[Congressional Record Volume 143, Number 91 (Wednesday, June 25, 1997)]
[House]
[Page H4611]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  TAX CUTS FOR MIDDLE CLASS AMERICANS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Maryland [Mr. Ehrlich] is recognized for 5 minutes.
  Mr. EHRLICH. Mr. Speaker, I rise today in support of the Taxpayers 
Relief Act and to talk about the class envy and the class warfare and 
the strategies that the American people and the producers in this 
country are absolutely sick of. I want to talk about it in the context 
of three particular taxes that we will be debating tomorrow in great 
detail.
  First the capital gains tax, Mr. Speaker. Cutting capital gains helps 
middle-class people, clear and simple. People who pay capital gains 
need the ability to understand that they should not be penalized for 
being successful in this society, Mr. Speaker.
  Consider these important facts from the Congressional Budget Office: 
About half of all families in this country own assets such as stocks, 
bonds, real estate, and businesses that generate capital gains. The 
elderly, and this is bad news for the generational warfare types in 
this House, the elderly realize a disproportionate amount of capital 
gains.
  In 1993, those over 65 in this country realized 40 percent of all 
capital gains, although they make up just 12 percent of the population. 
They also paid 18 percent of all capital gains taxes. A Joint Economic 
Committee report in 1993 found that one-third of all taxpayers 
reporting capital gains had incomes of less than $30,000.
  Why do folks in this country, who love to punish producers, who love 
to punish people who undertake risk in this society, why do they want 
to not index capital gains? Inflation is an unfair tax on producers in 
this country. To fight the indexation of capital gains, in my view, is 
grossly unfair.
  The nonrefundable tax credit we have heard other speakers tonight 
talk about, this aspect of the child tax credit. Democrats claim the 
Ways and Means bill is unfair because it offers a nonrefundable credit 
to middle-income families. Over 18 million low-income families in this 
country receive a tax break already. It is called the earned income tax 
credit, and we spend $26 billion on that earned income tax credit.
  Now folks on the other side of the aisle say that low-income workers 
should receive another tax break because they pay FICA taxes. And I 
hope the American people are listening to this argument tonight and 
tomorrow and in the weeks ahead. Payroll taxes are different from 
income taxes.
  Income taxes, which low-income workers do not pay because of the 
earned-income tax credit, go to general revenues and are used for 
Government programs, for general revenue purposes. FICA taxes are 
earmarked for Social Security and Medicare. Revenues from FICA taxes go 
to the Social Security Trust Fund and are used to pay benefits under 
Medicare and Social Security.
  Today, low-income workers, like all workers, are required to 
contribute to the Social Security system. They will receive all of what 
they pay into that system and more in the years ahead. And it is a very 
interesting difference between the parties when it comes to fairness, 
this concept of fairness.
  The Democrats seem to define fairness as follows: Middle-income 
earners, in addition to financing the earned-income tax credit, should 
also subsidize the retirement and health benefits of low-income 
workers. In essence, they say it is unfair for the working poor to 
contribute to the Social Security and Medicare system which will return 
benefits to them when they retire.
  Those of us on this side of the aisle define fairness as follows: All 
working Americans with kids deserve a tax break. Middle-income workers 
should not be responsible for subsidizing the payroll taxes paid by 
low-income workers. We all benefit from Social Security and Medicare, 
and we all need to contribute our fair share.
  Last, the great class warfare attack of 1997, the alternative minimum 
tax. The AMT passed originally in 1986, Mr. Speaker, as part of the Tax 
Reform Act of 1986, with all good intentions to make sure that truly 
individuals wealthy and corporations could not avoid paying taxes, and 
I am fully in support of that have goal.
  But I go to the factories, as many of us do, we talk to the small 
business people in the capital-intensive industries in this country, 
and they have got a problem with the alternative minimum tax. Like so 
many provisions of the Tax Code, the AMT has produced unintended 
consequences.
  Let us be clear what the bill of the Committee on Ways and Means does 
not do in the way of alternative minimum tax. Under current law, the 
alternative minimum tax treats investment in business machinery and 
equipment as income rather than as an expense.
  Under the proposal, it does not exempt the wealthy from paying taxes, 
it does not exempt companies from paying taxes. No companies with 
taxable income will be able to avoid paying taxes. We should all 
recognize this simple fact. Enough of class warfare. Enough of class 
envy. Let us go give a break to the producers and middle class of this 
country.

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