[Congressional Record Volume 146, Number 35 (Monday, March 27, 2000)]
[Senate]
[Pages S1696-S1698]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE BUDGET
Mr. REID. Mr. President, last year we spent a great deal of time
talking about whether or not we should have an $800 billion tax cut. We
spent an inordinate amount of time working on that. The minority, the
Democrats, thought we should not do that, that it was too much; that
instead of having this large tax cut, we should have some targeted tax
cut, much, much, much smaller. This debate went on for months. The sad
part about it is, when we came to the appropriations bills, the 13
appropriations bills, suddenly there was no money. Even though there
had been $800 billion set aside, supposedly for tax cuts, there was no
money to take care of the expenses that were necessary in the funding
of this country.
Day after day we were talked to--some say talked down to--by our
friends on the other side of the aisle, that the economy would come to
a grinding halt if we did not pass this $800 billion tax bill. Of
course, that has not happened. Not only did the minority not buy the
plan of the majority, but the American people did not buy the plan. In
any poll taken, the American people decided there were more important
priorities.
What were those priorities?
Education--when you have 3,000 children dropping out of high school
every day, you would think that would be a priority.
Social Security is a priority. We have to make sure in the outyears
Social Security is as good to people as it is today. Social Security is
going to be doing just fine until the year 2035, maybe 2036. But after
that period of time, people will only be able to draw 75 percent or 80
percent of their benefits. We need to make sure after that time they
can draw all their benefits.
We have to make sure Medicare is taken care of, that we do something
on this program that has been in existence for 35 years to take care of
people who need prescription drugs; that is, all seniors. The average
senior over age 65 fills 18 prescriptions a year. So we have to make
sure Medicare, a very important program that has done a great deal to
help the American senior population, that has allowed them to live
longer and live more productive lives--we have to make sure that as a
component of that there are some benefits for prescription drugs.
We have to make sure the debt is paid down. During the Bush-Reagan
years, we accumulated a huge debt of some $5 trillion. It is time we
started paying down that debt. We are not going to have the rosy
economic scenario we now have forever. We are in the longest economic
growth period in the history of this country. We are now in the 108th
or 109th month, but that does not mean it will go on forever. It will
not. I hope when the economic downturn comes, we will have paid down
that debt and not have voted for irresponsible tax cuts.
It is interesting that the demagoguery and rhetoric has not stopped.
It is at full blast--again, talking about tax cuts. Governor George W.
Bush has recently proposed tax cuts which would add up to $1 trillion
over 10 years. House Majority Whip DeLay from Texas--Congressman
DeLay--last week, when asked about this, said let's do that and even
more. He wants even larger tax cuts than George W. Bush has called for.
I think there could be no better example of ignoring the wishes of the
American people and ignoring what the economy needs.
As justification for this $1 trillion worth of tax cuts over programs
such as saving Social Security, doing something about education,
Medicare, and of course doing something about the national debt, the
Governor and others in the majority continually point to the
overwhelming tax burden on the American people. I imagine there were a
few people around America this past Sunday wondering why have we been
talking about that after reading newspapers all over America.
A column in the Washington Post from the front page reads: ``Federal
Tax Level Falls for Most; Studies Show Burden Now Less Than 10%.''
This was not a partisan poll put out by the Democrats or some liberal
think tank. This information is from a series of studies by liberal and
conservative tax experts. It shows that taxes are at their lowest point
in more than 40 years; Federal income taxes are at their lowest point
in more than 40 years.
I ask unanimous consent the article that appeared in the Washington
Post and other newspapers around the country be printed in the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Washington Post, March 26, 2000]
Federal Tax Level Falls For Most; Studies Show Burden Now Less than 10%
(By Glenn Kessler)
For all but the wealthiest Americans, the federal income
tax burden has shrunk to the lowest level in four decades,
according to a series of studies by liberal and conservative
tax experts, the Clinton administration and two arms of the
Republican-controlled Congress.
Each of the studies slices the data in different ways, but
the bottom line is the same: Most Americans this year will
have to fork over less than 10 percent of their income to the
federal government when they file federal income taxes.
