[Congressional Record Volume 143, Number 101 (Wednesday, July 16, 1997)]
[House]
[Pages H5386-H5393]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        THE REPUBLICAN TAX PLAN

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from Missouri [Mr. Hulshof] is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. HULSHOF. Mr. Speaker, this week there is much discussion, there 
is much speculation about the negotiations that are ongoing between the 
President and congressional leaders in the House and Senate. Hanging in 
the balance, Mr. Speaker, are the prospects of a bipartisan balanced 
budget plan. Hanging in the balance are the prospects of staving off 
the impending bankruptcy for Medicare, our health care system for 
senior citizens. And hanging in the balance through these negotiations 
are the prospects for permanent tax relief for men and women all across 
this country, essentially whether or not we want to let moms and dads 
across this great land keep more of what they earn.
  With the recent debate, Mr. Speaker, about tax relief centering more 
and more around detailed numbers and percentages and Treasury 
Department calculations, perhaps I should say Treasury Department 
miscalculations, it is easy to lose sight of what our tax relief 
package is all about, what it means to working families who have not 
had tax relief in nearly two decades.
  I know that I am but a single voice crying out on behalf of hard-
working men and women across this country, but I hope to include the 
pleas and the statements of those who came to Capitol Hill. Some 
working mothers in fact who came to Capitol Hill this month who quickly 
reminded us, gave us a reality check that tax relief is more than just 
abstract numbers. It is about take-home pay. It is about purchasing 
power. It is about freedom to make choices in raising a family.
  For example, it is about Debra from Dale City, VA. Debra is the 
divorced mother of a 17-year-old, an 11-year-old and a 10-year-old. 
Keeping more of her money means being able to help her three children 
reach their dreams. The dream of Debra's college-bound daughter is to 
attend college and become a doctor. For Debra's middle daughter, she 
aspires to be a teacher. And although Debra is determined to help bring 
her daughters' dreams to fulfillment, it is not going to be an easy 
task.
  Mr. Speaker, the House-passed version of the Taxpayer Relief Act a 
couple of weeks ago will make things a little bit easier for Debra and 
for her family. With the child and the education tax credits, for 
instance, Debra will get to keep more of what she earns, making it 
easier to send her kids to college and to fulfill their dreams. In 
fact, just with the child tax credit, the Republican version of the 
child tax credit, in calendar year 1998 Debra will get to keep $800 
more of her own money next year and $1,000 more in the following years. 
She can save for her kids' education, putting money way in a dream 
savings account.
  Our House plan also allows Debra to participate in education 
initiatives like the education credit for college deduction which helps 
defray the expenses, the out-of-pocket expenses for Debra's college age 
or college bound kids for tuition, for books and for fees.
  That is what this tax relief is about. It is not about numbers; it is 
about real people. It is about Don and Carnetta from my home town of 
Columbia. Don and Carnetta are both in their senior years. Don recently 
retired from a career at Wal-Mart. Part of the compensation package 
that Don had during his career at Wal-Mart was that he was given shares 
of Wal-Mart stock as incentive to build for his pension, to put his 
nest egg away for he and Carnetta. He fervently hopes, anxiously is 
awaiting whether or not the President will sign our tax package into 
law because what it means to 2 million seniors that are in the 15-
percent income tax bracket across this country is a capital gains cut 
from the 28-percent margin all the way down to 10 percent, if the 
President would enact and sign into law this much-needed relief effort. 
It is not about numbers. It is about people.
  I happened to receive a letter in the last 2 weeks that I want to 
paraphrase just a bit, Mr. Speaker, if I can. It says, ``Dear Mr. 
Hulshof, I am a star-ranked scout in Troop 50. I will be a 7th grader 
at St. Peter's in Fulton, MO. I am 12 years old. I am in favor of the 
tax cut,'' says Michael, ``because if taxes are cut, people will have 
more money. When they have more money, they spend or invest more. Then 
if they spend more,'' Michael writes, ``more needs to be produced. This 
increased demand means more people are needed to produce and then 
employment goes up. Increased employment means people are working more 
and paying more taxes which increases revenue to the Government, which 
means fewer people collect entitlements from the government resulting 
in less expense to Government.''
  Michael goes on to write, keep in mind, Mr. Speaker, Michael is a 7th 
grader, 12 years old at St. Peter's in Fulton, MO. Michael says, 
``Every time I hear the Democrats or certain members of the press talk 
about tax cuts, they say, how will the Government pay for the tax cut? 
But they never ask how the employed taxpayers are going to pay for the 
tax increases. Thank you for all the hard work you do. Thanks for 
considering my input.'' Signed, Michael.
  Well, Mr. Speaker, I think sometimes suffer ye unto the little 
children and out of the mouths of babes sometimes come pretty poignant 
points. I think Michael has somehow grasped something that we here in 
Washington from time to time forget. It is not our money. It is the 
American people's money. We are not giving it back to them. We are 
letting people keep it in the first place.
  For instance, in my congressional district, in the 9th Congressional 
District of Missouri, if the President will sign into law the 
Republican-passed tax relief package, the child credit alone, there are 
84,000 children in the 9th Congressional District of Missouri whose 
parents will qualify for the $500 per child tax credit. What that means 
is nearly $39 million get to stay in the 9th District of Missouri and 
do not have to be collected by the Government and sent here to 
Washington where oftentimes we spend it very unwisely. This is just one 
way that this tax relief package will help all Americans. It is not 
about numbers. It is about people.
  I see my friend and colleague from Missouri, from the 7th 
Congressional District of Missouri, is in the well of the House.

[[Page H5387]]

  Mr. Speaker, I yield to the gentleman from Missouri [Mr. Blunt].
  Mr. BLUNT. Mr. Speaker, I thank the gentleman for yielding to me.
  I saw that same report, I think it was from the Heritage Foundation, 
about children in our districts. I was amazed that in the 7th District 
in southwest Missouri, the southwest corner of Missouri, 74,533 
children, by that moment's count, and there are probably a few more 
children than that now that will benefit, would benefit, 74,533, over 
$34 million in one year alone will go back into our economy because of 
just the $500 per child tax credit. That does not count the other tax 
benefits in our economy and our district.

