[Congressional Record Volume 145, Number 52 (Thursday, April 15, 1999)]
[Senate]
[Pages S3765-S3768]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           TAX DAY, APRIL 15

  Mr. GRAMS. Mr. President, I just want to take a little time to talk 
today, because today is, of course, the infamous April 15 tax day. I 
know a lot of Americans are out there still working at the kitchen 
table at this time, working the pencils, trying to wade through 
thousands of pages, or at least dozens of pages, or all of the forms 
that they have trying to figure out their income tax by tonight. There 
are going to be long lines as people use every last minute to try to 
get this tax that they owe to the Federal Government in order. So that 
is the day that I think most Americans dread. That is April 15.
  For many American taxpayers, it is this usual routine. By this time 
there are only a few hours left to complete their tax form before 
midnight. They are going to be rushing to the Post Office. They are 
going to find themselves on the late night news as their local TV 
stations are showing footage of all these last-minute filers dropping 
the envelope into the mail slot to at least meet the filing deadline 
and finally be done with this.
  But even for those who file early, those who aren't going through all 
of this turmoil tonight, tax season, of course, is full of stress. Not 
only do we wade through endless paperwork but we also come face to face 
with the reality of just how big a bite Uncle Sam takes from us every 
year.
  Mr. President, have we ever really stopped to wonder why it needs to 
be this way? Do we stop to consider better alternatives to the current 
tax system? It sure doesn't make a lot of sense to me, because our 
current Tax Code is outdated. It makes our tax system among the least 
efficient. It makes our tax system among the most oppressive in the 
world. Everyone knows this. And, yet, it seems to get worse every year, 
and we don't do anything about it.
  When we have tried to give a little tax relief, or reform some of the 
Tax Code, what we have done is made it more complicated and added 
hundreds of pages. So we have made the tax system even worse in an 
effort to try to reform it and make it better.
  Congress, of course, is the first in line to blame because of this. 
Thanks to a Government that does not know when to stop spending, tax 
collections have grown faster than our economy has grown in the past 5 
years. And tax collections have grown twice as fast as the income of 
working Americans. So the Government is growing faster than Americans' 
working income. Hikes in the personal income tax--and particularly the 
increase in the effective tax rates--have propelled this increase in 
revenue.
  As Americans are working harder to try to earn a little bit more 
money, our tax system is taking more away from them in doing so because 
our tax system pushes more of them into the higher tax brackets.
  Since 1993, just 6 years ago, Federal taxes have increased for 
average workers 54 percent, which for the average taxpayer translates 
into about a $2,000 per year tax increase. So, if you look back at what 
you were paying on average in 1993 compared to what you are paying in 
taxes to the Federal Government today, the Federal Government is taking 
$2,000 a year more in taxes. As a result, Americans today have the 
largest tax burden, even more than in World War II, and it is still 
growing.
  Federal taxes now consume nearly 21 percent of the national income. 
Twenty-one percent of everything produced in this country goes to 
Federal taxes. That is compared to just over 18 percent in 1992. So, 
again, over the last 6 years, Government has taken 3 percent more of 
national income than in 1992.
  A typical American family today, when we say they are at the highest 
tax rate in history--even more than paying off and fighting in World 
War II--the typical American family today is paying 40 percent of its 
total income in taxes, more than the family spends on food, clothing, 
transportation, and housing combined. So they are spending more to 
support Uncle Sam than they are supporting their families with the 
necessities. And compare that to the average tax rate of only 2.75 
percent in 1916 when Congress first got the

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authority to level income taxes from 2.75 percent in 1916 to over 40 
percent for the average family today taken by Government.

