[Congressional Record Volume 143, Number 142 (Tuesday, October 21, 1997)]
[House]
[Pages H8904-H8909]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WHAT SHOULD BE DONE WITH THE IRS?
The SPEAKER pro tempore (Mr. Saxton). Under the Speaker's announced
policy of January 7, 1997, the gentleman from Georgia [Mr. Kingston] is
recognized for 60 minutes as the designee of the majority leader.
Mr. KINGSTON. Mr. Speaker, I wanted to talk tonight about what we
need to do with the IRS. I think what we need to do with the IRS is
change the initials from ``IRS'' to ``CRS.'' Right now, as we know, IRS
stands for Internal Revenue Service. I say that what we should try to
do is cut taxes, with a ``C,'' and give tax relief, change the attitude
of the tax system, and also simplify taxes. I guess the best way would
be to make it ``RAS,'' and have that stand for relief, attitude
adjustment, and simplification.
I have my friend, the distinguished gentleman from Pennsylvania [Mr.
Fox], who has been a leader on this with me tonight. I know that the
good folks in Pennsylvania want lower taxes and simpler taxes, or the
gentleman would not spend so much time working with that.
Mr. Speaker, I yield to the gentleman from Pennsylvania [Mr. Fox].
Mr. FOX of Pennsylvania. Mr. Speaker, I think the gentleman from
Georgia [Mr. Kingston] is right on target. There are three parts to
this national debate and national issue that I think affect
Pennsylvanians as well as they do Georgians and everyone else in the
other 48 States.
The fact is, people are already overtaxed, and we have already
started on the road to reducing taxes in this session. Number two, we
need to change the IRS culture as we know it, and to change that agency
and dismantle it. Three, we need to have a new Tax Code. Let me just
speak, if I can, about the second point, which I think is very
important.
The IRS has gone on too long with being unchecked, and where it all
started was the original law which said that the IRS commissioner is
presumed to be correct and taxpayers are presumed to be guilty. That
whole presumption has to change and be reversed.
We need to have legislation such as I will be introducing as Taxpayer
Bill of Rights III which says, no more quotas, no more fishing
expeditions by the IRS,
[[Page H8905]]
no more improper procedures with regard to bank accounts and
businesses.
The IRS from now on will be responsible for legal bills that they
cause unfairly to taxpayers and businesses, and they also will be
responsible for any closures of businesses wrongfully conducted, just
like you and I as private business people could be involved with a
lawsuit if we interfere with someone else's right to conduct business.
We need to make the agency accountable for the first time.
Mr. KINGSTON. Mr. Speaker, just to underscore what the gentleman is
saying, when we talk about we need an IRS attitude adjustment, I have a
rural district with a lot of farmers who work with the Soil
Conservation Service or the Farm Service Agency, and generally these
Federal Government agencies have a cooperative, friendly, help and
technical assistance kind of attitude with farmers. Farmers come to
them with erosion problems, wetlands problems, questions about
applications of fertilizers and so forth, and the Federal Government
agents, representing the USDA, are friendly to the farmers.
Would it not be nice if we had an IRS who was that way to small
businesses? Most of the people I know fear an audit, not because of
anything they have done wrong, but because maybe inadvertently they did
forget to dot an ``I'' or cross a ``T,'' and that being the case, they
are afraid the IRS is going to catch them and fine them, and be
excessively ruthless in their treatment of them.
Mr. FOX of Pennsylvania. If the gentleman will continue to yield, the
fact is, while most IRS employees are doing the job they have been
given to do, and do it properly, the fact is the whole culture has
given them the incentives to go through peoples' rights without going
through due process.
Take the example of Carol Ward in Colorado, in Colorado Springs,
Colorado, where she was complaining to an IRS agent about the way they
were treating her son's particular audit. The IRS agents get back at
her, close her three businesses, put a sign on the door saying the
business is closed, ruin her reputation, cost her hundreds of thousands
of dollars. They had an improper audit, and in the end she is going to
win back her business and hopefully get the fine she deserves back from
the government.
But this has, frankly, gone on not just as mere anecdotal evidence,
this is happening regularly.
Mr. KINGSTON. Mr. Speaker, if the gentleman will continue to yield,
here are some stories that the Heritage Foundation has given us, from
one of their fellows named Dan Mitchell.
One taxpayer was fined $10,000 for using a 12-pitch typewriter to
fill out his tax forms instead of a 10-pitch typewriter. He was fined
$10,000 for it.
