[Congressional Record Volume 146, Number 46 (Wednesday, April 12, 2000)]
[Senate]
[Pages S2568-S2575]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WAIVING THE MARRIAGE PENALTY
Mr. GRAMS. Mr. President, I want to take a few minutes to follow the
Senator from Texas and talk about one of the most important issues we
are going
[[Page S2569]]
to be considering this week. Especially for young families, this could
be one of the most important issues we are going to vote on maybe this
year. That is the question of waiving the marriage tax penalty.
The Senator from Texas has done an excellent job in laying out some
of the concerns, some of the questions, and some of the boundaries of
how this is imposed and who is paying this tax.
Is it a fair tax? When you make a commitment to somebody to get
married, should you also have to somehow make a commitment to Uncle
Sam? And that commitment is to pay higher taxes. That is not fair. It
would be like going into a store and buying a suit. The suit is $100.
And they ask: Are you married? You say yes. They say: Well, that will
be $150.
Why would we pay more? Why would we penalize someone just because
they are married or if they are single?
I also want to give a lot of credit to Senator Kay Bailey Hutchison,
the other Senator from Texas, for all the work over these last couple
of weeks--working with her and others to highlight the problems with
the marriage penalty, whom it affects, and how much money it really
means to those couples.
We just held a news conference outside the Capitol. Among those
speaking were, of course, representatives of a number of groups that
represent working families across this country that are there
supporting it, along with the Senators who were there to support it;
but I think most importantly there were three couples who also came to
tell their story, why they thought getting rid of this marriage tax
penalty was so important, how they urged Congress to pass this bill,
and not only urged the Congress to pass it but urged President Clinton
to sign this into law.
Their stories were about young couples with one child and expecting
another and how, after they are married, they look at the tax forms and
find because they are married--young families not making a lot of
money--their tax this year is going to be about $1,100 more because
they are married--nearly $100 in penalty every month for this young
couple.
Another couple from Maryland talked about the penalty they have--well
over $1,400 a year. Again, why? Because they are married.
Go to the Tax Code, to the page referring to you, and look down the
lines, and if you are married, there is a penalty.
As one man said, at many weddings across the country today there is
an uninvited guest. That uninvited guest is the tax man. He says: Good,
you are getting married; when you fill out your tax forms this year,
you will pay more to Washington in taxes.
Some in the Senate who say we don't need to repeal this marriage tax
penalty. As Senator Gramm of Texas says, some say they are rich people;
they can afford to pay this tax. Don't give them this break. They are
rich.
They are the ones who are advocating somehow Washington needs these
dollars more than the couples.
There are over 21 million couples across the country penalized at an
average of $1,400 a year just because they are married. A young couple
Senator Craig and I will talk about, when Senator Craig comes back to
the floor, has a story I have heard a number of times; that is, the
couple planned on marrying toward the end of the year, but after
filling out their taxes and comparing it to what they would pay in
taxes next year because they were married, they have decided to put the
wedding off at least for a couple of weeks beyond the December 31 date
so as a couple they will not be penalized because they are getting
married. This is a young couple who have made a decision based on
economics that because Uncle Sam wants to take a bigger bite out of
their wallet, they are going to have to put off their plans to get
married for at least several weeks just to get around the corner.
We have heard stories of friendly divorces where people have actually
decided to have a friendly divorce so they save some money. Or the
story of the 78-year-old man who called his wife of over 50 years and
said: Do you want a divorce? She said: What are you talking? He said: I
am at the tax man's office and if we get a divorce we could save a lot
of money.
They didn't do it, but it is unfair that the couple is having to pay
more dollars in taxes because they are married.
There are going to be stories during this debate, as the Senator from
Texas pointed out, that somehow there is a marriage bonus, many people
on one side are getting this bonus because they are married; or the
couple on this side who is being penalized. Somehow that is supposed to
wash out and be fair and even. I don't think that is true. These
families should not be overtaxed, incur a tax penalty, only because
they have decided they are going to get married.
I hope, when we consider this legislation this week, we consider
these millions of families across the country who are paying on average
about $1,400 a year. Nearly $30 billion will be collected for
Washington this year from these families. There is a belief that
Washington needs this money more than the families do to raise their
kids, to buy the clothes, to buy the food, to pay for the mortgage, to
put away money for the education of their children. All this is so
important, but Washington needs it more.
Several years ago, President Clinton was asked at a news conference
if he thought the marriage tax penalty was fair. He said, no, it is not
really fair, or something to that effect. But the underlying message
from the President was, even if it is not fair, Washington can use this
money a lot more than the families can. Washington needs these dollars
more than the families need these dollars.
I hope, when we get a chance to vote on this, we remember these
families struggling to make ends meet, families looking for that extra
dollar they can put into a savings account for their child's education,
or just maybe buying something extra, maybe putting money away for a
vacation or a night out for pizza, whatever is important to them. I
think $1,400 a year speaks loudly for them.
As I said, Washington might believe it needs the money more than
these families. However, if we have the families on the floor of the
Senate, and one by one ask them if this is an important bill, are these
dollars important to your family, could these dollars help out in your
budget decisions, or should we give the money to Washington and hope
and pray that Washington will give a few of the dollars back? I think
if we leave the dollars in the pockets of the families to begin with,
they will make the best decisions and they will not have to look to
Washington or ask Washington or beg Washington for a few of the dollars
to help them raise their families.
I defer to my colleague from Idaho.
Mr. CRAIG. Mr. President, I will be brief. I see our colleague from
Illinois on the floor. I stepped back to do this colloquy with my
colleague from Minnesota.
