICER. The majority controls the next 46 minutes.
Mr. DOMENICI. I see Senator Kyl. Did he plan to speak next?
Mr. KYL. I am ready.
Mr. DOMENICI. I have not spoken yet. How long would he speak?
Mr. KYL. Five minutes.
Mr. DOMENICI. Could I yield the floor, the Senator from Arizona
speaks for 5 minutes, and then I could be recognized for about 7
minutes?
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Arizona.
Mr. KYL. Thank you.
Mr. President, first let me thank the distinguished chairman of the
Budget Committee. I am glad I don't have to follow his remarks. So I am
pleased to speak before he does.
Mr. President, T.S. Eliot once wrote that ``April is the cruelest
month.'' Of course, he was referring to the change of seasons--of
``mixing memory with desire.'' Millions of Americans would probably
agree with Eliot about April being the cruelest month, but for a far
different reason. It is, of course, on April 15 that income taxes are
due.
By midnight tonight, millions of Americans will have finally
completed their income tax returns. According to estimates by the
Internal Revenue Service, Americans will have spent 5.4 billion hours
on tax-related paperwork. The Tax Foundation estimates that the cost of
compliance will approach $200 billion.
If that is not evidence that our Tax Code is one of the most
inefficient and wasteful ever created, I do not know what is. Money and
effort that could have been put to productive use solving problems in
our communities, putting Americans to work, putting food on the table,
or investing in the Nation's future are instead devoted to tax
preparation. And that is a waste.
It is no wonder that the American people are frustrated and angry,
and that they are demanding real change in the way their Government
taxes and spends.
Mr. President, the House of Representatives is today considering a
proposed constitutional amendment that represents the first step in the
direction of the kind of fundamental tax reform the American people
have been demanding--it would require a two-thirds majority vote of the
House and Senate to approve tax increases. Why do I say that it is the
kind of reform the people are demanding? Because a third of the
Nation's population has now imposed such limits on their State
governments, and voters have approved tax limits by wide margins. In
Arizona, for example, tax limitation passed with
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72 percent of the vote. In Florida, it passed with 69.2 percent of the
vote; in Nevada, with 70 percent.
The tax limitation amendment, which I introduced in January, now has
22 Senate cosponsors. It is something that was recommended by the
National Commission on Economic Growth and Tax Reform. The commission,
chaired by former HUD Secretary Jack Kemp, advocated a supermajority
requirement in its report on how to achieve a simpler, single-rate tax
to replace the existing maze of tax rates, deductions, exemptions, and
credits that makes up the Federal income tax as we know it today.
Here are the words of the Commission:
The roller-coaster ride of tax policy in the past few
decades has fed citizens' cynicism about the possibility of
real, long-term reform, while fueling frustration with
Washington. The initial optimism inspired by the low rates of
the 1986 Tax Reform Act soured into disillusionment and anger
when taxes subsequently were hiked two times in less than
seven years. The commission believes that a two-thirds super-
majority vote of Congress will earn Americans' confidence in
the longevity, predictability, and stability of any new tax
system.
Mr. President, tax reform cannot succeed without a supermajority
requirement for raising taxes. In the decade since the last attempt at
comprehensive tax reform, Congress and the President have made more
than 4,000 amendments to the Tax Code. Four thousand amendments. The
constant changes have left taxpayers perplexed, unsure how to
comply today, let alone how to prepare financially for the future.
Without the protection of the tax limitation amendment, taxpayers will
be vulnerable to further tax-rate increases, particularly if tax
reform--which we all hope will occur within the next few years--
eliminates many of the tax deductions, exemptions, and credits in which
they find refuge today.
Let me make a few other points about this amendment. First, the tax
limitation amendment itself cuts no taxes. It does not preclude
Congress from raising taxes in the future. It only raises the bar on
future tax increases.
Many people, myself included, believe that taxes are already far too
high, and that we ought to cut taxes. This amendment does not do that.
All it says, in effect, is ``enough is enough.'' It makes Congress find
a way to meet its obligations without taking even more from the pockets
of the American people.
Mr. President, here are some astonishing statistics from Americans
for Tax Reform. According to the organization's calculations, about 31
percent of the cost of a loaf of bread is attributable to taxes. About
54 percent of the cost of a gallon of gas goes to taxes. About 40
percent of the cost of an airline ticket is attributable to taxes, as
is 43 percent of the cost of a hotel room.
Understand that on an aggregate basis, the average family pays more
in taxes than it does on food, clothing, and shelter combined.
According to the Tax Foundation, Federal taxes amount to about 27
percent of the family's budget, and State and local taxes consume
another 12 percent--for a total of almost 39 percent. But spending on
food, clothing, and shelter totals only about 28 percent of the family
budget. And families still have to find a way to pay for everything
else they need--for example, medical care, transportation, education,
and an occasional vacation or dinner out--out of the meager amount that
is left after taxes.