  Another comparison worth noting is that Tax Freedom Day, the day that 
Americans can stop working for the Government and begin working for the 
families: If you start working on January 1, how long into the year do 
you have to work to make enough money to pay the taxes that you will be 
responsible for for that year? For families, it was May 13 last year. 
Americans that started working January 1, worked until May 13 to pay 
their taxes, the latest date ever in history. In 1915, in comparison, 
Tax Freedom Day was April 3. It will probably set another record this 
year.
  Despite a huge budget surplus over the next 10 years, the President, 
in the White House budget, has failed to offer even a single 
significant tax cut for working Americans. Instead, this 
administration's most recent budget proposes to increase taxes by at 
least $50 billion over the next 5 years. Even during a time of 
prosperity and surpluses, that is not enough for the appetite of this 
administration when it comes to spending. They are going to increase 
taxes by at least a net $50 billion over the next 5 years, $90 billion 
over the next decade.
  The good news is that the budget blueprint that we passed today on 
the Senate floor is reserving nearly $800 billion of the nonSocial 
Security surplus. That is important. We are not taking any money out of 
Social Security dollars to use for any kind of tax relief but $800 
billion of nonSocial Security surplus over the next 10 years for tax 
relief.
  There are basically two streams of surplus coming into Washington: 
One is from payroll taxes, the Social Security money; the other is from 
overcharging on income taxes. We are setting aside in our lockbox the 
$1.8 trillion in overpayment on payroll taxes or Social Security and 
locking that away so it can't be spent or used for anything but Social 
Security.
  The big debate is over what we will do with the other $800 billion, 
about 38 percent of this budget surplus. Again, the President wants to 
spend it, and more, over the next 10 years. We are saying it is an 
overcharge that should go back to the taxpayers. For Washington, this 
is a surplus. This is not money that Washington is entitled to. It is 
like finding a wallet on the sidewalk. If it has $100 in it, you can do 
one of two things: You can keep the money, and that would be stealing; 
or you could find the rightful owner and give it back. That is what 
Washington has done. It found the surplus and it can do one of two 
things: It can keep it and spend it, which would be stealing it from 
the taxpayers; or it can send it back to the rightful people, the 
taxpayers.
  Our $800 billion of nonSocial Security surplus over the next 10 years 
for tax relief would be the largest tax relief since the Reagan tax 
cuts of the 1980s. The Reagan tax cuts in the 1980s were about $1.4 
trillion over 5 years in today's dollars. This is about half and it is 
over twice as long. This is about 25 percent of what the Reagan tax 
cuts were in the 1980s, but it is something that we need to make an 
investment in in our society. It is like investing in research and 
development. We need to invest money into the economy in order for the 
economy to continue to grow and to produce the better jobs and the 
better wages that we need. We have had this unprecedented expansion in 
our economy over the last 18 years and most of the credit goes to the 
seeds that were planted with the Reagan tax cuts in the early 1980s 
that spurred this economic growth.

  I think that our commitment to set aside another $800 billion over 10 
years to go back into the form of tax relief, investment in consumers, 
investment in the economy proves that this Congress is committed to 
providing meaningful tax relief in 1999 and, again, providing tax 
relief while protecting Social Security, protecting Medicare, reducing 
the national debt, and also funding important national priorities as 
well.
  Whatever form the tax relief eventually takes, whether it is my 10-
percent, across-the-board income tax cut which I have proposed in 
Senate bill 3, a 10-percent, across-the-board reduction in all the 
rates--in other words, if you owe the $4,000 in taxes this year to the 
Federal Government, take 10 percent off from that, keep $400 and send 
in $3,600. If it was $5,000, you get a $500 tax break. If it was 
$1,000, you get a $100 tax break. It is even, across the board 10 
percent.
  Other tax-cut provisions on the table being debated include the 
elimination of the marriage penalty. Again, the average couple in this 
country spends about $1,400 or more in taxes just because they are 
married. We think that is unfair. Another option is the death tax or 
the dreaded estate tax--cut or eliminate that. Also, a cut in the 
capital gains tax. Or it could be a combination of all of these or some 
of these. It is a fact that Washington is finally focused on tax 
relief. I think that is good news for Americans.
  In our budget, we provided meaningful tax relief, earmarking $800 
billion in surplus over the next 10 years to go to tax relief. Again, 
the $800 billion in nonSocial Security surplus represents a tax 
overpayment. We have to stress that. This is a tax overpayment by hard-
working Americans, a tax overpayment that should be returned to them. 
Another way to say that, in a restaurant if your bill is $17 and you go 
to the counter and give $20, you expect to get the change back; if you 
have overpaid, you expect to get the change back. But Washington is 
saying, you overpaid but, jeez, like the President said in Buffalo, NY, 
in January, we could give the surplus back, but what if you don't spend 
it right? In other words, you are smart enough to earn the money, but 
you are too dumb to know how to spend it. The Government knows how to 
spend it better than you do. The Government will spend it on better 
things than what you could spend it on for your family--maybe braces 
for your children, dance lessons, to begin a college education fund, 
maybe repairing the furnace. Somehow, that priority does not fit into 
Washington's scheme, because Washington thinks maybe you won't spend it 
right; Washington can spend it better.
  I believe that Americans know what is best for their families and 
their lives. If it is their money, they should be given the right to 
spend it the way they see fit to support their families.
  A new study by the Congressional Research Service reports if we don't 
provide tax relief, the average household will pay $5,307 more in taxes 
than is needed to fund the Government. Think of what the average 
household can do if they could keep $5,300 more of their money, rather 
than sending it to Washington. Of course, maybe some believe Washington 
can spend it better, but the people I talk to in my home State of 
Minnesota believe that they would have a better place to put that money 
than Washington.
  Tax relief may temporarily relieve our pain, but the Tax Code, as I 
said, I believe is the root of all our tax evils. It is not the 
employees at the IRS, it is not the agents. They are trying to labor 
under some very, very complicated rules and regulations of the IRS Tax 
Code. Again, that is Congress over the last 50 years, with one layer on 
top of another, on top of another, on top of another, of Tax Codes, 
regulations, tax breaks, incentives, special interests or whatever it 
might be. The IRS is trying to dig out from underneath this or at least 
provide the information for us to file the taxes. It is Congress that 
needs to get its act in gear and do something to change it.
  We held hearings last year in the Finance Committee. Senator Roth did 
a great job on showing some of the abuses in the IRS and how the code 
really is oppressive. It is antifamily, antigrowth, antieconomy. We did 
make some changes. But a few changes is like putting lipstick on a pig. 
The IRS still is not pretty. We need to do something more than make a 
few changes.
  The Federal Tax Code stretches on for more than 7 million words. It 
is made up of four huge volumes, each thicker than the Bible, with 
another 20 volumes of regulation and thousands and thousands of pages 
of regulations. The Declaration of Independence took only 1,337 words 
to set the entire American Revolution in motion.
  Today, we have 7 million words in our Tax Code that state how the 
Federal Government will collect taxes. The Government publishes 480 
separate tax forms. The IRS mails out over 8 billion pages of forms and 
instructions