I ask the Senator from Minnesota, hasn't the marriage penalty earned
a special contempt in our eyes from a firsthand experience involving
our two offices?
Mr. GRAMS. The Senator from Idaho is correct. Two young people who we
care deeply about, one a dedicated employee in my office and one an
employee in the office of the Senator from Idaho, are among the latest
victims of this insidious provision of the Tax Code.
One of my legislative assistants is a young man from Minnesota. He
worked for me in Minnesota and also here in Washington, DC, for over 5
years. He is engaged to be married to a young woman in the office of
the Senator from Idaho, a native of Idaho who has worked in my
colleague's office for almost 3 years.
This young couple, very much similar to other couples all around the
Nation, is moved by faithful affections, shared values, common life
goals to become a family. But the Federal Tax Code is saying something
different to this young couple.
Mr. CRAIG. Mr. President, this couple are about the same ages as my
own children. I say to everyone of my generation, they are a lot like
all of our children and we want to see them succeed. They are like many
young couples ready to start a new life together, as we have seen
generation after generation.
They originally planned their wedding date for late this autumn this
year, but then friends actually started asking them, ``What about
taxes?'' So they did an interesting thing; they sat
[[Page S2570]]
down and computed their marriage penalty. Guess what. They found out
their combined incomes together as a married couple would cause them to
have to pay out of their pockets an additional $1,400 more than they
are currently paying as single people working on our two staffs.
We are talking about average earners. In fact, the marriage penalty
for our young Idaho-Minnesota couple is just about exactly the average-
sized marriage penalty American couples are paying across the country,
about $1,400. That could be the cost of a honeymoon or a wedding gown
or part of a college education, if properly saved and invested for
children who might come as a result of this union.
It is critically important we deal with this issue. Yes, they have
delayed their wedding only a few weeks, but I asked my friend from
Minnesota, does the Federal Government have any business forcing any
kind of a decision such as this on families and couples?
Mr. GRAMS. I answer the Senator from Idaho by saying it does not.
Again, if there are those in the Senate who believe this is one of
those rich families who can afford to pay this tax, believe me, these
are not rich young people. They are a hard-working young couple but by
no means rich. They will work hard and probably will get there someday
but right now they are not.
It is the furthest thing from fairness. That is the Federal Tax Code.
Even if this couple escapes the marriage tax penalty this year, they
will still have to pay next year and the next year and the year after,
for most of the rest of their lives, unless we change that, as we are
trying to do this week with the legislation before the Senate.
We are not talking about abstract tax policy. We are not talking
about economic theory. We are talking about average families, real
families, who are hurt every year by the marriage tax penalty. In many
cases, we are not talking about a delay of a wedding. We are talking
about a Tax Code that says do not get married if your family may need
that second income because the IRS has first claim on that income.
I asked that member of my staff why they felt they needed to postpone
their wedding a few weeks. He told me it did not make any sense for him
and his fiance to fork over another $1,400 to the Federal Government.
Some might think that is cheating the Government, but he didn't think
so. He said they already pay too much in taxes, and they simply cannot
afford to give the Government even more of what is rightfully theirs.
My staff member said they can use that money for their wedding, they
can use it to help take a trip, or to plan for their family's future,
rather than giving it to the Federal Government at a time when the
Government simply does not need it. I think he made an excellent point.
Washington is taking this money from young couples at a time when it
doesn't need the money and these young couples do. I think it is not
only wrong but a disgrace that Washington has the large appetite for
the hard-earned money of people across America who simply want to get
married, start a family, and to begin their lives together.
Mr. CRAIG. Mr. President, I do not think either my colleague from
Minnesota or I could ever put romance in the Tax Code. But I hope we
can stop the Tax Code from punishing folks such as the two young folks
on our staffs we have talked about who are having to change their plans
by postponing a wedding date by more than a month, contrary to their
hearts, but because of the dictates of a heartless tax code.
Mr. GRAMS. Mr. President, I fully agree with Senator Craig. I ask for
an additional 3 minutes.
Mr. DURBIN. Mr. President, I will not object, but I believe time is
being taken from the Democratic time; is that correct? The Republicans
have used all their time in morning business?
The PRESIDING OFFICER. That is correct.
Mr. DURBIN. In a spirit of fairness, I will yield because I do want
to respond to some of these wonderful assertions, 3 minutes.
Mr. GRAMS. Mr. President, to wrap up, our staff's story is not
uncommon. There are many young couples who are forced to make similar
decisions.
The marriage penalty tax has discouraged women from marriage. It even
has led some married couples to get friendly divorces. They continue to
live together, but save on their taxes.
Dr. Gray Burtless of the Brookings Institution recently found that
the decline in marriage may be a major reason why income inequality has
increased across families. He believes that many poor unmarried workers
suffer because they do not have a spouse's income to help support their
family.
The Economist magazine offered a possible implication of this
finding:
Mr. Burtless's research suggests that the Clinton
administration, rather than fretting about skills and trade,
would do better to encourage the poor to marry and make sure
their spouses work.
The family has been, and will continue to be, the bedrock of our
society. Strong families make strong communities; strong communities
make for a strong America. We all agree that this marriage penalty tax
treats married couples unfairly. Even President Clinton agrees that the
marriage penalty is unfair.
Contrary to these American values, the Federal tax code contains 66
provisions that can penalize married couples and force them to give
more of their income to Washington. The Government's own study shows
that 21 million American couples or 42 percent of couples incurred
marriage penalties in 1996. This means 42 million individuals pay
$1,400 more in tax than if they were divorced, or were living together,
or simply remained single--more taxes than they should have.