In 1983, one taxpayer was fined $46,806 for an alleged underpayment
of 10 cents. In another case, a day care center which allegedly owed
the IRS $14,000 was raided by armed agents, who then refused to release
the children until the parents pledged to give the money to the
government.
These are cases that have been documented. It is just atrocious.
There is no reason to have to have this kind of a relationship with a
government agency when it is a government by we the people.
The Tax Code, there are 17,000 pages of IRS laws and regulations.
There are 480 different tax forms. The IRS sends out, Mr. Speaker, 10
million corrections each year on notices.
In 1990, there were 190,000 disputes between the IRS and taxpayers
that went to court. But of those, something like, and I have the exact
statistic, 83 percent of all taxes that are collected are paid
voluntarily. Only 3\1/2\ percent is because of the dispute and the IRS
going after people, which tells me that the American people are pretty
darned honest and forthright about paying their taxes, particularly
when they can understand them.
Mr. FOX of Pennsylvania. If the gentleman will continue to yield, the
fact is it is very clear from the Senate Finance Committee hearings, we
learn that individuals who the IRS especially go after are the mom and
pop stores, or single person-owned businesses where they would be less
likely to be able to afford a lawyer or an accountant or taxpayer
services, so that they would capitulate and pay the fine, even when
they were not guilty.
The fact is, we should have a Federal Government agency like the
National Park Service which is so respected. Why can we not have an IRS
or a successor agency be one that the people will trust, they will have
some belief that what is happening is credible and accountable?
But beyond changing the agency, I think it is also important that we
move the debate on to having a replacement code from the 5 million
words we have now, where the perception and the reality, by most
Americans, is only those with special interests get the tax breaks, the
deductions that they want. And meanwhile, I think most Americans would
rather have a flat tax, something along the order of maybe a situation
where those who have a dual-income under $25,000 or $30,000 would not
pay a tax, a single person with $15,000 would pay no tax, but there
would be a flat tax for those above. But there would be three
exemptions: One for charitable deductions, a mortgage deduction, and
State and local tax deduction.
That is not the only program that is out there. People talk about a
national sales tax. But I think the important thing is to start the
debate moving forward of a fairer tax program that will not give
special breaks to those who have lawyers who can put them in the Tax
Code, only to make it more difficult for those who are hardworking
middle-income earners to make ends meet without having three jobs and
sacrificing the unity of the family.
Mr. KINGSTON. The tax simplification argument really sets the stage
for a thorough flat tax versus consumption tax debate. We have, in
fact, two of our colleagues, the gentleman from Oklahoma [Mr. Largent]
and the gentleman from New York [Mr. Paxon], who have introduced bills
that shelf the IRS code in the year I think 1999 or 2000. So if their
legislation passes, Congress will be in a position of having to change
the code. But it is not going to be easy.
Mr. FOX of Pennsylvania. If I may speak to that point, I am glad the
gentleman raised that. I believe that both the bills of the gentleman
from Oklahoma [Mr. Largent] and the gentleman from New York [Mr. Paxon]
are on target. What they are going to do for the first time, I say to
the gentleman from Georgia [Mr. Kingston] is to say we will put a
deadline. By the last day of the year 2000, we are going to have a new
code.
Just like it took discipline to make us have this 104th Congress,
105th Congress reach a balanced budget by a date certain, we need to do
the same thing. I think the gentleman from New York [Mr. Paxon] and the
gentleman from Oklahoma [Mr. Largent] are right on target, for us to
have the discipline to say here is the date by which we are going to
make this change, and let us be about the business in a bipartisan
fashion of changing the outdated code.
Mr. KINGSTON. As I talk to different civic clubs and have town
meetings and talk about the difference between a flat tax and a
consumption tax, one of the things that I realize, speaking for myself
and speaking for the folks in the audience, is we all need to have a
more thorough debate on it. We need to have education.
For example, if we exempt charitable contributions and the home
mortgage deductions and something else, what is going to prevent us
from coming back and saying, well, what about the cost of a wheelchair,
the cost of a college education, prescription drugs, long-term health
care, all of which are worthy causes, and underscore an important
investment in public policy?
If we start having those deductions again, will we not return back to
as complex a Tax Code as we have now? It is possible.
Mr. FOX of Pennsylvania. Mr. Speaker, let me respond. I think the
gentleman's point is well taken in this respect, that if we start kind
of slippery slope with three exemptions, where do we end up? But the
fact is, those are probably the three most reasonable. We may well end
up with those three, or we could end up with none.
