[Congressional Record Volume 149, Number 57 (Wednesday, April 9, 2003)]
[House]
[Pages H3004-H3009]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EXPRESSING SENSE OF CONGRESS REGARDING REFORM OF INTERNAL REVENUE CODE
Mr. THOMAS. Mr. Speaker, I move to suspend the rules and agree to the
concurrent resolution (H. Con. Res. 141) expressing the sense of the
Congress that the Internal Revenue Code of 1986 should be fundamentally
reformed to be fairer, simpler, and less costly and to encourage
economic growth, individual liberty, and investment in American jobs.
The Clerk read as follows:
H. Con. Res. 141
Whereas the Internal Revenue Code of 1986 is overly
complex, and imposes significant burdens on individuals,
businesses, and the economy;
Whereas the complexity of the Internal Revenue Code of 1986
makes the Code extremely difficult and costly to administer
and to comply with;
Whereas recent reports estimate that 1 in 4 Americans are
out of compliance with the Code and that the Internal Revenue
Service provides the wrong answer nearly half the time
through its telephone information program;
Whereas in 2001 the Internal Revenue Service spent
$8,900,000,000 to administer the current system while
American taxpayers spent an estimated $135,000,000,000 and
3,000,000,000 hours, more than a full day for each return, to
comply;
Whereas the Code imposes multiple layers of taxation and
hides the true cost of taxes in the price of goods and
service;
Whereas the Code penalizes investment, discourages the flow
of capital into our domestic economy, drives businesses to
consider moving investment and jobs to foreign locations, and
disadvantages domestically produced goods and services in
international markets;
Whereas the Code disincentivizes work, savings, and
investment by individuals and families;
Whereas the Code is riddled with decades of loopholes,
special interest exemptions, and contradictions which make
the Code confusing, costly, and unfair;
Whereas the Department of the Treasury estimates that
approximately $70,000,000,000 in taxable income remains
untaxed in off-shore accounts;
Whereas on April 13, 2000, the House of Representatives
passed, by a vote of 229 yeas and 187 nays, House Resolution
4199, calling for replacement of the Internal Revenue Code
not later than December 31, 2004; and
Whereas the most recent Economic Report of the President
states that ``the current tax system also causes households
and businesses to rearrange their affairs in a number of ways
that make poor use of economic resources, leading to
substantial economic waste and, ultimately, reducing real
incomes'': Now, therefore, be it
Resolved by the House of Representatives (the Senate
concurring), That the Congress--
(1) encourages and supports a national debate on
fundamental reform of the Internal Revenue Code of 1986;
(2) agrees with the most recent Economic Report of the
President which identifies reducing complexity, improving
economic incentives, and achieving fairness, as key
objectives of fundamentally reforming such Code; and
(3) as part of this national debate, will begin a series of
hearings to examine the case for, and the possible options
for, fundamental reform of such Code.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
California (Mr. Thomas) and the gentleman from Washington (Mr.
McDermott) each will control 20 minutes.
The Chair recognizes the gentleman from California (Mr. Thomas).
Mr. THOMAS. Mr. Speaker, I yield my time to the gentleman from
Georgia (Mr. Kingston), sponsor of the concurrent resolution, and ask
unanimous consent that the gentleman from Georgia control the balance
of the time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Mr. KINGSTON. Mr. Speaker, I yield myself such time as I may consume.
I rise today as millions of Americans are spending billions of
dollars and countless hours trying to comply with the monster we call
the IRS code. We all know it is that time of year when we should have
done what we promised last year, that we would even do it in mid-
January; but somehow all the stuff that we need did not come in the
mail, the dividend accounts and all the data that we need, and we know
we are supposed to put it together, but we just do not do it. So we
postpone it. And now here we are almost on April 15, that dreaded day
on the American calendar that we all have to pay our income tax, and we
just cannot stand it.
So all over the country right now people who would rather be doing
other
[[Page H3005]]
things are trying to figure out how much do I owe my favorite Uncle
Sam. And they are sitting around trying to fill out these forms, and
they cannot do it, and so many times they have to go to an accountant
or a lawyer to get opinions, and it is even said often when one goes to
two or three different accountants or lawyers and give them their tax
information, usually they will come up with a different number which
one needs to pay. So that is confusion even on the experts' part.
