[Congressional Record Volume 153, Number 4 (Tuesday, January 9, 2007)]
[House]
[Pages H238-H245]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 2130
TAX INCREASES
The SPEAKER pro tempore. The gentleman from Pennsylvania (Mr.
Shuster) is recognized for 60 minutes.
Mr. SHUSTER. Mr. Speaker, it is certainly an honor to be here on the
House floor, and it is a great opportunity to follow the Blue Dogs
tonight, that coalition on the Democratic side that are talking about
fiscal responsibility, because that is what I want to also talk about
tonight. It is an extremely important issue. It is a pocketbook issue.
And one I didn't hear mentioned too frequently by my friends in the
Blue Dog Coalition has to deal with taxes and what we are responsible
for here in Washington, which is spending, and also making sure we are
not reaching too deep in the pockets of the American people and
spending their money.
Quite frankly, Mr. Speaker, I am very concerned that the American
people are unaware of what is going to happen here in Congress in the
next 4 years. There is a countdown. The countdown begins. It is 1,452
days, and we will see over that period of time the tax cuts that we put
in place as a Republican majority, they will expire. So the American
people, over the next 4 years, will see a $200 billion tax increase,
money that will be taken out of their pockets.
The Democratic majority doesn't even have to act. They can just run
out the clock. I am not sure the American people realize that, that if
the Democrats don't act to extend these tax breaks, that they will see
this $200 billion tax increase occur, as I said between today and
January 1, 2011. As I said, I appreciate the Blue Dogs coming here and
talking about fiscal responsibility, but unless they act and they join
with the Republicans to see these extended, that is what the American
people face.
What do these tax cuts mean? They mean that over the last 4 years we
have seen 7.2 million jobs created in this country because of those tax
cuts. Just in the month of December, 167,000 jobs were created in this
country. The unemployment rate in this country is down to 4.5 percent.
That is the lowest average it has been in four decades, and that is
directly attributable to the tax cuts that we passed over the last 4,
5, or 6 years in this Congress. Again, if we don't extend them, if we
don't do the responsible thing and let the American people keep more of
their money, there will be dollars taken out of their pockets.
Now, what has happened with those tax cuts is that the American
people have gotten to keep more of their hard-earned dollars. The
American people, from Pennsylvania, to Arkansas, to California, to
Arizona get to keep their money in their pockets and get to decide how
that money is going to be spent. It is not going to be spent in
Washington by bureaucrats. When you get $2,000 or $4,000 more in your
pocket a year because of these tax cuts, you decide whether you will
use it as a downpayment on a car, save the money for your children's
college education, or buy a new washer and dryer or refrigerator for
your home. These are the things the American people want to be able to
purchase, and they can do it with these tax cuts.
[[Page H239]]
As I said, I am very, very concerned that we are going to see this
$200 billion tax increase if we don't move forward to expand that. We
had four major tax relief packages since 2001. We cut taxes on the
American taxpayer in every walk of life. Across the board, every
American has benefited by this. We eliminated the marriage penalty tax.
We stopped penalizing people in this country for being married. We
should be encouraging that in America: marriage. We doubled the child
tax credit from $500 to $1,000. If we don't act to extend that, that
will be cut in half over the next 4 years.
We removed 10.6 million low-income Americans from paying taxes all
together. People are not paying taxes because we lowered those tax
rates. We lowered tax rates on our small businesses and employers.
I know every single district in this country has numerous small
businesses. It is the backbone of the American economy. And we have cut
taxes for those people in small business, and they have been able to
take that money and reinvest it in their businesses and their
employees. I know full well because before I came to Congress I didn't
serve in the State legislature, I wasn't a trial attorney, I was a
small business owner, and I worked to employ between 30 and 40 people.
I know what it is like to meet a payroll, and I know what that burden
is like to have to pay crushing taxes. I know what it is like to make
sure my bills are being paid every month.
So as a small business owner, I know firsthand. As a family man, as a
father of two children, and a daughter that will go to Penn State
University next year, I know it is important to save for college. Every
American wants to save money to help their children get educated. As I
said, I think it is extremely important that we here in Congress act
responsibly to keep those tax cuts in place and there is record revenue
coming into Congress.
