[Congressional Record Volume 143, Number 92 (Thursday, June 26, 1997)]
[House]
[Pages H4820-H4821]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           NEW TAX PLAN DOES NOT FULFILL BARGAIN WITH AMERICA

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Texas [Ms. Jackson-Lee] is recognized for 5 minutes.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, the reason why it is difficult 
to be at this podium is because I thought it was extremely important to 
take a moment to explain to the American people just what occurred here 
today.
  Mr. Speaker, first of all, it is interesting that this debate began 
more than 2 years ago with a claim to the American people that the real 
focus would be on changing radically the tax system. Whether it was on 
a consumption tax or a flat tax, the key was simplification and 
equality. At least that is what we thought the debate was all about.
  But, Mr. Speaker, in the course of dealing with the political winds, 
today we voted on a tax bill that is unequal and does not hold its 
bargain and its partnership with the American people. First of all, let 
me share that included in these documents will be the so-called changes 
that were made in the tax bill. It is recognized that, yes, there were 
some tax cuts made by the Republicans, but it also is accurate that 
that tax cut does not impact the bulk of working Americans.
  Mr. Speaker, there was some representation about the Joint Committee 
on Taxation, holding that body, bipartisan that it is supposed to be, 
as the standard bearer to suggest that the Republican tax bill does 
meet the requirements of working Americans.
  They do seem to suggest that those making between $20,000 and $75,000 
would get 71 percent of the tax cuts under the Republican bills, and 
those making $75,000 to $100,000, 16 percent. But yet the Treasury 
Department calculations of that same bill indicate the real facts.
  Under that bill, those making 30,000 to 75,000, the bill that was 
just passed, get a mere 19 percent. Nineteen percent of those who make 
that amount of money would be able to get tax cuts under the Republican 
bill. Mr. Speaker, $75,000 to 100,000, if that is a taxpayer's 
earnings, only 13 percent would be able to come under the Republican 
bill. But if they made over 100,000 up to 200,000, 32 percent would 
benefit. And if they made over 200,000-plus, 31 percent would benefit.
  Mr. Speaker, let me simply say that it is not only those of us who 
voted against the Republican bill that acknowledge that it is skewed to 
the high-income individuals in this country who have not asked for a 
tax cut. The Wall Street Journal on Thursday, June 26 said, ``According 
to more reliable Treasury estimates, when the bill is fully effective, 
the top 1 percent of taxpayers would get 19 percent of the benefits 
under the House bill. Conversely, the bottom three-fifths of families 
get only 12 percent.''
  This same article notes that the Republican-run Congressional Tax 
Committee, the very tax committee that says those who make 20,000 to 
75,000 will get 71 percent, in this article, the Wall Street Journal 
says, not necessarily a captive of the so-called Democratic liberals, 
says, ``The Republican-run congressional tax committee has put out 
phony estimates of both the distribution effects and costs only 
calculating the first 5 years. The bills are back-loaded so that the 
tax cuts for capital gains, estate taxes, and new retirement accounts 
explode in 5 to 10 years.''
  Mr. Speaker, we went to the floor today and we called on God. Some of 
us, those in the Republican side, wanted to claim John F. Kennedy. 
Well, let me cite the last time we made major tax cuts: Under the 
Reagan administration in 1981. That skewing of tax cuts resulted in the 
trillion dollar deficit that we face in this country. Many would argue 
that it was tax and spend.
  We all understand that there is a connection between taxation and 
spending. But, yet, my colleagues on the other side of the aisle want 
to argue against the budget plan of 1993. Mr. Speaker, I was not here; 
that offered to the American people today the lowest deficit in our 
history, some $50 billion and going down.
  So now we have heard the American people. But we responded to the 
trillion dollar debt created by the Reagan tax plan giving all of it to 
the rich by creating a difficult vote in 1993 that, yes, raised some of 
the taxes. But, Mr. Speaker, it brought the deficit down. And then the 
American people spoke again and said they wanted a balanced budget. I 
have voted for a balanced budget. But in saying that, they said 
something else.
  Mr. Speaker, if I can add these in the record, let me say as I close, 
they said something else. They said they believe in the Democratic tax 
plan because it stood for working Americans, those making under 
$75,000. This is what my colleagues voted for: confusion and one-
sidedness. I hope we will get this straightened out.
  Mr. Speaker, I include the following for the Record:
  Forty-five percent of the children in Texas do not get the child 
credit under the Republican bill. That's more than 3.3 million 
children.

             [From the Wall Street Journal, June 26, 1997]

                 This Republican Tax-Cut Dog Won't Hunt

                          (By Albert R. Hunt)

