[Congressional Record Volume 143, Number 125 (Thursday, September 18, 1997)]
[House]
[Pages H7594-H7596]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      NO TAXATION WITH REFORMATION

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from New York [Mr. Paxon] is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. PAXON. Mr. Speaker, since January 1995, since the Republican 
majority took over the operation of the House of Representatives and 
the leadership of the Congress of the United States, we have 
accomplished, I think, many great things, many important steps forward, 
fulfilling our commitment to provide a new direction for this country, 
the will of the American people.
  Those successes I believe are in many ways historic, starting with 
the very opening days of that Congress in January 1995, the decision to 
reform Congress, to open the doors of this institution once again to 
the American people, to diminish the power of the all-powerful 
committee chairs that in the past did what they chose, not what the 
American people chose, for example.
  We also were able to pass what I think will go down in history as one 
of the most historic pieces of legislation of any Congress, basic 
fundamental welfare reform, giving our States the opportunity to 
replace welfare with work requirements.
  We passed illegal immigration reform, and freedom to farm legislation 
for the first time in 60 years, changing the face positively of 
American farming. We passed telecommunications reform, and this year 
plan to extend the life of the Medicare System that has saved the lives 
of my parents and so many other Americans, as well as tax relief for 
families.
  Last, but not least, we passed legislation that will balance our 
Nation's budget no later than the year 2002, hopefully even sooner if 
we can keep our steady hand on the rudder in controlling wasteful 
Washington spending.
  These are important accomplishments, but I think the most important 
accomplishment is just on the horizon, and to illustrate that I want to 
go back to the issue of balancing our Nation's budget.
  You know, sometimes we as Americans are so forward looking that we do 
not even look back 15 or 20 minutes, much less a couple of years. But 
it was two decades or longer that people in this Chamber and Americans 
across the country talked about, ``jeez, cannot we get Congress to 
balance our Nation's budget again? Cannot we get our government to live 
within the means of the American taxpayer?''
  We spent decades and decades talking about balancing our Nation's 
budget, but, you know, it was that Contract With America in 1994 that, 
right out on the steps of this Capitol, looking out across the country, 
we signed our names to and committed ourselves to, that finally moved 
the talk of balancing the Nation's budget to the reality of getting it 
done, the hard work of getting the Nation's budget balanced.
  We walked out on those steps, signed that document, and said not just 
that we would balance it; we turned that talk into action and said it 
would be done no later than 2002.
  Again, we are Americans and like to look ahead, and we sometimes 
forget the obstacles out there. Not only were the institutional forces 
of Washington, DC, opposed to balancing the budget, but they would like 
us to continue to just go on our merry way of spending more than we 
take in to pander to all the groups that Washington likes to pander to.
  But you know, more than that, it just becomes an act of self-
preservation of so many in Congress to talk about balancing the budget, 
and not really get down to the hard work. So we turned that into action 
     in saying the budget would be balanced no later than 2002, 
     and let the national debate begin.
  Ultimately, even the opposition of the President and the other party 
here in the Congress could not stop the will of the American people in 
getting that budget balanced. Once we put that marker down, that it 
will be balanced by 2002, the debate began and we were able to capture 
the attention of the American people and build the momentum necessary 
to balance our Nation's budget.
  Now, that process of laying down a date certain and of moving toward 
it is fundamental to tackling another important issue before this 
country that we have talked and talked and talked about for years, but 
we just cannot seem to get under way, and that is sweeping income tax 
reform.
  Everywhere I go in my district in upstate New York, in the Buffalo 
and Rochester New York regions and western New York and the Finger 
Lakes, and as I have traveled around the country and also talked to 
colleagues from both parties around the country, everybody at home and 
across America seems to agree: They are tired of the IRS and the 
intrusiveness of that 5.5 million-word Tax Code in their everyday 
lives.
  They want fundamental change in the Tax Code. The American people 
want to have that kind of fundamental change. But Congress just keeps 
talking about this reform, without moving forward on it.
  Of course, in this body we have some great proposals. We have 
proposals for a national sales tax to replace the income tax. We have 
proposals to have a flat rate income tax to replace the current income 
tax system. There are many other ideas out there, but we just cannot 
seem to move from talking about it to acting upon it.
  Every day we wait, that Tax Code keeps putting a greater and greater 
burden on the backs of the American people. Just think about it for a 
minute. A 5.5 million-word Tax Code enforced by 110,000 people in the 
Internal Revenue Service defines everything we do as American citizens. 
It limits our personal and economic freedom. The Tax Code discriminates 
against children, it discriminates against families, it discriminates 
against small business people and entrepreneurs. It encourages hundreds 
of billions of dollars, hundreds of billions of dollars, in the 
underground economy and in tax avoidance, things that never end up on 
the books, so the government can never collect its share of them in tax 
revenue. Certainly the Tax Code and its complexity and unfairness lead 
most folks to distrust this very Congress and this very government that