I hope that the Democrats will take a lesson from history, from one
of their own, Jack Kennedy, in the 1960s. President Kennedy did the
right thing. He cut taxes. What happened? Revenues increased to the
government. What happened in 1980, when Ronald Reagan did the same
thing? He cut taxes and revenues increased to the Federal Government.
And we did that again in 2001 and 2003. And what happened? History has
repeated itself. Revenues are at the highest levels that they have ever
been to the Federal Government.
So once again, I am absolutely committed, and we are going to be
coming to the House floor week after week talking to the American
people, reminding them that if the Democrats do not act, do not
aggressively pursue the extension of these taxes that the American
people will be penalized.
And I think that here in this next hour I am going to be joined by
many of my colleagues who want to stand up and talk about this. And the
folks coming down to the floor, most of them, if not all of them, are
former small business owners or still own small businesses and have
families and raised families, so they can talk to the issues that we
are here talking about tonight: what it means to get $2,000 more a year
in your pocket, or $4,000 or $5,000, or have lower tax rates, if you
are running a business.
I will now invite some of my colleagues up, the gentleman from
Tennessee (Mr. Davis). I yield to him.
Mr. DAVID DAVIS of Tennessee. Mr. Speaker, I thank Mr. Shuster for
giving me this opportunity. I too am a father of two and a small
business owner, and I am truly honored to have this occasion to discuss
my ideas. This open discussion is part of what makes us so great as a
Nation.
I am from the First District of Tennessee. It is a place of
beautiful, majestic mountains, thriving communities, and a growing
economy. Northeast Tennessee has unrivaled beauty and unsurpassed
potential. However, the beautiful First Tennessee District and our
country could be headed toward economic danger. For instance, in the
last week, the three-fifths majority required to raise our taxes has
been removed by the Democrat Party.
Tax cuts are not permanent. Seemingly, it is only a matter of time
before these massive tax increases are put in place. It is our
responsibility to protect the American people from these unnecessary
tax burdens. If the tax cuts that are in place are allowed to expire,
some families could see an increase in taxes up to 39 percent. Married
couples and families will once again be subject to the tax penalty.
As I speak tonight, time and time again history has proven that tax
reductions have spurred economic resurgence. Our current economic
figures once again prove this fact. With the tax cuts in place, real
after-tax income has risen 9.6 percent since the year 2000. The United
States has grown faster than any other G-7 industrialized nation over
the past four quarters. The time to control spending and to make tax
cuts permanent is now.
I will be joining many of my colleagues in signing a letter to
President Bush encouraging him to veto any legislation implementing tax
increases on working people and on the businesses of America. It is not
the time to place greater financial burden on the families of the First
District of Tennessee nor the many other people of this great Nation.
Mr. SHUSTER. I thank the gentleman from Tennessee and would just
point out that, as the gentleman said, he is a father, and I understand
that he was a hospital manager before he started his own business. So
he knows firsthand what it is like to be out there meeting a payroll,
facing the tax burden of this country. So I really appreciate not only
that you are here in Congress and you bring a commonsense, a small
business owner's perspective to the legislative process, but you are
here tonight talking about these issues that are going to be vital to
not only people in Tennessee and Pennsylvania but across this country.
Every American is concerned about their tax bill.
It was interesting, the Blue Dogs were down here talking this evening
earlier and they said America voted for a change. America did vote for
a change, I believe. But I don't believe that I heard anybody in
America, at least not in my congressional district in Pennsylvania, or
across Pennsylvania, who said they wanted to vote for higher taxes. I
am very concerned.
As you mentioned, they changed the rules. We had the rules in place
where we had to have a three-fifths majority to pass tax increases.
They have reduced that to a simple majority. That obviously means they
need only 218 votes. The Blue Dogs were talking tonight there are
between 40 and 50 members of the Blue Dogs. I hope they hang with us as
we try to push the agenda to keep the American taxpayers, keep the
American people with those tax cuts in place.
Again, Mr. Davis, thank you very much for coming down tonight.
Mr. DAVID DAVIS of Tennessee. Thank you.
Mr. SHUSTER. Mr. Speaker, it is now my pleasure to yield time to the
gentleman from Texas (Mr. Neugebauer), who again comes from a business
background, somebody who has raised a family and brings a businessman's
common sense here to the legislative process.