This was not the intention of Congress when it created the marriage
penalty tax in the 1960s by separating tax schedules for married and
unmarried people.
If we do not get rid of this bad tax policy that discourages
marriage, millions of married couples will be forced to pay more taxes
simply for choosing to commit to a family through marriage.
The marriage penalty is most unfair to married couples who are both
working, it discriminates against low-income families and is biased
against working women. As more and more women go to work today, their
added incomes drive their households into higher tax brackets. In fact,
women who return to the work force after raising their kids face a 50-
percent tax rate--not much of an incentive to work.
The good news is, Congress is working hard to provide marriage
penalty relief to married couples. American couples may finally get a
congressional blessing this year to eliminate the unfair marriage
penalty taxes if our colleagues from the other side cooperate and join
in our effort.
The marriage penalty repeal legislation which we currently debate
would eliminate the marriage penalty in the standard deduction; provide
broad-based marriage tax penalty relief by widening the 15-percent and
28-percent tax brackets; allow more low-income married couples to
qualify for the earned income credit; and preserve the family tax
credits from the bite of the alternative minimum tax which allow
American families to claim full tax credits such as the $500 per child
tax credit, which I authored.
Millions of American families are still struggling to make their ends
meet. Repealing the marriage penalty will allow American families to
keep an average of $1,400 more each year of their own money to pay for
health insurance, groceries, child care, or other family necessities.
Elimination of the marriage penalty tax brings American families one
step closer to the major tax relief they deserve. It is particularly
important to note that this repeal will primarily benefit minority,
low- and middle-class families.
Studies suggest the marriage penalty hits African-Americans and
lower-income working families hardest. Repeal the penalty, and those
low-income families will immediately have an 8-percent increase in
their income.
It is unfair to continue the marriage penalty tax. There is no reason
to delay the passage of the legislation. I urge my colleagues in the
Senate pass the marriage penalty relief legislation.
I yield the floor.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. DURBIN. Mr. President, what an interesting world we live in that
a Republican Senator and a Democratic
[[Page S2571]]
Senator can look at a similar issue and see it in so many different
ways. I sit here incredulous at times when I hear Republicans on the
floor describe their view of the world. They live in a world where a
young man and young woman fall in love and contemplate marriage and
start to make plans for their future but stop cold in their tracks and
say: Before we go a step further, we better go see an accountant.
I can barely remember my courtship with my wife. It was a long time
ago. But it never crossed my mind to go see a bookkeeper or accountant
before I decided to propose marriage. We thought there was something
more to it. We knew there would be good times and bad, and we were
prepared to make whatever sacrifice it took to live a life together.
When I listen to my Republican colleagues, it sounds as if they want to
change the marriage vows from ``love, honor and obey, in sickness and
in health'' to ``love, honor and obey, in sickness and in health, so
long as there is no income tax disadvantage.''
I do not think that is the real world of real people. Nor do I think
we can amend the Tax Code in a way that is going to create a great
incentive for people to run out and get married. I think there are more
basic human emotions at stake. I think it trivializes a very sacred
decision by two people making an important decision in their lives to
suggest this is all about money and it is all about how many tax
dollars you have to pay.
I will readily concede there is unfairness in the Tax Code. Yes, I
will concede it is fundamentally unfair for us to increase the taxes on
two people because they are being married. But if you would listen to
the Republican logic, they grab this hook and take off and run out of
town with it.
Their proposal on the marriage tax penalty is so far afield from the
argument you have heard on the floor, you just cannot recognize it. In
fact, let's describe the situation. If two people are about to be
married and their combined income, when they file a joint return, puts
them in a higher tax bracket, that is called a marriage tax penalty.
However, if two people are married and their combined income puts them
in a lower tax bracket, some would call that a marriage bonus. How does
that happen? Perhaps one person in the marriage is not working and the
other one is; the combined income on a joint return merits a lower tax
rate. If both of them are working, their combined income raises them to
a higher tax rate, a penalty.
We, on the Democratic side, believe we should eliminate the penalty,
eliminate the unfairness, eliminate the discrimination against married
people under the Tax Code. You would think from their arguments on the
floor that is where the Republicans are. But that is not what their
bill says, not at all. In fact, when you look closely at their bill,
you find two amazing things: First, on the whole question of the
marriage tax penalty, there are about 65 provisions in the Tax Code
that could be associated with a marriage tax penalty. The Republicans,
who have given speeches all morning about the marriage tax penalty,
address how many of the 65 provisions? In the most generous definition:
three, leaving some 62 discriminations in the Tax Code against married
people untouched in the Republican bill.
The Democratic alternative addresses all 65.
So after all these pronouncements about ending Tax
Code discrimination, the Republican bill falls flat on its face when it
comes to addressing the 65 different provisions in the Tax Code that
apply. The Democratic bill applies it to all 65.
The second thing that strikes you right off the bat is that the
Republican bill goes further than eliminating the marriage tax penalty.
It, in fact, creates an additional tax bonus for those not suffering
the penalty. We are not talking about couples who are calculating how
many days they have to wait to avoid paying taxes before they decide to
get married. We are talking about couples who really benefit from
marriage, and their taxes go down--the Republicans add more tax cuts
for them.
Everybody loves a tax cut. If we could give a tax cut to every
American, that would be the dream of every politician. But the voting
public in America, the people watching this debate, have the right to
step back and say: How many of these tax cuts can we afford, as a
nation, to give away? I think that is a legitimate point. The Finance
Committee in the Senate writes the tax laws, the committee that sent us
this bill that is pending. If you look at the minority views, from the
Democratic side, you find many Democratic Members believe the best
thing we can do with our surplus is to pay down the Federal debt. That
is my position. That is the position of the President and most
Democrats. Why is that important? Because today in America we will
collect $1 billion in taxes from individuals, families, and businesses,
and that money will be used not to educate a child, to pay a soldier,
or to build a highway; it will be used to pay interest on old debt of
the United States.