  We do not understand, I think, how this process works as well as 
Michael, who you were referring to from St. Peter's at Fulton, a 7th 
grader who already understands that taking this money off of tax rolls 
may not reduce taxes because things happen in the economy when you let 
people keep their money. We constantly want to talk here in the 
Congress about giving people money, giving them a tax break. What we 
are really just doing is we are deciding not to take as much of their 
money. It is their money. They work for it.
  We have an obligation as Members of Congress to do all we can to keep 
the money that working families have in their family checking account, 
in their family savings account, in their savings account for college, 
in their savings account to buy a home or buy a new car. We have an 
obligation to manage their money like they have to manage their money, 
where every penny has to count.
  I think with this kind of new responsibility of leaving money with 
families, we are understanding again that they can spend their money on 
their behalf better than we can. Forty-one million children will 
benefit from the tax cut, the $500-per-child tax credit that the House 
has sent over to the Senate, 41 million children.
  One of the things we did in our tax bill that I am particularly proud 
of is we expanded the children that would benefit. In the original 
package that came down from the President, you only got that tax credit 
until kids were 12. My children are beyond the range of this tax credit 
right now. They are 26 and 24 and 21. I do not recall that they got a 
whole lot less expensive when they moved from 12 to 13. In fact it 
might have been just the opposite. And we are covering millions more 
children than was originally proposed. Millions of families will 
benefit that would not have benefited otherwise.
  Children born this year, between now and the time of their 18th 
birthday their family would have a $10,309 tax benefit to go toward 
college, to go toward expenses while they are growing up, $10,309 per 
child. You have got three kids in your family, that is $31,000 which 
you have over the life of those children between the time they are born 
and the time that they are 18, that you otherwise would not have, 
$31,000.
  We heard earlier this evening here on the House floor about people 
who would get a benefit from this tax break. The tax break we have sent 
for the mother with a daughter who is 14, a son who is 16, she gets 
$1,000, who is working, she gets a $1,000 tax break. That is almost 
$100 a month. Under the President's proposal we want to remember that 
that mother may possibly, that single mother with the 14-year-old and 
the 16-year-old and all kinds of expenses and all kinds of life stress 
got no break because those kids were over 12. And so this is a 
significant thing for American families.
  The first tax cut in 16 years. How great that the first tax cut in 16 
years would have such a focus on families. We have a lot of ways in our 
country to say families either are not important or they are important. 
And in our welfare policies and our tax policies we really can take 
some massive steps to say again to Americans, young Americans and 
Americans who already have families, that this Government and this 
country value families.
  We think families are important, and that is why the family tax 
credit for kids up to their 18th birthday and then help for college 
beyond that is such a focal point of what we are doing here. I want to 
say to the gentleman, I think this focus on families is such an 
incredibly important focus, this first tax break in 16 years. We are 
going to do better than that. If we did not do better than that, this 
would be the last tax break, based on our history, for that child born 
this year who is going to save $10,000 in money they send to the 
Government by the time they are 18. If we go back to the last 16 years 
of history, they would not have any other tax relief but this.
  We are going to be looking I think in the future for what we can do 
to help families in greater ways, but a cornerstone of this Republican 
tax package that we got Democrats in the House voting for, too, so it 
is really a bipartisan tax package that we have sent to the Senate, the 
cornerstone is a cornerstone that says families matter and we are not 
going to take money from families because we know families can spend 
their money better than the Government can spend money on their behalf.
  Mr. HULSHOF. Mr. Speaker, I appreciate the gentleman's comments. The 
fact is that even way back in the early part of this Congress, the 
first couple months as the negotiations were just beginning, as they 
were trying to hammer out this budget proposal, to establish the 
parameters of the balanced budget agreement, the numbers we were 
provided, an $85 billion net tax cut, a $125 billion gross tax relief 
over 5 years, with that amount of money then we were required in our 
committee on the Committee on Ways and Means then to fashion some sort 
of tax relief. This child credit is an income tax credit.
  I know there has been a lot of discussion about whether or not we 
should expand this income tax credit, that is a credit for those 
families that pay Federal income taxes, whether or not we should expand 
that income tax credit to other families who pay no income taxes. I 
know the gentleman from South Dakota who joins us has been very 
outspoken on this point.
  Mr. Speaker, I yield to the gentleman from South Dakota {Mr. Thune].
  Mr. THUNE. Mr. Speaker, I thank the gentleman from Missouri. I would 
simply say that in the context of this debate this evening, that this 
is in basketball what you would think of as the great three point play. 
It is historic. It is exciting. It is a win-win for everybody.
  When you look at what is happening, for the first time in 30 years we 
are balancing the country's budget. For the first time in 16 years we 
are bringing tax relief to working men and women in America. And for 
the next 10 years we are restoring and saving the Medicare system, an 
important program on which many people in this country rely. Leave it 
to the liberals, leave it to liberals to try and rain on the parade.

