[Congressional Record Volume 147, Number 18 (Thursday, February 8, 2001)]
[Senate]
[Pages S1171-S1176]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE PRESIDENT'S TAX CUT PROPOSAL
Mr. HUTCHINSON. Mr. President, I want to respond to my distinguished
colleague on his always very insightful observations regarding the
President's tax cut proposals. I want to strongly commend the President
for coming out with a well-conceived tax program that will provide
broad-based tax relief for the American people; for every American
taxpayer will experience relief from the onerous burden placed upon
them by this Tax Code and tax burden we have.
My distinguished colleague spoke of the need for investment. Too
often when we talk about not giving tax relief because we have to
ensure we have enough resources to invest in the Federal Government,
what we are really talking about is: Let's make sure we don't give it
back to the American people so we have it to spend as we see fit. So
investment equates to big spending programs. That would be ill-advised.
If we do not enact broad-based tax relief, as the President has
proposed, I can assure you that over the next 10 years the projected
surplus will not go to debt reduction, as everybody would like to see,
but it will, in fact, be spent by a Congress that enjoys spending all
too much.
When Senator Lieberman speaks about a cautious approach, I agree.
What the President has done and proposed is cautious and prudent. He
has proposed that we spend one-fourth of the projected surplus by
returning to the American people tax relief. One quarter of every
dollar out of the projected surplus would be returned to the American
people who pay the bills.
As my friend Senator Enzi has often said, the surplus is a tax
overcharge, and at least a quarter of it ought to go back to the
American people.
EDUCATION SAVINGS ACCOUNTS
Mr. HUTCHINSON. Mr. President, I rise today to speak to a part of the
President's tax program and part of his education program, which is the
education savings accounts. My colleague,
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Senator Torricelli, spoke on this earlier today. I join him and am
pleased to cosponsor the education savings accounts legislation with
him. I am honored to take up this cause from its previous Republican
sponsor, the Senator from Georgia, Paul Coverdell, and it is in his
honor and memory that this legislation is named.
Senator Coverdell was an ardent supporter of education savings
accounts. He worked for years to ensure that families and children
across America had the best educational opportunities available to
them. I, with all of my colleagues, am sad that Senator Coverdell is no
longer here to continue his exemplary work on this issue. He believed
education was one of the five pillars of freedom. Not only did he work
tirelessly on this issue, but he coordinated the floor debate on the
Elementary and Secondary Education Act last May. He was dedicated to
the issue of education and its importance in shaping the future of our
country.
While this legislation was passed several times by the Senate under
the leadership of Senator Coverdell, I will work with Senator
Torricelli to ensure that his dream of expanded, broader education
savings accounts is not only passed this year but is signed into law.
This legislation, which we call the Coverdell Education Savings
Accounts Act of 2001, allows parents, grandparents, or other
scholarship sponsors to establish an education savings account to save
for a child's education expenses. The Taxpayer Relief Act of 1997
allowed families to establish individual education accounts for higher
education expenses, but it allowed contributions of only $500 per year.
That is simply not enough. This legislation would build on that
legislation by increasing the annual limit on contributions from the
$500 to $2,000 per child per year. Furthermore, and equally as
significant, it expands the account so that savings may be used for
elementary and secondary education expenses, including tutoring,
special needs services, books, home computers, and tuition.
Education savings accounts place the power of education in the hands
of those who should be in control, and that is the parents. These
accounts allow parents to invest their own money over time to plan for
their children's future. Parents would have a real incentive to save
for their children's education expenses, and as these accounts grow and
accumulate interest, they build compound interest so parents can have
significant resources to pay for many of the services associated with
educating their child.
My colleagues, even public education is no longer free. Parents often
have to pay for tutoring, for afterschool programs, for uniforms in
many schools, home computers and software, and they pay that out of
their own pockets. These accounts can help pay for that.
May I say, as an aside, public school teachers are going to be big
beneficiaries of these Coverdell accounts. They are going to benefit
because those who are hired to do tutoring, those who will provide
additional help for children who need that special time are going to be
the public school teachers who are going to see their incomes and
limited salaries oftentimes supplemented by these education savings
accounts.
