[Congressional Record Volume 144, Number 136 (Friday, October 2, 1998)]
[House]
[Page H9338]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     SIMPLIFIED USA TAX ACT OF 1998

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Pennsylvania (Mr. English) is recognized for 5 minutes.
  Mr. ENGLISH of Pennsylvania. Mr. Speaker, the American tax system is 
a Frankenstein's monster that terrorizes individual taxpayers while 
casting a cold shadow over the productive sectors of the U.S. economy. 
It is too complicated. It is riddled with obvious inequities. It 
punishes savings and investment. It reduces economic growth and burdens 
domestic industry struggling to remain competitive.
  Next week I will introduce the Simplified USA Tax Act, because I want 
to reform the American tax system in a way that makes sense to average 
citizens and that, therefore, will pass the test of time. Not only do 
we need a Tax Code that is fair and sensible, we need one that is 
stable.
  As bad as the current Tax Code is, and I am one of its severest 
critics, the last thing that we need is to enact some reform that is so 
radical and experimental that we may have to redo it all over again a 
few years later.
  The Tax Code must give Americans a fair opportunity to save part of 
their earnings. After all, it is thrift that has helped provide 
Americans with the security and independence that is the foundation of 
freedom. It is savings that buys the tools to make Americans more 
productive. And it is productivity that raises our living standards to 
the highest in the world.
  In my tax reform proposal, ``USA'' stands for unlimited savings 
allowance. Everyone is allowed an unlimited Roth IRA in which they can 
put the portion of each year's income they save after paying taxes and 
living expenses. After 5 years, all money in the account can be 
withdrawn for any purpose and all withdrawals are tax free. Nothing 
could be simpler and nothing could give people a better opportunity to 
save, especially young people.
  Under the new Tax Code, tax rates must be low, especially for wage 
earners who now must pay both an income tax and a FICA payroll tax on 
the same amount of wages. The USA tax starts out with low tax rates, 15 
percent at the bottom, 25 percent in the middle, 30 percent at the top. 
Then the rates are reduced even further by allowing wage earners their 
full tax credit for the Social Security and Medicare payroll tax that 
is withheld from their paychecks under current law.
  I do not propose to repeal the payroll tax because to do so would 
imperil Social Security, but I do allow a credit for it. And when the 
credit is taken into account, the rates of tax on workers' wages are 
very low indeed, in the 7 percent to 17 percent range for nearly all 
Americans.
  The USA tax provides tax relief for all Americans, especially who own 
their home, give to their church, educate their children and set aside 
some savings for a better tomorrow. Under my proposal, everyone gets a 
deduction for the mortgage interest on their home and for charitable 
contributions they make. In addition, and this is brand new and long 
overdue in our society. USA allows a deduction for tuition paid for 
college and postsecondary vocational education. Generous personal and 
family exemptions are also allowed under my proposal.
  The USA tax is simplicity itself. The tax return will be short, only 
a page or two for most of us. But, more to the point, the tax return 
will be understandable. For the first time in a long time, America's 
tax system will make sense to the citizens who file the tax returns and 
pay the taxes. For the first time since inception of the Federal income 
tax, Americans will have a full and fair opportunity to save whatever 
portion of their income they wish and for whatever purpose they wish.
  For the first time in history, working people will be allowed a 
credit for the payroll taxes they pay. And for the first time ever, 
families will have a generous tax-free allowance for the education of 
their children.
  My proposal also contains a new and better way of taxing corporations 
and other businesses that will allow them to compete and win in global 
markets in a way that exports American-made products, not American 
jobs. Experts who have studied this believe that, if enacted in 
America, this innovative approach to business taxation will soon become 
the worldwide standard to which other countries will aspire.
  For too long, the Tax Code has been a needless drag on the economy. 
That is not very smart and it is certainly not fair to those Americans 
whose living standards are lower because of it. For years its complex 
inanities have been the object of ridicule. It has also been the 
ultimate source of bureaucratic excesses and abuse by the IRS that is 
inconsistent with our free society.
  Mr. Speaker, it is high time that we restore people's faith in the 
integrity and competence of their tax system and, in the process, take 
a major step toward restoring people's confidence in the good character 
of their government.

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