Mr. NEUGEBAUER. Well, I thank the gentleman from Pennsylvania, and
just like him, I haven't been in the State legislature. I have been a
small businessman all of my life.
What we know about small businesses is that they are the number one
job creator in America. As we heard the gentleman say awhile ago, over
nearly 7 million new jobs have been created in this country in the last
3\1/2\ years. Quite honestly, most of that has been from small
businesses all across this country.
One of the things that a lot of people don't know that have not had
their own business is that small businesses are also big taxpayers.
What they do not also realize is that in some cases we ask our small
businesses to pay more taxes than we do other folks. That is because
our small business people, in addition to income tax, have to pay self-
employment tax.
The way you build a business in America is that you do it by taking
money that you are making and reinvesting it in your business, and that
is the way you grow your business. It is these growing businesses in
America that have been growing America.
When I first got in the home building business, I had a young man who
was a plumbing contractor, and he too was starting his new business.
And he was starting it with basically one truck
[[Page H240]]
and a helper. So when we started together, I had a small building
business and he had a small plumbing company. What I watched my friend
Bobby do over the years is build his business one truck at a time. He
would work hard and pretty soon he had built up his business and he had
to go buy another truck. You know what happens when a plumbing company
buys another truck? They have to hire what? More people. And pretty
soon he worked hard and he had to buy another truck. And you know what
happened when he bought another truck? He had to hire more people.
But Bobby couldn't have bought those trucks if he hadn't been
building his business, having money and capital in his business to be
able to go to his banker and say, you know, I am building a business
here and I have equity in my business. But what happens is the American
Government says, oh, Mr. Small Businessman, you are making money, so we
are going to reach in there and in some cases take half of that small
business's money. So that causes the business to grow at half the rate
as it could if it wasn't paying exorbitant taxes.
I would say to the gentleman from Pennsylvania, as you know, it is
not just Big Government taxing, but it is the regulation that also our
small businesses all across the country are worried about. When you add
onto small businesses not only the carrying of a tax burden, but all of
the burdens of regulation that we put on these small businesses, and on
top of that you put a lawsuit environment in this country that on any
given day a small businessman can lose his business, I say to my friend
that small businesses are about to be entered onto the Endangered
Species List.
{time} 2145
Because, quite honestly, we have policy in this country that is not
friendly to small businesses, the very businesses, the very people that
have built this great Nation. And so when I hear folks on the other
side of the aisle talk about we have a plan, well, I hope that plan is
not to continue the trend that they have done in the past, and that is
taxing small businesses out of existence. And you get a little nervous
when they change the rules in this House that, as the gentleman said a
while ago, that instead of taking three-fifths of this body, it only
takes a simple majority to increase taxes.
Now, I do applaud our friends, the Blue Dogs, for one of the things
that they said tonight, and that is that we do need to do something
about deficit spending in this country. And I am ready to join across
the aisle with my friends and say, let's do that by addressing
spending.
If you really want to do good things for America in the future, you
don't do it by taxing our small businesses out of existence. You do it
by making America a more fiscally sound country. You ask the American
Government to do the same thing that these small businesses do. They
are not able to, whenever they need more money, to go get it from
somebody else by just reaching in. You don't go to a customer after you
finish the job and say, ``you know, what, I told you it was going to be
one price, but I am going to charge you another price.'' You don't keep
your business very long. So I want to join our friends to do that. But
I do not want to join our friends on a path of taxing because I would
tell you, in 2003, the unemployment rate in America was 6.1 percent.
Today it is 4.5 percent. More people are employed today in America than
any other time in the history of this Nation. More people own homes
today than any other time in the history of this Nation. This is a
prosperous time. And we got here by leaving the decision on how people
spend their money to the people who make the money and not big
government. Big government doesn't grow America. Americans grow
America.
I thank the gentleman for having this time tonight, and I look
forward to continued dialogue with my colleagues as we really talk
about making sure that our American businesses don't end up on the
endangered species list.