In addition, this legislation would expand who can contribute to the
education savings accounts so that corporations, charitable
organizations, foundations, and labor unions can contribute to these
education savings accounts in the name of a particular child. So I can
certainly envision major employers deciding this would be an ideal
benefit to employees and their children by establishing these education
savings accounts, making contributions to them. I certainly can imagine
labor unions being supportive of this and seeing this as a wonderful
benefit for their members and ensuring that their members are going to
have the resources necessary for their children's education and for
their employees to have all of the options available as they look at
what is best for their children.
So this proposal will inject billions of new dollars into education
that would not have been spent previously. I think it is a wonderful
opportunity for companies and unions to offer education savings
accounts as benefits for their employees--a benefit particularly
helpful to low- and middle-income families who otherwise could not save
much.
According to a previous analysis by the Joint Committee on Taxation,
70 percent of the families expected to take advantage of this
legislation have incomes of $75,000 or less. These accounts are only
available to taxpayers making less than $95,000 or $190,000 jointly.
The Joint Committee on Taxation also estimated that 75 percent of all
families using these accounts will have children enrolled in public
elementary or secondary schools. That means public schools aren't the
losers; they are the winners under education savings accounts.
The injection of billions of dollars, 75 percent of which is going to
be benefiting families with children in public schools, is a tremendous
boon to public education. So education savings accounts benefit low-
and middle-income families who currently struggle to meet the education
needs of their children, and they benefit families not only of lower
income but those who are enrolled in public schools.
One of the arguments against these savings accounts is that you are
going to take the cream of the crop out of the public schools because
in their education savings accounts, they can save the resources for
private school tuition. Yes, they could, but the fact is, this
legislation is really targeting low- and middle-income families, those
who otherwise don't even have those choices. An affluent family can
look at private schools, parochial schools, all kinds of options. They
can afford tutors. It is the low- and middle-income families who
heretofore have not had those options, but with education savings
accounts they can look at these options.
Public schools, private schools, and parochial schools are all
enhanced by that competitive atmosphere. This legislation leaves public
money in public schools. Only private resources could ever be used for
tuition in a private school.
We are going to have a healthy debate about the ``V'' word--
vouchers--this year, and I commend the President for his portability
provision on title I so disadvantaged children don't have to remain in
a failing school, trapped in a school not meeting their needs, and
parents will be able to take a portion of Federal money out of title I
and move to another school. We are going to have a heated debate on
that. There are Republicans for and against it, and some Democrats are
for and against it. This is something Republicans and Democrats,
provoucher and antivoucher forces, can agree upon because it is only
private money that would be utilized in going to other public schools,
and only public money would go to the public schools. Instead of
creating a new Federal education program, should we not allow parents
to realize a maximum return on their savings by allowing for these
accounts?
It is estimated that education savings accounts will infuse more than
$12 billion of additional funding into education. That far outweighs
the cost of the bill. What better way to stress the importance of
education than by allowing parents the opportunity to make their
dollars count.
I look forward to working on this bill with the original cosponsors--
Senators Gregg, Frist, Enzi, Sessions, Thompson, Hagel, Brownback,
Santorum, and Breaux--as well as the chief cosponsor, Senator
Torricelli of New Jersey, who has fought this fight and who has been on
the floor with Senator Coverdell in past years and has taken a
courageous step for something that in the time since it began was
controversial. I commend him and look forward to working with him as we
move this legislation forward.
Parents deserve this chance of empowerment to provide a better
education for their children.
I thank the Chair. I yield the floor.
The PRESIDING OFFICER. The Chair recognizes the Senator from
Missouri, Mr. Bond.
Mr. BOND. Thank you very much, Mr. President. I rise today to discuss
some of the benefits of the tax plan that President Bush has sent to
Congress. I believe everybody is beginning to understand the
significant benefit families would receive under this tax reduction
plan.
A family of four living in my State--St. Louis, Kansas City, Sedalia,
Moberly, Maryville, or Kennett--if
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they earn $35,000, would have all their taxes eliminated, a 100-percent
tax cut. That has to be good news.
