[Congressional Record Volume 143, Number 103 (Monday, July 21, 1997)]
[Senate]
[Page S7770]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SHELBY (for himself, Mr. Craig, and Mr. Helms):
  S. 1040. A bill to promote freedom, fairness, and economic 
opportunity for families by reducing the power and reach of the Federal 
establishment; to the Committee on Finance.


            THE FREEDOM AND FAIRNESS RESTORATION ACT OF 1997

  Mr. SHELBY. Mr. President, although the tax reconciliation bill 
promises to cut taxes by approximately $76 billion over 5 years and 
$238 billion over 10 years, it should be viewed as only a small step 
forward in providing tax relief to the American people.
  I remind my colleagues this afternoon that we must not forsake our 
broader agenda to seek comprehensive reform of our tax system. 
Piecemeal tax cuts are not, and I want to say it again, are not a 
substitute for broad-based tax reform. Therefore, I rise today to offer 
the Freedom and Fairness Restoration Act which will scrap the entire 
Income Tax Code as we know it and replace it with a system that taxes 
all income once and only once at one low, flat rate of 17 percent.
  A flat tax, I believe, will correct the vast and pervasive problems 
of the current system. As illustrated before here, the complexity of 
Federal tax laws costs taxpayers approximately 5.3 billion hours to 
comply with the current Internal Revenue Code. The Tax Code is so 
complicated that even the IRS doesn't understand it.
  In 1993, the IRS gave 8.5 million wrong answers to taxpayers seeking 
assistance, and the IRS sent out 5 million correction notices which 
turned out to be wrong.
  In 1996, this past year, taxpayers spent a staggering $225 billion 
trying to comply with the Tax Code. Think about it--$225 billion in 
America spent by the taxpayers trying to comply with the Tax Code. This 
is a deadweight loss to the economy that is, as the Presiding Officer 
knows as a member of the Armed Services Committee, about equal to our 
national defense budget.
  We live in a society that accepts the notion that some level of 
taxation is necessary to finance the cost of Government, but it is 
important that it does no more harm than is necessary to achieve the 
stated goal. The current Tax Code is the product of a 40-year 
experiment with social engineering that has hampered the effort of the 
American people to be free, bear the fruit of their labor and 
ultimately live the American dream.
  Recently, the bipartisan national commission on restructuring the IRS 
came out with a report laying out their vision for a new and improved 
IRS. One of the key recommendations of this commission that was made 
was that simplification of the tax law is necessary to reduce taxpayer 
burden and to facilitate improved tax administration.
  We need to address significant tax policy changes that will not only 
provide taxpayers with relief, but will simplify and equalize the tax 
collection in this country. Taxation is bad enough without 
administering that tax through the inefficient, inequitable, and 
oppressive tax system that we have today.
  Rather than wading through stacks of complicated IRS forms and 
instruction manuals, under a flat tax taxpayers would file a simple, 
postcard-size return. When fully phased in, the family allowance would 
be $11,600 for a single person, $23,200 for a married couple filing 
jointly and $5,300 for each dependent child.
  These allowances will be indexed to inflation under our bill. For a 
family of four, this will mean that their first $33,800 of income would 
be exempt from taxation by the Federal Government, which will assure a 
progressive average rate for low-income households.
  The flat tax, I believe, will restore fairness to tax laws by 
treating everyone alike, regardless of what business they are in, 
whether or not they have a lobbyist in Washington or how much money 
they make. If you earn more, under the flat rate tax, you would pay 
more. Under the current system, one taxpayer may pay little or no taxes 
because they have paid an accountant or tax attorney to figure out the 
Tax Code for them. At the same time, another person with the same exact 
income but who does not have the professional assistance may pay much 
more in taxes. I say that is not fair.
  Under a flat tax, this would end. People would not have to hire an 
accountant or tax attorney simply to comply with the law. Everyone 
would fill out the same simple, postcard-size return. Everyone will be 
taxed at the same rate. And, yes, everyone will pay their fair share.
  Furthermore, the flat tax will eliminate the double taxation of 
savings and promote jobs and higher wages in this country. Because the 
flat tax applies a single low rate to all Americans, I feel it is the 
best replacement of the current system. I do not think that Americans 
should have to jump through hoops just to keep the money they have 
earned through their hard work. The current Tax Code basically says you 
can keep your money only if you do what we think you should do. This is 
not freedom; it is serfdom. The flat tax does away with Government 
micromanagement of people's personal lives and allows them to spend 
their hard-earned money as they see fit.
  But perhaps the most important virtue of the flat tax is that it 
supports the basic value of work, savings, and individual liberty. It 
has been a commitment to these principles that has made America the 
most successful economy in the world. In recent years, we have watched 
as the private sector has streamlined itself. I think it is now time 
for us to streamline the Tax Code.
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