The Congressional Budget Office estimates the middle fifth
of American families, with an average income of $39,100, paid
5.4 percent in income tax in 1999, compared with 8.3 percent
in 1981. The Treasury Department estimates a four-person
family, with the median income of $54,900, paid 7.46 percent
of that in income tax, the lowest since 1965. And the
conservative Tax Foundation figures that the median two-
earner family, making $68,605, paid 8.8 percent in 1998,
about the same as 1955.
Federal income taxes are so low for so many Americans that
it is little wonder many voters place tax cuts near the
bottom of their priorities in many opinion polls.
``It's a shocker,'' said Bill Ahern, spokesman of the Tax
Foundation, of the group's calculation that families paid
just 8.8 percent of their income in federal tax. Low federal
taxes make it harder to make a case for tax cuts, he added.
``With the lower- to middle-income taxpayers paying so little
. . . there won't be pressure'' for change.
George Velasquez agrees. ``I don't have any complaints on
the federal side,'' said the 29-year-old network engineer as
he left an H&R Block office in Falls Church last week.
Velasquez, who says he makes about $50,000, said he got hit
with unexpected state taxes
[[Page S1697]]
when he moved recently, but thinks his federal taxes are
fair.
The low effective rates are the result of years of
tinkering with the tax code by Congress and various
administrations--rates were cut in the 1980s, millions of
Americans were removed from the tax rolls in 1990s by an
expansion of a tax credit for the working poor, and a bevy of
tax credits for children and education was added in 1997.
More than one-third of eligible taxpayers pay no income
taxes, according to the congressional Joint Committee on
Taxation.
These effective tax rates don't include payroll taxes to
fund Social Security and Medicare, which have risen since the
1970s, now taking on average about 9 percent of income, the
CBO says. Most Americans, however, now receive far more in
benefits after retirement than they paid while working.
Federal excise taxes for such items as alcohol, gasoline and
cigarettes--on average 1 percent of income--also aren't
included; neither are state and local taxes.
But federal income taxes are a key point of contention
between Texas Gov. George W. Bush and Vice President Gore in
the presidential race. Bush has proposed a tax cut estimated
to cost from $1.1 trillion to $1.7 trillion over 10 years as
the centerpiece of his economic plan, much of it aimed at
cutting tax rates for all taxpayers.
Gore has countered with what is now $350 billion in tax
cuts targeted at middle-income Americans. The size of Gore's
package has grown in recent months as the vice president has
added tax breaks aimed at what a spokesman describes as other
burdens, such as the rising cost of college.
Neither man has suggested changing payroll taxes or
significantly altering excise taxes. Bush has called for
repealing 23 percent--4.3 cents--of the 18.4 cent federal gas
tax.
``I look at the data all the time,'' said Bruce Bartlett,
senior policy analyst at the Dallas-based National Center for
Policy Analysis, a conservative group. ``Taxes are never
showing up as a major factor. As far as people wanting a big
Reaganesque tax cut, I just don't see it. People are
satisfied with their economic situation.''
In the latest Battleground 2000 poll, conducted March 10-13
by the Tarrance Group and Lake, Snell Perry & Associates,
only 6 percent of respondents listed reducing taxes as a very
important issue--behind restoring moral values, improving
education, strengthening Social Security and improving health
care.
Celinda Lake, a Democratic pollster, conducted a series of
focus groups earlier this year that in part looked at
attitudes toward taxes. She said that in contrast to previous
years, ``there was a lot less energy'' to the tax issue, in
part because people are cynical about whether they will
personally ever get much from a tax cut.
People appear more interested in government benefits that
would put money in their pocket--such as for prescription
drugs or college loans. Interestingly, Lake said, blue-collar
workers were more interested in tax breaks than more
affluent, college-educated workers who pay the bulk of taxes.
There now are five tax brackets that range from 15 percent
to 39.6 percent, depending on income level. But deductions,
exemptions and tax credits help to dramatically reduce the
effective rate for many taxpayers. Bush has proposed
replacing the current brackets with four ranging from 10
percent to 33 percent because, as he put it earlier this
month, ``after eight years of Clinton-Gore, we have the
highest tax burden since World War II.''