A family of four making $50,000 a year would receive a 50-percent tax
cut--at least $1,600. That could be a downpayment on a new van or a car
or buy several weeks of summer camp for the kids or several weeks of
groceries.
President Bush's plan doubles the child tax credit to $1,000,
bringing it more in line with the actual cost of raising a kid. It is a
news flash for those of us inside the beltway. Kids are expensive.
Those of us who have kids know they are life's greatest blessing, but
they do not come cheap.
I commend the President for recognizing this.
I believe it is also very important that President Bush's plan
expands the charitable tax deduction. We ought to be encouraging more
people to contribute to the Salvation Army, Red Cross, Catholic
Charities, or any of the myriad wonderful private agencies that are
doing very important work helping those who need help.
I want to speak today specifically about the impact these tax
reductions would have on small business.
As chairman of the Senate Committee on Small Business, I hear from
small businesses every day that are the dynamic engine growing this
economy. These are the businesses that create the new jobs. As larger
and larger businesses cut back and lay off employees, they are finding
jobs. They are finding good opportunities in small business.
Small businesses represent about 99 percent of all employers. They
employ 53 percent of the private workforce and create about 75 percent
of the new jobs in this country. As you are looking to see where jobs
can be provided to those who are coming off welfare and those entering
the workforce for the first time, small businesses are the ones giving
them the opportunities.
Under the Bush tax plan, small businesses will get a huge benefit
from collapsing the tax brackets from 5 to 4--giving marginal rate
reductions. This is extremely important for these small businesses.
Why? You may think businesses and individuals are different. But
according to IRS statistics on income--most recent data available--
about 20.7 million tax returns filed by small businesses were sole
proprietorships, partnerships, and S corporations with business assets
less than $1 million. Those are significant numbers of small businesses
that are taxed on the individual tax rates. The income of the business
is passed through, and it is applied to their tax returns.
On the other hand, there are about 2\3/4\ million corporations, or
regular C corporations, that are taxed under the business rates. Almost
10 times as many businesses, much smaller, of course, are taxed on
individual tax returns. Eighty-eight percent of the businesses with
receipts under $1 million are passthrough entities--businesses taxed
only at the individual owner level.
The rate reduction proposed by the President will cut the taxes paid
by farmers, retail shop owners, small businesses, startup businesses
that are formed as sole proprietorship, partnerships, and S
corporations. What are they going to do with it?
We have seen in the past when they have the taxes reduced--and we are
reducing the taxes because we have a tax surplus; we are taxing them
too much; too much money is being taken out of families' pockets and
out of businesses' pockets--they will use those dollars left in their
pockets to invest in new equipment, in new technologies, hire more
workers, and pay better wages. They will be able to expand the product
lines and the services they offer. Most importantly, they will
contribute to the economic growth of their hometowns.
Week before last, we had a fascinating discussion with Chairman Alan
Greenspan of the Federal Reserve. Chairman Greenspan, many people
believe, has been one of the real economic gurus whose good economic
policies have allowed this economy to grow. He has talked in the past
about the need to reduce the huge national debt run up over past years.
But do you know something. This time Chairman Greenspan said it is
time for a tax reduction. Why? Because we are running surpluses. There
is a projected $5.6 trillion surplus over the next 10 years. That means
we would pay off all the debt we could pay off. Then the Federal
Government would be left in the position of what to do with the extra
money after they pay down the debt.
One of the most dangerous things he said they could do would be to
have the Federal Government accumulating private assets. That is
``economic speak'' for buying up businesses, buying up shares of the
stock market, or getting the Federal Government into socializing the
economy. We don't need to go that direction. We don't need to have the
Federal Government as the major shareholder in our economy.
Reducing high tax rates now is the best way to make sure we don't put
the Federal Government into the business of buying up businesses. That
is very dangerous. That is not where we want to go.
In addition, I asked Chairman Greenspan about what nature of tax cut
would most benefit the economy. He said as an economist that clearly
the most important thing we can do is lower the marginal rates.