                              {time}  2200

  But this is historic, and the people of this country should be 
jumping up and down for what we have accomplished here in the last few 
weeks and that we are in the midst of trying to bring to finality in 
the next couple of weeks. It is good for South Dakota, it is for 
America, and the folks the gentleman represents in Missouri.
  And when we look at all the things being said on the other side of 
the aisle, they have been hacking away again at the old same stilted 
and stale class warfare argument that has been drug out time and time 
again to create this perception of a bunch of haves and have-nots. But 
that is not what this is about. This debate is about improving the 
quality of life for all Americans.
  Now, it has to be an honest debate, and the problem we are running 
into I think in this Chamber, as I have listened to the debate since 
this subject got underway, is that we are not having an honest debate 
because some people are using different numbers, phony bookkeeping.
  We have heard a lot of claims about what the Treasury says about 
income, and our friend from Colorado, who is here, is going to I think 
point out very quickly here how we can find out if we are rich. But the 
Treasury has been suggesting that this is skewed towards people in the 
upper income levels because they have used a calculation of income 
which is very clearly phony.
  I want to point out how they get at that, because the Treasury 
Department says there are 21.2 million families in America who make 
more than $75,000. Now that is double, double the number

[[Page H5388]]

that the census department uses. They have doubled the number. The 
reason is they add in all kinds of things, like pension funds, even 
unreported income.
  They assume that there are dishonest people out there who are not 
reporting income. So when they factor in their calculation for income, 
they include unreported income.
  But the biggest winner of all is imputed rental income. Think about 
this. For those of us who live in houses, the last time that I talked 
to somebody when they paid their rent, they thought of it as an 
expense, not as income. The Treasury Department is suggesting that 
people who own a home, if they rented it out, would have income from 
that, and so they factor that in as part of their income.
  Now, what that tells me is if we want to be really, really rich, we 
should just keep buying a bigger house and the Treasury will impute 
more and more income to us.
  So they are using this false calculation on income to skew these 
numbers and to skew this debate and to create the discussion of haves 
and the have-nots and class warfare. I think that is counterproductive 
to where we need to go in terms of the policy in this country.
  Mr. HULSHOF. Mr. Speaker, reclaiming my time for a second on that 
point. I find it somewhat ironic that the administration, through this 
debate and through these negotiations, this conference to balance the 
budget, to save Medicare and provide tax relief, they will accept the 
Census Bureau's numbers of adjusted gross income when it comes to the 
child credit, that is for phasing out the child credit for the upper 
income families. They will also accept the Census Bureau's numbers when 
it comes to those individuals that are seeking a modest reduction in 
capital gains. They are willing to accept and embrace that number, that 
very bottom line number when it comes to who is unable to qualify. But 
then when it comes to this distribution table, and when they start to 
skew the results with who is benefiting from this tax package as a 
whole, then suddenly they push away the adjusted gross income, the 1040 
number that the gentleman and I fill out on our tax forms, and suddenly 
go to this family economic income model.
  Mr. THUNE. The gentleman is exactly right. It is a classic case of 
people trying to use the numbers to get the result that they want to 
get. When it is convenient for them, they will use the census numbers, 
yes.
  The point simply is when we hear this debate, and the American people 
who are listening to this debate about tax relief, it is important for 
them to know that this sort of shenanigan is going on and that this 
phony bookkeeping, this funky accounting system being used by the 
Treasury Department is totally unfair in terms of its characterization 
of people in this country and how the tax relief is distributed. I 
think that that is a point that needs to be made over and over and over 
again.
  But I would simply say this evening that we are moving in the right 
direction. We are winning this debate. And my colleagues who are on the 
floor today, most of them came here like I did, because we were 
interested in things like balancing the budget, lowering taxes and 
making government smaller, and saving Medicare. Look at how far we have 
moved this administration.
  The reason the President's approval ratings are where they are today 
is because he is operating on our agenda. The things he is doing, 
talking about balancing the budget and lowering taxes, are things that 
we believe in and are values that we share.
  I think it does come down to a basic fundamental value that all of us 
here in the Chamber tonight share, and that is this, that we believe 
that individuals are in a better position to make decisions about their 
future when given the freedom and the opportunity to do so than is the 
government.
  We believe as a fundamental premise as well that bigger is not 
necessarily better when it comes to government. We want a government 
that is responsive and effective, and we also want to make sure the 
people in this country who work hard get to keep more of what they 
earn.
  South Dakota is filled with a lot of hard-working people. We have a 
lot of farmers, small business people. And as I travel, and I put on 
2,200 miles in South Dakota over the 4th of July recess driving across 
my State, I never once heard somebody say this is about the rich and 
the poor, this is a class warfare argument that is trying to be used by 
their side. Their questions are very simple. They are, are we going to 
pass estate tax relief so we can keep the family farm; are we going to 
pass estate tax relief so we can keep the small business in the family? 
Are we going to do something in the area of capital gains for people 
who are in the farming business and small businesses, the people who 
comprise the rich heritage that is my State of South Dakota?
  Those are the kinds of things that they are interested in, and those 
are the kinds of things that we are interested in trying to achieve for 
them so that we can encourage the very best in our society; things like 
self-sufficiency and independence and family and thrift and hard work.
  We have a work ethic in South Dakota. People understand when they 
work hard they will see the fruits of their investment, and they do not 
want the heavy hands of government interfering and taking that 
away from them. So this debate is really about who do we want to 
control our future; do we want that control in the hands of individuals 
and families and people in their living rooms and on Main Street making 
their decisions about their family farms, or do we want the government 
to do it?