So what the tax limitation amendment says is that Government already
takes far too much from hard-working Americans and should at the very
least take no more, unless there is a very broad and bipartisan
consensus in Congress and around the country.
A second point. There is no small irony in the fact that it would
have taken a two-thirds majority vote of the House and Senate to
overcome President Clinton's veto and enact the 1995 Balanced Budget
Act with its tax relief provisions. By contrast, the President's
record-setting tax increase in 1993 was enacted with only a simple
majority--and not even a majority of elected Senators, at that. Vice
President Gore broke a tie vote of 50 to 50 to secure passage of the
tax-increase bill in the Senate.
The tax limitation amendment is based upon a simple premise--that it
ought to be at least as hard to raise people's taxes as it is to cut
them. What the tax limitation amendment seeks to do is force members of
Congress to think of tax increases, not as a first resort, but as a
last resort.
Mr. President, I hope the House will pass the tax limitation
amendment today. And if it does, I hope the Senate will take it up
promptly and give the States an opportunity to consider its
ratification. While there is much disagreement about whether to cut
taxes and how, we should at least be able to agree that we should not
raise taxes any further. I urge support for the tax limitation
amendment.
I hope we will be able to pass that amendment, and I hope we will
have an opportunity thereby to ensure that more money is left in the
pockets of hard-working American families rather than being sent to the
Federal Government here in Washington.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER. Under the previous order, the Senator from New
Mexico is recognized for up to 10 minutes.
Mr. DOMENICI. Mr. President, I compliment the distinguished Senator
from Arizona, Senator Kyl, for his devotion and dedication to doing
something about the tax mess in America. I look forward to supporting
many of his ideas here on the floor.
Mr. President, I thought today I would speak just a few moments about
the history of the income tax law in this Nation, and see if we can't
all agree without equivocation that something has really gone awry.
On October 13, 1913, President Woodrow Wilson signed the bill
enacting the income tax law under the authority of the 16th amendment
to the Constitution of the United States--October 13, 1913. The entire
law was 14 pages long. Slightly more than 1 percent of the population
had incomes large enough to be subject to the new tax.
The New York Herald predicted that many new taxpayers would proudly
display their income tax receipts as evidence of the fact ``that their
value and standing in the commercial world was worthwhile.'' So people
were pleased to pay their taxes and held up their receipts to indicate
that they had accomplished something meaningful in the United States,
they had gotten somewhere.
According to the Treasury Historical Association, when the first
income tax was due--listen to this--throngs of new taxpayers crowded
the IRS offices to pay and some of them were glad to be there. There
are throngs at the post office today mailing in their tax forms. I
daresay few are glad to be there.
At the time of the enactment, Representative Cordell Hull, the
chairman of the Ways and Means Committee, labeled the income tax ``the
fairest, most equitable system of taxation that has been devised.''
Amazingly, most Americans actually agreed and welcomed the tax.
Perhaps those statements were true in 1913, I say to our new Senator
from Arkansas in the Chamber, but in 1997 they no longer reflect
reality.
The current code is neither fair, equitable, efficient, nor loved. It
adds one-third to the cost of capital. Capital which makes a modern
economy grow and prosper is encumbered by the antigrowth ingredients of
this Tax Code such that capital has had added to its cost one-third--in
other words, one-third is wasted because of the nature of our tax laws.
It is hostile toward savings. It is tilted toward debt. Thus, it slows
economic growth, prevents jobs from being created, and makes us less
competitive in world markets.
The Tax Foundation estimates that complying with the Federal tax
system of the United States will cost the American people--I am not
talking about paying the tax. The cost, the waste, the money, the
energy--$225 billion in 1996.
Based on historical data from the IRS and the OMB--that is the Office
of Management and Budget--taxpayers will spend 5.3 billion hours
complying with the Federal tax laws.
Since 1954, the number of sections dealing with this have increased
dramatically. Determination of tax liability has grown 1,000 percent;
deferred compensation, 1,400 percent; computation of taxable income,
1,500 percent. Since 1954, there have been 31 major tax bills enacted,
more than 400 public laws that have amended the Internal Revenue Code.
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Two-thirds of the compliance burden is borne by the business sector.
Because of the marriage penalty built throughout this code--speak of
something that is antifamily. I would assume if you have a policy that
is antimarriage it cannot be, by definition, very profamily--most
working spouses work primarily to pay taxes rather than to improve the
standard of living of the family.
Congress will be dealing with tax cuts if we arrive at a budget
agreement, and that is good because it is obvious the tax take for the
United States, the amount of revenue we are getting from taxes,
continues to rise. But I believe ultimately the country is not going to
be as well off as it should be until we do a comprehensive tax reform.
We have put together, Senator Nunn and I and many Senators and many
people helping, an entire new tax plan. When time comes for reform, it
will be on the table. This Congress Senator Dodd has agreed to carry on
the work of Sentator Nunn.