But in 2001 the American taxpayer spent over $135 billion just trying
to comply. I want Members of Congress to think for a minute what would
we do if we had another $135 billion in the budget that we could use
for education or for Medicare, for health care, for the war effort, for
rebuilding Iraq or Afghanistan or so many other things. The irony is it
is certainly not our money. It is the taxpayers' money, and we would
not even be entitled to that money. It would be $135 billion in the
economy that consumers would control; but, instead, it is, in fact, a
hidden tax because if I have to spend $200 or $300 on an accountant
figuring out what I owe Uncle Sam, then that $200 or $300 is a
mandatory payment of taxes.
We spend over 3 billion hours filling out form. That is 1 full day
for every single tax return. I was giving a speech the other week to a
leadership Georgia group about volunteerism and was proud to report
that there are something like 94 million Americans who volunteer 4
hours a week, and it is worth millions and millions of dollars and
billions of dollars to the economy if we figure it at $14 an hour. But
the reality is these 3 billion hours do not help children. They do not
help dropouts. They do not help confused pregnant teenagers. They do
not help senior citizens and all the other groups who could use some
volunteer labor. It just goes to Uncle Sam. The IRS itself spent $10
billion just trying to enforce this very complicated system.
Mr. Speaker, I reserve the balance of my time.
Mr. McDERMOTT. Mr. Speaker, I yield myself such time as I may
consume.
This is, as I said, the second act in the Republican tax follies.
This is the one that is the longest-playing act in this town. They have
been talking about tax simplification since they took over. Since 1997
to today, they have added 293 Tax Code provisions that required 515
rule changes, that everybody has to understand they have added 2 hours
to filling out their tax form every year. By 2010 there are going to be
35 million people who are going to have to figure their tax twice
because of the alternative minimum tax. So these are the people who say
we want tax simplification, and they come out here every year and add
more complexity to this whole business.
I read this resolution. It says one out of four taxpayers are not in
compliance with the tax laws. The facts are that wage earners, the
ordinary citizens of this country, 98 percent of their income is
reported and 85 percent are in complete compliance with the law. The
former IRS Commissioner, Mr. Rossotti, said in his departure speech,
the most serious noncompliance areas are promoters of tax schemes of
all varieties, the misuse of devices such as trusts and offshore
accounts to hide or improperly reduce income.
The average guy working in an automobile plant is not setting up a
trust, does not have any money invested offshore. He is not using
abusive corporate tax structures. He is not underreporting, as high-
income people do, and the accumulation of failure to file and pay a
large amount of employment taxes, these are the people who are not in
compliance with the law. The average taxpayer has been waiting for that
taxpayers' bill of rights they have been promising them. And of course
the Republicans fell to fight among themselves upon that issue; so they
could not even bring that out here. They have been promising it for
weeks and weeks and weeks, and it ought to come out. April 15 is almost
here. But, no, they are going to bring this foolishness out here.
This reminds me of that story of the Methodist minister who was sick
and they had a board of deacons meeting come together and they had a
long discussion about what they should do about the minister's illness.
Finally, by a vote of four to three with 25 abstentions, they voted to
write a letter to the minister urging him to get well. This is a get-
well letter to the tax structure from the people who make it
complicated.
Why do you not stop putting this nonsense out here? We have had
Speaker and Committee on Ways and Means chairman after Speaker and
Committee on Ways and Means chairman talk about the fact that we are
going to have a simpler tax structure. I remember Mr. Armey, we are
going to pull it up by the roots. You have never put a single bill out
here. Eight years of talking and sending these letters urging the tax
structure to get well. Come on, guys. Let us stop this nonsense.
Mr. Speaker, I reserve the balance of my time.
{time} 1830
Mr. KINGSTON. Mr. Speaker, in the spirit of what my friend from
Washington had requested, I yield such time as he may consume to the
gentleman from Georgia (Mr. Linder), to explain a solution to the
problems of the onerous Tax Code.
Mr. LINDER. Mr. Speaker, there is simply no doubt that what we are
talking about is follies, but the follies are a 45,000-page Tax Code.
The Internal Revenue Code has made criminals of us all, and it is time
for it to go away.
There is a bill replacing the current code, H.R. 25, that would
abolish the entire IRS and all the Internal Revenue Code and replace it
with a simple, straightforward retail sales tax.
We have spent $22 million in the last 7 years with economic and
market research, and a study out of Harvard says, Dale Jorgenson, who
was at the time the head of the Economics Department at Harvard,
concluded that, on average, 22 percent of what you pay for at retail is
embedded costs to the current code, which is to say you pay every
company that has touched that product, their payroll taxes, their
income taxes and their accountants and attorneys to avoid the taxes.