With tax reform in the 1980s, we got the top rate down to about 80
percent. Most people think if the Federal Government is taking over a
quarter of every dollar earned, that is as much as it should take. But
right now we have the rates on the books of 39.6 percent. But with all
the phaseouts and others, sometimes that tax rate is 44 percent--almost
half of every dollar.
When you take that much money out of the system, and when you take
that much money out of the new dollars coming into a business, for
example, you discourage investment. From the economist's standpoint,
the best thing we can do is reduce those high marginal rates so that
small businesses will have the incentive to put more money into
technology and into equipment.
We have had a phenomenal growth in productivity. Because there has
been investment in new technology, information technology, the
information age has revolutionized the way businesses work. Businesses
are able to be more productive. What does that mean? It doesn't just
mean the businesses are more profitable. It means you and I as
consumers get better products at lower prices. It means they can hire
more workers. It means they can pay workers better salaries.
These are the benefits that come about from a marginal tax rate
reduction.
In addition, the President calls for repealing the death tax.
This will be a tremendous benefit to small business. I have a lot of
farmers in my State who are very worried that when they die the Federal
Government is going to come in with a confiscatory Federal death tax
and take away the farm, take away the small business that has been
built up over the years that the business owner or the farmer would
like to leave to his or her children.
Repealing the death tax will make a significant difference in
assuring that we continue jobs and economic activity. Thousands of
small businesses in this country waste millions of dollars each year on
estate planning and insurance costs just to keep the doors open if the
owners die.
A good friend of mine farms along the Missouri River in western
Missouri. When his father died they paid almost $100,000 in accounting
and legal fees to figure out how they could keep his farms from being
broken up. Death ought not be a taxable event. It is bad enough to have
the undertaker arrive at your door. You don't want to have the tax man
arrive at the same time.
The money we pay to accountants, to lawyers, and to insurance
companies to try to get around this estate tax could be much more
productively employed in investing in new equipment, in providing new
jobs and better wages.
Many times the tax at death ends a small business; it has to be sold.
It is a job killer. I think the days of the death tax should be
numbered, not the days of the business owned by an older business owner
or farmer who is reaching the end.
It should come as no surprise if the economy slows, as clearly it is,
small businesses will be first to feel the pain. Capital dries up,
sales will fall, and possibly business productivity will diminish. As
we focus on the need for immediate tax relief and the merits of it in
the Bush tax plan, we cannot ignore the plight of America's small
enterprises in the growing economy.
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Taxes are not supposed to be countercyclical. This is a long-term
investment in the productivity of our country. When we cut the capital
gains rate in the last decade, the money made available from the tax
reductions helped spur the investments in productivity that kept our
economy growing. Incidentally, that increased activity actually brought
more revenue to the Federal Government.
I think the Bush plan, in addition to holding tremendous benefits for
families, for individuals struggling to make ends meet, will have a
tremendous benefit for small business. The rate cut, the estate tax
repeal, and the other features of the President's proposal will
directly help the hard-working women and men who dedicate their lives
to creating small businesses, to taking the risks in the marketplace
that will allow this country to be healthier, and to allow themselves,
their families, and their workers to be productive, contributing
members of the economy.
When small businesses win, we all win. I think President Bush's tax
plan is one of the best hopes we have for ensuring that our economy
continues to grow.
I yield the floor.
The PRESIDING OFFICER (Mr. Thomas). The Senator from Arizona, Mr.
Kyl.
Mr. KYL. Mr. President, first, I commend the Senator from Missouri
for a fine statement. I certainly associate myself with those comments.
In particular, his reference to the effective tax cuts on the small
businesses in our country, something he has worked on literally all of
his career. I appreciate very much his emphasis on that.
The President, of course, sends us his bill today. The essential
feature, as the Senator from Missouri said, is the reduction in
marginal rates. Reducing the marginal rates is the best thing we can do
for all taxpayers, as well as for strengthening the economy itself.