I think what is important is that we be able to, in our town meetings
and in our discussions in the nationwide TV, as well as debates here on
the House floor, to discuss them.
My concern with the national sales tax is twofold. One, for those
living on fixed income, many of them seniors, you are going to tax them
the same as
[[Page H8906]]
they tax you or I, and they are less able to pay if we have a national
sales tax of a certain percentage. Plus, if we have States, and most of
them already have a sales tax, if we have a super sales tax now from
the Federal Government, what new tax will States have to have in order
to replace the old sales tax?
So I think the movement is more to a flat tax, rather than a sales
tax. But we have not heard the last of it. I think we need to have all
the different alternatives out there, put them on a board, figure out
who the winners and losers are, and have the American public weigh in
before any bill is adopted to find out what the best solution is. But
we certainly know from the American taxpayers and those who have worked
with this code that we need a change.
Mr. KINGSTON. Yes. I want to point out something about the national
sales tax. I know England, Britain, has a high sales tax, but they
exempt groceries from it and children's clothes, among other things. So
we can, for the seniors or those who could adversely be affected by a
national sales tax, we could have certain deductions for them. There
again, we get into a deduction kind of problem, but it still would not
complicate it for the taxpayer as much as it would for those collecting
it. That could be a problem in itself.
I want to give the gentleman some more statistics, though, about how
complicated the tax system is now. These figures came out from the
office of the gentleman from Ohio [Mr. Portman], who has been working,
as the gentleman knows, on the National Commission for Restructuring
the IRS.
Just to read some things they found, last year only one in five calls
to the IRS customer service hotline got through. How many constituents
does the gentleman have who call him for a fairly simple tax question,
they call the gentleman from Pennsylvania, [Mr. Jon Fox], because they
know he can get an answer from the IRS and they cannot? That is very
common.
Mr. FOX of Pennsylvania. Another interesting story, if the gentleman
will continue to yield, I had a CPA from Montgomery County,
Pennsylvania, call up the IRS helpful hotline, and he asked the
question on behalf of his client. And they said, this is only for
taxpayers, this is not for accountants.
This accountant is also a taxpayer. He pays part of the bills of this
Federal employee. As far as I am concerned, if you are going to have a
taxpayer service, it is for everyone, not just those who are not
accountants, and also those who are accountants.
So we have a whole culture that goes to why I say the agency needs to
be overhauled, it needs to be dismantled, and we need to start over
again. The gentleman's statistics bear out what I am saying.
Mr. KINGSTON. If I can reclaim my time, Mr. Speaker, here is
something interesting. The gentleman keeps using the word ``culture.''
One of the finds of this committee is that the culture is so insular
that only 5 of the top 73 IRS employees have been with the agency less
than 15 years. Other than the commissioner, only two non-IRS employees
have been brought in from the outside world to fill senior positions at
the IRS.
It is interesting, because quite frequently we read in the newspaper
that the CEO of General Motors or one of the senior VPs goes to Ford,
or the head guy of CBS goes to NBC, or whatever. We see that all the
time in the private sector, where top level management leaders are
moving from one corporation to the other. I think it is a good blood
mixture; it is good for everybody. But apparently the IRS does not
believe in that. That could be one of their problems.
Here are some more statistics. The IRS still hand-processes the vast
majority of returns and still relies on papers, 14 billion pieces of
paper annually. It costs the IRS about $7 to process a paper return,
and less than $1 if it is done electronically.
But electronically does not necessarily answer the question, because
an IRS agent may have to access six different computer systems to
resolve a taxpayer problem, and to answer questions, simple questions,
often because of this, takes weeks and weeks. It is just too
complicated.
Since 1956, the number of sections in the Tax Code has risen from 102
to 698.
{time} 1930
Just since 1986, that Simplification Act, there have been 4,000
amendments to the tax codes. I think this is important for us to
realize, that we as Members of Congress have taken on this task, and
the Republican Party has led the way. Unfortunately, for whatever
reason, the White House has decided that this is a partisan issue and
the President wants to go down saying that the Democrat Party is the
party of the status quo and the IRS and not change it. This is an
actual headline from the Washington Times, September 30. It says, ``The
White House champions the IRS. The President opposes a citizen
oversight committee.'' And the citizen oversight committee would just
have some ideas and some suggestions for the IRS. But the President
does not want that.