We call it the USA Tax Plan--Unlimited Savings Allowance. For those
who think IRA's are great investment vehicles we ought to be using, I
agree, but this is an unlimited IRA tax plan because essentially people
will pay taxes only on income they spend. Amounts they save or invest
will not be taxed until they take it from the savings pool of the
Nation, an investment pool of the Nation, and spend it. The tax would
be deferred, in other words, until it is consumed and has become income
that is being spent.
There is talk about tax credits and deductions for education
purposes. This USA tax recognizes those needs and takes care of that.
It provides a tax credit not for some taxpayers but for all, all
families facing higher education expenses. This plan recognizes
investment in capital should be expensed by the business community. It
provides a deduction from taxable income in the year that the
investment is made instead of requiring installment deductions called
depreciation, which I assume is the major argument between the business
community, business people, and the IRS.
This plan which I am speaking of today, with its unlimited deferral,
results in a capital gains tax rate of zero so long as the proceeds
remain invested. When they are no longer invested and they are being
spent, they are listed as income and subject to taxes.
The President and Republicans want to provide a $500 tax credit for
children, recognizing that family budgets are stretched most when there
are children in the family. I should say the President wants to do
this, although with less money. And the age that this stops vesting is
lower in the President's proposal. Nonetheless, they both recognize
that families, income tax payers are most stretched when there are
members of the family under this code.
The USA tax proposal includes a family living allowance, in addition,
to the dependent deduction. It does not phase out when a child reaches
13. It goes on until the child reaches adulthood.
Taken together, these two USA tax provisions provide relief
equivalent to what the dependent deduction would have been if it kept
up with inflation since the time it was first enacted.
So let me suggest that while we are all talking about tax cuts, and I
hope I have given a bit of the history that should shock us into
understanding that something basically is very wrong.
Our current Tax Code is sapping the strength of this country, it is
sapping the entrepreneurial spirit of people. This country will be
great when the entrepreneurial spirit, when innovation and risk taking
is maximized. Unfortunately, we have a code that does the opposite,
obviously, and we ought to get rid of it.
For now, we are scheduled this year for some tax cuts. I have
outlined them heretofore, and the Finance Committee chairman and others
have announced them, and the President has his set of proposals. But I
do not think we should let today go by without saying that tinckering
is not enough.
What we must do is throw out what we have and do a new one for the
American people, for growth, prosperity, and peace of mind for the
American people.
I yield the floor.
The PRESIDING OFFICER. The Chair recognizes the Senator from
Missouri.
Mr. BOND. Mr. President, let me thank the Senator from Tennessee, who
is next in line and allowed me to go first.
I commend my distinguished colleague from New Mexico for his great
leadership on this issue. He has within his hands the needed mechanism
to get to tax relief, and that is what I want to address very briefly
here today.
I follow up his point about the cost of the complexity of today's Tax
Code by saying we in the Small Business Committee have figures
indicating that computing taxes, figuring out taxes, takes 5 percent of
the revenues of small business. That is not paying the taxes. That is
just figuring out how much they are.
Mr. President, each year the American Tax Foundation computes what
they call ``Tax Freedom Day,'' the day of the year when the average
American can quit working to pay Federal, State, and local taxes and
start working for herself or himself. Last year it was May 7. This year
it will be May 9. This means each day you have worked since the new
year has been simply to pay your tax bill for the new year and you
still have 3 weeks to go. If that does not make you happy, I do not
know what will.
The American people take too much of their hard earned income to pay
for Uncle Sam's spending habits. Why is the tax burden on families so
high? Because Uncle Sam spends too much. It is that simple. Congress
has not balanced the budget since 1969. The cumulative effect of all
that deficit spending is a tax burden for most families that exceeds
what they pay for food, clothing, housing and automobile costs
combined. We need to fix that. We are trying to balance the budget so
we can reduce the tax burden for families with children, small and
home-based businessowners, family farmers, and frankly, everybody else
who is taking part in the economy.
The first step in bringing tax relief to middle-class America,
however, is to bring Government spending under control. A balanced
budget means a healthier economy, more Government revenue and less need
for taxes. As you fill in the amount of tax paid line on your 1040 form
this year or as you write out your check to the IRS, think about ways
you could use even a portion of that tax money and remember who is
trying to balance the budget and who is not because balancing the
budget and getting spending under control is the first step toward tax
relief.
I thank the Chair and yield the floor.
Mr. THOMPSON addressed the Chair.
The PRESIDING OFFICER. The Chair recognizes the senior Senator from
Tennessee.
Mr. THOMPSON. I thank the Chair.
Mr. President, it seems at this time of year every year we tend to go
out of our way to criticize the Internal Revenue Service, but I think
part of the reason for that is that sometimes it seems to take so much
to get their attention. As the Presiding Officer knows, the General
Accounting Office has a list of high-risk agencies which they set forth
as agencies that are more prone to fraud, waste and abuse, and
mismanagement.