I note that the low- and middle-class taxpayers are the biggest
winners under this plan. For example, a family of four making $50,000 a
year would receive a 50-percent cut, a $1,600 reduction average on
their tax bill. If that is not considered important by people, just
think about how much that would do for the average family. It pays the
entire average home mortgage for that family of four, a year of tuition
at a lot of community colleges, and so on.
The size of the cut is also modest by any standard. I know some of
our colleagues on the left have said it is too big. Frankly, it is not
nearly enough, in my view. I subscribe to the view of those in the
House of Representatives yesterday who said it could be much larger,
and it should be larger. I support at least this modest effort and urge
my colleagues who say it is too much to recognize that it is only half
the size of the tax cuts of the John F. Kennedy administration and one-
third the size of the tax cuts of the Ronald Reagan administration. So
I don't think one could say that this tax cut is too large, when all
economists agree that the tax cuts of the Kennedy and Reagan eras were
the primary cause of the great economic growths that occurred during
those periods of time.
Moreover, for those who contend that we don't have enough money to
accommodate this tax, I say, first of all, that is very much the wrong
standard to apply. This is not a Government expenditure. This has to do
with taking money from American workers. Recall that during the Reagan
era we had huge Federal debt and very large annual deficits, yet we
reduced taxes. As I said, this tax cut being proposed by President Bush
is only a third the size of those Reagan tax cuts.
The goal, first of all, should be to relieve the burden on American
taxpayers, enabling them to contribute to the great economic engine of
this country. We do not need to be worried about how much money is
going to be left over for this Congress to spend. Everyone here knows
that if we leave it on the table in the Congress, it will get spent.
That is why we believe there is another reason to support this tax cut,
not just to improve the economy and help American families but so the
money will not be spent by the Congress inappropriately.
Surpluses are proof of the fact that taxpayers are being overcharged.
They deserve some of their money back. The fact that the economy is
weakening at this point simply makes the point that this tax cut and
the case for this tax cut is undeniable.
I will focus my remaining comments on one specific feature of the
President's proposal; that is, the repeal of the estate tax, the so-
called death tax. Yesterday, I introduced legislation similar to that
introduced last year. Senators Breaux, Gramm, and Lincoln are
cosponsors. We all serve on the Finance Committee. It is balanced
between Democrats and Republicans. This is the bipartisan approach that
passed both the House and the Senate last year, only to be vetoed by
President Clinton.
The essence of the bill is to replace the Federal estate tax with a
tax on capital gains earned from inherited assets due when those assets
are sold. As I said, this is the approach that passed both Houses of
Congress, and it rests on the notion that death should be taken
entirely out of the equation.
Death should not be a taxable event. If people want to sell assets at
some point, they make an economic calculation knowing, among other
things, what kind of tax would pertain. They can make that decision on
their own. That is the only time there should be any kind of a tax. At
that point, it should be a capital gains tax, not a tax that is more
than twice the capital gains rate, which is what the death tax is.
As I said, the beauty of this approach is it removes death as a
trigger for a tax. Death neither confers a benefit nor results in a
punitive, confiscatory state. Small estates would be unaffected by the
basic changes we are making. For them, the estate tax would be
eliminated and a limited step-up in basis would be preserved. Each
person under our proposal has a $2.8 million automatic step-up in
basis. So for a couple, there is no chance that an estate that is not
taxed under the estate tax today would be taxed under our proposal.
This measure would not allow unrealized appreciation on inherited
assets, however. I know that is a concern for some of our friends on
the other side. Beyond this limited step-up in basis, all assets would
be taxed as in any other situation if and when they are ever sold.
Friends who own small businesses who never want to sell the small
business or farm, that is fine. You never pay a tax. The tax only
pertains if and when the business is sold.
This is a very fair proposal. In fact, the American people, even
though most of them realize they are not liable for an estate tax,
understand the fairness of this and support it.
A Gallup poll not too long ago found that 60 percent of the American
people support repeal of the death tax, even though about three-fourths
of them do not think they will ever have to pay the death tax
themselves. They are right, although many Americans have to go through
the expense of paying for insurance or estate planning.