Now, we are not here to bash IRS employees, we are here to bash a tax
system, a code, which these employees, another statistic, many of these
employees want tax simplification and this was one of the findings of
this committee, that the IRS employees themselves want simplification.
But every time we in Congress, Democrats and Republicans, pass new
exemptions on tax, it is not just if we have children, we want a $500
tax credit, we just fill out this form. It is not like that. It is
pages and pages of forms, because that is the nature of it. As a result
of it, Congress is the one who has made this system so complicated.
Now, we are not the one who has given the attitude which seems to be
so prevalent among some IRS offices, but we certainly should be the
ones to try to straighten out the complications.
Mr. FOX of Pennsylvania. If the gentleman would yield, the fact is
that the agency has not been able to make the proper changes on itself.
Take for example the fact that I exposed in my recent ``Washington
Waste Watch,'' the fact that $2.5 billion was spent on a new computer
system that does not work. We would think that the agency that most
depends on computers would buy a system that works.
Then we have 110,000, approximately that number, of IRS employees and
when we think how many taxpayer advocates we would appoint to make sure
they represent the taxpayers, one would think there would be several
thousand or several hundred. There are only 43. So we have our sights
and our issue of taking care of taxpayers, helping them fill out forms,
helping them try to get through their debts and reshape their lives
when they have been overburdened would be something that the agency
would be about, and I am sure there are cases where there are some
directors who worked at it. But as an overall, there has not been the
changes that the public wants and Congress must demand.
Mr. KINGSTON. I think we should move for simplification and we should
move to insist that IRS employees have a taxpayer friendly attitude.
But along with this, whether we go to a flat tax or whether we go to a
national sales tax or whatever we do, we still have to keep tax relief
in mind.
Here are some examples of hidden taxes that we do not know about when
we think about it. This is from Americans for Tax Reform, 1997: That a
bottle of beer has 43 percent taxes. An airplane ticket, 40 percent
tax. A bottle of liquor, 72 percent taxes. Electric bill, 25 percent
taxes. A loaf of bread, 31 percent taxes. A car, 45 percent taxes. A
hotel bill, 43 percent taxes. A restaurant bill, 27 percent taxes. A
packet of cigarettes, 75 percent taxes. The phone bill, which keeps
going down and down and down incidentally, 50 percent taxes. Pizza, 38
percent taxes. A set of tires, 36 percent taxes. And a can of soda,
that is what my colleagues say up north. We say a can of Coca-Cola
where I am from.
Mr. FOX of Pennsylvania. Mr. Speaker, the gentleman is from Georgia,
so I understand that.
Mr. KINGSTON. A can of soda, 35 percent taxes. A gallon of gas, 54
percent tax. When taxpayers say, ``I am paying too much tax,'' they are
saying ``I pay too much sales tax. I pay too much income taxes and
tangible taxes and ad valorem taxes.'' They are not thinking about what
they pay when they buy a pizza or tires or pay their phone bill. This
is a tremendous problem.
Mr. FOX of Pennsylvania. If the gentleman would yield, and it is not
only that the American people have been
[[Page H8907]]
paying too much in taxes and our tax relief bill, the $500 per child is
going to help and the new tax credit for education is going to help and
the capital gains tax reduction is going to help. But one of the most
important areas that we need to work on is making sure that the Federal
Government wastes less. Our legislation, which will sunset review
regulations and that also will sunset review agencies will make a
difference. Under my legislation what will happen is every seven years
each Federal Agency will have to justify its existence.
Mr. Speaker, what would happen if during that rotation an agency does
not meet its original purpose or is wasting money because it is
duplicating what States already do, or the private sector can be doing
better? That agency could be either eliminated, it could be privatized,
or it could be downsized.
The fact is we need to look to for more than just tax relief, we need
to look for regulation relief and we need to look for spending relief.
When we look to this Congress, there are going to be three things that
we look at, and I am pleased that the gentleman from Arizona [Mr.
Hayworth] has joined us. There are three things: Trying to reduce
taxes, change the IRS as we continue and, third, make sure that we
change the code.
Mr. Speaker, I would like to turn to our friend who has been an
outspoken fighter for the taxpayer.
Mr. KINGSTON. And as a distinguished member on the Committee on Ways
and Means leading the tax fight.
Mr. HAYWORTH. Mr. Speaker, I thank my colleagues from Georgia and
Pennsylvania, and listened with great interest to some of their
discussion here tonight because, Mr. Speaker, it mirrors, it echoes
what I have heard in the sixth district of Arizona.