It has been estimated that in 2001 Americans spent $250 billion just
complying with the code, and that was only the estimate of the man-
hours it would take to fill out the paperwork. That did not include the
tens or maybe hundreds of billions of dollars that corporate America
spent just calculating the tax implications of a business decision. And
in 2001, after spending a couple of hundred billion dollars complying
with the code, corporate America sent in to the government $187
billion. This is not an efficient system for gathering revenues.
We need to start with a truth: There is not a mechanism for a
business to pay a bill other than through price. The only way to pay
the light bill, the labor bill and the tax bill is through price, and
your customers pay it; and the only taxpayers in the world are
consumers, who actually consume the product and all the embedded costs
therein.
So if we have a price system that has a tax component that is 22
percent of the price system, we ought to fix it. If you abolish the
code and replace it with an embedded 23 percent, your cost of living
goes up 1 percent, but you get to keep your whole check. Nothing is
taken out for payroll taxes or income taxes, and every American becomes
a volunteer taxpayer, paying taxes when they choose, as much as they
choose, by how they choose to spend.
We also have a provision in the bill that would rebate to every
household, rich or poor, we are not going to know how rich they are, we
are not going to have that number; it would rebate to every household a
check at the beginning of every month sufficient to rebate the entire
tax consequences of spending up to the poverty line. For a household of
one, that is $9,500 a year. For a household of six, it is about $30,000
a year, which is to say, a household of six could spend $30,000 with no
tax costs at all.
If you get the tax component out of the price system, you increase
the purchasing power of everyone at or below the poverty line by 22
percent.
What will happen to our economy? We have studies that say the exports
go up 26 percent in the first year. We have studies that say capital
spending goes up 78 percent in the first year. We know a study taken
from 1945 to 1995 shows that real take-home wages increases in exact
correspondence with
[[Page H3006]]
increases in capital spending, because it makes them more productive
and they get to take home the money.
When Bill Archer was here and chairing the Committee on Ways and
Means, he had cited many times a study done by Princeton Econometrics
of 500 European and Japanese international firms, and the question was
asked to their leadership, what would you do in your long-term planning
if America eliminated all taxes on capital and labor and taxed only
personal consumption? Eighty percent said they would build their next
plant in the United States. Twenty percent said they would relocate to
the United States.
We have been bickering about companies relocating their mailboxes
overseas to save taxes. Some years ago we complained about rich people
moving to Ireland and giving up their citizenship. Those people would
be flocking to our shores. We would have a problem finding workers for
all the manufacturing jobs.
It is time for us to take a hard look at what we have created. The
tax we have today is the flat tax on incomes, 90 years later. It
started out at a single rate on the upper 2 percent, and look what it
has become.
We ought not worry about punishing people who are successful. They
are going to spend more money and they are going to pay their share.
The single biggest reason people escape the Tax Code is bankruptcies,
and quite frankly, they can still bankrupt. But if they buy a loaf of
bread, they are going to pay for their share of government.
We do not know how large the underground economy is. We simply do not
know. But if you want to see it, go to your regional banker any Friday
afternoon at 4 o'clock and watch the contractor come out and pay off
his subs in cash, and every banker in America will come out and shake
his head and agree with that.
This simplified, voluntary tax system would raise the same revenues
as the current system, but more important than anything else, it would
make every taxpayer a voluntary taxpayer, and it would give every
American in a free society the privilege of anonymity. No one should
know as much about us as we know about the American citizens. No one
should know that.
So this is not pie in the sky. There is a proposal that would replace
the current system. It has been looked at by economists all over the
country. It has been looked at by people in the last administration
favorably and in the current administration favorably, and we just need
to take the huge step to make it happen.
To those who are concerned about who pays, the rich or poor, let me
say that the bill that is going to come due on the young working
generation is the payroll tax. It is going to eat up working America,
and this fixes that. It removes the payroll tax and collects the money
out of the sales tax. It saves Social Security in 13 years by doubling
the revenues to those categories by just doubling the size of the
economy.
Last, let me say to my liberal friends, this is a tax on accumulated
wealth. You ought to love this. Because if you paid taxes on the money
you earned and you paid taxes on the capital gains when you sold the
business and you paid taxes on the interest you earned, we are going to
tax you one more time when you spend it.
Last, to those who have accumulated wealth, it is simply this: You
are already paying this. It is just hidden. You are already paying this
tax. Let us make it honest. Let us have a tax system that is fair, that
is understandable, that is voluntary, that is neutral between
industries, neutral between businesses and neutral at the border. The
fair tax does it, and this is a great opportunity to talk about it.