If we do not change that, it means my grandchild, who is now about 4
years old, will continue to pay taxes, to pay interest on debt incurred
by my generation to build our roads and educate our kids.
Some of us think the fairest thing we can do for future generations
is to reduce the public debt with our surplus so that perhaps that $1
billion tax bill each day will be reduced for future generations.
Relieving this burden is a good gift to give our children and
grandchildren.
If one listens to the other side of the aisle, they do not want to
take the surplus and pay down the debt. They want to dream up more and
more tax cuts. The George W. Bush tax cut is so big, so massive, and so
risky that last week not a single Republican would vote for it on the
Senate floor when I called for a vote.
He wants to spend--I hope I get these figures right--$1.3 trillion. I
believe it was $400 billion or $500 billion more than the surplus. He
obviously wants to reach deep into the Social Security trust funds to
pay for his tax cuts or to cut spending on basic services for
education, protection of the environment, and defense. Not a single
Republican would stand up for that, and I am glad they did not. Most
Americans know better.
The Senate Republicans now have a George W. Bush tax cut; they want
to come in and keep hacking away at the surplus instead of putting it
to reducing the national debt, which on the Democratic side we consider
to be the highest priority.
The expected 10-year budget surplus, according to the Finance
Committee, is $893 billion. It is amazing that in a short period of
time, we can talk about those surpluses.
If this bill passes, the Republicans will have already spent over
half that in this session on tax cuts. Instead of lowering the national
debt, reducing the tax burden on future generations, preserving Social
Security and Medicare, they would have us continue on with tax cuts.
Take a close look at the Republican marriage tax penalty bill. First,
the tax cuts they offer are piecemeal rather than comprehensive. They
are not fiscally responsible because we are not putting money away for
reducing the national debt. More than half the taxpayer benefits in
their bill go to people already receiving a tax bonus. These are not
people discriminated against; these are people doing well under the Tax
Code, and they want to give them an additional tax cut.
They do not eliminate the marriage penalty, some 65 provisions; at
best, they only address 3. Here is the kicker about which they do not
want to talk. They have drawn their bill up in a way so that 5 million
Americans will actually pay higher taxes. Their intent was to reduce
the tax burden for married people. They went further than they had to.
On the bottom, the last page, take a look around the corner. Five
million Americans end up paying higher taxes under the alternative
minimum tax.
Isn't that something? Take a look at this on a pie chart to get an
idea, from the Republican plan, how much is being spent on the actual
marriage tax penalty relief: 40 percent. Of the amount of money they
have put on the table--$248 billion roughly over 10 years in tax cuts--
40 percent of it goes to marriage penalty relief; 60 percent goes to
people already receiving a bonus under the Tax Code for being married;
and, of course, they raise taxes on 5 million Americans by increasing
the alternative minimum tax.
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On the Democratic side, we think there is a better alternative. In
the Finance Committee proposal, the one that will be before us, married
couples will be allowed to file separately or jointly, whatever
benefits them from a tax point of view. We fully eliminate all marriage
penalties in the Tax Code --all of the 65 provisions. It is fiscally
responsible. The price tag is about $150 billion over 10 years, a
little over half of what the Republican proposal costs. It does not
expand marriage bonuses, and it does not exacerbate the singles
penalty.
Why do we want to reduce this idea of tax cuts? First, we think we
should be reducing the national debt, paying it down, which is good for
the economy, as Chairman Alan Greenspan of the Federal Reserve tells
us. In so doing, we strengthen Social Security; most Americans agree
that is a pretty high priority for all families, married or not.
We also believe strengthening Medicare, which is something the
Republicans never want to talk about, is good for the future of this
country, for the elderly and disabled. It is an absolute lifeline. We
believe if we are careful and target tax cuts, there are some things we
can achieve which are good for this Nation.
One is a proposal which, in my State of Illinois, is very popular,
which is the idea of the deductibility of college education expenses up
to $10,000. It means if parents are helping their son or daughter
through college and pay $10,000 of the tuition bill, they can deduct
it, which means a $2,800 benefit to the family paying college expenses.
That is going to help a lot of families in my home State. I certainly
think that makes more sense than the Republican approach in the
marriage tax penalty bill which provides a bonus to people already
receiving the tax bonus.
The other item we think should be the prime focus when we talk about
targeting tax benefits relates to the prescription drug benefit which
has been talked about for years on Capitol Hill. The Medicare plan,
conceived by President Lyndon Johnson and passed in the early sixties,
was a health insurance plan for the elderly and disabled which made a
significant difference in America. Seniors live longer; they are
healthier; they have better and more independent lives. I have seen it
in my family; most have seen it in theirs. We want it to continue.
There is a noted gap in that Medicare policy, and that noted gap is
prescription drug coverage. Virtually every health insurance policy in
America now covers prescription drugs but not Medicare. The Republicans
have come in with all sorts of ideas for tax cuts, but they cannot come
up with the money to pay for a prescription drug benefit under
Medicare.
We on the Democratic side think this should be the first priority,
not the last. In fact, we put a provision in our budget resolution,
with a contentious vote, I might add, to raise that to $40 billion to
pay for it. It has already been cut in half in the budget conference
committee. There is no will on the Republican side for a prescription
drug benefit.