Bush acknowledged that polls show little support for tax
cuts, but said: ``I'm not proposing tax relief because it's
the popular thing to do; I'm proposing it because it's the
right thing to do.''
Bush's assertion that the tax burden is so high is based on
dividing tax revenue into the nation's gross domestic
product. According to the Clinton administration's latest
budget, anticipated federal tax revenue from both corporate
and personal taxes will represent 20.4 percent of gross
domestic product this year, which is the highest since 1945.
The booming economy has added millions of jobs to the work
force, boosting tax revenue, and many economists also
attribute the surge in tax revenue in part to increased
capital gains revenue from the booming stock market.
But the gross domestic product, the broadest measure of the
economy, does not include capital gains income, thus
overstating the impact of increased capital-gains revenue.
And taxpayers making more than $200,000 pay more than three-
quarters of all capital gains taxes, according to
calculations by the Institute on Taxation and Economic
Policy, which uses a computer model to calculate the impact
of tax policy for Citizens for Tax Justice, a progressive
organization.
John Cogan, senior fellow at the Hoover Institution and a
Bush economic adviser, said the ratio of taxes to the
nation's goods and services is an accurate way to measure the
nation's tax burden. But he acknowledged that taxes have
declined for many low- and middle-income Americans.
``That's a point worth talking about,'' Cogan said. The
burden of paying taxes has mostly shifted to high-income
Americans while taxes have decreased for others, he said.
The CBO estimates the wealthiest 20 percent of families
(with average income of $132,000) paid 16.1 percent of their
income in federal taxes in 1999--about the same as the late
1970s, before the Reagan tax cuts took effect. The top 1
percent (with average income of $719,000) paid more, 22.2
percent--but still far from the 39.5 percent top rate.
Sen. William V. Roth Jr. (R-Del.), chairman of the Senate
Finance Committee, acknowledged that federal taxes have
declined for many working Americans. ``We made some progress
because of the Republican Congress,'' he said, ``and we are
very proud of that fact.'' But he said taxes are still too
high, citing the ratio of tax revenue to the gross domestic
product.
In many of Bush's speeches, he expresses concern for the
tax burden of ordinary Americans, such as a waitress trying
to raise two children on $22,000 a year, as their incomes
increase. Larry Lindsey, Bush's chief economic adviser,
agrees that tax credits and the like have reduced effective
tax rates. But Lindsey said there is ``an egregious problem''
of higher marginal rates--how much of additional income goes
to taxes--as the credits begin to phase out.
Bush's World Wide Web site (www.georgewbush.com) includes a
``Bush Tax Calculator,'' which also demonstrates how low
taxes are for most Americans. A family of four making $56,000
pays 8.3 percent of its income in federal tax, according to
the Bush online site, which Cogan said is based on the tax
code.
The online site's calculator also says a single parent with
two children making $22,000 a year pays $110 in federal
income taxes, or 0.05 percent of her wages. But the Bush
calculator doesn't include the impact of the earned-income
tax credit, which results in a rebate of $1,700 for this
wage-earner. A single parent with two children actually
doesn't owe federal tax until her income reaches nearly
$27,000.
Bush's plan would take many Americans who already pay
relatively low taxes off the tax rolls. But because Bush has
focused on cutting tax rates, the largest share of the tax
savings would go to Americans who pay most of the taxes.
The institute on Taxation and Economic Policy estimated
that the wealthiest 10 percent of taxpayers would receive
more than 60 percent of the tax cuts in the Bush plan.
Someone making $31,100 would receive a tax cut of $501, about
1.6 percent of income, while a taxpayer making $915,000 would
receive a tax cut of $50,166--5.5 percent of income.
The Bush online calculator doesn't calculate taxes--or tax
cuts--for people making more than $100,000.
Mr. REID. I draw my colleagues' attention to this front-page story
and a few of the statistics the article discusses.
The middle fifth of American families with average incomes of $39,100
paid 5.4 percent in income tax in 1999, down from 8.3 percent in 1981.