Mr. McDERMOTT. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, before I yield to my colleague from Massachusetts, I
would point out that the gentleman from Georgia has introduced a bill
called the Fair Tax Act. We submitted it to the Joint Committee on
Taxation, that is a joint House and Senate committee, everybody agrees
that it is balanced, Democrats and Republicans and all that sort of
thing, and they came up with the fact that this flat tax that we are
talking about here, the rate would have to be at 59.5 percent.
That means if you buy a Coke, suddenly the Coke is $1.60. If you buy
a hamburger and it is $2, you are going to have to pay $3.20 for that
hamburger. This goes onto health care, this goes onto pharmaceuticals,
it goes onto everything, not just things you just choose; that is,
everything you buy, you have to pay 60 percent taxes.
Mr. LINDER. Mr. Speaker, will the gentleman yield?
Mr. McDERMOTT. I yield to the gentleman from Georgia.
Mr. LINDER. Mr. Speaker, would the gentleman admit that the Joint Tax
Committee made presumptions and assumptions that the bill would not
pass as written, and so they changed it to the way they thought it
would pass and changed the numbers entirely?
Mr. McDERMOTT. Mr. Speaker, reclaiming my time, no, I would not admit
that at all. This is the letter they put out, and they are standing by
this.
Mr. LINDER. They also presumed the bill would not pass as written.
Mr. McDERMOTT. Mr. Speaker, reclaiming my time, I know, you fired the
lady that wrote this. You got rid of her. So I know that that is
probably why you got rid of her.
Mr. Speaker, I yield such time as he may consume to the gentleman
from Massachusetts (Mr. Neal).
Mr. NEAL of Massachusetts. Mr. Speaker, I thank the gentleman for
yielding me time.
Mr. Speaker, I do not know if this is more this evening about amnesia
or cranking out a press release for April 15. When you listen to these
folks, they talk about changing the Tax Code. They have now been in
charge since 1994. We are no closer to changing the Tax Code today than
we were in 1994. But we were told we were going to pull the Tax Code up
by its roots, we were going to drive a stake into the heart of the Tax
Code, we were all going to a long funeral procession for the Tax Code.
Well, this resolution today is like their commitment to term limits:
You hope that the public is not watching, and you change your position
on the issue.
We have an opportunity to do something real about the Tax Code, and
we could do it tomorrow, and everybody on the other side knows it,
because I share their late-stated interest in closing tax loopholes.
I filed a bill last year that would close the most egregious tax
loophole that confronts the American people, and that is for those U.S.
corporations who claim their headquarters are really in Bermuda so they
can avoid paying U.S. income taxes.
Well, my bill has languished for a whole year despite the fact we
have had 186 signatures last year on a discharge petition, 125
bipartisan signatures this year on the bill, and they do not seem to
think that there is any speed with which they can act.
Let me give a few names tonight. Here are some of the corporate
expatriates who are taking advantage of the Bermuda loophole: Tyco,
they avoid paying $400 million a year in U.S. taxes; Ingersoll-Rand,
$40 million a year in U.S. taxes, and by the way, walk outside and see
the machinery that says Ingersoll-Rand on it, where they win contracts
with the Federal Government while our troops are overseas in Iraq, and
they will not pay their fair share of income taxes while they win these
contracts; Cooper Industries, $55 million a year in U.S. taxes they
avoid. How about Weatherford, $40 million a year in U.S. taxes?
The Joint Tax Committee scored my proposal. We save $4 billion over
10 years if they would enact an opportunity to close the Bermuda tax
loophole.
We hear the majority tonight that is concerned about a code that is
riddled with decades of loopholes, but we cannot close this one?
We are going to vote tomorrow on an energy bill which cleverly
includes a protection for a loophole. I mentioned earlier there are
many who exploit this $4 billion loophole, but in fact, tomorrow, in
that energy bill, they are going to grandfather a whole element that is
left, and they think they are doing it in the disguise of tax reform.
The Treasury Department estimates that $70 billion a year in taxable
income remains untaxed in offshore accounts. Sound familiar? Of course,
this is what I and 125 Members of this body think we should be
addressing. But instead we get a meaningless resolution
[[Page H3007]]
and a bill to cement the loophole into law on the same day. Oddly
enough, one of those expatriates, by the way, and listen to this one,
listen to this one, they currently hold a $50 million contract with the
IRS to help the IRS collect taxes from the rest of us.
Mr. Speaker, the American taxpayer deserves better. There is no
reason on Earth why that Bermuda tax bill is not on this floor in front
of the American people for an up-or-down vote.
