[Congressional Record Volume 147, Number 39 (Thursday, March 22, 2001)]
[Extensions of Remarks]
[Page E429]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        IN SUPPORT OF TAX RELIEF

                                 ______
                                 

                     HON. GEORGE R. NETHERCUTT, JR.

                             of washington

                    in the house of representatives

                        Thursday, March 22, 2001

  Mr. NETHERCUTT. Mr. Speaker, I rise to express my support for 
enactment of the extensive tax package forth by President George W. 
Bush to reduce the tax burden on all Americans.
  I agree with the President's statement in his address to a joint 
session of Congress on February 27, 2001, that the ``American people 
have been overcharged.'' There was a $236 billion tax surplus during 
fiscal year 2000 and we expect a tax surplus of $268 billion this year. 
If the people continue to be taxed at the same amount, the government 
will accrue a $5.4 trillion surplus over a ten year period. This is not 
the government's money, but money each American taxpayer could use to 
pay for increases in energy costs, their children's college expenses, 
reducing credit card debt or save for retirement. Why should the 
government sit on a large tax surplus while each individual interested 
in investment could be receiving a maximal return? Taxpayers are due 
for a tax refund in order to resuscitate a slowing economy and keep it 
strong.
  President Bush has proposed a bold and fair tax relief plan that will 
reduce the inequities of the current tax code and help ensure that 
America remains prosperous. His six key components-replacing the 
current tax rates with a simplified rate structure, doubling the child 
tax credit to $1,000 per child, reducing the marriage penalty by 
reinstating the 10 percent deduction for two-earner couples, 
eliminating the death tax, expanding the charitable deduction to 
nonitemizers and making the Research and Experimentation tax credit 
permanent-touch the lives of all. In concert, these changes will enable 
all taxpayers to retain more of their own money and they will support 
our American economy.
  Many of these measures have already been introduced by members of 
Congress. The passage of H.R. 3 is a positive first step in achieving a 
simpler tax structure by immediately reducing the marginal rates from 
15 percent to 12 percent with President Bush's reduction of all 
brackets by 2006. It also helps families by repealing the mandatory 
reductions in the additional (three or more children) child tax credit 
and the earned income credit for taxpayers subject to the alternative 
minimum tax. These are positive steps for immediately helping those who 
need it most.
  Some have expressed concern about the equity of President Bush's tax 
proposal and criticize it by comparing the amounts of money people in 
each tax bracket will ``receive'' if it passes. Under President Bush's 
plan, lower income individuals would actually receive a greater 
percentage of tax relief in relation to their current personal tax 
burden once all tax credits are considered. For instance, the marginal 
federal income tax rate would fall by over 40 percent for low-income 
families with two children and nearly 50 percent for families with one 
child.
  Contrary to some charges, single filers falling in the 15 percent tax 
bracket after the tax cut will also receive a tax cut. They will have 
their first $6000 taxed at 10 percent rather than 15 percent, or if 
they have a dependent, the first $10,000 would be taxed at this lower 
rate. In the case of couples filing jointly, the first $12,000 would be 
taxed at this lower rate. If no other tax credits are claimed, someone 
filing as an individual without dependents would expect a $300 tax 
break per year. This can range anywhere from 7 to 12 percent less in 
total taxes.
  One argument made against these tax proposals is that they reduce our 
capacity to pay down the national debt. I agree strongly that paying 
down the national debt must be a priority. Both the President and I 
believe that we can both pay down the debt and have tax relief. In 
fact, the President's plan places debt elimination before tax cuts in 
his budget outline submitted to Congress on February 28, because 
retiring the debt can enhance the viability of his tax cut. The charge 
that those who favor a tax cut oppose debt reduction is wrong. The 
President's plan will accelerate debt retirement payments to record 
rates by proposing to eliminate $2 trillion in public debt over the 
next 10 years. Actually, the President's budget pays down the debt so 
aggressively that it effectively cannot pay off all the debt when it 
would be possible to do so in 2007. The remaining $1 trillion in public 
debt, which is composed of savings and special bonds, cannot be retired 
until after 2011 when it becomes due. Even after the President's tax 
cut and spending priorities, the government is still projected to have 
$1.3 trillion in excess cash balances in 2011.
  Budget projections these past several years have been overly 
conservative. $850 billion of unexpected tax revenue was collected, and 
combined with debt service savings, revenue intake underestimates 
contributed to about a $1 trillion surplus. The Congressional Budget 
Office and the Administration continue to use conservative estimates in 
order to accommodate slower growth. Theoretical projections are a 
necessary part of the budgetary process and policy making each year. 
Consideration of the future of Social Security, Medicare and debt 
reduction are all based on theoretical projections. There are inherent 
uncertainties in making 10 year budget projections; however, the 
President's Budget creates a $1 trillion reserve over the same amount 
of time. This can be used to aid in Medicare and Social Security 
modernization. In all, the tax cut will only amount to one quarter of 
the projected surplus, leaving room for program maintenance, growth and 
unexpected situations. I am proud that Congress has made protecting 
Social Security its highest priority with the passage of H.R. 2, the 
Social Security and Medicare Lock-Box Act. Now, 100 percent of the 
Social Security surplus cannot be touched for other government 
spending. President Bush has pledged to keep the promises that America 
has made to its senior citizens by signing this bill.
  We must eliminate the death tax--a major reason for the dissolution 
of family-owned small businesses, farms and ranches upon the death of 
the owner. Originally enacted as a temporary tax to raise funds for 
national security emergencies, this tax first helped create our Navy in 
1797 and fund the Civil and Spanish-American wars. In 1916, the tax was 
made permanent. Once the current $650,000 threshold is met, the tax 
consumes up to 55 percent of the remaining estate. This money will have 
already been taxed first as income, then possibly as capital gains or 
property. The impact on Eastern Washington farmers and ranchers is 
particularly severe. In order to be viable, even the smallest farm 
operation must have about $500,000 tied up in equipment. If the farmer 
owns the land, the value is at least $1.5 million. On paper, this 
farmer is worth $2 million or more. This makes it difficult for the 
farmer to pass his property and business on to his family after death. 
The same is true for small businesses, where the owner's children are 
not the only ones affected. Those who lose their jobs when the business 
is partitioned and sold face even more dire circumstances. I support 
the legislation that would phase-out the death tax over ten years. 
Defeated only by President Clinton's veto during the last Congress, I 
hope it can pass this year.
  This tax package is right for our country. It meets our needs and 
obligations for the future while helping all of Americans who pay 
taxes. It is becoming more and more evident that we need to do 
something to strengthen the economy. Tax relief is needed now.

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