The IRS has been on that list now for 6 years in a row, and we had
hearings last week in order to find out what they intended to do about
it because not only do they have the normal problems that we all hear
about and complain about every year, it seems now that in their attempt
to modernize their computer system, which is totally outdated; they are
working on 1960's technology, but in an attempt to do something about
that they have spent billions of dollars and canceled one program after
another and are not making substantial progress into getting into the
20th century much less the 21st century.
We also found out that the Internal Revenue Service cannot stand an
audit. They do not really know how much they have spent on this
computer modernization system and they really do not know how much
money they collect in terms of various categories of collection.
In addition to that, we have learned more about the security
problems. We know that we are all concerned about the browsing problem
we have had some discussions about recently, but
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now we learn of the tremendous physical security problems, so much so
that they had to classify the report when they sent it over here to us
because they did not want to provide a blueprint, understandably, for
people who might wish them ill. It is that bad.
Congress has responded with the power of the purse. And last year we
cut them back some, but that is not the total answer because they are
going to need revenues in order to take care of some of these problems.
So we had the hearings. We brought the IRS in. We brought the Treasury
in, which the IRS, of course, is a part of. Perhaps if there is any
good news in this it looks as if for the first time we do have a
blueprint to work our way out of this.
Congress in the past few years has passed some legislation which
requires these agencies to come in and report on what kind of progress
they are making in solving some of these problems. We have not always
had this, but now we have some accountability--what are they trying to
achieve, and every year come back and tell us and show us in some
detail what they are doing to work out of these things.
Treasury now says they are going to take a greater oversight
responsibility, which they clearly should have done long before. There
are timetables which they are going to be held accountable to. We are
going to make sure they report back in solving these problems when they
are supposed to be reporting back. So perhaps we are going to be making
some progress for the first time. But this is the reason why we talk
about the IRS. It is not just the fact that people do not like to pay
taxes. It is just they have the right to have the IRS and all these
other agencies at least reach the minimal compliance levels they expect
out of the American taxpayer because, ultimately, our national security
and our prosperity depend upon our faith in these institutions and
certainly the IRS.
So with that, I thank the Chair and will relinquish the remainder of
any time I might have.
The PRESIDING OFFICER. The Chair recognizes the Senator from Alabama.
Mr. SESSIONS. Mr. President, I would just like to take a few minutes
on this important day in our Nation's history, this day that comes up
every year, when we are responsible for paying our taxes, to discuss
the problems of working families and what they are facing in America.
Two years ago, I traveled all over the State of Alabama, campaigning
for Attorney General. I talked to all kinds of people. This past year I
campaigned throughout the State of Alabama and talked to hundreds and
hundreds of young families who are struggling throughout our State.
They are struggling all over America. People who are doing their very
best to live the American dream are not able to do so because of
financial reasons. Many families are calling on their parents to help
them with the finances and burdens it takes to raise their children. We
need to help those families.
I was recently in a committee meeting in which a very wise Senator
said: We look at numbers and we study statistics and we do all these
kinds of things. But, when it comes right down to it, we need to use
our judgment about what we believe are the most important problems
facing America. In my judgment, no matter what numbers show--and
numbers back me up on this--in my judgment, working families are
struggling. In terms of income, the numbers have declined in the last 6
years in relative terms, considering inflation. It is more expensive
than ever to raise children today.
I want to show a chart that illustrates a shocking statistic. In
1950, due to the personal exemption for children and family members,
which allows you to exempt your income from taxes, 70 percent of the
average working family's income was exempt from taxes. They did not
have to pay taxes on 70 percent of their income. Today only 30 percent
of working families' income is exempt from taxes. They must pay taxes
on 70 percent of their income and they are paying at a much higher rate
than they paid in 1970. Is there any reason to wonder that working
families are falling further behind? In 1950, they paid 2 cents of
every dollar to the Federal Government. Today, every working family
pays 25 percent of every dollar to the Government. That is
unacceptable. No wonder families are struggling to raise and educate
their children, who will take care of us in the future.
The Republicans have proposed a bold plan to give a $500-per-child
tax credit to every working family in America. I support that proposal
and campaigned for it very aggressively. Just a few months ago the
President said he believed in the per-child tax credit and that he
would support such a plan because it is needed to bring working
families' incomes up to the level that they need to be. I ask American
families today to think about this. What would you do if there were two
children in the family and you had a $1,000 tax credit? That means
$1,000 extra income to the family, in which there would be no income
tax or health care taken out--nearly $100 a month, $90 a month extra
income that you could spend for your family.
It would be available to buy shoes, clothes and for field trips for
school. Maybe the car breaks down--you could repair the transmission.
Maybe you need a set of tires for the vehicle or just grocery money.
These are the kinds of things that families struggle with every day.