I would suggest this to you tonight: If they put that bill on the
floor, there will be a rampage to get to the well to vote for this
measure, and there will be at least 300 votes in this House if the
Republican leadership would let the bill come up.
Close the Bermuda tax loophole.
Mr. KINGSTON. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I just want to say, if we could get rid of the current
Tax Code, we could get all those companies back.
Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr.
DeLay), the distinguished majority leader.
Mr. DeLAY. Mr. Speaker, I might say to the gentleman from
Massachusetts, that he is making our case for us. The reason that all
these companies are leaving our shores is because the Internal Revenue
Code is unfair, it is incomprehensible, it is broken, and it needs to
be fixed.
{time} 1845
Since 1955, the text of the Internal Revenue Code has increased 472
percent to nearly 1 million words. The Code costs almost $9 billion for
the IRS to administer, and it costs Americans more than 5 billion hours
and $244 billion just to comply with it.
For some perspective, let us consider those numbers amount to 2.7
million people or five full congressional districts working full-time
just to fill out the paperwork for the IRS. It taxes income when it is
earned, spent, invested, and even after death when it is left to loved
ones. All of these factors slow down our economy, wasting the valuable
time of the American people.
In short, our Tax Code is a giant, ugly mess that only a jumble of
lawyers, politicians, bureaucrats, and committees could love.
We need a tax system that is fair and supportive of American workers
and one that does not penalize people for working hard and saving for
their family's future.
We have taken important steps with the tax bills we have passed over
the past 2 years, or over the past 8 years. We can take another this
year by passing the President's proposal, including an end to the
unfair double taxation of dividends.
This commonsense move would simplify the law and bring us closer to
reforming the Tax Code once and for all, and I look forward to working
with my colleagues to finish the job.
I just want to thank the gentleman from Georgia for introducing this
resolution, and I urge my colleagues to support it.
Mr. McDERMOTT. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Cleveland, Ohio (Mrs. Jones).
Mrs. JONES of Ohio. Mr. Speaker, I would like to thank the gentleman
for yielding me this time, and I thank him for the opportunity to be
heard on this issue.
Mr. Speaker, today in our hearing before the Committee on Ways and
Means, one of the speakers said, Well, what are you talking about? The
Congress is the board of directors. If the Congress wanted to change
the law, the Congress could do so. In fact, he said, we could change
the health care issues; we could change the Medicare programs. So I am
asking the question, Why, if we are the board of directors, are we
``expressing the sense of Congress'' instead of doing the job of
Congress and making a change?
Mr. Speaker, I am clear that my constituents would say to me, keep
the ``sense,'' meaning S-E-N-S-E, and give me a prescription drug
benefit for senior citizens. Keep the ``sense'' and fund No Child Left
Behind. Keep the ``sense'' and improve our economy. Keep the ``sense''
and maybe all the money that we are talking about that is collected by
the IRS could, in fact, pay for the war in Iraq, pay for the fact that
there are seniors out there who need a prescription drug benefit, pay
for the fact that their children, the best investment we can make in
this country that will pay for generations and generations and
generations, we ought to do that.
I want to respond just on one thing. I have been a vocal advocate for
not allowing the dividend tax cut, and the reason I have been an
advocate is because the dividend tax cut will have a significant impact
on low-income housing. And while we are talking about low-income
housing, keep the ``sense'' and build enough housing so people can, in
fact, have a safe place to live in a decent neighborhood with their
families.
Mr. KINGSTON. Mr. Speaker, it is my proud opportunity to introduce
the gentleman from Indiana (Mr. Chocola), and I yield 2 minutes to him.
He is one of our distinguished freshman Members.
Mr. CHOCOLA. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, I came to Congress from the business world; and I would
like to share briefly a real life experience, a real life story on the
implications of our Tax Code. The smartest person I ever met in my
business career was a man named Gerry Shivers. Gerry Shivers is an
accountant. He works for a big accounting firm in New York, and every
time our business ever even thought about entering into a transaction
of any kind, we would have to call Gerry Shivers up on the phone and
ask him, how do we comply with the more than 17,000 pages in our
Internal Revenue Code. Every time we called him, it cost us thousands
and thousands of dollars. Instead of paying those thousands of dollars
to Gerry Shivers, we could have been investing in new equipment, we
could have been investing in research and development, we could have
been investing in our markets, and we could have been creating jobs.
So, Mr. Speaker, it is time that we give Gerry Shivers a new job. It
is time that this very intelligent man has a more productive life in
our economy. It is time to simplify the Tax Code that no one truly can
understand and comprehend, and it is time to put the billions and
billions of dollars we spend every year on these costs to building our
economy and creating jobs.
