[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current Tax Code is outdated.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
[[Page S3766]]
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
[[Page S3767]]
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
[[Page S3768]]
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.
____________________