This tax credit would put real money into their hands and drive their
incomes up in an immediate way. It would put an immediate source of
income into the pockets of the people who are making America great.
These are the people who are going to raise the next generation who
will lead this country. The families today are raising that next
generation that will take care of us and we need to give them some
relief. We need to give families some income so that they can do their
job of raising their children. We need to give them the kind of
commitment that our families gave to us.
One thing I must say. The President says he is for a tax credit. But
you have to look at the small print, as we so often have to do. His
$500 deduction would only go up to age 13. I have had children under
age 13. I have had children over age 13. Anyone who has had children in
that age group knows it costs more to raise a teenager than it does a
younger child.
That is totally unacceptable. The President says he is for a tax
credit. Let's do it. Let us support the teenagers, too. Let families
have the kind of money so they can raise their teenagers in the way
they should. I feel this is a very important issue for our country. I
think it is important that this body recognize that we have penalized
working families. It is time to give families some relief and restore
them to the position they were in a number of years ago. It is time to
restore and strengthen family values in America.
I yield the floor.
The PRESIDING OFFICER. The Chair recognizes the Senator from
Colorado.
Mr. ALLARD. Mr. President, I rise today to make a few remarks
concerning April 15. That is today. As all Americans are no doubt
aware, today is tax day. Millions of Americans spent this past weekend
finalizing their returns. Today those returns are due.
However, while the returns and taxes are due today, the tax burden
continues. According to the Tax Foundation, the average American family
now must work until May 9 in order to pay local, State, and Federal
taxes. April 15 may be tax return day, but May 9 is tax freedom day.
The Tax Foundation also reports that Federal, State, and local taxes
now cost a typical two-earner family more than that family spends on
food, clothing, transportation, and housing combined. It is no wonder
that most families require more than one income. As families work
through their tax returns, many were no doubt struck by the complexity
of the tax system. Earlier this year, Money magazine revealed the
results of its annual report on tax complexity. The magazine
commissioned 45 tax professionals, many of them CPA's, to complete the
tax return of a hypothetical and prosperous American family. While this
hypothetical family certainly had more tax issues to deal with than the
typical family, the issues raised were not unique and should have been
very familiar to tax professionals.
The results reported in the Money article were astounding. No two
preparers came up with the same result, and
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the fluctuation in the level of the taxes was striking. There were
literally tens of thousands of dollars of differences between the
calculations of some of the preparers.
Nearly $14 billion is spent by the Internal Revenue Service and other
Federal agencies to enforce the tax laws each year. There are 136,000
employees of the Internal Revenue Service. There are 17,000 pages of
Internal Revenue Service laws. There are 480 tax forms published by the
Internal Revenue Service, and there are an estimated 8 billion pages of
forms and instructions sent out by the Internal Revenue Service every
year.
I think these statistics make the case for tax reform. There are
certainly a number of reforms that need to be made at the Internal
Revenue Service. However, Congress is the principal entity responsible
for the Tax Code. Congress should scrap the current tax system and
start fresh with a simple and fair system.
I support taking this action now. However, if our leadership
determines we cannot reach agreement with the President on
comprehensive tax reform, then we should at a minimum reduce taxes this
year. This should be done by a reduction in the capital gains tax by at
least half the current rate for all individuals, eliminate the estate
taxes, and a reduction in the family tax burden. This action should be
done as a part of the budget and should not be delayed.
Before I close, I would like to mention a necessary tax change in
health care. This concerns medical savings accounts. Last year,
Congress made the tax changes necessary to make medical savings
accounts available for up to 750,000 individuals. Medical savings
accounts allow companies to give the funds currently set aside for
health benefits directly to their employees. These employees are then
empowered to purchase their own health plans and set aside funds for
future medical expenses.
MSA's, or medical savings accounts, are an important counterweight to
Government and health care bureaucracies. They put greater power in the
hands of individuals and families. The changes made last year have
proven popular and demand for medical savings accounts is high. But
even before Congress provided the full deductibility for MSA's, many
employers offered them successfully for years.
Last year, I opposed the artificial cap on medical savings accounts,
and today I am introducing legislation that would make medical savings
accounts available to all taxpayers. This will foster the type of
empowerment and competition that we need in health care. It will also
increase health care coverage for the self-employed and, thus, those in
transition from one job to another. Medical savings accounts are the
ultimate form of health care portability.
Medical savings accounts provide a superior alternative to a further
expansion of Government-run health care. Americans want health care
choice and competition, not more bureaucracy.
I invite all my Senate colleagues to cosponsor this MSA extension
legislation.
I yield the floor.
The PRESIDING OFFICER. The Chair recognizes the Senator from
Arkansas.