Mr. McDERMOTT. Mr. Speaker, I yield 2 minutes to the gentleman from
California (Mr. Sherman).
Mr. SHERMAN. Mr. Speaker, I was just down here because the next bill
is one I am managing dealing with Cyprus and international relations;
but in a former life, I headed the second largest tax agency in the
country, and that is why I thank the gentleman from Washington for
yielding me this time this evening.
This resolution calls for a fundamental review of our tax system; but
no speaker has mentioned the most unfair, egregious, and unproductive
tax of all, and that is the debt tax. Tomorrow, we will bring to this
floor a budget resolution which will put us on target and may even be
honest enough to express this in exact numbers, to tell us that we are
on target for an $11 trillion Federal debt. Imagine the effect that has
on our economy. Imagine the effect that has on interest rates and on
what our children will be paying one way or another. Surely we should
close the Bermuda loophole.
But what concerned me most was when the majority leader himself came
down here and addressed the issue of those U.S. corporations that want
to contract and do business with our Federal Government while renting a
hotel room in the Cayman Islands and claiming to live there. He came
here to justify and protect and court and woo those tax trader
corporations back to the United States with a plan; and that plan, as
the gentleman, I believe from Washington, pointed out is to tell
working people that when they buy a $1 can of cola, they should pay an
extra 60 cents so that the corporations do not have to pay anything so
that they can come back from the Cayman Islands. I welcome in depth
congressional hearings on such proposals.
Mr. KINGSTON. Mr. Speaker, I yield 2 minutes to the gentleman from
Texas (Mr. Burgess).
Mr. BURGESS. Mr. Speaker, I thank the gentleman from Georgia for
yielding me this time.
Mr. Speaker, Albert Einstein once said, ``The hardest thing in the
world to understand is the income tax.'' If we look at today's Tax
Code, it is easy to
[[Page H3008]]
see his genius. The cost of the current income tax system in both time
and dollars is just too high.
Consider this: each year Americans spend 6.1 billion hours preparing
their tax forms, and businesses spend 800 million hours complying with
the Tax Code. In 2001 alone, Americans lost $183 billion in opportunity
costs which were calculated at $30 an hour. Those are costs that people
spend working on taxes instead of working on money-producing activities
for themselves.
Two-thirds of Americans think the income tax system is too complex.
We need a simpler system for all Americans to understand. Taxpayer
phone calls to the IRS help line doubled during the 1990s from 56
million to 111 million, even though the number of taxpayers only grew
by 12 percent.
The Federal tax rules are over 45,000 pages in length, which is
double the number of pages since the 1970s, including the full Tax
Code, the IRS rules and regulations, and tax court rulings. The average
taxpayer spends over $1,800 per household in compliance costs. In other
words, that taxpayer must work 6 days per year just to pay for the cost
of preparing his or her taxes for that year.
Valuable resources are being lost to taxes, resources that could be
used for productive, job-creating economic behavior, or for spending
time with our families. As my colleagues can see, the costs imposed by
our tax system are just too high.
Today I rise in support of H. Con. Res. 141 and strongly urge my
colleagues to join in a national debate about the problems of our
current tax system and the need for fundamental reform.
Mr. McDERMOTT. Mr. Speaker, I yield myself such time as I may consume
just to finish up.
We have a tax structure, and we are all going to vote for this
foolishness; and I would suggest to the Clerk of the House that you not
throw these resolutions away, because you can just bring them out again
next year. We will be back here at the same old place with the same old
tired rhetoric. They will not have done anything more about this issue
than they have this year. So I think we could at least save a little
money by not reprinting this kind of nonsense.
We passed a tax bill last spring; and I do not remember the exact
figure, but something like 75 percent of the benefit went to people who
make more than $100,000 in this country. Now, if that is a fair tax
structure, I will be darned. I mean, I have to relearn the meaning of
fairness. The whole idea of a tax structure is to pay on one's ability
to pay.
Ideas like the gentleman from Georgia (Mr. Linder), who comes out
here with a sales tax, the idea being that we will put a sales tax on
everybody and that will be fair. Of course, ordinary people have to buy
food and clothes and medicine and gasoline and a whole bunch of things;
they do not have any choice whatsoever. So they have to pay the tax.
Rich people, well, of course, they have to buy food and gas and medical
care and whatnot; but all of the rest of the money they earn, they do
not pay any taxes under that kind of a structure. That is not fair.
