[Congressional Record Volume 150, Number 51 (Tuesday, April 20, 2004)]
[Senate]
[Pages S4116-S4118]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       THE TAX BURDEN IN AMERICA

  Mr. CORZINE. Mr. President, first of all, let me congratulate the 
distinguished Senator from Iowa for pointing out and being so 
persistent in dealing with this issue of overtime pay and how working 
Americans are being treated by the economic policies of the current 
administration.
  I have been on the Senate floor a number of times over the last 
several months talking about the status of the American economy--the 
job losses that we have had: 2 million, roughly, generally, and 2.6 
million private sector jobs. We have talked about the pressure on the 
middle class. Good gracious, we are now talking about cutting overtime 
pay for 8 million working Americans in the middle class.
  Goodness knows, the budget situation in this country, under this 
administration, has been a fiasco. We have gone from projections of 
$5.5 trillion worth of budget surpluses to $5 trillion of budget 
deficits over the next 10 years--$18,000 of debt per American to 
$24,000 now, and projections it will get up to $35,000 over the next 10 
years--an incredible failure of economic policy.
  But today I want to talk about another indicator that is showing the 
weaknesses and the failures of this policy. Last week, millions of 
Americans paid their income tax. A lot of us struggled to figure out 
how to do that and send it in by the April 15 deadline. But the fact 
is, when all is said and done, about 30 percent of Americans' income 
was paid in Federal, State, and local taxes--about 30 percent. But 
while the average American is paying 30 percent of their income in 
taxes, the majority of corporations are paying far less. In fact, about 
60 percent of all corporations reporting income did not pay income tax 
at all. That is according to the General Accounting Office. Sixty 
percent of corporations did not pay any Federal tax at all.

  Moreover, about 95 percent of corporations pay less than 5 percent of 
their income in taxes. As a share of corporate profits, corporate taxes 
are now at their lowest level since World War II. There has been a 
dramatic shift in the tax burden from corporations and high-income 
folks to those middle-class folks who are now going to have their 
overtime cut. It is an incredible change in the direction of this 
country and in fairness.
  While corporate taxes have declined, as the good Senator from Iowa 
pointed out, corporate profits have increased dramatically over the 
last several years, much greater than wages. Median income during the 
Bush administration has fallen about 3 percent for the average worker 
in America. Corporate profits, by contrast, have increased by 26 
percent. There has been a huge growth in corporate profits at the same 
time median income for working Americans is down. In other words, 
workers have received relatively little benefit from the increase in 
corporate profits. With all this ``hootin' and hollerin''' about GDP 
growth, it is not showing up in the paychecks of working Americans.
  In the early 1990s, when you had an increase in the economy as we are 
seeing now, 60 percent of those increases in income went to wages, and 
about 40 percent went to corporate profits. In today's recovery, the 
one that has occurred over the last several years, only 13 percent has 
gone to working men and women, and almost 87 percent has gone to 
corporate profits or corporate wages, to the CEOs. It is incredible, 60 
percent versus 13 percent. There is something afoul here.
  It fits into an overall flow of facts that middle-class income 
workers are getting hurt in this economy. The fact is, we have seen 
median income decline 3 percent for the average worker in America. And 
by the way, at the same time income has fallen for real families in 
America, the costs are going up. For example, a couple of items that go 
on in everybody's budget: Health insurance is up 14 percent at the same 
time these median incomes are going down. Corporate profits are going 
up. Gasoline prices are up 19 percent. College tuition, something that 
gives access to the American promise, is up 28 percent at the same 
time. I hate to get into property taxes, but in many parts of our 
country, all we have done is shift the tax burden from the Federal 
Government to the local level. The Bush record includes income falling 
for middle-income families and rising costs on things that matter in 
their lives.
  It is incredible, particularly when put in the context that we 
haven't been creating jobs. The fact is, we have 8.4 million Americans 
without jobs. That is the latest survey. We have been hearing a lot of 
hootin' and hollerin' about growth and jobs. There are 8.4 million 
Americans without jobs. That is 2.4 million more jobs lost during this 
administration's tenure and stewardship of the economy. Something is 
wrong here. Income is going down. Jobs are going down. Costs are going 
up.
  What is happening is we are putting incredible pressure on the 
average American. By the way, even when people get jobs after they have 
lost a job, there is an incredible loss of real income for those 
individuals. That is how that median income came down.
  According to survey, for workers who lost jobs in 2001, the average 
salary was $44,570. Today, for those who have found jobs, the average 
salary an individual ultimately was able to get was $35,410. That is 
another 21-percent drop for those people who lost jobs and then 
ultimately reentered the workforce.
  We have median income going down. We see job losses going up. We see 
corporate profits going up, and no sharing of that going on in the 
economy.
  There is a real problem. The administration's proposals and policies 
have done an incredible job of actually undermining the well-being and 
quality of life for middle-income Americans.
  Many people have different views about fairness, but since the tax 
date was last week and we talked about the fact corporations are not 
paying their fair share, I want to mention the fact for the middle 20 
percent of Americans, a range of people who have an adjusted gross 
income from filings and income tax, the average tax break for that 
middle 20-percent, middle-class America, was $647. That is not 
something to throw out the window, but it is not a great amount of 
money given what tuition costs are doing, and given gasoline prices and 
health care costs. But it is a break. But if you were in the top 1 
percent of Americans, on that same scale of adjusted gross income, you 
got an average tax break of about $35,000.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. SARBANES. Mr. President, I yield the Senator 1\1/2\ minutes of 
the time allocated to me.
  Mr. CORZINE. I thank the Senator from Maryland.
  Finally, if you look at those individuals in America who have been 
blessed