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every year. Congress has revised the tax law a total of 5,400 times 
just since the 1986 Tax Reform Act. In 13 years, 5,400 times the Tax 
Code has been revised. Who could possibly keep track of all those 
changes? Not even the best tax lawyers and CPAs in the country 
understand the Tax Code completely. Not even the experts at the IRS 
itself can understand the Tax Code completely. Taxpayers today spend 
billions of dollars a year trying to comply with its dizzying rules and 
regulations.
  The IRS today employs over 102,000 agents to collect taxes. Now, 
102,000 agents to collect taxes, that is more agents than the FBI and 
the CIA have combined. So I think that is just proof that tax 
collection has become the primary function and goal of the Federal 
Government. That is the largest agency in Government, the IRS--102,000 
agents to collect taxes. I guess you put the people where your 
priorities are. So we can see the Federal Government's priority is to 
collect as much in taxes from you as it can.
  Our current tax system is antifamily, anti-economic growth; by any 
standards, it encourages abuse, it encourages waste, it encourages 
corruption. To solve this problem forever, we have to do one thing and 
that is uproot the current tax system. We need to replace it with one 
that promotes freedom, that promotes economic opportunity. We must 
repeal the income tax and other taxes, and we have to abolish the IRS--
again, not because of the people there, but because of the system that 
is so complex we cannot understand it anymore. We must create a new tax 
system, one that is fair, a system that is simple and a system that is 
friendly to the taxpayers--not an adversary. There is an increasing 
national consensus that the current system is unfair, a system that we 
must end, and that the Tax Code as we know it has to be eliminated.
  But the unresolved question is: How should we replace the Tax Code? I 
am a cosponsor of a bill in the Senate called the Tax Code Elimination 
Act, which would sunset the current Tax Code by January 1 of the year 
2003--in other words, get rid of it, pull it out by the roots, say it 
is all done, repeal the 16th amendment, and we will start all over from 
scratch.
  The White House said: That is irresponsible. How could you eliminate 
a Tax Code before you have something to replace it? I think we all know 
that Congress would never let one day go by that it did not have the 
ability to collect taxes. So if we had the ability to pass this bill 
today, Congress would work overtime, or on weekends, if it had to, in 
order to put a new system in place to collect that first dollar of new 
taxes in the year 2003. So I do not have any worries about that.
  The biggest job is going to be finding the political will to get rid 
of the Tax Code we have today. There is an increasing national 
consensus that the current system is unfair. Ask your neighbor if he 
thinks this is a fair code. We must end the Tax Code as we know it 
today. But, again, the unresolved question is: What to do to replace 
the code?
  I have been exploring alternative tax systems for quite awhile and, 
after considerable study of the issue, I believe the national sales tax 
plan is the best solution to our problems. I used to support a flat 
tax. I think most Americans would say a flat tax would be a good 
alternative. That is the one that has gotten probably the most 
publicity. But it needs to have a lot of examination. In fact, a couple 
of Congressmen in the House, Congressmen Dick Armey and Billy Tauzin, 
went on the road last year to about 30 different cities, doing what 
they called townhall meetings on tax issues and what to do to replace 
the current Tax Code with something else. Representative Dick Armey of 
Texas supported the flat tax, Congressman Tauzin of Louisiana supported 
a national sales tax. They played to crowds of about 5,000 people or 
more at some of their stops.
  So Americans are interested in this. They want to have some 
information, they want to know what some of the alternatives would be 
and how they would work. But when you talk about flat tax versus 
national sales tax--which are probably the two leading alternatives--
going into the meetings, about 75 percent said they would prefer a flat 
tax--again, because they have heard it most, it sounds like the most 
simple plan--but after an hour and a half or 2 hours of this townhall 
meeting, as they came out, 75 percent favored a national sales tax.