As a matter of fact, about 3 years ago, coincidentally, the
Government collected about the same amount in estate tax--I think it
was around $23 billion--that other Americans paid to avoid paying the
estate tax. So it is actually a double tax. A lot of people who do not
actually pay it end up paying as much through the estate tax lawyers'
fees, accountants' fees, insurance, and so on. So I think most American
people understand it is not a good tax to have, even though they
themselves may not be liable for it.
Also this last year, in the last election, voters in two States
approved referenda to repeal their own estate tax: South Dakota, by a
vote of 79-21, and Montana, 68 to 32 percent. Clearly, repeal of this
confiscatory tax is an idea whose time has come, both in the State and
at the Federal level.
I conclude by reiterating the significant majorities in the House and
Senate who voted for repeal last year means we have finally found the
formula for taxing inherited assets in a fair and commonsense way. I
hope, as this process unfolds and the tax legislation comes before the
Senate and the House, our colleagues will recognize the validity of
this approach, the fairness, the place in which the death tax repeal
fits into the overall tax program, and that we can pass tax relief for
hard-working American families.
It is the most sure way not only to do right by them but to ensure a
strong economy for the United States of America.
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The PRESIDING OFFICER. The Senator from Virginia.
Mr. ALLEN. Mr. President, I rise to state that Americans need tax
relief and I believe they need it now. Despite record economic growth
for the last several years, and huge budgeted surpluses in the last few
years and in the future, I think these surpluses simply represent
overtaxation of the American taxpayers. Americans, in recent years,
have been repeatedly denied tax relief despite these surpluses because
there were not enough Senators to override the President's veto--the
previous President's veto.
Excessive taxation limits the individual freedom of hard-working
Americans, their families, and their enterprises. I agree very much
with the previous remarks made by the Senator from Arizona, Mr. Kyl,
and the Senator from Missouri, Mr. Bond.
The fact is, Americans are paying more in taxes as a proportion of
the gross domestic product than at any time since World War II. In
fact, for this fiscal year, the Federal Government will pull out $1 of
every $5 in the economy--20 percent of the economy is being taken by
the Federal Government, even though there is a non-Social Security
budget surplus in this year that is going to top $125 billion, and it
is going to exceed $3.1 trillion over the next decade.
I believe we must assure that Americans can keep more of their hard-
earned dollars in their pockets. Previously, the Senator from
Connecticut paraphrased a song to slow down tax cuts in this surplus. I
think there is a more apt country western song to reference this gold
mine surplus that is created by the work of the taxpayers. What has
been suggested by the opponents is that the Government gets the gold
mines and the taxpayers get the shaft.
I think the taxpayers deserve better. It is simply common sense that,
rather than continuing down the path of excessive Government spending
in Washington, Americans ought to be allowed more money to invest in
their priorities for their families, for their homes: saving for
retirement or the purchase of a computer for their children. It is
common sense--trusting families, trusting people. They know better than
the Federal Government about what they need and how to make their
earnings work for themselves, their families, and their enterprises.
Overall, for the economic success and jobs in America, I believe the
Federal Reserve needs to rapidly reduce interest rates much more, and
soon; we must pass tax relief soon to help bolster consumer confidence.
When you look at these surpluses, I believe they ought to be handled
the same way a well-managed business would handle surpluses. A business
would first put funds into retirement or pension funds. Then they would
look at their priorities as a company and invest in them. And then they
would look for a dividend to the shareholders.
As the Federal Government, I think we ought to look at it the same
way a business would. Certainly a business would not be raiding, at
times of surplus--or at any time for that matter--pension funds or
retirement funds. That is why I think as a Government we need to
protect Social Security. Put Social Security in a lockbox. Hopefully,
with this spirit of bipartisanship, that will change and we can pass
legislation necessary to protect Social Security so future retirement
funds are not raided for more Government spending.
The advantage of the Social Security lockbox is not only protection
of retirement funds; it also helps pay down the national debt.
Implementing the Social Security lockbox and allowing those surpluses
to be used only for addressing the long-term solvency of Social
Security helps us reduce the national debt, and we can effectively
eliminate the publicly held debt in the next 10 years with that fiscal
discipline.