  That, on a fundamental level, is what we are talking about in this 
debate, and that is why I believe we are winning the debate because 
what we are saying is resonating with the American people.
  Mr. HULSHOF. I appreciate the gentleman's comments. And before we 
leave the part of the discussion about how the administration, 
specifically the U.S. Treasury, calculates one's income to determine 
whether one is well off or not, I see my friend from Colorado is here. 
There is some chart next to him, and I would be happy to yield to the 
gentleman from Colorado, [Mr. Bob Schaffer].
  Mr. BOB SCHAFFER of Colorado. Mr. Speaker, I thank the gentleman for 
yielding to me.
  This chart on my right is one I have used on the floor here on a 
number of occasions. I usually use it in a way that pokes fun at this 
whole notion of the Treasury Department inflating the actual income of 
the American family so that our tax cuts for middle-class families 
somehow appear to be tax cuts for the rich.
  That is the claim that the Democrats frequently make here on the 
floor. It is the claim we see coming out of the White House. So I made 
this chart really to show the absurdity, I think, of this family 
economic income definition that they use. And I made this look like one 
of those cheesy get-rich-quick ads, or get-rich-quick schemes. And it 
simply says that we can learn the amazing secrets of the White House 
and get rich quick if we call the Treasury Department now, and the 
number, and this really is the Treasury Department's phone number, 202-
622-0120. And I tell folks that operators are standing by.
  Well, the reason I ask people to do this is because when I tell 
people back home how the Treasury Department has manipulated the 
numbers to make a $45,000 a year family, a family earning $45,000 a 
year all of a sudden become rich, in the rich category, people do not 
believe it. I walk them through the numbers and I ask them to call this 
number to find out how the Federal Government, the Democrats, the 
liberals here in Washington, believe that an average family gets rich 
quick overnight only when we talk about tax relief here on the floor of 
the House.
  The gentleman from South Dakota mentioned the biggest way they do 
this, and let me just kind of walk everybody through this for a moment.
  If we take an average family making, let us say, for example, $45,000 
a year, this is their gross income. This is before they take out all of 
their payroll taxes and other sorts of deductions that they have on 
their paycheck. And they add to this something called imputed rent, 
that the gentleman from South Dakota mentioned.
  Now, imputed rent is not anything that we receive. It is not cash we 
have. It is not really income tax. What imputed rent is is the rent 
that an individual could receive if they moved out

[[Page H5389]]

of their house and rented their home to someone else.
  Now, the Treasury Department really did not consider where an 
individual might live, whether in a tent, in the park, or whether they 
would move into the Treasury Department offices. I do not know where 
they would go, but they assume that the rent that the individuals could 
earn on their homes is part of their income.
  So we can see for a family of $45,000 that imputed rent can be as 
high as $12,000 a year annually added to their rent. So we can see how 
we are taking an average family, that really is the object of our tax 
relief package, and slowly moving them up over the $75,000, $76,000, 
$77,000 range, because in addition to imputed rent, the Treasury 
Department also adds things like the benefits that an individual may 
receive at work; $600 for the parking space that they may have in the 
parking lot outside of their office building is also added to imputed 
rent.
  They include several other things. They assume, as the gentleman from 
South Dakota mentioned, that we are just simply not reporting all of 
our income; that as Americans we somehow lie every year when we report 
our income to the Federal Government and comply with the tax law. So 
they just throw in a few thousand dollars to the family economic income 
to further bump the income up for the purposes of this debate here on 
the floor.
  They also add the income that a child might earn in a summer job or 
the job that they may have after school. They figure that that has some 
kind of value to the average family. So they throw that in.
  There are several other things. The anticipated income that an 
individual may receive on capital gains. Not for the capital gains that 
an individual achieves in one year, but for those assets that they 
might have and sell some year off in the future. They bring that to 
today and throw that into the family economic income.
  This is how they bump the family income up so that they say the 
average American family is in fact rich. And since the average American 
family are the beneficiaries of our tax package, that is how they make 
the wild claim that our tax relief package is tax cuts for the rich.
  Well, this is a bunch of baloney over here, this chart to the right. 
But I do urge people to call the Treasury Department at 202-622-0120 
and ask them for the rundown on this calculation. It is called family 
economic income. That is the dirty little secret of the Democrats here 
in Washington. And I urge Americans to find out all about it and ask 
how it might apply to them.
  I would point out that the fact of the matter is that American 
families have been overtaxed for too long. Back in 1950, this was the 
tax bite out of the American family budget. Six percent of our family 
budgets went to taxes in 1950. This is when my parents were starting 
out and trying to make a go of it as a brand-new family.
  Well, over here on the right we can see that in 1994, the Federal tax 
burden on the family budget was 23 percent. Now, that is just the 
Federal burden. We also pay State taxes and we pay local taxes and all 
sorts of other taxes that go along with that. In 1995, the total tax 
burden was 39 percent. Almost 40 percent of a family's annual budget is 
confiscated in taxes of one sort or another.
  This is what we really care about here in Washington as a Republican 
Party, and it is the object of our tax plan, and this is what we are 
trying to address. We are trying to get back to the days of 1950, when 
the tax burden was much, much less, much, much friendlier, and much 
more oriented toward liberty and freedom in our great country.
  Mr. HULSHOF. If the gentleman would leave that chart up, the one 
entitled ``Family Tax Burden.'' I had a question at one time during a 
radio town hall meeting regarding tax relief and was taking a variety 
of calls. I mentioned that the average family in America today pays 
more in taxes than they do for food and for clothing and for shelter 
combined. And the gentleman on the phone asked me how is it that I 
could make this claim. And as the gentleman mentioned, the total tax 
burden is nearly 40 percent, 40 cents out of every dollar goes to the 
government.
  Think about a typical day. When we wake up in the morning and grab 
our first cup of coffee, we pay the sales tax; when we drive to work, 
we pay a gas tax; when we get to work, we pay an income tax; when we 
flip on a light, we pay an electricity tax; when we flush the toilet, 
we pay a water tax; if we have cable TV, we pay a cable tax; if we 
drive home and we happen to have one of these homes the gentleman was 
talking about with imputed rent, we pay property tax. As the gentleman 
from South Dakota mentioned, when we die, the government is there 
taking up to 55 percent of the family farm or family business in death 
taxes.
  Now, that is how it is that clearly we are paying much more in taxes 
than we should. The problem is not that we do not tax enough. The fact 
is that we here in Washington spend too much, and we are trying not to 
give back, but letting people keep more of their money.
  Mr. BLUNT. If the gentleman would yield before we get away from the 
whole topic of how we calculate wealth in Washington. This is not the 
first time we have done this this way.