Now, Mr. Speaker, just to offer some background as to the nature of
the sixth district in Arizona, in square mileage it is almost the size
of the entire Commonwealth of Pennsylvania which the gentleman from
Pennsylvania [Mr. Fox] my good friend, calls home.
I heard a lot of what my colleagues heard back home during town hall
meetings; an almost universal urge on the part of those gathered to
move to sunset the current Tax Code by a date certain. As my colleague
from Pennsylvania pointed out, the gentleman from New York [Mr. Paxon]
has legislation in that regard, as does the gentleman from Oklahoma
[Mr. Largent].
But coming up tomorrow, Mr. Speaker, in the Committee on Ways and
Means, and later this week, we will move to actually mark up, and let
us move out of legislative parlance to discuss this for those who join
us outside this Chamber via television, to sit down and examine a piece
of legislation to make sure the wording is correct, perhaps to offer an
amendment here or there, to deal with accountability of the Internal
Revenue Service.
Mr. Speaker, as my colleagues pointed out earlier, it certainly it
was a curious spectacle to see government employees, their identities
shielded, their faces kept from the cameras, their voices
electronically altered, as they offered example after example of an
agency that sadly has run roughshod over the rights of many Americans.
Indeed, one of the most important provisions we will discuss this
week in the IRS accountability legislation that I am pleased to
cosponsor with my colleague and fellow Ways and Means member, the
gentleman from Ohio [Mr. Portman], one of the most important provisions
that will emanate from that legislation is something that Americans
take for granted. For, Mr. Speaker, when we are hauled into a court of
law on criminal charges, I know my colleague from Pennsylvania not only
has the initials J.D., but he is in fact a juris doctor, he is an
attorney. The presumption when we are hauled into court and charged
with some criminal activity, if any American is placed in that
situation, the burden of proof rests with the State. The presumption of
innocence belongs to the accused citizen.
And yet, sadly in terms of tax adjudication, that presumption of
innocence is not there for the individual. Essentially in tax
adjudication, an American citizen, a taxpayer, has to go in and prove
his innocence. The government assumes the taxpayer's guilt.
Mr. KINGSTON. Mr. Speaker, if the gentleman will yield, it just
occurs to me, is this a throwback from the days of a monarchy? When we
had our revolution with the folks overseas, did we not change this
part? Was this not a Constitutional right? Did the Committee on Ways
and Means discover at what point in American history the taxpayer
became guilty until proven innocent? Or was it something that actually
goes back to the monarchy?
Mr. HAYWORTH. No, indeed, to the best of my recollection, and I must
confess, Mr. Speaker and to my colleagues here, I do not have a
detailed history at my fingertips. It is my understanding, however,
that as things changed in our society, as the 16th Amendment to the
Constitution was ratified, as there was an allowance of direct taxation
of income, sadly, a lot of perversions have grown out of that. And I
use that word purposefully, because these things run counter to our
well-established constitutional rights that our Founders brought us.
Mr. KINGSTON. I do not want to digress too much, but income tax,
1913; correct?
Mr. HAYWORTH. That is correct.
Mr. KINGSTON. Now, the use of the audit, I understand that regardless
of who the commissioner of the IRS is, the commissioner, the head
person is appointed by the President of the United States and
regardless of who that appointee is, Democrat or Republican, audits
still seem to happen with a curious degree of coincidence.
For example, my wife's great uncle, who is deceased now, during the
1930s made a wisecrack about the WPA, the Works Project Administration,
of the Roosevelts, and he made a comment to a group that was working on
a street or road. He said that unfortunately the employees got there
before the truck with the equipment did, and so the shovels are going
to be a little bit late today, but to tell employees to go ahead and
start leaning anyhow.
He made that comment and was asked by the Roosevelt administration to
take it back. This is America. Free speech. He made a comment. We may
like it or not like it, but he has a right to say it. He would not
retract it. This is years and years ago. And as a result,
coincidentally, he was audited the next year.
Now, we have another case of a young lady named Paula Jones. I do not
know Ms. Jones, but she has suddenly become audited. Now, I am sure it
is just coincidence, but did the Committee on Ways and Means come up
with any correlation between Paula Jones' legal situation right now and
the fact that she is being audited?