Everybody knows it. That is why we can never bring that thing out here
seriously and debate it on the floor. You would get eaten alive in the
press when the American people figured out what you are talking about.
I know what my colleagues are doing today; they are really laying the
groundwork for their press releases. We will all leave in a couple of
days and you all have to have your April 15 press release: ``I voted to
change the unfair tax structure. I was working in Washington all last
week trying to change the unfair tax structure that is burdening my
constituents'' and other silliness that will be in the papers.
This is not going to do anything, everybody knows it will not do
anything, and it is not going to make anybody do anything. We are just
sending another letter to the minister telling him to get well.
I see the gentleman from Wisconsin (Mr. Ryan) is here. He has a great
chart that is too small for anybody to read, but we are going to put it
up anyway; and we will go through with this so we can get out of here.
So I want the gentleman to have his press releases. Are the gentleman's
press releases related to that?
Mr. RYAN of Wisconsin. Mr. Speaker, will the gentleman yield?
Mr. McDERMOTT. I yield to the gentleman from Wisconsin.
Mr. RYAN of Wisconsin. Mr. Speaker, I will explain the chart so the
gentleman from Washington can understand it. Even if he cannot see it,
I will explain it all to him.
Mr. McDERMOTT. Mr. Speaker, I thank the gentleman. I appreciate that.
Explain it to my mother who is watching this, will you? Because she
really wants to understand how this fair tax structure, when she is
living on Social Security, why she has to pay a 60 percent sales tax,
because I have no idea. For all of the people living on Social
Security, if the gentleman from Georgia (Mr. Linder) succeeded, they
would get a 60 percent flat tax on everything they bought. It is so
nonsensical, I do not know how my colleagues can stand out here with a
straight face and offer it up here.
Mr. Speaker, I reserve the balance of my time.
{time} 1900
Mr. KINGSTON. Mr. Speaker, I yield 3\1/6\ minutes to the gentleman
from Wisconsin (Mr. Ryan) so he can explain these charts.
Mr. RYAN of Wisconsin. Mr. Speaker, I thank the gentleman for
yielding time to me. Mr. Speaker, these are not sales tax charts, by
the way, I say to the gentleman from Washington. Let me explain what
these charts do in a second.
We are here to talk about tax reform. We are here to talk about, can
we have a better way of raising revenue for the government without
doing so much harm and damage to our economy, to the daily lives of
individuals and to the businesses and job creation in this economy.
There is an issue that is also important, not only to mention the
fact that our Tax Code consumes so many hours of preparation, wastes so
many trees, and the fact that it is just so large; but it also inhibits
our competitiveness globally. Where we work on the Committee on Ways
and Means, we are experiencing this on a day-to-day basis.
But the point that I want to make here today, the reason we need to
reform our Tax Code is not just to make it easier for people to keep
more of the money they earn, but to make it simpler, to make our Tax
Code less punitive.
Let us take it for a fact, the Tax Code punishes all the qualities
that make America great. It penalizes us if we get married, it
penalizes us if we want to have kids, it penalizes us if we have a
small business, it penalizes us if we save, it penalizes us if we
invest, it penalizes us the more we work and the more successful we
become. These are things we should not be penalizing in this country;
we should be rewarding those things in America.
Where it really is arrogant is in the fact that we are losing jobs to
foreign trade every day in this country. When we look at our Tax Code,
and this is what this chart goes to, if we look at the effective top
central and local corporate rate, meaning how much do we tax businesses
in this country, if we look at the entire industrialized world from
Ireland on up to Japan and every other industrialized nation in the
world, the United States has tax rates on business income that are
higher than any other industrialized country in the world except for
Japan. Japan is in their second decade of recession.
If we take a look at just the tax rates on capital, and what I mean
when I say ``capital'', that is investment, that is plant and
equipment, that is expansion of businesses, that is capital. When we
take a look at the tax rates on capital such as the tax rates on
dividends, that tax rate is the second highest in the world except for
Japan, again, a country that is in its second decade of recession.
So when we sit here and tax capital, when we sit here and tax our
businesses at not 20 percent, not 15 percent, but at an effective tax
rate of over 35 percent in America, we are taxing jobs overseas.
More importantly, what is also harmful with our Tax Code is, unlike
our industrial competitors, we tax our income on a worldwide basis. Not
only do we have the second highest tax rates in the world, we tax all
worldwide income made by U.S. companies at that higher
[[Page H3009]]
rate. If you are an American company making money in Ireland, a country
with a corporate tax rate of 17 percent, you are going to end up paying
that U.S. tax rate of 35 percent, whereas it will be much less for
France or England.