                              {time}  2215

  The first time was 1993, when supposedly the biggest tax increase in 
the history of the country was only a tax increase on the very wealthy. 
Working Americans all over the country found out suddenly how wealthy 
they were when this massive tax increase hit them, hit their paychecks, 
this wealth that the gentleman from Colorado [Mr. Bob Schaffer] has 
talked about.
  I call it stealth wealth because it is so stealthy they do not even 
know they got it. It is out there somewhere and they do not know it is 
there, they do not know they have that money to spend, but suddenly 
they become very rich Americans. And, in fact, if we look at the 
Treasury Department calculations, the kind of calculations that were 
used in 1993, if we look at those calculations, more than 50 percent of 
the people who have a school teacher in the family or an auto mechanic 
in the family or a construction worker in the family are among the very 
wealthy.
  Now, if we want, if we will accept that as our definition, we very 
well may be having a tax increase for the wealthy if the wealthy 
includes school teachers and auto mechanics and construction workers. 
Not only this imputed value of their home, but if they have got a 
health care benefit, any benefit that they have got that their employer 
gives them, the capital gains calculated back over the time that they 
might average those out over 20 years.
  I got to tell my colleagues, that does not help their budget much if 
they are the janitor at school and they mess around with a rental house 
every Saturday of their life to try to hold their money together, and 
suddenly someone says really this rental house some day is going to be 
worth, they paid $30,000 for it, 20 years from now with inflation it is 
probably worth $60,000. We need to take that $60,000 and divide it back 
up over these 20 years, and really they have got another $3,000 or so a 
year of wealth right there that they do not know anything about. All 
they know is that they are under that house on the coldest day of the 
winter trying to thaw out the water pipe.
  And those are people that pay capital gains tax, another element of 
this tax. This is not stealth wealth for them. It is trying to hold the 
money together in an economy that has had too much inflation. It is 
trying to make something for their children that they did not have for 
themselves.
  Forty percent of the capital gains taxes in America are made by 
families who have a total family income of less than $50,000. Now under 
the Treasury Department calculations they may have a total family 
income of $80,000. I do not know. But all they know is their checks add 
up, before the taxes are taken out, to $50,000. Those are the families 
that pay 40 percent of the capital gains taxes. They have absolutely no 
mechanism to avoid it. They do not have expensive accountants or 
lawyers. This is a tax break for them, as well.
  The taxes that we talk about are taxes that really give a break to 
work and productivity and families. And what should we be encouraging 
in America? Work, productivity and families. And we ought to be at 
least talking about the right numbers. We ought

[[Page H5390]]

to be talking about numbers that when we ask our neighbors, or maybe 
not our neighbors, maybe our son, maybe somebody that would tell us 
what they are making, probably should be willing to talk about that 
when we say, ``What do you make?'' they tell us that that is the number 
that we would look at in Washington.
  Instead we come up with some number that nobody in their wildest mind 
would believe, and then we say and that means that this is a tax break 
for the wealthy because they are a school teacher and they are married 
to an auto mechanic or they are an auto mechanic and they are married 
to a construction worker, and they are now one of the wealthy Americans 
according to the way we calculate in Washington.
  They do not calculate income that way anywhere else in America, maybe 
not anywhere else in the world. And we are trying to fool the hard-
working people of America into believing that everybody else who works 
beside them at the job is rich. Because they know they are not rich. 
This stealth wealth issue is an issue we have to deal with. But if we 
only would deal with numbers that Americans have confidence in, they 
would have more confidence in the Congress.
  Mr. THUNE. If the gentleman would yield, that is a wonderful point, 
and he did I think an excellent job in elaborating on why people are so 
confused about this argument. I think it is totally unfair to the 
people of this country, most of whom are going to benefit from this, to 
try and confuse the issue.
  What happens is the other side is losing. And, so, in being crushed, 
in losing, they are dragging out the class warfare thing again. It is 
not fair when we start talking about the types of things that we have 
alluded to, and the gentleman from Colorado [Mr. Bob Schaffer] and his 
numbers. If my colleagues want to find out all those things and what 
they are, call the Treasury Department.
  But we cannot have an honest debate on this issue unless we are 
dealing with the same set of numbers. And we are not doing that, and it 
is not fair to the people of this country.
  One other point I would like to make before we leave this subject, 
because again the way this is being pitted, it is playing this tax 
relief for the wealthy type thing, which is an absolute misnomer. We 
just talked about some statistics earlier this evening with respect to 
family tax credit.
  The people in this country who are eligible for it, and by the way, 
there are 136,000 kids in the State of South Dakota who are eligible 
and will qualify for the family tax credit, the families who qualified, 
are eligible, there will be 1.9 million, almost 2 million taxpayers in 
this country will have their income tax liability entirely wiped out 
simply because of the family tax credit.
  These are hard-working people on the lower end of the income scale 
who are paying income taxes today, who because of the family tax credit 
are going to have their tax liability wiped out, almost 2 million 
people in this country. That is what we are talking about here. We are 
talking about helping people who are working hard, trying to make a 
living, people like in my State of South Dakota when I think, given the 
opportunity to understand the arguments that are being made here and 
understand clearly the types of numbers that are being used and the way 
that they are being inflated by the Treasury Department, when people 
understand what the issues are, they are hugely in favor of what we are 
doing. They are on our side.
  We are on the right track and moving in the right direction. And 
hopefully, again, we have the opportunity and in future years will be 
able to come back again and say, ``We want you to keep even more of 
what you earned,'' because Washington, DC does not make very good 
decisions when it comes to spending money, and it is proven by the way 
they calculate income.
  In this country, and only in a country where we have $5\1/2\ trillion 
in debt, and we are talking about different degrees, can we double 
someone's income just like that out of thin air; and that is what is 
happening.