Then I believe we need to look at the non-Social Security surpluses
and, again, handle it the same way a well-run business would. What
would a well-run business do with the nonretirement surpluses? They
would address priorities, research and development, workforce training,
maybe investment in ideas to be more competitive, or increase their
market share. In the Federal Government, even after we save and protect
the Social Security surpluses and pay down the national debt, the
Federal Government still will be collecting $3.1 trillion more in taxes
than is needed at the current levels of spending, on top of the current
level of spending inflationary increases. So it is $3.1 trillion. That
is over $10,000 of excess taxation of every man, woman, and child in
this country.
There are legitimate national responsibilities we need to address and
in which we need to invest. We must provide that out of this $3.1
trillion surplus. There are new investments we need to consider in
education. We must also act quickly, making sure we are improving the
preparedness of our national defense and our Armed Forces. We need to
invest in new technological and scientific research. We need to shore
up the Medicare system, as well as investing in our national
transportation infrastructure.
But once we take care of these priority responsibilities in
education, national defense, scientific research, and combating illegal
drug trade, we should again operate as a business. Then what would a
business do after you take care of priorities? They would declare a
dividend. That is what I think we ought to do is declare a dividend for
the shareholders, the owners of this Government who are the taxpayers
of America.
Surely, out of the $3.1 trillion surplus, I do not think the $1.6
trillion the Bush administration is proposing is an excessive amount to
return to our taxpayers. It is a minimal amount we ought to be
returning to the taxpayers. In fact, when you compare this proposal to
previous major tax cuts, history shows we can dedicate even 50 percent
of the current non-Social Security surplus to tax relief measures and
still barely make a blip on the radar screen of our national economy.
For example, in 1963 President Kennedy's tax cut reduced tax
collections by 12 percent. That is this chart here, the Kennedy
administration; it was 12.6 percent.
The Reagan administration 1981 tax cut reduced tax collections by
18.7 percent--nearly 19 percent.
The tax collections proposed by the Bush administration would return
just over one-half of the excess tax collections to American taxpayers,
and the tax collections would be reduced by 6.2 percent--much less than
the Kennedy and much less than the Reagan administrations. In fact,
according to the National Taxpayers' Union, as part of our gross
domestic product, when you compare the Kennedy tax cut, it was 2
percent of the gross domestic product--the Bush proposal of taxes being
reduced by $1.6 trillion is a mere 1.2 percent of the gross domestic
product.
You might recall the great growth in our economy in the 1960s was
occasioned by the tax cuts of the Kennedy administration. So this is
merely one-half of the revenue impact of the Kennedy tax cut.
I say to my colleagues in the Senate, if we cannot cut taxes in the
times of these surpluses, when will we be able to give tax relief and
reduce the tax burden on the people of America?
This is the time to make the Federal Tax Code more fair and less
burdensome. This is the time to get rid of this illogical marriage
penalty tax which imposes a penalty on men and women just because they
are married. This is the time to eliminate the death tax which is a
very unfair tax, especially on family farms and small businesses. This
is the time to make sure that individuals and small business owners get
100-percent tax deductibility for health insurance. And there are many
other things we can do. This is the time to act for the people of
America.
I hope my Senate colleagues will seize this opportunity to exercise
fiscal discipline and restraint and realize that the owners of this
country deserves tax relief, and they deserve it now.
I thank the Chair. I yield back the remainder of my time.
The PRESIDING OFFICER (Mr. Allard). The majority leader is
recognized.
Mr. LOTT. I thank the Chair.
Mr. President, I want to acknowledge the very fine statement made by
the junior Senator from Virginia, certainly a very experienced leader,
having served in the House of Representatives and having been Governor
of the Commonwealth of Virginia, and already a very active participant
in what is happening in the Senate and in our Government.
[[Page S1176]]
I had a feeling he would probably be suggesting tax relief is a good
idea. Virginia has a strong opinion on that going back just a few
years. I thank him very much for his statement.
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