[Congressional Record Volume 145, Number 118 (Monday, September 13, 1999)]
[Senate]
[Pages S10743-S10745]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               TAX RELIEF

  Mr. HUTCHINSON. Mr. President, I rise today to address for a few 
minutes the tax relief package that the Senate passed before the August 
recess.
  I had the opportunity during the August recess to travel much of 
Arkansas.

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 I was in 27 counties in Arkansas in about a month. So we were very 
busy. In each one of those counties there were opportunities for people 
to express their opinions and to talk about issues that were of concern 
to them. We heard much about the farm crisis. I know the Presiding 
Officer has been very involved in trying to fashion a farm policy that 
is going to allow family farmers to survive, be viable, and has been 
very involved in the ag policy of this country. We have heard a lot of 
concerns about agriculture.
  I also heard a lot about the tax package, and there were a lot of 
questions. I want to take a few minutes today to talk about what I 
heard and what I shared about the tax relief package that we passed in 
the Senate and the conference that was agreed upon with the House. I 
think it is responsible and provides much-needed relief for the 
American taxpayer.
  I think that is the first thing we have to realize--how much there is 
a need for tax relief. People say, well, the economy is booming; we are 
doing fine; people are fine; no one really wants a tax cut. I think the 
reality is far different.
  Under the Clinton administration, taxes have risen to the highest 
level in peacetime history--almost 21 percent of the gross domestic 
product. When you compare that to the 1950s and the Eisenhower years, 
the tax burden upon the American people measured--there are lots of 
ways of measuring ``tax burden,'' but one of the most helpful, I think, 
is in terms of the gross domestic product. At that time, it was about 
15 percent of GDP; it is now 21 percent of GDP. And it took that last 
leap when Congress passed and the President signed the 1993 tax hike.
  When we are talking in terms of the tax relief package, the $792 
billion--and for a farm boy from north Arkansas that is a lot of money, 
$792 billion--it is over 10 years, and when you realize that what we 
are doing is rolling back the tax burden on the American people by a 
grand total of 1 percentage point of GDP; we would take it from about 
21 percent to about 20 percent, there is nothing draconian--an overused 
word these days--there is nothing irresponsible about the tax relief 
package that was passed by the House and Senate.
  According to the Office of Management and Budget, total Federal 
receipts amounted to 19.9 percent of GDP in 1998 and will be 20.1 
percent of GDP in 1999.
  Now, in Arkansas, that amounts to about $7,352 in taxes per capita, 
in 1998.
  In a State such as Connecticut, it is about twice that; $15,525 was 
paid in taxes for every man, woman, and child in Connecticut. It was 
Ben Franklin who said a penny saved is a penny earned. I think maybe we 
could adjust that motto and say: A dollar earned is 38 cents spent by 
the Federal Government. The typical American family sees 38 percent of 
its income paid in taxes, as opposed to 28 percent of its income for 
food, clothing, and housing and only 3.6 percent that goes to savings.
  I believe at a time of surplus, it would be unthinkable, it would be 
unconscionable for us not to allow the American people to keep more of 
what they have worked so hard to make. As Ronald Reagan once remarked: 
The taxpayer is someone who works for the Federal Government but 
doesn't have to take a Civil Service exam. When we think about the 
increasing percentage of our income going to taxes, that is, 
unfortunately, more true today than it was when President Reagan said 
it. The American people are laboring under a heavy burden of taxation 
and an intrusive Tax Code and tax system.
  There are many provisions in the tax relief package. I want to 
address two that are particularly compelling. One is the marriage 
penalty tax.
  Approximately 42 million American couples, including 6 million senior 
citizens, must pay an average of $1,400 extra in taxes for simply being 
married. The marriage penalty punishes in two ways. It pushes married 
couples into a higher tax bracket, and it lowers couples' standard 
deduction. So two married income earners with combined income must pay 
their income tax at a higher rate with a lower deduction than they 
would if they were two single people. It is unfair. It is wrong. Most 
Americans are absolutely perplexed why such a quirk in the Tax Code 
would be allowed to continue.
  Keep in mind, it is not a one-time penalty. Under our tax system, 
marriage is not a freeway; it is a toll road. For 10 years of marriage, 
couples must pay an average of $14,000 extra; for 20 years, couples 
must pay $28,000 extra. The tax relief package that passed would 
finally achieve equity and fairness by eliminating the marriage tax 
penalty.
  The other aspect of the tax relief package we passed that I think is 
especially helpful and important and about which people feel strongly 
in Arkansas is the death tax. Small business owners and farmers can 
lose their lives and all they have saved for their children because of 
death taxes. Since the value of a business is added to the estate and 
taxed after exemption, sometimes as high as 55 percent, many small 
businesses and farms must be sold in order to pay the death tax. It is 
wrong. Just as the marriage penalty, it is something we should not 
allow, it is something we should not tolerate, and it is something we 
have the ability and capacity to change this year. It is a form of 
double taxation. The most obvious inequity is the death tax.
  It also doesn't make a lot of sense. It taxes investment and savings. 
It taxes the American dream. Part of the American dream is, if you work 
hard and save and invest well and are able to accumulate something in 
life, you will be able to pass that on to your children and your 
grandchildren so they can start their lives with better prospects than 
what you did. It is not all of the American dream, but it is part of 
the American dream. The death tax is absolutely contrary to what we 
hold out as being something Americans should strive toward--investment, 
savings, building for the future.
  Right now, the survival rate for a family farm from the first to the 
second generation is only about 30 percent. The odds are against a 
family farmer being able to pass along that farm to their children or 
grandchildren. I know our farmers are working hard, and these are 
difficult times for them. We keep having emergency bills to help 
alleviate the problems, but they are kind of a Band-Aid solution. We 
have one the Senate passed before the August recess.