  I yield back.
  Mr. HULSHOF. If the gentleman would yield, because I think there is 
also a lot of misinformation being distributed, originating from right 
here in the well of this House, about the $500 per child income tax 
credit and whether or not that income tax credit should be applied to 
those individuals in our country who are working that receive an earned 
income credit but that pay no income tax liability.
  If we could take just a minute to explain the difference, because 
this is exceedingly important and I think the issues are being framed 
up, even as we speak, among the conferees. This is an extremely 
important debate.
  The income tax credit, as my colleagues know, was first enacted back 
in 1975; and the purpose of the earned income credit was to provide 
public assistance in the form of an income supplement to low-income 
workers, something that the Republican side has continued to support.
  In fact, the earned income credit I think has been modified and 
expanded. Back in 1993, the earned income credit was expanded even 
more. It has been indexed to inflation. We cannot get capital assets or 
estates indexed to inflation, but we indexed the earned income credit 
for low-income working families to inflation to make sure that their 
pay checks would keep pace with the rate of inflation.
  So we got nearly 19 million Americans that have qualified and will 
qualify for the earned income credit, almost $28 billion in public 
assistance going to individuals that will not have to pay Federal 
income taxes. In fact, I think the gentleman pointed out a couple weeks 
ago when we were discussing this issue, 20 percent of the earned income 
costs actually are a refund of income tax that are paid by low-income 
people, but 80 percent of the $28 billion, 80 percent is in the form of 
supplemental public assistance that goes to working low income 
families. Eighty percent is a cash assistance program in excess of 
Federal taxes paid.
  Now the other side talks about, well, what about the payroll taxes 
and what about taxes going to social security and to Medicare? And the 
fact is, when each of us at all ends of the income spectrum are working 
and paying payroll tax, that is for a future benefit. We are investing 
in social security, we are investing in Medicare that we are hoping to 
save for future generations.
  So the fact is that we have to decide, within the very narrow 
parameters that we were given by the White House and congressional 
leaders, where are we going to target our tax relief? And right now we 
are trying to focus our tax relief on middle-income families with kids 
that are trying to make ends meet, that this tax burden, as the 
gentleman from Colorado, Mr. Bob Schaffer, mentioned, that are sending 
nearly 40 cents out of every dollar here to Washington. Those are the 
people that we are trying to aim and rifleshot this tax relief to.
  Mr. KINGSTON. If the gentleman would yield, I know we were talking 
about this earlier, and I wanted to give an example of a woman, say 
Susan, she makes $20,000 a year. She has a 14-year-old and a 16-year-
old.
  Now under the Republican plan she would be getting $1,000 tax credit 
for those children. Under the Clinton plan she would get zero. But who 
would get the money instead is somebody who is not paying income taxes. 
And that person who is not paying income taxes may be already receiving 
public housing assistance, free health care for the kids, Medicaid, 
food stamps for the family, WIC for the children, supplemental security 
income, possibly the earned income tax credit, public assistance/
welfare benefits, worth anywhere from $10 to $18 an hour. In addition 
to all those public assistance benefits, under the Clinton liberal 
Democrat plan they would get another $1,000 check because of having two 
children or children under 12 years old. And it is not punitive to say 
let us give the income tax credit to those who earn income, rather than 
let us just make it one more welfare benefit.
  It was interesting, in the Washington Times today, it did say on the 
front page, Clinton admits that it is an expansion of welfare. So I 
think my colleague raised a good point. This tax relief proposal, the 
intent of it is not to expand welfare. The intent of it is to give tax 
relief to middle-income Americans.
  Mr. HULSHOF. If the gentleman would yield, one additional point, and 
I think it is dead on with what the gentleman says.

[[Page H5391]]

  One of the subcommittees that I serve on is the Subcommittee on 
Oversight of the Committee on Ways and Means, and we recently had 
testimony from the IRS, the Internal Revenue Service, about the earned 
income credit. Unfortunately, the earned income credit is rife with 
fraud and waste and abuse.
  In fact, the IRS even estimates that the rate of fraud and error was 
over 20 percent. Essentially, out of every $5 then in the earned income 
credit that IRS that the Federal Government was giving to these 
families, $1 out of every $5 should not have been paid out because this 
error rate is so extremely high due to in some instances to fraudulent 
reporting but some instances just error in reporting.
  The question I have is, given this high level of fraud and error rate 
found by the IRS, is it wise at this point to expand, to seek an 
expansion of this earned income practice until we can at least get a 
handle on or solution to the fraud and the waste and abuse in this 
program?
  I yield to the gentleman from South Dakota [Mr. Thune].
  Mr. THUNE. We had this discussion on the floor before, as my 
colleagues know, and I think that the point that my colleague made 
earlier, 80 percent of that $28 billion is going out not in the form of 
a credit against taxes that are currently being paid but as a 
government check. The question that we are faced with, I think, in 
terms of this debate is whether or not we want to add to that 
government check $500 per child.
  Now we talked a lot about statistics in this whole debate, and I 
would again mention that 75 plus, 76 percent of the tax relief in this 
proposal goes to people who are, families who are making less than 
$75,000. Now just by comparison, the taxes that are currently being 
paid in America today, 37 percent of the tax burden, the taxes being 
paid, are being paid by people making less than $75,000, and yet we are 
giving 76 percent of the tax relief to that group of people.
  This is very targeted toward hard-working men and women, middle-class 
Americans in this country, and families. Sixty-three percent of the tax 
burden in America, according to IRS figures, is paid by people who are 
making more than $75,000, and yet, under our proposal, they would get 
somewhere in the neighborhood of 24 percent of the tax relief.

