[Congressional Record Volume 143, Number 84 (Tuesday, June 17, 1997)]
[Extensions of Remarks]
[Page E1221]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E1221]]

                         D.C. FLAT FEDERAL TAX

                                 ______
                                 

                           HON. NEWT GINGRICH

                               of georgia

                    in the house of representatives

                         Tuesday, June 17, 1997

  Mr. GINGRICH. Mr. Speaker, I wish to recommend the following 
editorial to my colleagues, entitled ``Fixing a Flat,'' which appeared 
in the May 19, 1997, Wall Street Journal. I commend the Congresswoman 
for fighting against the District of Columbia's destructively high tax 
policies and for a pro-growth, pro-investment flat tax:

                             Fixing a Flat

       Summer's almost here, which means soon tourists will be 
     pouring into Washington, D.C., to see the sights in their 
     beloved capital city, a municipality so broke, so inept, so 
     seemingly beyond hope that the financial control board that 
     oversees its affairs is weighing a plan to appoint a city 
     manager and largely supplant Mayor Marion Barry. There has to 
     be a better way to save the capital, and believe it or not, 
     some of the attending politicians may have hit on an answer: 
     a flat 15% federal income tax and elimination of all capital 
     gains taxes in the District of Columbia.
       It's closer to reality than you might imagine. Last week, 
     Senate Majority Leader Trent Lott won rousing cheers from a 
     crowd of D.C. residents when he and four other Senators 
     embraced a flat tax sponsored by Eleanor Holmes Norton, the 
     District's Democratic Delegate.
       The Norton plan would levy a flat 15% federal tax on all 
     bona fide District residents. The first $25,000 of income 
     would be exempt for single filers and the first $30,000 for 
     married couples. Her plan would zero out capital gains taxes 
     on investments in the District made by residents. Senator 
     Lott would go further: no residency requirement for investors 
     and he'd add a $5,000 tax credit for first-time home buyers 
     to encourage a return of the middle-class. Since 1950, the 
     District's population has plummeted to less than 520,000 from 
     800,000.
       Ms. Norton says that the combined support of Senator Lott 
     and Speaker Newt Gingrich has convinced her that ``there is 
     going to be some configuration of tax cuts for District 
     residents'' this year. She has other powerful allies, 
     including Democratic Senator Joe Lieberman and GOP Senators 
     Connie Mack and Sam Brownback.
       No one pretends that a new tax regime will solve all the 
     District's problems, but Delegate Norton says a dramatic 
     confidence-building measure is needed to stop the exodus. She 
     says her tax plan has ``united black, whites and Hispanics'' 
     and in every part of the city ``the enthusiasm and the chorus 
     is the same: Do it and we'll stay.''
       The opposition to a flat tax for D.C. comes in two forms. 
     Some claim it wouldn't spur economic growth and that rising 
     property values will create a zero-sum housing crisis. 
     ``There are not enough homes for the poor now,'' says liberal 
     activist Mark Thompson. ``Where are they going to live when 
     all these people start coming back in the city?'' As far as 
     we can see, every city with the exception of rent-controlled 
     New York City manages to build housing for a variety of 
     incomes. A tax-liberated D.C. would likely see an explosive 
     growth in construction.
       Others object that a D.C. flat tax is unfair to nearby 
     suburbs and other states; D.C. residents get a tax break 
     while other Americans endure combined marginal tax rates of 
     more than 40%. A fair point, we suppose, but hardly cause to 
     condemn the District to economic and social collapse. And if 
     it succeeded, the idea would spread rapidly elsewhere.
       That, of course, is precisely why it's believed President 
     Clinton will persist in his opposition to Delegate Norton's 
     flat tax. The opposition of old-line Democratic constituency 
     groups to any idea they didn't dream up 25 years ago is 
     utterly pro-forma by now. Delegate Norton thinks the first 
     step is to get her bill onto the President's desk. Senator 
     Lott seems to agree. Keep pushing.

     

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