[[Page H7595]]

has put together this monstrosity we call the Internal Revenue Code. 
Some friends of mine at home call the Infernal Revenue Code, and I can 
understand it.
  When you look back on the history of the Tax Code you can understand 
a bit of this. In 1913, when it was put in place, the Tax Code 
consisted of 11,400 words. Today, it is over 5.5 million. Americans 
spend $157 billion in tax compliance, having to spend that kind of 
money to comply with the Tax Code, just putting together all the 
paperwork they need to maintain and all the other reference they have 
to undertake, and it amounts to 5.5 billion hours wasted in this 
country every year putting together tax codes and compliance with the 
Tax Code. Gosh, couldn't you find better things with your time than 
complying with all those regulations?
  Of course, in my view, the worst impact of this Tax Code is the fact 
that it has unfairly impacted families and families with children. When 
I was growing up in the fifties, the early fifties, the tax burden was 
about 3 or 4 or, at the most, 5 percent of family income. Today, the 
tax burden, the Federal tax burden, is about 25 percent of family 
income, and the total combined tax burden, Federal, State and local, is 
in the 38 to 40 percent range, depending upon where you live in this 
country.
  We all agree, most of us agree, most in America and a growing number 
here in Congress, agree that the Internal Revenue Code and all it means 
is a national scandal and a disgrace that holds the greatness of this 
country back as we approach this new and next millennium.
  I believe that if we apply the same principles and the same 
definition to the issue of tax reform that this Congress did to 
balancing our Nation's budget, putting a date certain to it, initiating 
a national debate, we could accomplish great things.
  You know, it is almost like a race. You can talk about running a foot 
race, but until you establish the goal line for that race, the finish 
line, and until somebody shoots the starting gun to begin that race, 
there is no race.
  We did that with balancing the budget. We said there is the goal 
line, 2002. Let us begin the race, figure out how we solve this problem 
by that year.
  If we do the same thing with changing our tax system, I think we can 
see fundamental reform occur. Let us act now, this fall, to put on the 
President's desk a bill repealing the Federal income tax code.
  Now, that is exactly what I did. This Tuesday I submitted legislation 
that would accomplish that goal. It is H.R. 2483. My legislation will 
effectively sunset the entire Federal Income Tax Code, absent two 
provisions, on December 31 in the year 2000.
  Three short years from this December the Federal Income Tax Code 
would be sunsetted, in effect repealed, under the legislation I have 
sponsored. The two provisions that would still be in effect are 
Medicare and Social Security. I repealed 96 of 99 chapters of that 5.5 
million-word Federal Income Tax Code.
  Now, if we have the courage and commitment in this Congress to see 
this through, think of what this will mean. It means that 3 short years 
from now, three Christmases from now, on New Year's Eve 2000, Americans 
everywhere will get together to celebrate good riddance, wishing good 
riddance to the 5.5 million words of freedom-limiting gobbledygook in 
the Tax Code.