They want to talk about a marriage penalty benefit for those who are
not suffering a penalty. We want to talk about a prescription drug
benefit for the elderly and disabled who are penalized every day when
they cannot afford to pay for their prescriptions.
Perhaps my friends on the other side of the aisle do not understand
the depth of this problem. We have seniors in some States who are
literally getting on buses and riding to Canada to buy prescription
drugs because they cost half as much in Canada as they do in border
States such as North Dakota, Minnesota, and Montana. They understand
this. They want us to do something about it, but the first tax cut bill
that comes before us since we passed our budget resolution is not about
prescription drugs, it is about a marriage penalty bonus for people who
are not facing a marriage penalty.
I will tell you how bad this drug crisis is for seniors. Their
coverage is going down. About a third of seniors have great coverage on
prescription drugs, a third mediocre, and a third none at all. At the
same time, the cost of these drugs is going up. There was a time when
drug prices went up once a year. Then the drug companies realized they
could hike their prices twice a year, then once a month, and then every
other week. If my colleagues talk with pharmacists or doctors or
seniors themselves, they will tell you exactly what I am talking about:
Prescription drug costs are going up; coverage is going down.
Take a look at the type of bills seniors are facing. Prescription
drugs are a burden on moderate income beneficiaries: typical drug costs
versus income. For a patient with heart trouble and osteoporosis,
typical drugs cost $2,400, 20 percent of pretax income--20 percent if
they are living at 150 percent of poverty. That is an income of about
$12,000 a year.
High blood pressure--one can see the percentages go up: 20 percent,
26 percent; arthritis and osteoporosis, 31 percent; high blood
pressure, heart disease, 40 percent. Heart disease and severe anemia,
more than a person's income.
In the city of Chicago, we had a hearing on prescription drug
benefits. Some of the stories that were told were memorable. I can
recall several organ recipients, transplant recipients, who came to us
facing monthly prescription bills of $1,000 or $2,000. These people, on
a fixed income, could not handle it. Medicare only covered it for 3
years. They knew what the cost of prescription drugs meant because for
them it was a matter of life or death. Without their drugs, after
transplant surgery, they could not survive.
There were some who were not in a serious condition but they could
tell me about $200, $400, and $500 a month in prescription drug costs.
Many times, seniors then make a choice: Will they take the medicine or
not? Will they take half the prescription or the full prescription?
Will they choose between food or medicine? That is a real world choice.
We on the Democratic side think a prescription drug benefit should be
the first priority out of the box. We believe we can pass marriage
penalty relief that addresses the problem, solves it for the vast
majority of couples affected by it, and leaves enough money for a
prescription drug benefit. That is our alternative to the Republican
proposal.
The Republicans want it all to be on the side of marriage tax penalty
relief and marriage bonus. We think prescription drug benefits should
be part of it. That will be the choice on the floor for Democrats and
Republicans.
Let's hear your priorities, whether or not you think a prescription
drug benefit should be a high priority. We certainly do.
Look at how drug costs are growing each year. I mentioned earlier,
they go up almost on a weekly basis: 9.7 percent in 1995; continuing to
grow to 16 percent in 1999.
Of course, drug companies are in business to make a profit. They need
to make a profit for research to find new drugs. That is a given. I
accept that. A company such as Schering-Plough, that sells Claritin,
that spends a third of its revenue on advertising--how many times have
you seen the Claritin ads on television, in magazines, in newspapers?--
Spends only 11 percent of their revenue on research. We realize the
costs are going up for the advertising more than for the research.
We believe that as these costs continue to rise, seniors will
continue to be disadvantaged. As I have mentioned, seniors --most of
them--are on a fixed income and really have nowhere to turn to pay for
these drugs.
Mr. President, 57 percent of seniors make under $15,000 a year; 21
percent make above that but under $25,000. You get to the categories of
seniors who make over $25,000, and that is about one out of five
seniors; four out of five make less. So as the prescription drug costs
go up, their ability to pay is being stretched.
We think this prescription drug benefit then will have a great
advantage for seniors. It will give them some peace of mind. The
doctors who prescribe these drugs will understand that their patients
will be able to afford them and take them.
What is the alternative? If an elderly person goes to see a doctor,
and the doctor prescribes a drug, and the elderly person goes to the
pharmacy and finds out they cannot afford the drug, and they then do
not take the drug, and they get sick enough to go to the hospital, who
pays for the hospitalization under Medicare? Raise your hands,
taxpayers. We all do.
[[Page S2573]]
When someone gets sick and goes to the hospital, under Medicare,
taxpayers pay for it. Yet we do not pay for the prescription drugs to
keep people well and out of the hospital. That does not make any sense.
It does not make sense medically. No doctor, no senior, would believe
that is the best way to deal with this.
So we are talking about changing this system for the prevention of
illness and disease, for the prevention of hospital stays, and for
reductions in the costs to the Medicare program. It is a real cost
savings.
It isn't just enough, as I have shown from these charts, for us to
provide the benefit for seniors so they can pay for prescription drugs.
We have to deal with the whole question of pricing, the cost of these
drugs.
How will we keep these costs under control? People in my part of the
world, probably all across the United States, get a little nervous when
you talk about the Government being involved in pricing. They say: I am
not quite sure the Government should be doing that.
They have a right to be skeptical. But let's step back and take an
honest look at this. Is there price fixing now when it comes to the
cost of drugs? Yes.
Insurance companies contact drug companies and say: If you want the
doctors under our insurance policy to prescribe your drugs, we will pay
you no more than the following cost. That is a fact of life. The
bargaining is going on.
If these same drug companies take their drugs up to Canada to sell
them, the Canadian Government says: You cannot sell them in Canada
unless we can establish the ceiling for your prices.