Mr. SHUSTER. I thank the gentleman from Texas. And when you talk, I
think a lot of folks here in Congress, I think, forget about the
stories that you talk about, the plumber who starts out with a truck
and all of a sudden he has enough business, he buys two trucks, then
three trucks. And that is what small business in America has been doing
over the last couple of decades. That is where most of the jobs are
created in this country, in small business by that plumber or that
person who has an idea that works hard and puts together a plan and
goes to the bank and borrows some money. And I know when I first went
into business back in 1990, I bought an existing business, borrowed a
lot of money, went into debt, worked hard. And something that I learned
in college in accounting is that cash and profits aren't the same
thing. And a lot of people, I think they say, and I realized that
lesson, I learned it in accounting, but it really didn't make an impact
on me until my first year I had a profit in business and thought, oh my
goodness. We had a great year. And then I realized that I had to pay
this tax bill, but all my cash was tied up in my inventory and
improving the physical plant and doing things to make business continue
to grow. But I didn't have the cash. So I had to keep the debt up; had
to figure out how to get that money to pay taxes. So it really puts a
tremendous burden on small business when you have a high tax burden.
And, as you pointed out, American business, small business, is really
the backbone of this country. So I appreciate the fact that you are
another small business owner and that you, like myself, didn't serve in
the legislature before, and you bring that perspective of a small
business owner, of a business owner of someone that has been out there
meeting payrolls and creating jobs in this economy.
It is now my pleasure to yield to another great Texan, Mr. Conaway,
from Texas, who is the resident CPA in the House tonight. So I am sure
we can learn a few lessons from him. So with that, Mr. Conaway, thank
you.
Mr. CONAWAY. I thank my colleague for doing this hour tonight. And if
I really want to put the colleagues in the House to sleep, we can talk
about Internal Revenue Code sections and those kind of things. I will
have you dozing off quickly.
Mr. SHUSTER. But I would ask the gentleman at some point to talk
about cash flow and the difference between profit and cash because that
is an awakening process.
Mr. CONAWAY. Exactly, something that most everybody understands.
When I came to Congress, actually, my first race was against my good
colleague, Randy Neugebauer. He and I campaigned against each other
and, quite frankly, campaigned the way Republicans ought to campaign
against each other, and that is why you should vote for me, and he
stuck to why you should vote for him. And one of the reasons that I
thought folks should vote for me was that I thought the small business
mind set or experiences were underrepresented in Congress. Now, I
hadn't done any empirical research. I just made that up. It sounded
good. I thought, from having watched the way things going on out here,
I just thought it was the case. But Randy won the first one. He was a
small business guy. He won that first race, and then I was fortunate
enough to win a race, and we now serve together. And I suspect he has
found, like I did, that that was a lot truer than I had even thought
about; that there really is a real lack of appreciation of how hard it
is to make a buck.
Not to denigrate anybody's path to this place, but I think folks who
have worked in the real business world, who have, as you said, met
payrolls and been responsible for both sides of a budget; it is easy to
budget if you are in government and all you are worried about is how
much you spent because you know that you can collect it from somebody.
You have got a sheriff someplace that will go collect it if need be. We
have got a big gun that we will point at folks and take that money away
from them.
But in business, you have got to worry about both sides. You have got
to figure out how to do some service or put together some product that
you can sell to somebody else for a profit. And then you have got to
hold your costs down and all those kinds of things, all those decisions
that go into that.
I had 32-plus years in business as a CPA. I had a, from a variety of
clients,
[[Page H241]]
from really big clients to really small mom-and-pop shops.
We have got a colleague that is going to talk in a little bit that is
a doctor. One of the closest things that I had to being a doctor-like
experience and telling somebody they have had a terminal illness was
each year when I would have to go to my dad, who ran a small business
in the oil field service company, and tell him what his taxes were
going to be. I dreaded that like the plague because it was my fault. I
was his accountant. And even though the Congress and the Internal
Revenue Code were done by Congress and implemented by the Internal
Revenue Service, I was the bad guy. I had to go tell my dad that he
owed more money in taxes than he really wanted to pay. And he would
constantly say, well, how do I not pay those taxes? How do I get out of
doing that?
I heard an interesting phrase the other day that fines are a tax on
criminal activity; taxes are fines on successful activities.
Every time we spend a buck in here, and we spend a lot of bucks, $2.7
trillion, I try to not lose sight how hard it is for us to, for whoever
that taxpayer out there that we collected that buck from, how hard it
was for them to make that money.