Mr. HAYWORTH. Mr. Speaker, as my colleague asked the question, I can
simply point out that is one of many questions that members of the
committee have had for those involved in the Internal Revenue Service
and for those who ostensibly oversee the Internal Revenue in the
Department of Treasury.
But as my colleague points out, whether it is as relevant as today's
headlines or historical incidents in the past, for example, I would
commend to the attention of my colleagues and those who join us tonight
a very fine book by the political author and columnist Chris Matthews,
entitled ``Kennedy and Nixon.'' Very interesting. And these are the
words and the observations and the scholarship of Chris Matthews. I am
not here to hurl partisan brickbats, but as a historical fact or
incident, Mr. Matthews points out that the audits were used quite
willingly to the defeated candidate, Mr. Nixon, in the early years of
the New Frontier. Again, I am quoting Mr. Matthews and his book,
``Kennedy and Nixon.'' I am not making that assertion.
We understand, certainly, President Kennedy is not here to answer for
that. But there have been numerous examples. And then again for the not
so rich and famous an example in my district. One of my colleagues, one
of my coworkers, had a situation where his father was a small
businessman, a pharmacist. An Internal Revenue agent came in. In
frustration, the gentleman made a comment that probably we could all
agree was ill-advised and intemperate. He did not threaten any violence
against the government employee, but it was a comment that was fraught
with frustration. However, after that, the gentleman was audited, I
believe, for the next 5 to 7 years, every year.
[[Page H8908]]
{time} 1945
Mr. FOX of Pennsylvania. Perhaps what we need, you, as a member of
the Committee on Ways and Means, may be in the best position to be our
fiscal watchdog. We need a taxpayers' whistle blower law, because it
seems to me that in a Federal agency or the private sector, if you
report a wrongdoing, the law is supposed to say you are to be protected
from bringing forward a wrongdoing so that redress can occur without
having recrimination.
Why should it be that someone who uses their free speech rights as an
American, whether they agree with an agency or a Congressman or anyone
for that matter should have to have their rights trampled upon just
because the party in power or the person with authority disagrees with
them?
I hope that the oversight factor on whatever successor agency happens
to the IRS is something that you are contemplating when you get
involved with the legislation.
Mr. HAYWORTH. I think that is absolutely necessary. We manifested in
perhaps another fashion what is key on this legislation that will be
offered by the gentleman from Ohio [Mr. Portman] in a bipartisan manner
is to say that there needs to be effective oversight of the Internal
Revenue Service not only from the constitutional purview of those of us
in the Congress, but also immediate oversight. And right now the
Internal Revenue Service is the 800-pound gorilla, if you will, of the
Treasury Department, because so many of the resources allocated for
Treasury end up in the Treasury of the IRS. So much of the Treasury
budget is focused there that sometimes it is the tail wagging the dog,
so to speak.
What the legislation calls for is an independent advisory oversight
council, not based on political appointees, but again to remove some of
the suspicion, some of the coincidence of audits, some of the questions
that I think Americans of all political persuasions have to
depoliticize that agency. Of course, this is but a first step.
You spoke earlier of what should transpire in the years to come as we
have a grand debate about tax reform in general, whether it is a flat
tax, a national retail sales tax or some other notion, it is such an
important debate to have that we take the steps now to rein in the IRS,
but certainly as we confront a new century, it is certainly time to
reexamine the 16th amendment, certainly time to reexamine the tax
tables and the Tax Code and some of the arcane procedures that surround
them.
We have a very big job. The challenge for us, and I think this is a
marked difference, quite candidly, in political discourse and in
working within our constitutional Republic, that instead of walling off
this debate and calling a few people in, a few so-called experts in to
give testimony behind closed doors, this is something that is so far-
reaching to every American family, to every American citizen that quite
literally every American needs to weigh in, needs to offer their
thoughts and opinions. That is why I am so gratified, Mr. Speaker, that
two of our colleagues, our party leader here in the Congress, the
gentleman from Texas [Mr. Armey], and our good friend, the gentleman
from Louisiana [Mr. Tauzin], have taken to American cities to debate
the different alternatives that are there because the stakes are high
and the implications are many for our Nation as we approach the next
century.
Mr. FOX of Pennsylvania. Mr. Speaker, I think the gentleman hit some
good points. The fact is that those two individuals, the gentleman from
Texas [Mr. Armey], and the gentleman from Louisiana [Mr. Tauzin] are
leading the fight for a flat tax and the sales tax, respectively. But
that is not the last word. Your town meetings and the town meetings of
the gentleman from Georgia [Mr. Kingston], or mine, we will hear other
ideas that may be equally good.