That is why the same prescription drugs--made by American companies,
in American laboratories, by American technicians, approved by the Food
and Drug Administration of the United States of America--when they
cross that border, in a matter of minutes, they become a Canadian
product sold at half the cost. That is why American seniors get on
buses and go up there, to buy those drugs at half the cost.
The Canadians speak out when it comes to the price of drugs, as do
the Mexicans and the Europeans and every other industrialized country
in the world.
Oh, the Veterans' Administration here in the United States bargains
for drugs, too. We want to get the best deal for our veterans. We tell
the pharmaceutical companies: This is the maximum we will pay. They
sell it to us.
The only group that does not have bargaining power is the seniors and
disabled under Medicare. They are the ones who pay top dollar for the
drugs in America. Is that fair? Is it fair that the people of moderate
income, of limited resources, are the ones who pay the highest price?
That is why we on the Democratic side believe a prescription drug
benefit should be the first tax cut that we consider, if you want to
call it that, because it affects a program such as Medicare.
But on the Republican side, no, it isn't a high priority. It isn't in
this bill. There is no money set aside for it. There isn't a sufficient
amount of money set aside for it in the budget resolution presently in
conference.
That is the difference. It is a significant difference.
If you take a look at the prescription drug coverage by income level,
here is what you find. Those who are below the poverty level, 35
percent of them have no prescription drug coverage. For those barely at
poverty and above, it is 44 percent. You will see that as you make more
and more money, you have more and more likelihood that you will have
drug coverage.
The lower income Americans, the lower income seniors, and the
disabled are the ones who do not have prescription drugs protection.
We think the prescription drug benefit should really hit several
principles. Any plan that does not is a phony plan. The plan should
cover all. There should be universal coverage. Do not pick and choose.
Every American should be allowed to be covered under this plan. No. 2,
it should have basic and catastrophic coverage. No. 3, it should be
affordable.
We think if you put these together, you can come up with a
prescription drug benefit the President has asked for, which the
Democrats in Congress support, and which the Republican bill before us
does not even consider.
We will come back with an alternative, a Democratic substitute, to
give this Chamber a choice. You can take the Republican approach and
give tax cuts to those who do not need them or you can take the
Democratic approach and eliminate the marriage tax penalty for the vast
majority of young people who want to be married--all 65 provisions in
the Tax Code--and have enough money remaining to deal with a valid
prescription drug benefit.
The difference is this. We buy the premise of what the President said
in his State of the Union Address, that we happen to be living in good
times but we should be careful about our future. If we are going to
have surpluses, let us invest them in things that count. Let us pay
down the national debt. Let us strengthen Social Security. Let us
strengthen Medicare and target the tax cuts where they are needed the
most.
Some of the Republicans are running around Capitol Hill like folks
with hot credit cards. They cannot wait to come up with a new tax cut--
needed or not needed. We think we have to be more careful. If we are
more careful, if we show some fiscal discipline, we can not only avoid
the deficits of the past, heaping them on the national debt, but we can
be prepared for any downturn in this economy as well. I think that is
fiscally conservative--a term Democrats aren't usually allowed to use
but certainly applies in this situation--and it is fiscally prudent. It
is the way a family deals with its situation. Before you run out and
pay for that big vacation, you might think about paying off some of the
credit card debt. I think a lot of families think that way. The
Republican leadership in the Senate does not.
Instead of paying down the debt of this country, they want to give
away the tax revenues in a surplus, give it back to the people. They
can give it back, but still we will collect $1 billion a day in
interest on old debt.
The provision we will be bringing before the Senate during the course
of this debate will offer those who are truly fiscally conservative on
both sides of the aisle a viable option. We are going to address all 65
provisions in the Tax Code that have a marriage tax penalty effect. The
Republican bill goes after the standard deduction and partially
addresses two others: Rate brackets and earned-income tax credits.
Among the 62 provisions the Republican bill does not address on the
marriage tax penalty but the Democratic optional, single-filing
alternative does are adoption expenses. Doesn't that make sense, that
we wouldn't want to discriminate against couples who may want to adopt?
Child tax credits, think about that for a second. A couple wants to
get married. They may have some children. We want to give them the
child care tax credit. The Republican bill doesn't protect them against
the discrimination that might be part of it.
Taxation of Social Security benefits, savings bonds for education,
none of these is covered by the Republican bill; IRA deductions,
student loan interest deductions, elderly credits--the list goes on.
After their pronouncements and speeches about what a serious problem
this is, their bill really comes up short. It doesn't address the basic
problem. It provides tax cuts that are not asked for or needed. It
shortchanges the opportunity to put money into a prescription drug
benefit.
We think it is far better to take an approach which is fiscally
prudent, conservative, sensible, and straightforward.
We also believe that during the course of this session we will be
considering other targeted tax benefits. We can only have limited
amounts and still bring down this national debt, so let's spend the
money where it will be the most effective: A prescription drug benefit,
No. 1; the deductibility of college education expenses, No. 2. If you
send a son or daughter to college, you will have a helping hand from
the Tax Code to pay for those growing expenses.
A third, which the President has proposed and which I think makes
sense, is a long-term care credit. How many
[[Page S2574]]
people have parents and grandparents who are growing older and need
additional care? We know it is expensive. Because of that additional
expense, we want to provide a tax credit to help defray some of those
costs. Those are very real and serious family challenges.