Mr. Speaker, we are losing jobs because we tax our companies and
businesses more than anybody else does. We tax them overseas. What
happens? Foreign companies are taking over U.S. companies, pushing
income and jobs overseas.
We need to lower our tax rates, we need to fix our Tax Code and make
it more efficient so we can keep jobs here at home.
Mr. McDERMOTT. Mr. Speaker, I yield myself the balance of my time.
The SPEAKER pro tempore (Mr. Bass). The gentleman from Washington
(Mr. McDermott) is recognized for 3\1/2\ minutes.
Mr. McDERMOTT. Mr. Speaker, I appreciate the erudite lecture on the
tax structure of the gentleman from Wisconsin (Mr. Ryan). I know he
sits on the Committee on Ways and Means, and he knows we have not had a
single hearing on any kind of tax reform bill the whole time he has
been on the committee.
It is good to come out here and send these letters to the Congress. I
do not know who this Congress is. When we send the sense of the
Congress, where do these go? Do these go to the leadership or
somewhere, or up in the air, or over to the Senate?
Mr. RYAN of Wisconsin. Mr. Speaker, will the gentleman yield?
Mr. McDERMOTT. I yield to the gentleman from Wisconsin.
Mr. RYAN of Wisconsin. Mr. Speaker, I would tell the gentleman, we
have had hearings in the Committee on Ways and Means. We have had
hearings in the Subcommittee on Select Revenue Measures on tax reform
ideas.
Mr. McDERMOTT. I would ask the gentleman, Mr. Speaker, when are they
going to bring something to the full committee? I do not sit on that
subcommittee.
Mr. RYAN of Wisconsin. Well, in the subcommittee we had a lot of
hearings.
Mr. McDERMOTT. Mr. Speaker, I take back my time. I appreciate the
gentleman's point.
The last tax we had last year, the one they have been running their
elections on, the Urban Institute says that if your income is between
$30,000 and $40,000, that is the average income in this country, the
tax cut was $339. Households with over $1 million get an average tax
cut of $90,000. Sixty-eight percent of households in this country get a
tax cut of less than $500.
If you are a typical elderly family with an income between $20,000
and $30,000, you get 89 bucks. That is an unfair tax structure. They
made it worse. If they have their way with this $700 billion nonsense
that they are trying to push in this session, they will make it even
worse, because they will saddle our kids with debt and give all the
money to people on the top.
Now, I agree, this is a great thing. I wish we could get somebody,
when we send this sense of the Congress, it would actually get to
somebody who could actually do something, maybe the Speaker's office,
maybe the majority leader's office. Mr. Armey used to talk about it,
but he never brought a bill here. Maybe the new majority leader would
bring us out something we could vote on. It would be real nice to have
a debate on an actual piece of legislation, so we could understand what
it was really going to do.
Mr. Speaker, I urge all my Members to vote for this, because we all
want a more fair tax structure.
Mr. Speaker, I yield back the balance of my time.
Mr. KINGSTON. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I want to say to my friend, the gentleman from
Washington (Mr. McDermott), whose mother is watching him tonight, that
she knows her own son. However, the IRS would define ``child'' five
different ways under the current code. I know she is with us and
appreciates the gentleman's ``yes'' vote.
This bill supports this hearing, this bill supports that debate. It
is my hope that we can get those of us who may or may not be on the
right committee to introduce our bills.
I am hoping that the Democrat Party will introduce a bill. To my
knowledge, and I have been up here 10 years, I have never seen the
Democrat Party introduce tax simplification. We have gotten a lot of
criticism. I would like to see some of their solutions. Maybe we can do
some bipartisan things together.
The criticism about the length of this debate is valid, but we have
spent a lot of time preserving Social Security and Medicare and
reforming education. These things do, unfortunately, take decades to
accomplish. Welfare reform, which we passed in 1996, actually was
debated for 30 years before we actually got reform on it.
I do not want this to be 30 years, Mr. Speaker. I am hoping that
Members of Congress can use this resolution as a vehicle to encourage
debate within this body, within this town, within the other body,
within the executive branch, to bring the tax simplification debate
forward.
I ask Members to put their ideas on the table, whatever it is,
Democrat Party, Republican Party, Independents, flat tax, sales tax,
simplifying the current code. Let us do something, because what we have
right now is not working.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Georgia (Mr. Kingston) that the House suspend the rules
and agree to the concurrent resolution, House Concurrent Resolution
141.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of
those present have voted in the affirmative.
Mr. KINGSTON. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
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