[Congressional Record Volume 149, Number 75 (Tuesday, May 20, 2003)]
[House]
[Pages H4327-H4328]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            TEXAS AND TAXES

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California (Mr. Sherman) is recognized for 5 minutes.
  Mr. SHERMAN. Mr. Speaker, I came down here to talk about taxes, but 
first

[[Page H4328]]

let me talk about Texas. All Americans must unite against terrorism, 
and we did that. We passed the PATRIOT Act. We provided resources for 
the Department of Homeland Security. But now we discover the war on 
terrorism is a war on Democrats. This will divide America, and that is 
good for the terrorists.
  How many Americans will lose their lives because we in this House 
cannot empower the Department of Homeland Security because that 
Department now seems bent on a coverup of its use of its great powers 
to pervert American democracy? Only a release of the tapes can reunite 
America behind the Department of Homeland Security. A failure to 
release those tapes breaks up American unity, impairs our security, and 
raises questions about what is there to cover up, questions like what 
did they know and when did they know it?
  Let us unite America behind the war against terrorism. Let us release 
the tapes.
  Now let us talk about taxes. The Bush recession continues. 
Republicans continue to use their political power to adopt job-killer 
policies, which means the Bush recession will continue to continue. The 
most obvious job-killer policy is the dividend exclusion provision 
included in the bill passed by the Senate.
  Now, every major tax provision has both positive and negative effects 
on our economy, and Republican after Republican has come down to this 
floor to talk about the rather modest economic benefits of excluding 
dividends from taxation.
  We Democrats have been distracted. We have been so incensed that this 
dividend exclusion provision gives almost all its benefits to the 
wealthiest that we forgot to point out it is also a job killer.
  Yes, this is a provision that provides 50 percent of its benefits to 
the richest 1 percent of Americans and provides 1 percent of its 
benefits to the 50 percent of Americans at the bottom and in the 
middle. It represents class warfare against working families. It seems 
to be inspired to allow the wealthiest in our country to buy this new 
automobile from Mercedes Benz, the Maybach. It is only $350,000, or 
roughly the benefit to those with an income of $1 million over a 3\1/
2\-year period from this provision.
  So we got so distracted by how incensed we were that we forgot to 
mention it is a job-killer provision.
  Let me illustrate that. Let us say there was a proposal to drop $25 
billion from helicopters. There would be a positive effect. Those who 
supported the programs from the other side of the aisle could come down 
here and say, hey, it is going to stimulate the economy, putting money 
in the hands of somebody. But it would be obvious that 25 or $50 
billion dropped from helicopters would also hurt our economy, because 
it would drive up interest rates, drive up the deficit and deprive this 
House of the opportunity to help our States keep teachers and law 
enforcement officers employed. They are being laid off in so many 
States.

                              {time}  1715

  So dropping money from a helicopter is ultimately a job-killer 
proposal.
  The dividend exclusion has a smaller positive economic benefit and a 
larger economic harm than dropping money from helicopters, because at 
least the people who would catch money from helicopters would spend the 
money in America on the necessities of life, whereas the dividend 
exclusion tends to go to those who would spend money chiefly on luxury 
imports like the Maybach from Mercedes Benz, only $350,000.
  The dividend exclusion was justified under the idea that we are going 
to put money in corporate treasuries because people were going to buy 
stock, so the first effect of this dividend exclusion is that more 
dividends are paid. That takes money out of treasuries and deprives 
corporations of the opportunity to buy plants and equipment. But at 
least it provided some reason, perhaps, for people to buy stock, to put 
money into corporate treasuries and they go out and buy plants and 
equipment.
  But now the Senate has changed it. Now the new provision provides a 
half exclusion for dividends paid in 2003, a full exclusion for 
dividends paid in 2004, 2005, and 2006, and back to full taxation in 
2007.
  What does that mean? First, it means 8 months of an economic freeze. 
For 8 months, the corporations will not pay any dividends, they are 
going to be half taxable, when they can wait until January of next 
year. They cannot invest this cash because they are going to need it to 
pay the big dividend in January. They cannot distribute it because it 
is subject to half taxation. It is locked up, hurting our economy 
tremendously by freezing the very cash that we need to put into the 
economy.
  Then what happens after that? In 2004, 2005, 2006, huge dividends and 
no investment in the economy. But why would anybody buy stock because 
of a provision that is going to exempt dividends for a few years? Would 
Members buy a municipal bond that was tax-free for a few years and then 
was going to be subject to full tax?
  This means no new investment except in Germany, where they will need 
a new line to build more copies of the Maybach. That will be the only 
investment caused by this provision. The Bush recession continues, and 
job-killer policies like the dividend provision in the Senate bill 
ensure that the Bush recession will continue to continue.

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