As much has been said on the floor about the marriage penalty and the
reverence for families, which I agree is the backbone of this country,
let's take a look at families in a little different context, not just
on wedding day but when those families are raising their children and
sending them to college, when those families are caring about their
parents and grandparents who meant so much to them. Our targeted tax
cuts go after all of those elements because, on the Republican side,
they heap tax cuts on those who, frankly, do not need them, those who
are not facing a marriage penalty. They cannot have enough money left
to pay down our debt and have the resources for a targeted tax cut
along the lines I have suggested.
I see my colleague from Wisconsin has come to the floor. I know my
time is limited. I ask the Chair how much time I have remaining.
The PRESIDING OFFICER (Mr. Grams). The Senator has 16 minutes
remaining.
Mr. DURBIN. I thank the Chair and yield the floor to my colleague
from Wisconsin, Senator Feingold.
The PRESIDING OFFICER. The Senator from Wisconsin.
Mr. FEINGOLD. Mr. President, one thing observers of the Senate are
not likely to see today is anyone defending the marriage penalty. The
tax code should not discourage the act of getting married, and it
should not encourage divorce.
There is widespread agreement that Congress should pass marriage
penalty relief. The President's budget included a proposal to address
the marriage penalty. And last week, the Senate voted 99-1 in favor of
sense of the Senate language calling on us to ``pass marriage penalty
tax relief legislation that begins a phase down of this penalty in
2001.''
The marriage penalty is particularly burdensome for lower-income
couples--and many young couples don't have much to spare. For some of
these couples, the amount of their taxes could actually affect their
decision whether or not to marry. Luckily, in the vast majority of
cases, in the words of a recent law review article, love triumphs over
money.
But in this debate that the majority has scheduled for the week
before the April 15 tax deadline, one can be forgiven for harboring the
suspicion that more than marriage penalty relief is involved.
For one thing, on this subject on which there is a broad consensus,
the majority appears unwilling to work out a compromise with the
President or with Democrats. Rather, the majority seems driven more to
create election-year campaign talking points than real tax relief.
For another thing, on this bill, for the third time this year
already, the majority seems willing to plow ahead on major tax cut
legislation before even adopting its own fiscal plan in the form of a
budget resolution. To recount, in early February, the Senate passed a
$103 billion tax cut as part of the bankruptcy bill. Then, in early
March, the Senate passed another $21 billion tax cut for education
savings accounts. And now in April, the Senate is considering another
$248 billion in tax cuts labeled as marriage penalty relief. So the
majority this year has already moved $372 billion in tax cuts--at an
average rate of $124 billion a month--before it has even adopted its
budget resolution.
And you need to add to that the approximately $80 billion in debt
services that tax cuts of such a size would require. That yields
roughly $450 billion of the surplus that this Senate will have spent in
just three months--an average of $150 billion a month. And that doesn't
even count the health tax cut provisions that we can expect in the
Patients Bill of Rights bill. And that also doesn't count the other
multi-billion-dollar reconciliation tax cut that the budget resolution
calls for no later than September 22.
Some said that the majority brought up the amendment to the
Constitution to prevent flag burning when they did because the American
Legion was having a convention that week. Now, it seems that they are
bringing up the marriage penalty because tax day is coming. What the
majority chooses to call up seem more driven by the calendar than by
legislative sense.
Moving so many tax bills so early in the year raises another
suspicion as well--that if we waited, we would find that there is not
enough money to do everything that the majority wants.
The Senate's consideration of a tax cut this size is also premature
because the majority continues to push tax cuts before doing anything
to extend the life of Social Security, before doing anything to extend
the life of Medicare, or before doing anything to make prescription
drugs available to seniors who need them.
Yes, Social Security is projected to run cash surpluses on the order
of $100 billion a year for the next decade, but beginning in 2015, it
is projected to pay out more in benefits than it takes in in payroll
taxes. Medicare Hospital Insurance benefit payments will exceed payroll
tax revenues as early as 2007.
The tax cuts that the Senate has passed and that we debate today
would phase in so that their full impact would come just as the Nation
begins to need surpluses in the non-Social Security budget to help
address these Social Security and Medicare commitments.
In 2010, the marriage penalty bill before us today alone will cost
$40 billion a year. Rather than pay down our debt to free up resources
for our coming needs, these tax cuts would add to our future
obligations. To commit resources of this magnitude without addressing
the long-term solvency of Social Security and Medicare is simply
irresponsible.
The size of the tax cut before us today flows in large part from its
scatter-shot approach. According to the Center on Budget and Policy
Priorities, it delivers a comparable amount of benefits to those who
enjoy marriage bonuses as to those who suffer from marriage penalties.
And according to Citizens for Tax Justice, more than two-thirds of this
tax bill's benefits would go to the fewer than one-third of couples
with incomes of more than $75,000. Are tax cuts for the well-off really
our most pressing national need? A more targeted approach could save
money and leave us better prepared to address our coming fiscal
commitments.
Our economy is strong and has benefitted from sound fiscal policy.
Monday's papers reported that unemployment has remained below 4\1/2\
percent for fully two years now. The Nation continues to enjoy the
longest economic expansion in its history. And home ownership is at its
highest rate on record.
We have this strong economy in no small part because of the
responsible fiscal policy we have had since 1993. That responsible
policy has meant that the government has borrowed less from the public
than it otherwise would have, and indeed is projected to have paid down
nearly $300 billion in publicly-held debt by October. No longer does
the government crowd out private borrowers from the credit market. No
longer does the government bid up the price of borrowing--interest
rates--to finance its huge debt. Our fiscal policy has thus allowed
interest rates to remain lower than they otherwise would be, and
businesses large and small have found it easier to invest and spur new
growth.