[[Page S4117]]

with good earnings and opportunity, with $1 million of earnings or 
more, a tax cut of $123,500. I don't understand why anyone would think 
this is going to be stimulative to the economy, efficient to the 
economy. Let alone does it relate to the fairness most Americans 
expect. Here we have $1.5 trillion in tax cuts and a whole bunch of it 
is going to the people making $1 million or more, and the middle class 
is getting a very small portion. We have a major problem with economic 
policy. We clearly are not creating jobs. We clearly are undermining 
the quality of life of middle-income Americans.
  There is a classic fairness issue that is going on here which I 
wanted to relate with regard to corporate income taxes and certainly 
with regard to how tax breaks work.
  It is time for a rethink. The IMF and the OECD this week released 
reports that said the current administration's policies are going to 
end up undermining growth for the rest of the world because we are 
running such big deficits. There is something wrong. It is time for us 
to address it. I will come out here and talk about these kinds of 
pressures on the middle class, on our budget, on what is fair. We need 
to make sure the American people know they are not getting a fair 
shake.
  We need to pass the legislation for which the Senator from Iowa has 
so assiduously fought to make sure 8 million people are protected on 
overtime. We need to make sure we change this tax policy so all 
Americans benefit from the great bounty we have. The choice is clear.
  We were able in the 1990s, with a different set of policies, to 
create 22.5 million jobs, the greatest increase in wealth for all 
Americans, not just middle class but all Americans. We decreased 
poverty. All good indicators of what happened.
  Now we have lost 2.6 million private sector jobs; 8.4 million people 
are unemployed; and we have a distribution of income that makes no 
sense for the middle class.
  Mr. SARBANES. Mr. President, I commend the very able Senator from New 
Jersey for his very powerful statement and for putting everything in 
context.
  First of all, I appreciate his taking the April 15 filing deadline, 
which most of us have just confronted in terms of filing our tax 
returns, and pointing out that corporations are paying hardly anything 
in income taxes. As I understand it, 60 percent of corporations filing 
show no tax liability. As I understand it, 95 percent were paying 5 
percent or less.
  Secondly, the Senator has pointed out this huge discrepancy in the 
tax benefit from the Bush tax cuts. His chart shows middle-income 
people were getting about $600, as I recall the figure. And for the top 
1 percent, what was the figure?
  Mr. CORZINE. That was $124,000.
  Mr. SARBANES. That is the millionaires.
  Mr. CORZINE. Excuse me, $35,000.
  Mr. SARBANES. And the millionaires were getting $124,000. This is 
classic trickle-down economics. It doesn't work. Proof that it does not 
work is where we are on the jobs front. We have an administration that 
claims it has a successful economic policy, and it is not producing 
jobs. In fact, we have now over 2 million fewer jobs than we had when 
this administration took over in January of 2001.
  The last time we had an administration that failed to produce a net 
increase in jobs over the course of the administration was the Herbert 
Hoover administration. Now, stop and think about that. I say to the 
Senator, is it not his understanding that every administration since 
Herbert Hoover has been able to show a net increase of jobs over the 
course of their administration--until this administration which now is 
over 2 million jobs in the hole below where we were when they came into 
office?
  Mr. CORZINE. The Senator from Maryland is absolutely correct. If you 
look at private sector jobs where a real economy is broadly creating 
wealth for individuals, 2.6 million jobs have been lost, and it is a 
horrific record relative to the performance of what should be enormous 
productivity and job growth in this country.
  Mr. SARBANES. Furthermore, it is my understanding, I say to the 
Senator, that this recession we have experienced began 36 months ago. 
As we have said, we have fewer jobs now than we did when the recession 
first started. This is the first recession since the Great Depression 
in which 36 months after the recession began we have failed to come 
back and recover or recreate the jobs that were lost in the recession.
  Stop and think about that. It is 36 months after the recession began. 
In every other economic downturn since the Great Depression, 36 months 
after the recession began we had recovered all the jobs lost and gone 
well beyond that in most instances in job creation. We have not done 
that in this business cycle. In fact, if we had grown at the job growth 
equal to the worst on record following a recession--I am just taking 
now the worst performance of previous economic downturns--if we had 
just the job growth now that we had in the worst recovery period, we 
would have 3.4 million more jobs than we have today. It is incredible 
what is happening on the jobs front. We are not closing this jobs gap. 
This administration doesn't seem to understand it or face up to it.
  In fact, in the 2002 Economic Report of the President, the 
administration forecasted that in 2004--the year we are in--the economy 
would have 138.3 million jobs. Last year, the President lowered that 
estimate for the number of jobs we would have in 2004. In 2003, he 
predicted only 135.2 million jobs. In the most recent economic report, 
the administration lowered it again to 132.7 million jobs. In 2 years, 
they lowered the number of job predictions by 6 million jobs.
  Mr. CORZINE. Will the Senator yield for a question?
  Mr. SARBANES. Yes.
  Mr. CORZINE. The Senator from Maryland understands supply and demand. 
But if there are 6 million more Americans looking for jobs than is 
demand, what usually happens when there is excess supply of labor or 
any other element of our economic system versus demand?
  Mr. SARBANES. You can see the effect on the earnings of workers that 
is taking place in the economy, for one thing.
  Mr. CORZINE. It is a most important element. This jobs issue is not 
only impacting people who don't have jobs, it is impacting people who 
do have jobs.
  Mr. SARBANES. Exactly.
  Mr. CORZINE. It is undermining the ability of working Americans to 
actually get good wages. That is why median income is down. That is why 
you go from $45,000 for a job lost to picking up a job worth $35,000.
  Mr. SARBANES. The Senator is right to focus on the inadequacy of 
demand. If he would put up the chart that shows how much of the benefit 
goes to workers' wages as opposed to corporate profit in this so-called 
recovery, we can see that if you go back to the early 1990s, during 
that recovery, a majority--85 percent--of the benefits were going to 
workers. In this recovery, the workers are getting only 15 percent.

