[Congressional Record Volume 145, Number 53 (Monday, April 19, 1999)]
[Senate]
[Pages S3831-S3832]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              INCOME TAXES

  Mr. DORGAN. Mr. President, last Thursday was tax filing day, and we 
had a number of my colleagues come to the floor of the Senate and talk 
about taxes. I have yet to meet anybody who likes taxes. I know taxes 
pay for the cost of civilization. I know we would not have the kind of 
country we have in this country without taxes. I know that the ability 
to drive on good roads, to have a police force, to have a fire 
department, to have a Defense Department, to have safe food through 
food inspectors, to be able to control our borders--all of those things 
require the payment of taxes.
  But our tax system has become enormously complicated, and it ought to 
change. I authored, about a year and a half ago, a proposal called the 
Fair and Simple Shortcut Tax Plan; it is called the FASST Plan.
  You want to file your tax return with minimum bother? You want to 
avoid having to file an income tax return at all? Then this is a plan 
that will work for you.
  It was not too many years ago that the American people, by and large, 
did not have to file an income tax return because only a small 
percentage of the American people paid income taxes. About 6 percent of 
the American people had a requirement to file a tax return. The rest of 
the people did not. For those who had to file, they had a very thin 
instruction booklet, just a couple of pages.
  Now we have an instruction booklet with our income tax return that 
looks very much like a J.C. Penney's catalog. We have moved 
dramatically in the wrong direction with a highly complicated federal 
income tax system. Taxpayers are spending more than 3 billion hours at 
a cost of some $75 billion in trying to comply with our federal income 
tax laws every year; and it need not be that way.
  We have had people come to the floor of the Senate to say, ``I have a 
better idea. Let's abolish the whole federal income tax.'' I would like 
to know what they want to put in its place before abolishing it. Others 
say, ``Let's have a flat tax so that the person making $30,000 a year 
can pay the same tax rate as Ross Perot or Donald Trump pay.'' I do not 
happen to share that belief.
  Still some others say, ``Let's have a national sales tax; get rid of 
the income tax and put a national sales tax on everything.'' I don't 
know how much you would like to buy a home and discover you have to pay 
a 35 percent sales tax on the value of the home. Or if that is the 
first thing you would exempt, how much higher would the national sales 
tax rate increase in order to get the required money to make the 
difference?

[[Page S3832]]

  My point is, it sounds great to say, ``Let's abolish the income 
tax,'' but I want to know what you want to do in place of it. Some 
would say--and some have offered plans here in the Senate and the 
House--``Let's have a different tax system. Let's have one that taxes 
work. You go out and work for a living? We want you to pay a tax. But 
if, on the other hand, you get your income from capital gains, 
dividends or interest, you don't pay a tax. Let's tax only activities 
from work; and let's exempt investments.''
  I guess that sounds pretty good, if all your income comes from 
investment. Guess who would pay taxes and be exempt under that kind of 
scheme. The wealthiest folks would be exempt and the working people 
would pay the taxes. That is a tax on work.
  My point is, let's take a look at seeing if we can't change the 
current system in a way that benefits at least a fair number of the 
American people.
  Here is what I propose we do. More than 30 countries have some kind 
of income tax system in which most of the taxpayers, or many of the 
taxpayers, do not have a requirement to file an income tax return. Here 
is how I would propose we do it. Everyone who signs in at work for a 
job fills out a W-4 form. It says, My name is so and so. My Social 
Security number is x, y, and Z. I'm claiming this many allowances. And 
I am married, filing jointly, or whatever that information would 
conclude; and therefore your employer calculates how much income tax 
shall be withheld from your weekly or monthly wage.
  I propose an approach where we would put a couple of extra lines on 
the W-4 form, and for a lot of Americans--perhaps 60 to 70 million 
Americans--with a few extra checkmarks on the W-4 form, their 
withholding at work will become their exact tax liability for the year. 
They would have no requirement to file a tax return--no return to be 
filed at all--therefore, no trips to the post office on April 15 and no 
worry about major audits. What is your wage? and based on what you 
checked on your W-4 form, what kind of withholding is necessary.
  Let me give you an example of how we would do that. Families earning 
up to $100,000 in annual wages--$50,000 for singles--and up to $5,000 
in capital gains, dividends and other non-wage income--$2,500 for 
singles--may elect this tax return-free filing system at work. This 
other income would be tax free. When they sign in at work, they would 
simply fill out a slightly modified W-4 form that allows them to have 
their employers withhold their exact tax obligation computed by using a 
table provided by the IRS, and they would pay a single low tax rate of 
15 percent on their wages. They would still be allowed their standard 
deduction, their personal exemptions, a deduction for home mortgage 
interest and property taxes paid, and their child tax credits. Those 
would be the couple of extra boxes checked on the W-4 form. But by and 
large, this would radically simplify income tax filing for 60 to 70 
million Americans to say to them, check these extra boxes, you, 
therefore, do not have to file an April 15 tax return. You have a flat 
15-percent tax rate on wages, and your other income, up to $5,000 for 
married, filing jointly, is totally exempt from any income tax 
obligation.

  This system makes a great deal of sense in my judgment, and, as I 
indicated, anywhere from 60 to 70 million Americans will be able to 
decide if they want to use this system and, therefore, not be required 
to file any income tax return at all on April 15.
  The reason I am describing this system today is the discussion last 
week on tax day was interesting. I do not quarrel with those who say we 
ought to change the current tax system. Yes, we should.
  The first step would be to dramatically simplify the responsibility 
for filing income tax returns for the bulk of the American people. I am 
saying that the majority of taxpayers could avoid having to file any 
income tax return at all on April 15, could avoid all of the problems 
of getting paperwork together, and could stop worrying about a 
subsequent major audit. They could avoid all of that with the Fair and 
Simple Shortcut Tax plan.
  My proposal allows every taxpayer, if they want, to compute and file 
their tax returns under the old system. You could get your tax return 
and your catalog size instructions, and you can go through it and you 
can labor and agonize and sweat and talk to accountants if you want. 
That is your choice. You will have the choice. But the second choice 
and I believe much more appealing for most Americans is to access the 
return-free income tax system with a single 15-percent rate, with the 
abolition of both the marriage tax penalty and the Alternative Minimum 
Tax under this system, with up to $5,000 of capital gains, dividends 
and interest income completely tax free.
  We can do this. We can do it easily, and we can do it now. More than 
30 countries have some kind of approach like this. This is better 
tailored to our system, but some 30 countries already have some form of 
a tax return free system. This country can do that for the 60 to 70 
million Americans it would relieve of having to file an annual federal 
income tax return.
  As we debate and discuss the tax system in this Congress, it is 
important for us to listen to all of the ideas that exist, and there 
are plenty, some wonderful, some crackpot, some workable, some 
unworkable. This, in my judgment, is a system that can be implemented 
almost immediately, is eminently workable, and will address the first 
roadblock that exists in our current income tax system--that is, 
complexity. It can eliminate all of the complexities all at once for up 
to 60 to 70 million American people. That makes a great deal of sense.
  I will be visiting with a number of my colleagues about it, and we 
are going to introduce it as a formal plan very soon. I hope that some 
of my colleagues will consider it favorably.
  Mr. President, I yield the floor.
  Mr. MURKOWSKI addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alaska.

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