[Congressional Record Volume 149, Number 72 (Wednesday, May 14, 2003)]
[Extensions of Remarks]
[Page E951]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             JOBS AND GROWTH RECONCILIATION TAX ACT OF 2003

                                 ______
                                 

                               speech of

                            HON. MAX SANDLIN

                                of texas

                    in the house of representatives

                          Friday, May 9, 2003

  Mr. SANDLIN. Mr. Speaker, I rise today in opposition to H.R. 2, the 
Jobs and Growth Tax Act of 2003.
  Despite the assertions of my Republican colleagues, the Jobs and 
Growth Tax Act will neither create jobs nor grow the economy. Instead, 
this legislation increases inequity and unfairness in our tax system 
and society by drastically redistributing income to the very wealthiest 
taxpayers.
  If the Republican Party was actually interested in stimulating the 
economy, this legislation would provide tax relief to lower and middle 
income taxpayers who are likely to spend additional income. By 
contrast, the richest taxpayers in our society need no extra incentives 
to consume, and are likely to save, rather than spend, their generous 
tax cuts.
  The Republican tax bill accurately reflects the other party's 
priorities. While the bill's dividend and capital gains rate reductions 
will be in effect until 2013, the bill's limited middle class tax 
relief, including the acceleration of marriage penalty relief and an 
increase in the child tax credit, expire in three years. The 
Republicans are effective at paying lip service to the middle class, 
but completely ineffective in backing up their words with meaningful 
actions.
  While I strongly support tax relief, and was one of only 28 Democrats 
to support President Bush's tax cut package [EGTRRA] in 2001, I do not 
believe that the tax bill before us today will provide the economic 
stimulus that our country needs. Unfortunately, the Republican tax 
bill's dividend income tax rate reduction will not increase either 
short or long term economic growth, as it will have only modest effects 
on demand in 2003 and would expand budget deficits over the next 
decade.
  According to the Library of Congress's nonpartisan Congressional 
Research Service [CRS], ``using dividend tax reductions to stimulate 
the economy is unlikely to be very effective.'' CRS further notes that 
``the dividend relief proposal is less likely to be successful in 
stimulating short-run demand than a spending increase or some other tax 
cuts because it accrues to higher income individuals who may save a 
larger fraction of the cut.''
  The country's economic, fiscal, and national security situations have 
changed significantly since Congress passed the first Bush tax package 
in 2001. According to the nonpartisan Congressional Budget Office 
[CBO], in fiscal year [FY] 2000, the US had a budget surplus of $236 
billion. The CBO currently projects a budget deficit in FY2003 of $248 
billion. The White House's Office of Management and Budget [OMB] 
estimates a higher deficit for the current fiscal year [$304 billion] 
if Congress enacts the president's tax and spending proposals. The very 
first bill I cosponsored in Congress would have amended the U.S. 
Constitution to require a balanced Federal budget. The Federal 
Government needs to operate under the same principles of fiscal 
responsibility as the states, most of which are constitutionally 
required to produce balanced budgets. The increases in our budget 
deficits and national debt are counterproductive and will only serve to 
damage long-term economic growth prospects.
  Further, according to the Bureau of Labor Statistics, the 
unemployment rate in Texas has risen from 4.3 percent in January 2001 
to 6.7 percent in March 2003. 112,000 jobs have been lost across Texas 
since January 2001, and many working Americans have not been able to 
find new employment. Texas has the fourth highest unemployment rate in 
the country, and the Republican tax bill will do more harm than good 
for my constituents.
  In Texas, under the President's so-called stimulus plan, the average 
tax cut for the top 1 percent of taxpayers would be $32,571. The 
average tax cut for the middle 20 percent of taxpayers, the definition 
of the middle class, would have been $283. 4.4 million Texans would 
have received $100 or less under the Bush plan, and of those, 2.9 
million people would have realized no benefits at all. Like the Bush 
plan, the Republican tax bill under consideration today drastically 
redistributes wealth toward the very richest taxpayers, and increases 
the tax burden on the middle class and poor.
  A congressional study on the Bush ``growth'' package estimates that 
the average East Texas taxpayer would receive $30 from the package's 
dividend proposal. The Republican bill's dividend tax cut will provide 
equally ineffective relief. The negative impact of higher budget 
deficits, and consequently higher long-term interest rates, far 
outweighs any potential short-term gains from an elimination of 
taxation on dividend income.
  I will continue to enthusiastically support reasonable tax relief 
that does not threaten the fiscal future of our country. I support many 
of the individual provisions of the Republican tax bill, but believe 
that Congress and the President have a responsibility to work toward 
balanced budgets and should avoid passing the costs of large, 
unproductive tax cuts on to our children and grandchildren.

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