  Eliminating the death tax is something we can do that will 
permanently benefit agriculture and farmers in this country. Only a 
fraction of 1 percent of small businesses make it through to four 
generations. Just as the family farm, which is, in effect, a small 
business, other small businesses are also having a difficult time 
surviving and certainly being passed on to future generations.
  Consider the case of Clarence who owns a farming and lumber business 
in North Carolina. He provides jobs to 720 people in his community 
through three small farms, a fertilizer and tobacco warehouse, and a 
small lumber mill. His family has worked hard for four generations to 
build this business to what it is today. All of that may well be lost 
when Clarence dies and his family is faced with a huge Government death 
tax bill. Clarence has worked hard to try to reduce the burden of the 
death tax. He slowed the growth of his business. He has hired lawyers. 
He has purchased life insurance. He has established trusts--all with 
the hope that he could create a plan to enable his children to keep the 
family business when he dies. All of that work and planning still may 
not be enough.
  Clarence figures that his son will owe the Federal Government about 
$1.5 million upon his death, an impossible amount to pay for a man who 
makes only $31,000 a year. His son will almost certainly have to sell 
all or part of the business in order to pay the consequences of the 
death tax. Over four generations, Clarence's family businesses have 
been whittled down to a sliver of what they once were.
  Then consider the case of Mr. Kennard, whose spirit of free 
enterprise is being stifled by the death tax. He owns a small septic 
tank company in Virginia. He began his business in 1963. Today, he 
employs 15 people, including his son and daughter who have worked with 
him since they were teenagers. His son runs one of the businesses and 
takes home about $30,000 a year, hardly enough to pay the $2 million 
bill the Government will hand him when his father dies.
  Death should not be a taxable experience. In order to reduce the 
estate tax,

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Mr. Kennard has stopped expanding his businesses and is considering 
transferring shares of his business to his children now rather than 
wait until his death. He would like to invest in insurance and put some 
of his money back into the business, but it doesn't make sense when his 
family will have to pay exorbitant taxes on any new appreciation. In 
fact, Mr. Kennard may have to liquidate one or two of his businesses in 
order to pay the death tax on the remaining businesses.
  The tax refund bill would provide relief by lowering the 5-percent 
surtax on estates and replace the unified credit with the unified 
exemption of $1.5 million. We would ultimately be rid of the death tax 
altogether. It is something we should do. It is something we have 
within our power to do. We have passed it. We will send it to the 
President. It is our hope, still, that the President will change his 
mind and not veto this very important legislation.
  There are many other important provisions in the bill as well. People 
say: Why spend your time on tax relief when the President said he is 
going to veto it? Because it is important, because it is the right 
thing to do, because our responsibility to our constituents is not what 
the President may or may not do. I recall well my early years in the 
House when we passed welfare reform and had to send it to the President 
not once, not twice, but three times, before the President finally 
decided the American people wanted welfare reform. He signed an 
important piece of reform legislation that has transformed welfare in 
this country and cut the rolls in half in State after State, including 
my home State of Arkansas.