I live in West Texas where oil and gas is a big deal. And part of my
background is working as a rough neck on drilling companies for
drilling rigs. And when we spend money, I think about that rough neck
working morning tower for a drilling company. In the winter, it is cold
and miserable and wet and nasty, and in the summer time, it is hot and
dry and miserable. Hard work. I am talking labor. Now we sometimes
refer to what we do in this body as work. But folks, this is not work.
This is a job. This is something we do. Work is when you are outside
doing physical labor. And I have done some of that, and I went to
college so I didn't have to keep doing that.
But I think about how hard that person works to earn the money that
we then take taxes away from him to help do whatever it is we do. Most
of what we do appears important. Some of what we do is not important,
and we shouldn't do it. And that is where we ought to be about the
process of reducing the amount of money that we take away from people
and spend. But I keep thinking about that guy working morning tower and
how hard it is for him to earn a dollar so that we can take $0.20 of it
or $0.50 of it, whatever it is we decide to take in our infinite wisdom
from him as a result of his or her hard work.
We will hear over the next 2 years as we talk about this stealth tax
increase that is coming, that is either the capital gains rate going up
or the various family-friendly things that we did in 2001, 2003, or the
death tax that comes roaring back in 2011; we will hear the Democrats
talk about, ``well, we are going to fix it for the little guy. We are
going to not raise taxes on the small taxpayer and all those kinds of
folks.'' That is a class warfare issue that I think is unworthy of us.
As we begin to kind of differentiate between good folks who make money
and bad folks who make money based on the amount of money they make, I
think it is unworthy of us. Let's try to not do that because successful
people are the ones who invest. They are the ones who
create businesses. They are the ones that make money that can provide
jobs.
The times that I have had to go look for a job, it has been very few,
but the times I have gone to look for a job, I have not gone to
somebody that was losing money to ask for a job. Only the Federal
Government can lose money and still hire new people. Every small
business out there, every medium-size business, most big businesses
quit hiring people if they are not making money. Only in the Federal
Government do we have the luxury of continuing to hire folks when in
fact we are in a deficit spending that we have been on in the last
several years.
In an attempt to, well, before I start that, I spent 2 years on the
Budget Committee and listened to some of our good colleagues on the
other side talk, day after day in those hearings about their proposals
for PAYGO, their proposals for reducing the deficit, all those kinds of
things. Every single one of those conversations, either overtly or as a
sub plot to those conversations, was a tax increase. It wasn't about
spending less money, because at the same time they were talking about
reducing the deficit, they would propose billions of dollars of
additional spending within the budget that we were trying to pass. So
the idea that we can only fix the deficit by raising taxes is
misplaced.
We don't have a tax revenue problem in this Federal Government. We
collected a record amount of revenues for the Federal Government in
fiscal year 2006, up double digits from the collection record in 2005,
which was up double digits from the collections in 2004. We have got a
spending problem. And I have got some, a couple of proposals that I
want to talk about which may not be exactly on point with what Mr.
Shuster wants to talk about tonight. But one of them is a ``no new
programs'' agenda. This was a rule to the House rules that, you know, I
hate to whine like the rest of us, but we had no input in the House
rules. But I introduced a House rule the other day that said, if you
are going to propose a new program of some sort, then, as a part of
that enacting legislation, you actually have to eliminate another
program of equal or greater spending; the idea being that if we have
come up with the newest great new idea, that I ought to find somewhere
else in the Federal activities that there is a program that is less
important than my new one. The idea being is, if I can't find something
that is less important than my new program, then what I am effectively
telling the taxpayers of this country is this new program is the least
important thing the Federal Government could do. And for goodness sake,
why would we do that?
And so the idea is to help us begin to set priorities. Talk is cheap,
and we all, both sides, talk about setting priorities and all those
kinds of things. But this would help put some teeth in the idea of
forcing Congress to make choices between two good things. I am not
talking about good and bad. Anybody can make those decisions. But we
have got to make choices between two good things a lot of times as to
where we spend our money. Families do that. Businesses do that. And all
of us have to do that, except at the Federal Government level. So in an
attempt to help us learn how to set priorities, this ``no new
programs'' would be a small step in that direction.