                              {time}  2230

  We look at who is paying the taxes today, who gets the relief and I 
think again we are faced with this question as to whether or not it 
makes sense, fiscal sense, to the taxpayers of this country for people 
who are already receiving 80 percent of the $28 billion in earned 
income credit going as a payment to people who are not currently paying 
income taxes. Do we add on to that payment $500 per child?
  I think what we have said in our plan is that we want to apply the 
tax relief to people who are paying income taxes, and particularly 
given what the gentleman has just mentioned about the amount of fraud 
in the EITC. The earned income tax credit program is a program that is 
seriously in need of reform. I think it would be in our best interests 
and in the taxpayers' best interests to reform that program before we 
ever look at adding a $500-per-child tax credit.
  Mr. BOB SCHAFFER of Colorado. This really defines the classic debate 
that we see here in Washington or the classic differences, I should 
say, between Democrats and Republicans, or liberals and conservatives.
  It is the difference between the entitlement mentality that the 
Democrats fight for every day here, which if one is a Democrat makes 
perfect sense to them, versus our model of encouraging honest hard 
work, which if one is a conservative or a Republican, that of course 
makes sense to us. Because on one hand what the Clinton administration 
is proposing is within that entitlement mentality, that entitlement 
framework, where we just send cash. The cash actually comes to 
Washington and it is redistributed by politicians here in Washington. 
We take from some families, we take that cash and give it to the 
charity of the government's choice, which in this case would be the 
individuals who would qualify under the Clinton entitlement tax credit. 
Again, contrasting that with our model which suggests that the harder 
you work, the more you contribute to our economy, the more you are 
willing to try to work hard to strive for self-sufficiency and provide 
for your family, the more we want to encourage you. We want to help 
that. We want to take less away from you. We want to take less cash out 
of your family budget and allow you to keep it, not just so you can 
spend it on things, but also so you can be charitable.
  This is the point that I think is frequently missed here. President 
Kennedy and President Reagan and many Presidents before that have shown 
us very directly that when you in fact reduce the tax burden on 
American families, charitable giving continues to climb. In fact, under 
the Reagan administration, charitable giving reached an all-time high. 
It was not until we undid the Reagan tax cuts under the Bush 
administration, and even taxed families more under the Clinton 
administration, that we saw charitable contributions begin to decline. 
These dollars, allowing families to keep more of their cash, to keep 
that cash within their family budget for their own discretion under 
their own judgment, to put toward their children, their schools, their 
communities, their churches, their synagogues, the charities of their 
choice is far better, I believe, and we all believe, than the liberal 
Democrat model of the entitlement mentality which suggests that 
everyone should send their cash to Washington and politicians here will 
spend it on the charity of the government's choice.
  Mr. BLUNT. I have got a chart here that follows up on what the 
gentleman from South Dakota [Mr. Thune] was saying and the gentleman 
from Colorado, Mr. Bob Schaffer, was talking about that shows exactly 
where these tax cuts are distributed. This is your income on this side. 
Under $20,000, almost 5 percent of the tax breaks are for those 
taxpayers. Between 20,000 and $75,000, almost 72 percent. Over 76 
percent of the tax breaks are for people that make less than $75,000. 
We believe that to be a real add-your-paycheck-up figure, add your 
check stub up and see what you are making.
  When families think about that, where I am from, $75,000 is still 
quite a bit of money. But if somebody in your family is making $2,000 a 
month and somebody else is making $41,000 a year, you are at $65,000 in 
your family income. This is a family income. This is your total family 
income. Seventy-six percent of the tax benefits here are for people who 
make less than $75,000, 5 percent are for people who make less than 
$20,000. These are real numbers. These numbers count.
  As the gentleman from South Dakota [Mr. Thune] has pointed out, the 
tax breaks are very much in disproportion in terms of the taxes being 
paid today, but they are in proportion to what the Members of this 
Congress think ought to happen right now to make American families 
work.
  The gentleman from Missouri [Mr. Hulshof] has talked about from the 
minute the alarm clock goes off until you set it again that night, you 
are paying somebody some kind of taxes. We are saying that is too much. 
We are going to have conservative Democrats, we are going to have 
Republicans voting again for this issue if we get to vote on this kind 
of issue again. Certainly we had those kind of votes when the 
Republican majority, helped by conservative Democrats, sent this tax 
bill over to the Senate.
  Mr. HULSHOF. I think a point that needs to be made regarding the 
numbers on the chart that the gentleman from Missouri [Mr. Blunt] has 
before him is that these numbers, this is not sham accounting. This is 
not cooking the books, as the gentleman from Colorado, Mr. Bob 
Schaffer, talked about the Treasury likes to do with this nebulous 
concept called family economic income. These numbers have come from the 
Joint Committee on Taxation, which is a bipartisan group that takes the 
effects, the true effects of any tax law and determines what is going 
to be the effect.
  These numbers are what will happen over the next 5 years if the 
President will sign into law the measure, the tax relief measure that 
we have passed here in the House by an overwhelming majority. These 
numbers are good numbers. They are solid numbers of the Joint Tax 
Committee.

[[Page H5392]]

  It might even be that those who come after us this evening, after our 
time is up, as it draws to a close, will talk about, well, 10 years 
from now these Republican tax cuts are going to explode the deficit, 
are suddenly going to balloon the deficit, and use these terms. I would 
challenge anybody that makes these spurious arguments. It is difficult 
enough for us to try to project a balanced budget plan for the next 5 
years and to try to fashion some modest tax relief for the next 5 
years. Certainly when we start looking in a crystal ball and predicting 
the future of what is going to happen 10 years down the road, I just 
think it is somewhat disingenuous to make an argument that these tax 
proposals in the next 10 years or in the next 15 years are going to do 
this or do that.
  I do not think this House, if we look at its track record, those that 
have been in control of this House, I do not think necessarily that we 
can go to the bank, so to speak, on the numbers of the predictions that 
previous Congresses have had regarding the economic forecasts.
  Mr. BOB SCHAFFER of Colorado. Mr. Speaker, I would like to point out 
for one minute, before we close here, I just want to reiterate what has 
been said over and over again, and I do not think we can make the point 
too often, that the real numbers that we have been working with and 
that we rely on show us that 76 percent of the tax relief that the 
Republicans are providing go to families earning between $20,000 a year 
and $75,000 a year. Again, that is 76 percent.