  What we need to do is begin the debate. We need to do more than just 
30 town meetings around the country. We need to do this here in the 
Senate. We need to be part of the campaign, to start talking about Tax 
Code relief or reform, so the American public at least gets some 
information on what the Tax Code is today, how oppressive it is, and 
what we can do to replace it, what are some of the alternatives. I 
think that is the way we need to lead in order to get some tax relief.
  Any new tax system, I think, has to do a couple of things. First, it 
must restore the fundamental principles of taxation upon which this 
whole country was founded, and they are low taxes and limiting the 
taxing power of Government. It must fairly and efficiently distribute 
the burden of funding our Government. It must promote economic growth, 
not be anti-economic growth. It must present less of a compliance 
burden, and that is, again, not having to spend billions of dollars a 
year, every year, just to be able to fill out the tax forms and meet 
that requirement. And it has to offer every American better economic 
opportunity. The national sales tax would do that.
  The national sales tax system, which I intend to introduce soon, with 
other Senators, I think meets these very important criteria. It is 
fairer, more simple, it is friendlier, it will increase economic 
growth, it will increase investment, it will help with capital 
formation, and it will create new jobs and savings.
  Under the national sales tax system, working Americans will be able 
to keep 100 percent of their pay, their pension, or Social Security 
check. They no longer need to file a tax return with the IRS. Their 
family's finances are not revealed to Government bureaucrats. They will 
not be penalized for getting or staying married, and they will not be 
penalized, by the way, for dying either. Everyone will pay the same tax 
rate without loopholes, without any special interest groups. There will 
not be any hidden taxes, and everybody will easily understand the tax. 
They will be able to understand exactly how much they are paying in 
taxes. And, finally, it will abolish the IRS completely.
  Does this sound too good to be true? It may sound that way, but 
believe me, it is real. Let me briefly highlight how the national sales 
tax legislation would be able to achieve this.
  First, the legislation will call for the repeal of the constitutional 
amendment that created the tax nightmare that we find ourselves in 
today. Mr. President, the 16th amendment is the root of the tax evil. 
It abandoned our Founding Fathers' original principle of taxation by 
giving the Government unlimited power to tax the private income of 
American people. Without the repeal of this amendment, any tax system 
will eventually become abusive and intrusive. First and foremost, get 
rid of the 16th amendment.
  Second, the legislation will repeal the income tax. It will get rid 
of the payroll tax, the estate tax, the gift tax, the capital gains 
tax, the self-employment tax, the corporate tax, and all the other 
taxes out there.

  Third, the legislation will impose a single rate on all new goods and 
services at the point of final purchase, the final point of purchase 
for consumption, and it will provide a universal rebate in the amount 
equal to the sales tax paid on essential goods and services such as 
food and medicines.
  So, in other words, for low-income or whatever the income is, if you 
are saying you cannot do this because you are going to be charging more 
on foods and medicines and necessities, that is not true. There will be 
a rebate for that. But it is a single rate on all new goods and 
services at the point of final purchase for consumption. Every American 
will be better off under the national sales tax system. I believe it 
will create expanded economic opportunities for our Nation and for our 
people.
  The process of implementing the national sales tax system is going to 
be a long one. There is going to be a lot of debate. So in the interim 
we must reduce the tax burden on overtaxed Americans. I think a lot of 
us would like to go to eliminating the IRS tomorrow if we could, and 
cement in