Mr. HUTCHINSON. Mr. President, every year like clockwork, with the
approach of April 15, tax day, millions of Americans are out scrambling
to find out how much they owe the Federal Government in taxes and how
much they have overpaid the Federal Government in taxes. The IRS
requires us to fill out complicated tax forms and, after plugging in
numbers to formulas and performing various mathematical calculations,
we come up with the magic number of what we owe the Federal Government
or sometimes, rarely, what the Federal Government owes to us. To
complete these tax forms is sobering. Sometimes it is a frightening
experience, especially when you look at the block on your W-2 form that
shows the amount of your income that has been consumed for tax
purposes.
The truth be told, the typical worker toils nearly 3 hours in a
typical 8-hour workday just to pay taxes. Many families with two
working parents find that one of those working parents is working full
time just to pay Uncle Sam. Put another way, May 9 is tax freedom day.
In theory, this is the day when an individual who has been working
since January 1 will be able to take home his or her first paycheck.
Every penny of the income they earn during that first 5 months of the
year has gone to pay their annual income taxes.
Our Nation's total tax burden is at an alltime high. Federal, State
and local receipts remain at a record 31.7 percent of the gross
domestic product. That is one-third of our Nation's total output now
consumed in taxes.
Even more demonstrative of the magnitude of the American tax burden
is the fact that the average American family pays more in taxes, as we
have heard over and over again, than it spends on food, clothing, and
shelter combined. This, I think, is proof positive that American
families are overburdened and in need of tax relief.
That is why I introduced, with Senator Grams of Minnesota, who is on
the floor this afternoon, the $500-per-child tax credit for all working
families, regardless of income. Everyone talks about the importance of
family values. It is time that we act to preserve American families by
passing that $500-per-child tax credit.
I talked to a person in Pine Bluff, AR. He said, ``My children are
grown. What do you have for me? I don't need that $500-per-child tax
credit.'' I said, ``Sir, if you would just compute the benefit that you
had as you had reared your children--they are now grown--you would see
that the benefit that you had has been eroded through inflation and no
longer exists.'' And he was soon convinced. As we look at that per
child dependent exemption, that would be over $8,500 had it been
indexed for inflation.
The 1997 tax season has been fraught with reports of abusive
practices and sloppy management with the IRS--reports of taxpayer money
being used to provide tax refunds to prison inmates at the nearby
Lorton prison facility, of IRS agents improperly accessing taxpayers'
returns, and of other coercive tactics employed by IRS agents to
collect taxes.
Americans already suffer under an unfair and incomprehensible Tax
Code. As they struggle to be honest, taxpaying citizens, they should
not have to worry about being harassed by an agency that, according to
the General Accounting Office, cannot accurately account for its own $7
billion annual budget.
I think millions of Americans feel as I do today, as we look at the
Internal Revenue Service. We would say, ``Physician, heal thyself.''
I yield the floor.
Mr. FRIST addressed the Chair.
The PRESIDING OFFICER. The Chair recognizes the Senator from
Tennessee.
Mr. FRIST. Mr. President, I understand morning business was to end at
12:30. Was there a unanimous consent obtained to extend that?
The PRESIDING OFFICER. The Senator is correct, but there has not
been.
Mr. FRIST. Mr. President, I ask unanimous consent that morning
business be continued for 30 minutes, or until such time that speakers
on the floor are allowed to make their presentation.
Mrs. HUTCHISON. Mr. President, can I make an inquiry?
The PRESIDING OFFICER. The Senator from Texas.
Mrs. HUTCHISON. The time was extended for the Democratic side by 10
minutes. Up until 12:40 is still the Republican time; is that correct?
The PRESIDING OFFICER. The Senator is correct.
Mrs. HUTCHISON. Thank you, Mr. President.
The PRESIDING OFFICER. The Chair recognizes the Senator from
Tennessee.
Mr. FRIST. Mr. President, I ask unanimous consent that the time be
extended up until 1 o'clock, or until Senators are allowed to complete.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. FRIST. President, I rise today to speak out for Americans on tax
day--April 15. On this day more than any other, every American is
reminded how much government costs--not just in actual dollars but in
time and energy spent filling out forms.
Today, many of my colleagues have described the tax burden in many
insightful and illustrative analogies. For example, we know that the
average American will work until May 9--tax
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freedom day--just to pay his or her taxes. We know that the typical
American family pays 38 percent of their income in Federal, State, and
local taxes--a one-third increase over the past four decades. I commend
my colleagues for bringing clarity and focus to an extremely complex
debate.
Today, I want to add to their comments. Putting statistics and
anecdotes aside, every lawmaker should be asking three questions about
tax revenue--not just on Tax Day but every day: Whose money is it? How
much of it are we spending? and How are we spending it?
whose money is it?
Whenever we debate tax policy in this body, we must begin with a
simple principle that should govern all our decisionmaking: There is no
such thing as government money, there is only the people's money. Every
dollar that comes into Washington belongs to some individual, family,
or business--not the other way around. For far too long, the Federal
Government has treated the income of the American people as it own--as
an entitlement it deserves--and this practice must stop.