  For those people who want to find out the real numbers for what the 
impact of this tax plan is going to be on their families, the 
Republican Party has provided a Web site that I would encourage people 
to visit. The address is right here. It is hillsource.house.gov. You 
can call there or visit us here. It is a GOP tax calculator. You impute 
your income, and the service here will help figure out what the impact 
on your family will be once this tax package is agreed to, is signed by 
the President.
  The reason we do this is because we are very proud of it. We are 
convinced that when real families make contact with us and figure this 
out for themselves and apply our tax relief package to their family 
income, their average family income, they will see a dramatic reduction 
in the amount of cash which the Federal Government confiscates from 
your family budget. For that reason, we really encourage people to 
call.
  This is a winning strategy for us as Republicans. The Democrats are 
scared to death because they know when the American families realize 
that this really does affect them and helps them, that it is to our 
advantage politically but, moreover, economically and for the country. 
That is what we care about most. Please visit us. We would love to show 
how our relief package is going to help you.
  Mr. THUNE. I notice the gentleman made the comment there as he was 
pointing that out, that you impute your income. I was wondering if that 
was just a slip.
  Mr. BOB SCHAFFER of Colorado. That was a slip of the tongue, right. 
You compute your income.
  Mr. THUNE. I am glad to hear that. You input your income and it will 
give you the real number, not the imputed number.
  Mr. BOB SCHAFFER of Colorado. Right.
  Mr. BLUNT. The other thing to remember here, too, is that as hard as 
we have worked on that and as much debate as we have had about the 
dangers of giving this money back to the American families and the 
American people, we are only managing to give back in this tax cut a 
third, one-third, of the dollars that we increased taxes by in 1993, 
the biggest tax increase in the history of the country. I do not recall 
nearly this much concern in the Congress about taking three times as 
much money away from the American people as now we have letting them 
keep a third of their money.
  We hear about giving them money, giving them a tax break. We are just 
again letting them keep their money, and still we have got a long way 
to go just to get the tax burden, the Federal tax burden back to where 
it was in 1993.
  This is the first step, it is a big step, but I just remind people of 
the country who are thinking about this debate, how much debate did you 
really hear in 1993 as that big tax bill passed about how much money we 
were taking away from Americans, or whether we were going to explode 
the deficit at some mythical point in the future or what was going to 
happen? Were we going to explode the American family at some mythical 
point in the future, at a time when we were taking three times this 
much money away?
  We are working very hard, I think we have taken a very important 
first step. We are just giving a third of that tax cut that is in very, 
very recent memory back to the people and the families of the country.
  Mr. THUNE. I would just add because we are coming to a close here, 
but I am proud to be a part of this effort. I think most of us, I know 
our colleagues in our freshman class, the people with whom we joined 
the Congress, came here for a specific reason. It was because we 
believe profoundly and fundamentally that the people in this country, 
if given the freedom and the opportunity to make decisions that affect 
their lives, will do a better job than the government will. It is all 
about allowing people to keep more of what they earn, allowing 
government to become smaller and allowing people to be able to do more 
because government is doing less.
  The gentleman from Colorado [Mr. Bob Schaffer] very aptly pointed out 
that when people have more of what they earn, they are willing to 
contribute more into their communities. That again is something that we 
want to encourage in this country because we have fostered a culture 
that has become very dependent upon government. We have an expectation 
in this country that government will do all things for you. That is, I 
think, a mentality that we need to get away from. I believe that this 
debate is moving us in that direction.
  I would just make one point in closing, because we look at the 
breadth of this thing and the many component parts of it. In lowering 
the taxes on saving and job creation, investment, the capital gains 
tax, I had people when I was in my State last week ask me, when are you 
going to do something in capital gains; we want to sell the farm but we 
cannot afford to do it.
  You look at the estate tax, the death tax. We believe that people in 
this country, when they die, should not have to see the undertaker and 
the IRS at the same time. Those are just fundamental values. Those are 
things that we stand for and believe in.
  I am delighted to be a part of this effort and a part of this class 
and the commitment that we have to accomplishing the things that are 
good for the future of this country, for my kids and for the kids and 
grandkids in South Dakota and throughout America.
  Mr. HULSHOF. Mr. Speaker, I appreciate my colleagues joining me this 
evening. I appreciate very much their eloquence and the sincerity with 
which we have approached this debate. Again, because of the parameters 
of the budget agreement, we are trying to focus tax relief, income tax 
relief to those families who pay income taxes. Certainly we want to 
help those on the lower income scales, to help pull themselves up; but 
because of the earned income credit, and especially because of the 
disturbing news from the IRS about the fraudulent rate or the error 
rate, I should say, regarding the earned income credit, the fact that 
of the $28 billion that nearly $6 billion next year will be wasted and 
paid out to individuals that perhaps do not qualify or who fraudulently 
apply for the earned income credit, again my question to those on the 
other side is, is this the time for us to be expanding that credit? 
Because of the parameters of the budget agreement, should we not be 
looking to those individuals that are paying more in taxes than for 
food and for clothing and for shelter combined?
  Again, Mr. Speaker as our time is drawing to a close, this is more 
than about numbers, this is about choices. It is about people. We want 
men and women across this country to be able to earn more so that they 
can keep more, to do more. It is about improving the quality of life, 
as the gentleman from Colorado [Mr. Bob Schaffer] mentioned, as the 
gentleman from Missouri [Mr. Blunt] mentioned, as the gentleman from 
South Dakota [Mr. Thune] mentioned. The fact is that

[[Page H5393]]

many couples right now, in order to make ends meet, have no other 
choice than to have both spouses working in order to put food on the 
table and a roof overhead.

                              {time}  2245

  We believe, the newly elected Members on the Republican side believe, 
that taxpayers should reap the rewards of their efforts and our efforts 
to shrink the size of the Federal Government. As we force Washington to 
balance its books, and as we hold government programs like the earned 
income credit accountable, and as we shape and force a smaller, 
smarter, more effective government, Washington does not need as much of 
the American people's money. The money should stay in the pockets of 
hard-working men and women across this country, not into this bloated 
bureaucracy or into any schemes to redistribute income. It is the 
American people's money. They have earned it, they should keep more of 
it. That is what this tax debate is all about. That is why it is so 
important.

                          ____________________