[Congressional Record Volume 147, Number 83 (Thursday, June 14, 2001)]
[Senate]
[Page S6321]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SHELBY:
  S. 1040. A bill to promote freedom, fairness, and economic 
opportunity for families by reducing the power and reach of the Federal 
establishment; to the Committee on Finance.
  Mr. SHELBY. Mr. President, Congress recently passed a tax bill that 
provides much-needed relief for all Americans. While I am pleased that 
the tax bill included marriage penalty relief, a reduction in marginal 
rates and a phase out of the estate tax, these changes unfortunately 
increase the tax code's complexity. Furthermore, despite the positive 
changes made this year, the current code still retains the alternative 
minimum tax, the taxation of Social Security benefits, and marginal 
rates that increase with income.
  I rise today to introduce legislation that takes tax reform to the 
next level and addresses the fundamental problems of the current code. 
My bill accomplishes this by repealing the current Internal Revenue 
Code and replacing it with a flat tax, where all taxpayers pay the same 
rate.
  As with current law, not all wage earners will pay a Federal income 
tax under a flat tax. In order to assist lower income Americans, I have 
included large standard deductions. For example, a family of four would 
need to make more than $35,200 before paying a single penny in taxes.
  Some argue that it's fair to tax wealthier people at higher rates. I 
believe that nothing can be further from the truth. Not only is this 
type of tax policy fundamentally unfair, it also prevents our economy 
from realizing its full potential.
  A flat tax does not mean that a school teacher will have the same tax 
liability as Bill Gates. The principles of math dictate that people who 
make more will still pay more in taxes with a single rate. The 
difference is that with a flat tax those who earn more will no longer 
be penalized by rising marginal rates.
  My bill also increases tax fairness by eliminating itemized 
deductions and credits. While these tax breaks benefit those who are 
lucky enough to claim them, they consequently hurt the taxpayers who 
are not. As a result, people with the same yearly salaries can pay very 
different Federal income taxes depending on whether they have children, 
they decide to own or rent a home, or decide to finance a family 
vacation through a credit card or a home equity loan.
  Over time the tax code has evolved from a way to collect Federal 
revenue into a way to encourage and reward behavior the government 
deems important. I believe that the American people are intelligent 
enough that they do not need the Federal Government dangling a carrot 
in front of them when they make life decisions. Furthermore, I believe 
that people should not be punished for deciding to make these decisions 
in ways that are contrary to what the government decides is right.
  Simplification is yet another reason our country needs the flat tax. 
The National Taxpayer Advocate cited complications in the tax code as 
the number one issue taxpayers faced in 2001. As the IRS publishes more 
and more regulations, and new tax laws are enacted, the complexity of 
the tax code will only grow.
  The complexity of the tax code forces many Americans to seek the 
advice of tax professionals at the cost of many millions of dollars. No 
tax code should be so puzzling that the average person has to spend his 
hard-earned money to hire a tax preparer or an accountant. Those who 
decide to brave the tax code and file their own returns do not fare 
better. These people face conflicting IRS advice and many hours of 
completing confusing tax forms. All of these needless hassles results 
in taxpayer frustration and apathy and less time spent on more 
productive endeavors.
  Under the flat tax, a taxpayers would be able to be quickly and 
accurately file their returns. There would be no itemized deductions or 
credits to calculate, no capital gains tabulations and no alternative 
minimum tax. With this new simplicity, taxpayers would be able to 
complete their personal income tax return in virtually no time at all 
compared to the 13 hours the IRS estimates it takes to complete a 1040 
form.
  I understand that my bill is a major change from the current tax 
code. Many people have become complacent with the status quo. Still 
others enjoy using the tax to implement social policy. I on the other 
hand believe though that a tax code should have one purpose and that is 
to collect revenue.
  I hope that my colleagues will begin to seriously look at 
alternatives to the current code. The legislation I have introduced 
today is an excellent opportunity to bring this debate to the floor of 
the Senate. The combination of freedom, simplicity and fairness make 
the flat tax the ultimate goal of true tax reform. I urge my colleagues 
to join me in support of meaningful and comprehensive tax reform.
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