As newspaper columnist James Glassman describes it,
Tax dollars begin life as personal dollars. They're yours,
not Washington's. You do agree, through the political
process, to turn over some of your income--but that deal is
transitory and renewable, and it depends on Washington
providing good value for your money.
That agreement is based on public trust.
When we Senators meet with constituents in our home States, we must
remember: It's their money. Every time we pass a spending bill on the
floor of the U.S. Senate, we must be able to look our constituents in
the eye and say, ``Here is how we spent your money.'' If we can't--look
them in the eye--then we have betrayed their public trust and we have
failed as representatives.
how much of it are we spending?
Too often over the last half century, lawmakers seem to have
forgotten or ignored whose money they were managing. Once we remind
ourselves that we are dealing with the taxpayer's hard-earned dollars,
we must ask, ``How much of it are we spending?''
This year, the Federal Government will spend about $1.6 trillion.
Grasping the concept of a trillion dollars is difficult, but let me
try. If you started a business 2,000 years ago and that business lost
$1 million a day each day from then until now, you still would not have
lost your first trillion dollars. Yet our 200-year-old Government
already owes $5.5 trillion.
Why? Because the Federal Government consistently spends more than it
takes in, running up massive debts and threatening our economic future.
This year alone, the Federal Government will spend about $107 billion
more than it receives from the taxpayers. These annual deficits have
added up over time to a total debt of $5.4 trillion--that's nearly
$20,000 for every man, woman, and child in America. We cannot continue
to shackle our children and grandchildren with this debt burden. That
is why balancing the budget is so critical for our future. A balanced
budget is the first step toward breaking those shackles.
how are we spending it?
The third and final question lawmakers must ask themselves on tax day
is ``How are we spending the taxpayers' money?''
The simple answer is, ``We are spending it at an unsustainable
rate.'' In 1965, entitlement spending and interest on the debt consumed
30 percent of the Federal budget. Discretionary spending--which
includes the basic functions of Government like defense, highways,
education, medical research, and national parks--consumed 70 percent.
Today, entitlements and interest consume 70 percent of the budget,
while discretionary programs consume 30 percent. By 2012, just 15 years
from now, entitlements and interest on our growing debt will consume
all Federal revenues--leaving nothing for roads, education, national
parks, medical research, defense.
We have all heard from Members who say that the current tax rate is
punitive, burdensome, and a threat to the survival of our competitive,
capitalistic economy. If that's true today--when our tax rate hovers at
38 percent per family--consider the effects on our economy in the
future if we do nothing to change this. If we fail to act and act soon,
a child born today will pay a lifetime tax rate of 84 percent on his or
her earnings to pay for the cost of Government overspending. Such a
burden would be at the very least unfair and irresponsible.
As the tax debate rages on, I urge my colleagues to remember that we
are trustees of the American Treasury. Building and maintaining that
trust is one of our most important duties as representatives of the
people. If we always remember whose money we are spending, how much we
are spending, and how we are spending it, I believe we can be more
responsible trustees and we can leave our children a future worth
working toward.
I yield the floor.
Mrs. HUTCHISON addressed the Chair.
The PRESIDING OFFICER. The Chair recognizes the Senator from Texas.
Mrs. HUTCHISON. Mr. President, today is tax day, and for millions of
Americans, this is the day that they end their painful ritual of fiscal
fealty to the Federal Government. So I thought it would be appropriate
to cite a few statistics that make tax day possible: 136,000 is the
number of employees of the IRS responsible for administering the tax
laws; $13.7 billion, that is the amount that it costs to administer and
enforce the Tax Code; 480 is the number of forms printed by the IRS; 8
billion--8 billion--is the number of pages of forms and instructions
sent out by the IRS every year; 293,760 is the number of trees that
must be cut down each year to supply the 8 billion pages of paper
needed for filing the country's taxes.
Mr. President, these are just a few of the statistics that point out
the complexity and the burden that our Tax Code puts on the American
family and the Nation itself. The typical American family pays more in
taxes than it spends on food, clothing, and shelter combined. That is
more than 38 percent for total taxes versus 28 percent for food,
clothing, and housing.
This year, the Republican Congress wants to do something unusual for
the taxpayers of our country: Give their money back to them. We want to
stop penalizing young couples for getting married. Republicans want to
increase the standard deduction for married couples filing jointly. In
1993, 40 percent of families paid higher taxes because they got
married. A couple without children who earns $20,000 a year pays an
additional $188 in taxes. When they have children, the number soars to
$3,717 per year. In Texas, a mother of two children on welfare is
penalized $5,862 a year for marrying a man who earns $20,000. Our Tax
Code is biased against marriage, and that is just flat wrong.
We want to provide a $500-per-child tax credit for the American
family to give them help in the struggles of raising a family. This
would mean 3.5 million families in America would not have to pay taxes
anymore. We want to cut capital gains taxes to encourage and reward
investment to create new business, to create new jobs.