  I hope the President will reconsider, and I hope the American people 
will let us and the administration know how important tax relief is. 
When they understand what is in it, they do support it. In 27 counties 
in Arkansas, I did hear some concerns, primarily because of the myths 
that have been perpetrated about this tax relief bill.
  One of the concerns was the myth that this tax relief bill somehow 
trades debt reduction for tax cuts. The fact is, the budget and the tax 
relief bill we passed will reduce public debt by 60 percent and achieve 
over $200 billion more in public debt reduction than the President's 
plan over the next 10 years. It is not a matter of either/or. It is not 
a matter of whether you are going to have debt reduction or we are 
going to have tax relief. We can and should have both.
  Another one of the myths people are concerned about, and 
understandably concerned, is that somehow, if you pass a meaningful tax 
relief bill, as we did, it is going to erode and eat into the Social 
Security surplus. In fact, that is nothing but a myth. We would lockbox 
Social Security. We would not touch any of the Social Security 
surpluses, and we shouldn't. We should not perpetrate the wrong that 
has been done by previous Congresses by dipping in and using those 
revenues which are designated and should be designated for Social 
Security only.
  Then there is, perhaps, one of the greatest myths of all; that is, 
the tax relief bill will primarily benefit the wealthy. This tax relief 
package would provide broad-based tax relief. It cuts every bracket 1 
percent. That is not much. But it cuts across the board of tax brackets 
by 1 percent. It doesn't take somebody trained in math to figure out 
that if you are in the 15-percent tax bracket and you lower it from 15 
to 14 percent, it is a much bigger personal tax cut than for somebody 
who is in a lower tax bracket who also sees only a 1-percent reduction 
in taxes.

  The fact is that this tax relief package benefits low-income earners 
in the lowest tax bracket more than any other taxable group. We not 
only lower the rate, we expand the bracket to include yet more hard-
working Americans.
  In a State such as Arkansas, where we have one of the lowest per 
capita incomes, lowering the tax by even 1 percent for the lowest tax 
bracket has a significant benefit for hard-working Arkansans and hard-
working Americans.
  One of the other myths I heard while I was traveling across Arkansas 
was that there was concern that somehow these surpluses might not 
become reality. Conservative Arkansans who look at the Congressional 
Budget Office projections a decade out, I think, are right to say: What 
happens if, in fact, the surpluses don't become reality? Are you going 
to give all of this back in tax cuts? And are we going to go back up in 
deficit spending?
  I was glad to be able to report that there was an important provision 
including a trigger--maybe it is better to call it a safety valve--that 
ensures that if the surpluses do not become reality, the tax cuts don't 
kick in. They don't become reality either. That, I think, is the 
ultimate fallback to ensure that we don't return to the big spending, 
red-ink, deficit spending ways of the past.
  The bottom line is that in Arkansas 683,741 people would have tax 
reductions under this bill. That is, 750 million Americans would see 
their tax bills reduced. It is not something targeted for the wealthy, 
but it is something that would benefit every taxpaying American.
  Opponents of tax relief insist that money must be left on the table 
in the name of debt reduction. The reality is that if you leave it on 
the table in Washington, it will be spent.
  Therein is the great divide philosophically between those who believe 
the American people can better decide and determine how they ought to 
spend what they have earned and what they have worked for than people 
in Washington, DC--Government officials and bureaucrats in Washington. 
For those who believe we have to keep that money up here because we 
have to reserve it on the table for more spending programs because, 
truly, wisdom is found here inside the beltway, we reject that. I 
reject that.
  I ask my colleagues to request of the President his reconsideration 
of what is desperately needed for the American people--lowering that 
tax burden from 21 percent to 20 percent. There is nothing too dramatic 
nor too drastic about it, but it is a small step in providing the 
American people the tax relief they deserve and they desire.
  I thank the Chair.
  I thank Senator Thomas for providing this time and this opportunity 
to discuss what we have done in the area of tax relief.
  I yield the floor.
  Mr. THOMAS. Mr. President, I think the Senator from Arkansas stated 
very clearly the strong feeling that I have received from folks in 
Wyoming. As I went around as well, when I first talked about tax 
relief, people kind of rolled their eyes. But when you start talking 
about the specifics of it--estate taxes and marriage penalty taxes--
when you talk about the kinds of things that are there to encourage 
retirement funding and educational funding, you really get a great deal 
more interest in it.
  I think the Senator pointed out clearly the real philosophical 
difference. If the money is here, it will be spent for increased 
government and increased programs rather than going back to the people 
who really own the money.
  I thank the Senator.

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