       ``Taxes are the killing fields for Democrats,'' Grover 
     Norquist, the irrepressible conservative activist, predicted 
     to Time magazine this week.
       After the government shutdown and minimum wage defeats of 
     the last Congress and the disaster relief debacle of last 
     month, the GOP hopes that finally the political game is being 
     played on their turf. They're living in yesteryear.
       The case for any tax cut in this booming economy is 
     dubious. If President Clinton gets his way, precious few 
     additional kids are going to get college education because of 
     this tax bill. If the Republicans get their way, the tax bill 
     is going to add precious few jobs.
       Moreover, voters should feel duped by this debate. Last 
     year, the Republicans stressed a simpler and flatter tax 
     code; their proposals create more special preferences and a 
     more complicated code. In 1996, the Democrats emphasized 
     equity; whatever emerges, however, will be skewed heavily to 
     upper-income individuals and exacerbate the income gap 
     between rich and poor.
       Thus the battle over the size and shape of tax cuts over 
     the next month is about politics. The heart of the GOP tax 
     cut effort--capital gains and estate tax relief--resonates 
     with campaign contributors, not with voters. When it comes to 
     the specific proposals before Congress today, according to 
     this past weekend's Wall Street Journal/NBC News poll, 
     Americans side with the Democrats by a lopsided 2-to-1 
     margin.
       The House and Senate both likely will pass separate 
     Republican-crafted bills this week. Both bills, however, are 
     so bad--a bonanza for the affluent, crumbs for the working 
     class and eventually costly--that President Clinton will 
     enjoy enormous leverage in the negotiations over distribution 
     and costs. The Republican-run congressional tax committee has 
     put out phony estimates of both the distribution effects and 
     the costs, only calculating the first five years; the bills 
     are back-loaded so that tax cuts for capital gains, estate 
     taxes and new retirement accounts explode in five to 10 
     years.
       According to more reliable Treasury estimates, when the 
     bill is fully effective, the top 1% of taxpayers would get 
     19.3% of the benefits under the House bill and 13.3% under 
     the Senate version. Conversely, the bottom three-fifths of 
     families get only about 12% in both measures. The liberal 
     Center on Budget and Policy Priorities argues that the 
     Treasury underestimates the case; it calculates that under 
     the House Republican tax and spending measures, the poorest 
     20% of the

[[Page H4821]]

     population would actually lose income while the wealthiest 1% 
     ultimately would get an annual average tax cut of $27,155.
       Under this so-called balanced-budget agreement, the net tax 
     cuts can't exceed $250 billion over the next 10 years. But 
     with the back-loading in the following 10 years, the House 
     bill would cost between $650 billion and $700 billion, while 
     the Senate version would cost around $600 billion.
       Even worse, in order to shoehorn in tax breaks for their 
     wealthier constituents, the Republican bills shamefully 
     shortchange the working poor. Conservatives have long argued 
     that the tax code shouldn't be used to redistribute income. 
     Yet that's exactly what these Republican bill do.
       A critical issue is whether the politically popular, if 
     economically questionable, $500 child credit goes to the 
     working poor. Last week House Speaker Newt Gingrich charged 
     that the Democrats' efforts to give more to the working poor 
     amounted to a ``welfare'' sop.
       Republicans would deny the child credit to workers who 
     already are receiving the earned income tax credit. They 
     argue that since the EITC wipes out income tax liabilities 
     for these people, they don't deserve the credit.
       The real reason they want to deny these taxpayers the 
     credit is that they want to use the money for tax breaks on 
     capital gains, estates and retirement accounts. Both the 
     GOP's Contract With America in 1994 and the tax bill that 
     Senate Republican leader Trent Lott introduced earlier this 
     year proposed to give the child care credit to EITC 
     beneficiaries. The House bill would deny this to six million 
     kids and the Senate bill would deny it to four million in 
     this category. Moreover, ever since the EITC was enacted in 
     1975, its purpose was to offset not only income taxes but the 
     regressive payroll taxes that all of these recipients pay; 
     until it became a budgetary inconvenience, most Republicans 
     supported that notion.
       This is best illustrated by a real situation. A starting 
     police officer in Gwinnett County, GA.--coincidentally part 
     of Speaker Gingrich's district--is paid $23,078 a year. If 
     his family has two kids, it gets a $1,668 earned income tax 
     credit, which offsets its $675 in federal taxes and yields a 
     check for $993. But that family pays $1,760 in payroll taxes 
     (most economists would also add the employer's share of 
     payroll taxes too) and another $354 in federal excise taxes. 
     Thus, even after the EITC, this police officer's family's 
     out-of-pocket federal taxes would be at least $1,121 and in 
     reality more like $2,881.
       Mr. Gingrich and company apparently believe giving that 
     young police officer and his family the child credit is 
     welfare. In truth, these are working people who most need 
     help. The bottom line in the House GOP tax measure: Bill 
     Gates would get capital gains and estate tax reductions and 
     even a new IRA provision that would let him take a $4,000 tax 
     break for educational expenses for his kids, but a $23,000-a-
     year rookie cop would be denied a tax credit for his kids.
       The Clinton administration is calculating how to reshape 
     the tax legislation in the next month and may set some 
     benchmarks for what's unacceptable. One possibility under 
     consideration is that the cost of the tax cuts in the second 
     10 years couldn't exceed $500 billion, about halfway between 
     the House Democratic and Republican measures. And top 
     administration officials say that at least 40% of the tax-cut 
     benefits should go to the bottom 60% of taxpayers. That would 
     still be regressive but much less onerous.
       Republicans hope--and more than a few Democrats fear--that 
     if the president gets his college tuition tax breaks, he'll 
     cave on the other issues. Some also note that many of those 
     Lincoln bedroom guests and campaign contributors of 1996 
     would do very well by these tax bills.
       But congressional Republicans are notorious in misjudging 
     Bill Clinton if the politics are on his side. In this fight, 
     that's where they are.

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