Mr. HAYWORTH. In fact, just to point out one of the ideas, this
engenders a lot of interest and a lot of initiative. Indeed, one of our
constituents in Carefree, Arizona, put together a proposal. He attended
a town hall meeting in Carefree and two nights later was back at
another town hall in Fountain Hills, Arizona, where he had put together
his own plan that, indeed, I will take and certainly take into the
Committee on Ways and Means and offer to the Joint Committee on
Taxation and take a look at with my staff, because that is the essence
of our constitutional Republic, different opinions, different notions.
In fact, the gentleman, as he brought the plan down, I could not help
but say, imagine if it is this skill, and someone on the front lines
who has been in business, has not been wrapped up in electioneering,
has not been part of bureaucratic intrigue, but simply seeks a
solution, how refreshing it would be? And one other constituent at the
meeting said, there may be a town hall marker, there may be a
historical marker placed outside this room saying, here is where the
solution was found. That type of participation we need.
One cannot help but note the stark contrast to before we arrived in
Washington when those in the administration dealing with health care
wanted to have almost super secret meetings and then unveil a plan from
soup to nuts that ostensibly was going to help the American people.
What a great contrast to have the sunshine come in, to have the
ingenuity, the ambition, the ideas of the American people come to us as
their duly elected representatives and then move forward to have the
debate. This can be a great moment for our country.
Mr. FOX of Pennsylvania. I like that idea of Carefree, Arizona. They
probably do not pay taxes in Carefree.
Mr. HAYWORTH. They pay quite a few.
Mr. FOX of Pennsylvania. When the gentleman from Georgia opened the
hour, he said the three things we need to look at is reforming the IRS,
dismantling it, number two, change the code and, three, look to some
more tax relief for Americans.
The one I wanted to start off there was to talk about eliminating the
marriage penalty. Right now, two people are discouraged from getting
married because they actually will pay more in taxes if they do get
married. I thought you, as an expert, might have some other taxes that
you want to reduce.
Mr. HAYWORTH. My good friend from Georgia has a tangible example.
Mr. KINGSTON. This is the situation with the gross income taxes, the
couple, once they are married, actually end up paying more taxes. I
will not go through this, but just suffice it to say that basically
each individual is in a lower percentage tax bracket than they are
collectively when they married. The percentage bumps up. They pay more
taxes. And it is a crazy example of a policy that is wrong because if
we as a country support the institution of marriage, then certainly we
should not give people a financial penalty for getting married,
particularly right now with all the children that we have running
around who are illegitimate today.
The gentleman is from Arizona. I am from Georgia. Georgia had a
substantial tax cut, $500 million, exempted food from the sales tax,
and as a result we have had one of the fastest growth rates in the
history of our country. In 1992, since 1992, your Governor has cut
taxes by 1.5 billion and including dropping the top rate from 8.7 to
5.6 percent and reducing the corporate tax rate as well.
As a result, the new business creation has grown in Arizona three
times the national average because folks are spending their money their
way instead of sending it to Washington and having bureaucrats spend it
for them.
Mr. HAYWORTH. I thank my colleague for pointing out the Arizona
experience because certainly in this short time frame, this decade of
the 1990's, we have seen a philosophy in Arizona that, indeed, I
believe would work well throughout the country and it is born of this
notion, we have talked about it before, Mr. Speaker. It is the notion
of many of us who came here to change the way Washington works, to
first of all, identify the problem in this fashion.
When we are talking about tax funds, money taxed from the American
people, this money does not belong to the Government. It is money that
belongs to the people. Quite simply, whether at the State, county or
more fittingly here for this Chamber at the Federal level, the notion
should be that the American people work hard to create their wealth.
They worked hard for the money they earned. Therefore, they ought to
hang on to more of it and send less of it to the Government and we
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have been able to do that and make great strides in the State of
Arizona and, indeed, Mr. Speaker, as I was riding out to catch the
airplane very early this morning Arizona time to get back here prior to
votes after 5 eastern time, we heard some of the new unemployment
figures. And unemployment is down in metropolitan Maricopa County to
points almost minuscule.
To be sure there are other problems, other places across the width
and breath of the Sixth District, but it shows what can happen when
people are allowed to hang on to more of their own money. When they
have it to save, spend and invest as they see fit and that can really
be an answer because it actually, with economic growth, would create
more revenue for the government.