Passing large tax cuts like the one before us today without
addressing the long-run needs of Social Security and Medicare risks
returning to the budgets of 1992, when the government ran a unified
budget deficit of $290 billion and a non-Social Security deficit of
$340 billion. It risks returning to the Congressional Budget Office's
1993 projection of a unified budget deficit that would climb to $513
billion in 2001, instead of the unified budget surplus of $181 billion
and non-Social Security surplus of $15 billion that we now enjoy.
Any young couple would be well-advised to do a little financial
planning before entering into a marriage. We can ask the Senate to do
no less.
I yield the floor.
The PRESIDING OFFICER. The Senator from Montana is recognized.
Mr. BAUCUS. Mr. President, I know there will be a lot of time for
debate
[[Page S2575]]
later today and tomorrow, and perhaps in the future, on the so-called
marriage penalty. I want to respond to two points that several of our
Republican colleagues have made with respect to the Finance Committee
bill, the majority bill.
The first claim is that the Finance Committee bill, the majority
bill, eliminates the marriage penalty. Not true. It does reduce the
marriage penalty for some people, to some extent, but it does not
eliminate the marriage penalty.
Why do I say that? Well, first, let me show you this chart. This
chart basically shows, in the main, that there are 65 provisions in the
Tax Code that create a marriage tax penalty; 65 different provisions in
the code create the so-called marriage tax penalty, the inequity that
married people pay. The Republican bill, the Finance Committee bill,
addresses some of them. How many? Out of the total of 65, how many do
you suppose the Finance Committee addresses? A grand total of three. So
62 of the provisions in the Internal Revenue Code that cause a marriage
tax penalty are not addressed by the Finance Committee bill.
Let me give you an example. One is the deduction for interest on
student loans. The phaseout for this begins at $40,000 for unmarried
individuals and about $60,000 for joint return filers. So if two young
people each earn $35,000 and they marry, they get hit harder by the
phaseout. In other words, they pay a marriage tax penalty. It is not
covered by the Finance Committee bill. It is covered by the alternative
to be offered by Senator Moynihan.
Another example in the Finance Committee bill is not covered. A
marriage tax penalty that is not taken care of is Social Security for
seniors. The tax threshold for Social Security for seniors is $25,000
for individuals and $32,000 for couples. Again, a marriage tax penalty.
What does the Republican bill, the Finance Committee bill, do about
these provisions? Nothing. They are not among the three penalties the
Republican bill addresses. The Democratic proposal, in contrast,
addresses all 65 marriage tax penalty provisions--all of them. Not 3,
not 4, not 5, but all of them, all 65.
So, again, the Finance Committee bill does not eliminate the marriage
tax penalty. The Democratic alternative does.
There is a second point made on the floor today that I would like to
address. About half of the relief in the Finance Committee bill goes to
people who don't pay a marriage tax penalty today. They get a so-called
bonus, or they get neither a penalty nor a bonus. That is this chart.
This chart shows that less than half of the relief in the majority bill
goes to the marriage tax penalty; that is, more than half goes to
people who don't have a marriage tax penalty, who are already in a
bonus situation.
Some argue, well, gee, we should not penalize couples, such as those
with a stay-at-home spouse, by denying them the same tax cut we provide
to couples who face a marriage tax penalty. Frankly, that is a red
herring, as lawyers say. That is totally beside the point. Obviously,
we have nothing against people who receive a tax bonus. Nobody wants to
penalize them. But let's be honest. If we are providing half the relief
to people who don't pay a marriage tax penalty, it is simply not a
marriage tax penalty bill anymore; it is a tax cut bill, and we should
evaluate the bill on that basis.
Let's talk about singles, for example. The marriage tax penalty
relief bill that we are talking about is going to proportionally put
more burden on individuals, single taxpayers, on widows who are not
heads of households, widowers. They are going to be hit indirectly
because of the action that will probably be taken at a later date on
this floor. In the main, this is not a marriage tax penalty bill out of
the Finance Committee; it is primarily a tax cut bill.
That kind of tax cut compared with other priorities may or may not
make sense. What about prescription drugs, long-term care, retirement
security? I don't think we have addressed those issues enough on this
floor; that is, trying to determine what our priorities should be,
given the limited number of dollars we have in the budget surplus.
Another thing. Viewed as a tax cut, the majority bill is completely
arbitrary. There is no particular rhyme or reason to it. If you are
married and pay a marriage tax penalty, you get a tax cut. If you are
married and pay no marriage tax penalty, you get a tax cut. That is
what the Finance Committee bill does, in the main. If you are married
and get a tax bonus, you still get a tax cut. That is what the
committee bill does.
If you are single, you get no tax cut. In fact, the disparity between
married and single taxpayers widens to where it was before 1969.
Think about this for a moment. If you are married, have no children,
you are receiving the so-called marriage bonus, you get a tax cut. If,
on the other hand, you are a single mom and you have three kids, you
get zero tax cut. Is that what we want to do?
So the Finance Committee bill doesn't eliminate the marriage penalty.
It simply does not. Sixty-two of the marriage penalties in the code are
not addressed by the Finance Committee bill. Only three are.
There are many others I have not mentioned which are very big and
have a very big effect.
In addition, the majority committee bill provides a large tax cut
unrelated to the marriage tax penalty. It is a large tax cut which has
nothing to do with the marriage tax penalty.
I am saying briefly, because my time is about to expire, that there
are some major flaws in the majority bill. I have only touched on a
couple of them. There are many more which will be brought out later in
the debate.
I urge my colleagues, people around the country watching this on C-
SPAN, other offices, and the press to take a good look at the majority
bill because there are some real problems with it. I hope we can
straighten them out and fix them very soon.
I yield the floor.
____________________