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place a new tax system. But what do we do in the interim, until that 
debate is completed, before we can make that happen, before we can 
begin putting in a fair, simple, friendly tax system? I think that is 
why our budget includes the $800 billion of tax relief now. This is 
interim tax relief, but we have to make sure our residents, our 
workers, at least have some relief from the burden they are paying--
again, the highest in the history of taxes.
  For those taxpayers who are satisfied with the current system, I wish 
them the best of luck in preparing their taxes this year. For others, 
like the hundreds of Minnesotans who tell me they are tired of filling 
out the complex and endless tax forms, who tell me they do not think it 
is fair that the Government takes so much of their hard-earned dollars, 
I invite you to join me in rethinking our tax system. I think we can 
work together now to create a new and more fair way to fund the Federal 
Government, one that ultimately makes April 15 just another day, just 
another day of the year, and not this day that everybody dreads and 
hates and is now spending many hours, tonight, trying to figure out 
exactly what they owe in taxes.
  Again, I do not know if 40 percent is a fair amount of income to pay 
to the Federal Government. I do a lot of town meetings, or talk with 
students. I always like to ask a question to start with: What do you 
think is a fair percentage of your income that should go to support 
government? We all need a good government. This is not about getting 
rid of the government. This is not getting rid of the Federal, State, 
or local governments. But what is an adequate amount of money to fund 
the Government, and what kind of services should we demand the 
Government provide with those tax dollars, not the waste and abuse that 
is in the system today. Today, if the system runs out of money, they 
just add more money to it, not look at where the abuse is, whether the 
money is being spent right. Are we overpaying for services we do not 
get?
  This Government has never had to do what business has to do, and that 
is, look at how we can provide a service at the least possible cost. If 
they run out of money, they just want to raise taxes again, raise taxes 
again, raise taxes again.
  When I ask this question at townhall meetings or at town meetings in 
high schools, of course some will say zero percent. That is not 
rational. But then we get into the basics, and it usually comes out, 
people say around 15, 20, maybe 25 percent of their income should go to 
support all levels of government--Federal, State, and local. But then 
you tell them they are spending, today, 40 percent of their income to 
support government.
  So, for all of those who are filling out their taxes tonight or have 
time to take a look at your pay stubs, take a look at exactly how much 
you are spending on taxes, and then you can figure in the sales tax, 
your property tax, all the other taxes that you pay, and just find out 
how much of your income is going to support government.
  Again, for the average family in this country, they are spending more 
to support Uncle Sam than they are spending on the necessities; That 
is, food, clothing, shelter, and transportation, and even, in most 
cases, recreation combined. So the Government is taking a bigger bite 
out of their paycheck than their family is getting. I think it is time 
we look at this and find how we can reduce this and allow hard-working 
Americans to keep a little bit more of their money in their pockets 
rather than sending it to Washington.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative assistant proceeded to call the roll.
  Mr. SPECTER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SPECTER. I thank the Chair.
  (The remarks of Mr. Specter pertaining to the introduction of S. 822 
are located in today's Record under ``Statements on Introduced Bills 
and Joint Resolutions.'')
  Mr. SPECTER. I thank the Chair and yield the floor.
  Mr. COVERDELL addressed the Chair.
  The PRESIDING OFFICER. The Senator from Georgia.
  Mr. COVERDELL. First, before the Senator from Pennsylvania gets away, 
I wish I had been able to hear all of his remarks. But it will be in 
the Record. It was very intriguing. I could not agree more with any 
concept that envisions simplicity, equity. I think a lot of taxpayers 
today think somebody else is getting a better deal, and there is a lot 
of cynicism as a result.
  But with a proposal such as you are talking about, everybody knows 
what the rules of the road are. I think in addition to the many 
accomplishments that you are suggesting your proposal would achieve 
would be a confidence among the American people and a reduction in 
cynicism about somebody getting a benefit that somebody else does not, 
and that sort of thing. So I commend the Senator for his work.
  Mr. SPECTER. Mr. President, I thank my distinguished colleague from 
Georgia for those very complimentary remarks. I wonder if it would be 
too presumptuous to list him as a cosponsor.
  Mr. COVERDELL. It is not presumptuous to let me think about it.
  Mr. SPECTER. Let the Record show the request has been made. I thank 
the Senator.
  Mr. COVERDELL. Thank you very much, I say to the Senator.

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