  Mr. CORZINE. It is 13 percent.
  Mr. SARBANES. So 87 percent of it is going to corporate profit. That 
is one of the big differences. That is one of the reasons we are not 
creating jobs. When it goes to workers' wages, it makes its way back 
into the economy, stimulates economic activity. As a consequence, it 
helps produce jobs. Now it is so heavily weighted away from workers and 
toward the corporations that are showing these record profits that we 
are not getting the same economic stimulus.
  Then they say, well, if the corporations make big profits, they will 
invest in plant and equipment. But the corporations won't invest in 
plant and equipment if they don't think there is going to be a demand 
for what that plant and equipment will produce. The major source of the 
demand comes from workers' wages, which is being grossly shortchanged 
in this so-called economic recovery. It is no wonder we are facing such 
a severe economic situation.
  Twenty-four percent of the people who are unemployed have been 
unemployed for more than 26 weeks. They are the so-called long-term 
unemployed. We are now at a record in that this percentage has been 
above 20 for 18 consecutive months. The last time we had long-term 
unemployed at that level for such a long period of time was in the 1982 
recession, when the unemployment rate went up to close to 10

[[Page S4118]]

percent. So what is happening is a lot of the impact is being concealed 
or disguised. People have dropped out of the workforce. The workforce 
participation rate now is at a 16 year low, despite having previously 
risen almost every year in this postwar period. That is the situation 
we confront.
  The Senator is absolutely right to put his finger on these gross 
inequities in the workings of the economy because more and more of its 
benefits are being pushed to the very top of the income and wealth 
scale. As a consequence, they do not get recirculated back through the 
economy to create jobs and meet the tremendous challenge that working 
people in this country are facing, which the Senator has very 
thoroughly outlined in the course of his statement. I commend my 
colleague from New Jersey for his very strong and powerful statement in 
underscoring this shift in economic benefits.
  There is one strata up at the top that is reaping the benefits, and 
all the rest of us are feeling the economic burdens, stress and strain 
of this economy.
  Mr. CORZINE. Will the Senator yield?
  Mr. SARBANES. Yes.
  Mr. CORZINE. I think the Senator from Maryland probably realizes--and 
correct me if I am wrong--I think there are 1.4 million or 1.6 million 
Americans that have even dropped out of looking for work.
  Mr. SARBANES. That is right.
  Mr. CORZINE. The Senator most appropriately talked about the pain 
that is being inflicted on the unemployed because they are unemployed 
for a much longer period of time. But what is just as serious is that 
there are a lot of people who have said the heck with it; there is no 
chance of actually getting a job.
  Mr. SARBANES. I thank the Senator for his very strong presentation.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Enzi). There will now be 30 minutes for 
the majority.
  The Senator from Wyoming is recognized.

                          ____________________