A low capital gains tax rate is important to our future, because we
should be able to take our money and put it where we need it at the
time. But many people cannot sell their assets because of the huge
capital gains tax that has accrued over the years. So we need to
encourage investment to create the new jobs and the new industries that
will get our economy on a safer track.
We want to cut estate taxes so that years of hard work and success
will not be wiped out in a generation. I have known people who have had
to sell land that they inherited because they could not pay the
inheritance taxes on that land. Mr. President, that is wrong. It walks
away from the American dream. The American dream is if you work harder
in this country, you can do better and you can create a little nest egg
that will make it easier for your children to have a better life. Why
in the world would we take dollars that are taxed first when you earn
them, again when you invest them, then when you die? It does not make
sense, and it especially hurts the small family farm, ranch, or
business.
We are trying to cut the burden of taxes on the American family. What
better day than today to talk about
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this burden and to talk about the differences between the President and
Congress and our priorities.
Thank you, Mr. President. I yield the floor.
Mr. GRAMS addressed the Chair.
The PRESIDING OFFICER. Time has expired. Under the current order, we
are in morning business.
Mr. GRAMS. Mr. President, I ask unanimous consent to speak for up to
5 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GRAMS. Mr. President, there are 365 days in each calendar year,
but I can think of no other date that the American people await with
such universal dread as April 15, tax day.
However, there is one other date working Americans should look upon
with equal disdain, and that is the date that says a great deal about
the Federal, State, and local tax burden working families are expected
to bear. That date is May 9, this year's tax freedom day.
As it does every year, the Tax Foundation has calculated the date the
average American stops working just to pay their share of the tax
burden and begins working for themselves. This year, tax freedom day
falls on May 9. And while the use of the word ``freedom'' in tax
freedom day implies something to celebrate, working Americans have
absolutely nothing to celebrate when it comes to their taxes.
Tax freedom day falls a full day later this year than it did in 1996,
meaning taxpayers must work 128 days before they can count a single
penny of their salary as their own.
Of those days, 44 will be spent paying personal income taxes; 38 days
will be spent paying payroll taxes; sales and excise taxes, 18 days;
property taxes, 12 days; corporate income taxes, 13 days; also 3 days
will be spent paying miscellaneous taxes.
When you total all that up, that is 128 days, Mr. President, 128 days
in which the American people spend imprisoned by their own tax system.
If the cost of complying with the tax system itself were included in
the calculations, tax freedom day would be pushed forward another 13
days.
The tax burden on middle-class Americans is rising rapidly. Taxpayers
are now working an entire week longer to pay off their taxes than they
were when President Clinton first took office in 1993. That sounds like
Government getting larger and more expensive, not the ``era of big
Government is over.'' If you calculate the tax load in hours and
minutes, instead of days, Americans spend fully 2 hours and 49 minutes
of each 8-hour workday laboring to pay their taxes.
That is a great deal more than the 1 hour, 40 minutes it takes to pay
for their family's food, clothing, and shelter.
May 9 marks the arrival of Tax Freedom Day for the average State.
Unfortunately for taxpayers in my home State, Minnesota ranks well
above average in the tax burden my constituents are forced to bear. In
1997, Tax Freedom Day will not arrive in Minnesota until 4 days later,
until May 13. Only five other States and the District of Columbia mark
Tax Freedom Day as late or later than we do.
There has never been a time in our history when the need for tax
relief was so obvious and so great. Let us make 1997 the year we enact
the $500 per-child tax credit. Let us make 1997 the year we kill off
the death tax. Let us make 1997 the year we promote savings and
investment by cutting capital gains. Let us not let another Tax Day go
by before we deliver on our promise of substantial relief for the
American taxpayers.
Mr. President, it is not a normal practice of mine to quote poetry on
the Senate floor. I prefer to leave the rhymes to those Senators who
possess a more poetic nature than I. But because this is Tax Day, I
would like to share the closing lines of a poem by Ogden Nash and then
follow it up with a final comment.
``Abracadabra, thus we learn
The more you create, the less you earn.
The less you earn, the more you're given,
The less you lead, the more you're driven,
The more destroyed, the more they feed,
The more you pay, the more they need,
The more you earn, the less you keep,
And now I lay me down to sleep.
I pray the Lord my soul to take
If the tax-collector hasn't got it before I wake.''
It was 1935 when Mr. Nash first published his poem warning of the
dangers of a tax system run amuck. At that time in our history, the
Federal tax rate was less than four percent.
Now, I cannot imagine what kind of poem Mr. Nash would write today,
at a time when Washington demands an average 28 percent of our income
in taxes. And even if I could imagine what Mr. Nash would write I am
not sure I would be allowed to read it on the floor of the Senate.
Mr. WYDEN. Mr. President, I ask unanimous consent to speak for 15
minutes as in morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.
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