The other thing that I have done and I have actually got two of the
Blue Dogs to cosponsor, original cosponsors on my savings and
appropriations concept. If we come in here, and our experiences so far
with the Democrats is that the rule under which we debate things that
we are passing has not provided us opportunities to amend them. I mean,
it is a closed rule. We did it to them; they are doing it to us. That
is just kind of the way it works. But on appropriation bills, those are
the one opportunity that we have where the Rules Committee is not in
between us and what needs to get done. And with all due deference to my
former member of the Rules Committee, this is an opportunity for those
of us on the floor to suggest changes in the appropriations process
that we think are appropriate.
Under the current scheme, if we amend an appropriations bill to
reduce the spending in that bill, common sense would say that that
money doesn't get spent. That is not how this system works. That money
goes back to the committee and is spent somewhere else. So while we are
able to get an amendment that the 218 of us would agree that spending
shouldn't occur, it gets spent somewhere else.
So what this law would say is that when that happens, if we are able
to overrun the appropriators, and the appropriators legitimately hate
this idea, but if we are able to get 218 of us, whether it is, in our
case now, it has got to have some Democrats now to help us out, but we
are able to reduce an appropriations bill by some amount, that that
will actually reduce the 302A and 302B allocations and all of that
machination that goes on so that we would actually not spend that
money.
{time} 2200
It would reduce the deficit or increase a surplus, if we ever got to
that particular place. I have got a couple of Democrats who have agreed
to cosponsor, so I am encouraged by that, that we can, in fact, begin
to work on the spending side of what we have got going on here.
[[Page H242]]
I want to again thank Mr. Shuster for having this out here tonight.
When Congress saw fit to increase the section 179, throwing a little
code at you, section 179 deduction for businesses or small business
deduction where you can immediately expense up to $100,000 of business
property that you put in service, that was a huge boon to small
businesses.
It allowed them to immediately write off the cost of having to put
new equipment into service, and as Mr. Neugebauer has already said,
when his plumber friend bought a new truck, he had to have somebody
drive that truck. In all likelihood there was a swamper on that truck
so he put two more people to work.
That happened thousands of times across this great country. It was
part of that impetus, part of this push to get us out of this recession
that we were in 2001, 2002 and 2003, that single piece was a great part
of what helped do that. That was directly positive for small
businesses, and it is one of those that we continue to extend, but will
go away unless this Congress acts to keep renewing it.
One final story. In talking with folks about the death tax back in
the district, I tell them that probably the most dangerous week for
anyone who has assets and beneficiaries is the week between Christmas
of 2010 and New Year's Day. Here is why:
If you have got assets that you have worked hard for your life, but
you got beneficiaries, you are going to get those assets when you die,
if you are still breathing on January 1 of 2011, then those
beneficiaries immediately have a 55 percent partner called the Federal
Government.
My advice to those folks is to go ahead and have Christmas with your
family, but then you probably ought to make yourself real scarce
unless, if the current law stays in place where the death tax goes
completely away in 2010, and the Federal Government has no claim on
your assets when you die, to January 1 of 2011, when the Federal
Government gets a 55 percent claim on those assets. So those of you who
have assets, if we aren't able to get the laws changed and effect that,
you probably ought to make yourself pretty scarce around your
beneficiaries post-Christmas and January 1. Good luck with that.
I would like to thank my good colleague, Mr. Shuster, for having this
hour tonight, sponsoring it. I hope to participate with you in the
future.
Mr. SHUSTER. I want to thank the gentleman from Texas. I think you
bring up a very good point on the spending side. As you know, as an
accountant, anybody that has been in business, two sides to the income
statements, there is revenues and costs.
Costs are important. You have to control your costs. You can't spend
more than you bring in. Of course, we have done that over the last
couple of years, because we are at war, we have seen a recession. But
the revenue side is equally important, and there are two ways to do it
in the Federal Government. We have found that you can increase taxes,
which gives you increased revenue for a while, but eventually the
economy turns down, and then revenues go down; or you can do as Jack
Kennedy, President Kennedy, did in 1960, Ronald Reagan did in the 1980s
and we did in the early 2000s, we cut taxes and revenues grew. There
are record levels of revenue coming into the Federal Government.
Don't listen to Bill Shuster about how it works when you cut taxes.
Look at the record, look at the history record, and you will see it is
quite clear.
You mentioned the death tax, yes. The gentleman has another point to
make.