Families with an income of $54,900 paid 7.46 percent in income tax, the
lowest level since 1965. Even the median two-earner families making
$68,605 a year were at 8.8 percent, paying their lowest level of income
tax in 50 years.
According to the Washington Post and other newspapers around America,
even conservative think tanks see the writing on the wall. A
spokesperson for the Conservative Tax Foundation said:
It's a shocker.
That was referring to the 8.8-percent income tax level.
Low Federal taxes make it harder to make a case for tax
cuts. With the lower- to middle-income tax payers paying so
little there won't be pressure [for change].
Bruce Bartlett, senior policy analyst at the Dallas-based National
Center for Policy Analysis, another conservative group:
Taxes are never showing up as a major factor. As far as
people wanting a big Reaganesque tax cut, I just don't see
it. People are satisfied with their economic situation.
It is time we start addressing the real problems facing this country.
Sure, we would all like less taxes, but let's look where the taxes are
coming from. They are coming from State and local government, not from
the Federal Government. Take a look at payroll taxes, but get off the
income tax kick. The taxes are the lowest they have been in some 40 to
50 years, according to your tax category. Even a Bush adviser
acknowledges that taxes have declined for many low- and middle-income
Americans. I don't know if this adviser for Governor Bush will continue
working for him.
The problem, which is what we have been saying, as quoted in the
article:
Federal income taxes are so low for so many Americans that
it is little wonder many voters place taxes near the bottom
of their priorities in many opinion polls.
Why are our friends on the other side of the aisle not listening to
the American people? The public continues to demand first things first.
What are they? Save Social Security, especially when we have the budget
surpluses which allow extending Social Security's long-term solvency.
The fact
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can't be ignored. We must do something about Social Security in the
outyears. Republicans basically want to ignore Social Security, ignore
the debt of $5 trillion, and squander this surplus with rhetoric which
champions more than $1 trillion worth of tax cuts.
Remember, we have the lowest taxes in some 40 to 50 years, according
to your tax category, yet most of the rhetoric on that side of the
aisle has been: Lower Federal income taxes.
As I said on numerous occasions, paying down the debt is a tax cut
for everyone. If we cut down the $5 trillion debt, which means we pay
less interest every year as the Federal Government's biggest
obligation, other than military, we would save billions and billions of
dollars every month. It seems to me that is where we should put our
priorities. Paying down the debt is a tax cut for everyone. Interest
saved from paying down the debt could be credited to the Social
Security and Medicare trust funds, which would extend their solvency
and give us flexibility to target tax cuts. In other words, let's do
tax cuts we can afford.
Certainly, there are some tax cuts that are necessary. We can
increase the standard deduction for both single and married filers. We
can provide tax relief to married couples who suffer as a result of
their having been married. We can offer a long-term tax credit,
providing a deduction for long-term-care insurance premiums. In America
today, people are living longer, more productive lives. As a result,
there are a lot of people going to extended-care facilities. It has
become a tremendous burden for people placed in these institutions. We
need to provide some tax credits for people who buy insurance for their
golden years. This tax cut makes it easier not only for the people who
buy the insurance but for families who care for their elderly family
members.
We need to increase deductions to make health insurance more
affordable and accessible, especially for self-employed Americans. We
need to increase the maximum amount of child care expenses eligible for
tax credit. These are targeted, reasonable tax cuts that would more
evenly distribute the load.
I think it is remarkable we can pick up the paper Sunday and get the
good news. The good news is, Federal income taxes are the lowest they
have been in America for 40 to 50 years. I think that says a lot for
the 1993 Budget Deficit Reduction Act that passed without a single
Republican vote; we passed it. The Vice President came to the Senate
and broke the tie. As a result of that, America has been put on a long-
term economic upturn. Not only has there been great economic news in
that the economy is doing well for a record amount of time but, in
addition to that, taxes are lower than they have been in 40 to 50
years.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, I understand we have 45 minutes in morning
business set aside.
The PRESIDING OFFICER. That is correct.
Mr. DORGAN. Mr. President, if I could be notified after 12 minutes.
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