                              {time}  1945

  We will also say good bye to almost all of the 110,000 bureaucrats 
who enforce this Tax Code with what I consider a sledgehammer, and that 
is the fact that we, under their eyes and under the law, are guilty 
until we prove ourselves innocent. It is the only place in American 
society really where we have that mentality, that we are guilty, we 
have to prove ourselves innocent.
  Nothing gets Washington off its duff faster than a deadline, and my 
legislation, H.R. 2483, would impose one heck of a deadline. That is 
why I am calling this legislation ``No Taxation Without Reformation.''
  I am pleased that already many Members of Congress on both sides of 
the aisle have come forward to encourage this bill forward. Many are 
signing up to cosponsor H.R. 2483, and I am particularly pleased with 
the fact that the largest grassroots business organization in America, 
the National Federation of Independent Business, the NFIB, is stepping 
forward and beginning a national campaign on the issue of sunsetting 
the Federal Tax Code effective December 31 in the year 2000. They 
intend to go coast-to-coast collecting signatures of millions of 
Americans to present to Congress to say we want this Tax Code 
sunsetted. I am so encouraged by the fact that Jack Ferris and the NFIB 
are taking this leadership role. I am convinced that its going to have 
a major impact on moving this legislation forward.
  Now, the impact of sunsetting the Federal Tax Code is not an end, it 
is the beginning. It is the gun that shoots off the debate that 
establishes the finish line for the race. What kind of things could we 
consider, then, if we begin this debate? Well, I mentioned several.
  We can talk about a flat rate income tax as proposed by many folks in 
this Chamber, most notably the majority leader, the gentleman from 
Texas [Mr. Armey]. He wants to bounce that Tax Code and replace it with 
a tax system we can fill out on a postcard. We list our income and a 
few basic deductions and multiply it by a percentage point and send in 
the check. That easy. No more need to go to H&R Block and no more need 
to go to accountants and attorneys, no more need to keep extensive 
records. That easy, that simple.
  Now others, including the esteemed chairman of the Committee on Ways 
and Means, the gentleman from Texas [Mr. Archer], who has just 
conducted the tax relief provisions that we have carried forward this 
July in the 5-year budget plan, Chairman Archer wants to move forward 
by replacing the entire Income Tax Code with a national sales or 
consumption tax. We would not even have any income taxes, and that 
national sales tax is an alternative to the current income tax.
  Then there are other proposals and many, many of them filed. There is 
a new one out by the Cato Institute, a very, very respected think tank 
that has put forward what they call the alternative maximum tax that 
would say that one would pay no more than 25 percent of gross income. 
They keep in effect, they put in place again the Federal Income Tax 
Code, and one could still take all of the deductions, all of the other 
benefits of the current system if one so chooses, or if one did not 
want to do that, one would just pay 25 percent of one's income. If one 
chose that, the alternative maximum tax, one would know that there was 
a ceiling the tax could not go above.
  These are all great ideas. There are a lot of great ideas in this 
Chamber, and quite frankly there are a lot of even greater ideas 
probably out across the country that we have not even heard of yet that 
may come forward; new nuances, new ideas that could help bring about 
fundamental change. But our goal and the benefit that we derive of 
having H.R. 2483 passed is that it will begin this debate and allow 
Americans to come forward with these ideas.
  Now, I do not know about every Member of Congress, but I know my 
constituents. Sometimes, and rightfully so, they are a little skeptical 
of what we do here. We like to talk about these great changes, but I 
know when I go home on weekends and conduct town meetings in western 
New York and the Finger Lakes, a lot of people say to me, ``Paxon, it 
sounds good, but when is it going to get underway? When are you going 
to start this?"
  I am hoping that if we can get Members of Congress on board, get 
Members of the Senate on board, get this legislation, H.R. 2483, passed 
into law and down to the President this fall, we can get this national 
debate underway on replacing that income tax system with a flatter and 
fairer tax, a flat tax, or with a national sales tax or some other 
proposal.
  I am excited about this. I am encouraged by this momentum that we are 
seeing develop this week alone. I could not help but be encouraged when 
I sat down today and took a look at some of the statistics regarding 
our current income tax system.
  I know there are a few folks across America, and certainly there are 
many in this Chamber, who say well, the Devil is better than the one we 
do not know, and maybe we better stick with the current system. But 
just think about some of these things that involve our current Tax 
Code. The complexity is staggering.

[[Page H7596]]

  In the 1980's alone, the tax laws were changed over 100 times. In 
1986 alone, the 1986 Tax Reform Act, they added over 100 new tax forms 
to the IRS, 100 new forms one had to look at and fill out.
  Now, no wonder every year that goes by, more Americans find it 
impossible to figure out their own taxes. I do not need to tell my 
colleagues, as Members of Congress, most of them are honest, but we end 
up having to go to tax preparers, I know I do, because I cannot figure 
it out any better than the folks that I represent back in upstate New 
York.
  The percentage of Americans using professional tax preparers rose 
from 41 percent in 1981 to about 50 percent today who use professional 
tax preparers. Money Magazine reported that the tax bill that we passed 
this summer and that was signed into law in August will add 37 new 
lines to the form used to report capital gains alone.
  Now, I am very pleased that we were able to bring about reductions in 
capital gains taxes, but even in our effort to try to bring about 
reductions in capital gains taxes we added 37 new lines to the form, 
and you know and I know that we are going to have to go out, most 
Americans, and hire somebody to help us fill out those forms with all 
of these increases in complexity that have been put into place.
  There is a huge burden in compliance with the Tax Code. Individuals 
spend 1.7 billion hours per year filling out their taxes. Businesses 
spend 3.4 billion hours filling out their taxes. No wonder two out of 
three or more small businesses fail in their first 2 years just trying 
to deal with all of this complexity, and that means job losses for 
Americans. Of course, and I know this is no surprise to people in my 
district, the problems of the IRS are profound. In 1989 alone, the IRS 
answered just 62.8 percent of taxpayer questions correctly. This means 
24 million Americans were given the wrong answer.
  In 1995, about half of the computer-generated correction notices 
contained inaccurate information from the IRS, and about 40 percent of 
the revenue collected from IRS penalty assessments was abated, 
set aside, when citizens challenged the penalties. Just think about 
that. Forty percent of the revenue that the IRS assessed was abated or 
repealed when people challenged their IRS decisions.