Mr. KINGSTON. Mr. Speaker, New Jersey cut taxes. Gov. Christine Todd
Whitman made good on a campaign promise and cut taxes and as a result
they have had growth. Massachusetts, under Dukakis, had high tax
increases. Under Governor Weld they enacted an income tax rollback and
as a result they have regained 150,000 jobs that were lost under the
Dukakis tax increase. California, the same way, 1960, the legislature
enacted a $7 billion tax increase. It was the largest in the history of
any State in the country. And income taxes went up. Everything went up
and then there was a recession. Now they have turned it around.
In 1995, these tax hikes were repealed and since then California has
gained over 150,000 jobs. Revenues have gone up to States because of
tax cuts that they have enacted. Revenues have also gone up nationally.
As a result of that, this Congress is very, very close to having a
balanced budget. Our deficit has fallen from about over $200 billion 3
or 4 years ago to now around $23 billion. And it is because if we
confiscate less of the people's money, they are going to spend more of
their own money and when they spend money, business expands, jobs are
created, more people go to work, less people are on welfare and tax
revenues do go up.
Mr. FOX of Pennsylvania. Mr. Speaker, the fact is, when it comes to
the balanced budget, people like the gentleman from Wisconsin [Mr.
Neumann], who came here to Congress has done a great job in championing
reducing the deficit and balancing the budget. By balancing the budget,
we have been able to reduce those interest costs for car loans, for
mortgage payments, for education, those are key things to making people
live the American dream. I have to thank the gentleman from Wisconsin
[Mr. Neumann], for his leadership in moving us forward in that
bipartisan debate and the bipartisan success.
Mr. HAYWORTH. Let me join the chorus of praise for our colleague from
Wisconsin because we are moving actually beyond that notion where, yes,
we realize we want to balance the budget, but it should not be a one-
time curiosity. Indeed, now with responsible fiscal practices that
allow people to hang on to more of their own money, with the growth we
have seen in terms of jobs and economic opportunity, it now appears
that we may really turn the corner, and as our colleague from Wisconsin
has pointed out, we may be moving into an era of surplus and yet there
is another public charge, if you will.
There is another requirement of those of us who serve here for future
generations and that, of course, is to pay down the debt. So we really
have a one-two punch. I am pleased that our colleague from Wisconsin
has offered a National Debt Repayment Act as well where we take a look
at codifying or putting into law a fairly significant observation that
with those surpluses, one-third for tax relief, one-third for debt
retirement, and one-third for Social Security to maintain that program
so vital to our retirees.
I think there are a lot of things that we are working on in this
Congress, building off the solid success of the first tax cuts in some
16 years, also balancing this budget, and then moving forward to define
how best to serve as custodians of our children's future by working to
pay down and eventually pay off this burdensome debt.
Mr. KINGSTON. Mr. Speaker, if the gentleman is through, I am ready to
yield back the time.
Mr. FOX of Pennsylvania. I want to conclude by saying I appreciate
the leadership of the gentleman from Georgia [Mr. Kingston], and the
gentleman from Arizona [Mr. Hayworth] for helping us lead the charge
here for doing the three-part goal; that is, first, tax reductions for
the American family; second, dismantling the IRS as we know it into a
new successor agency that is taxpayer-friendly; and third, to change
the Tax Code so it is more flat. And in my case, I would like to see it
more flat, but certainly more fair to the American people.
We are moving to that goal and I support the legislation that these
two individuals have introduced. Hopefully, it will be passed and under
the gentleman's leadership in the Committee on Ways and Means, we are
looking forward to it being a very happy day for the American people.
Mr. HAYWORTH. I just want to say, I thank those in the Sixth District
of Arizona and those nationwide who join in this endeavor, in this
crusade to make our tax laws fairer, to work to restore basic
constitutional dignity and to restore fiscal sanity to this Nation.
Mr. KINGSTON. I know the gentlewoman in Arizona, Ms. Mary, is in the
Sixth District, but you should always thank her.
Mr. HAYWORTH. Amen.
Mr. KINGSTON. I wanted to say this, the gentleman is blessed to have
good family support, as I am and the gentleman from Pennsylvania [Mr.
Fox], and everyone else.
The initials, IRS, if we can change them to RAS, which would stand
for reduced taxes, change the attitude and simplify taxes, if we could
do that, I think then we can all go home to these great families that
we have and look our children in the eye and say, we have done
something to make a difference.
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