  Now, folks and my colleagues, I just think that those kind of 
statistics should make us really understand how compelling the need is 
for swift action to repeal the IRS code that I want to do under H.R. 
2483 and replace it with some other system. But if that does not make 
us want to do it, these figures will.
  Earlier this year the House passed legislation, H.R. 1226, to provide 
criminal penalties, criminal penalties for IRS employees who snoop 
through taxpayer records. We may say, well, is that really happening? 
According to the General Accounting Office, there have been over 1,000 
incidents reported of IRS snooping in taxpayer files. I want to make 
clear, it is not every IRS employee, it is a small number that are 
doing this. However, in my home area, in Buffalo, NY in early April of 
this year it was revealed that 18 Buffalo IRS agents snooped through 
tax returns, and unfortunately just two were fired for their actions.
  We have 110,000 IRS employees in this bureaucracy, most of whom are 
doing their job diligently, but they are enforcing a Tax Code that is 
unenforceable, indecipherable, misunderstood by everybody, whether one 
is trying to prepare taxes or the folks who oversee it, and then we 
find a few people are abusing their jobs at the IRS, and out of the 18 
of the agents that were charged, just 2 were fired in my hometown of 
Buffalo, NY.
  The IRS itself has grown dramatically. Today, the IRS employs 113,000 
people. I was wrong, it is not 110, it is 113,000. But contrast that 
with other Federal agencies. The FBI out there on the front lines of 
the war against criminals, only 24,000 compared to the 113,000 at the 
IRS. The Immigration Service, 12,000 defending our borders, yet 10 
times that many in the IRS. The Drug Enforcement Administration waging 
a tough fight against the war on drugs, only 5,700 employees. We have 
113,000 in the IRS. The border patrol again at our Nation's borders, 
5,800 people.
  Would it not be better if we could get rid of that IRS, get rid of 
that Tax Code, replace it with a flatter, fairer income tax or a 
national sales tax or consumption tax or something else, and take some 
of those IRS employees and retrain them to help our FBI agents in the 
war on crime or our border patrol or our INS or our DEA as they try to 
keep people out or keep drugs out of our Nation.
  Of course recently, and again I know this is no surprise, folks at 
home and in this Chamber know these statistics, but Money Magazine 
every year selects a group of professional tax preparers and asks them 
to complete the tax returns for a fictional family. They put together 
some numbers. The same numbers are submitted to a group of professional 
preparers.
  This past March Money Magazine gave this test to 45 different 
preparers, and it comes as no surprise, they received 45 different 
answers. Only one-quarter of the preparers even came within $1,000 of 
the correct answer. How can we have confidence in a system that is so 
impossible to comprehend, even by the professionals who are supposed to 
understand all of this?
  Now, it is not the first time that we would have the opportunity to 
repeal the income tax. In 1861 the U.S. Government passed the first 
income tax. It was 3 percent on net incomes over $800, and 1.5 percent 
on income from government bonds. The tax was so unpopular that the 
Treasury Secretary then, Salmon P. Chase, refused to collect it.
  In 1862 Congress mandated the collection of this income tax that 
remained in effect even after the Civil War ended. It was so unpopular 
that Congress passed a law in 1870 to repeal the income tax starting in 
1872. Now, it did not take commissions or blue ribbon panels to figure 
that out. They set a deadline, they passed the tax, and then they 
repealed it.
  My friends, I have to say this. My colleagues in this Chamber, the 
time has come to do what the American people want us to do. The time 
has come to have some courage, to stand up and say we are going to turn 
our backs on the special interests, we are going to turn our backs to 
the special interest breaks that are out there for a few, the 
privileged few. We are going to tell our constituents that it is time 
to involve them in the process, for a change, of determining policy in 
this country.
  Let us shoot that gun to start the debate, the race. Let us set the 
finish line of December 31, 2000, to sunset the Federal Tax Code, to 
end it, and let us begin that great race, that great debate, that great 
discussion with the American people on what should replace it.
  I am convinced that this Congress has done many great things in the 
past couple of years: welfare reform, the effort to balance our 
Nation's budget, so many other good pieces of legislation. But I 
believe as we begin the new millennium on January 1, 2001, what a great 
way to start that new millennium and what a great hope and opportunity 
for our children and grandchildren and frankly for ourselves, to begin 
our new millennium and our place in an even stronger economy in the 
global marketplace, by repealing this Income Tax Code and replacing it 
with something that the American people can trust and believe in once 
again.

                          ____________________