Mr. CONAWAY. Let me just, on your point, most business, every
business, has to decide what they are going to charge for their product
or their service. It is one of those key decisions every business
manager has to make.
Because if they set their prices too high, they will not sell enough
units. Obviously if they set it too low, they will not make as much
money as they should. So most times the businesses decide to lower that
price in order to get volume up, in order to sell more.
The Federal Government doesn't exactly do that; but the truth of the
matter is, if we do raise taxes, you will get a short-term blip; tell
people, until that begins to act, in effect a fine on doing well, and
having a negative impact on the economy. Businesses have to make that
decision, and I think the Federal Government ought to be in that same
mind-set as well.
Mr. SHUSTER. That is a great point. It is great to have people like
you in Congress to bring that common sense and know what it is like,
and what really happens when prices go up and taxes go up and the
response you get from people.
You also mentioned that January 1, 2011, the death tax expires. You
also have the capital gains tax will expire January 1, 2009. The taxes
on dividends will increase January 1, 2009. I think it is record
numbers of American people that have investments in the stock market
through their mutual funds. Over 60 percent of America has invested.
Folks that are getting dividends from those investments are going to be
taxed at higher rates.
We are going to again lose the child credit that will be cut in half
over the next couple of years, the marriage tax, the penalty will be
put back in place. Low-income taxpayers will go from that 10 percent
tax bracket up to 15 percent tax bracket if we don't act.
Just to remind the American people that are watching tonight, it is
14,052 days in the countdown for the Democrat tax increase. They don't
have to act. All they have to do is sit on the clock, run out the
clock. When it runs out, we are going to see over the next 4 years a
$200 billion tax increase.
Another thing you mentioned about job increases, I saw over the last
6 years, one of the sectors in the economy that saw one of the larger
increases percentage-wise in jobs was the government, and over 4
percent increase in government jobs. You know, we see that in other
sectors of our economy. We have seen many of them increase double
digits, but that is one that was discouraging to me to see the Federal
Government, when we were at these times when we were trying to cut
spending. We need to cut some of that and curtail some of these
government jobs.
Mr. CONAWAY. Let me mention one other tax that is out there; we will
talk about the national sales tax on another night. But the alternative
minimum tax is another tax that we in the Republican majority basically
kicked the can down the road a year at a time; this Congress under the
Democratic leadership will have to do the same thing because it is a
tax increase that is on the horizon that requires Congress to do
something or the tax comes in.
We were unable to put a permanent fix in place, and full or fair
disclosure. I actually had to pay the alternative minimum tax this
year, and it ticked me off.
Mr. SHUSTER. That is like 20 million Americans, or something like
that.
Mr. CONAWAY. Yes, and that number grows. So in addition to these
taxes expiring on their own, the fix on the alternative minimum tax has
got to be removed and/or a permanent fix put in place, which will be
quite daunting for anyone to get done, particularly in a Congress,
which my sense is they would rather increase taxes than deal with the
tough decisions of cutting spending.
Mr. SHUSTER. I thank the gentleman. The last point you make, we
talked about it earlier, I think Mr. Davis brought it up, they
decreased the number of Members of the House that had to vote in favor,
three-fifths down to a simple majority. It seems pretty clear to me
what they are doing.
Over the last 4 or 5 years, 6 years since I have been in Congress, I
haven't seen a budget proposal by the other side that hasn't increased
spending significantly, and there are some estimates that in these
first 100 hours the proposals that they are putting forth over the next
several years are something to the effect of an $800 billion increase
in spending.
Again I think it is quite clear what the Democrats intend to do. We
need to stay together as Republicans and join together with the Blue
Dogs to fight that.
Mr. CONAWAY. Let me add one point to what you just said. The bill we
passed this evening to make the world quote, unquote, a safer place,
which I voted against, one, in my view, of the fatal flaws to that is
we don't know how much that costs. There were open-
[[Page H243]]
ended blank check authorizations in that bill for so much money and for
such time as is needed.
So the first rattle out of the box, the first substantive piece of
legislation that the other side proposed and put forward had these
open-ended spending issues in there. You know, the cost is not
necessarily always the determinative factor, but I grew up in a world
where I had to ask what things cost, and I suspect most folks do. I
factor that into a cost benefit analysis that we all make every single
day.
It is one of those fatal flaws to the very first piece of legislation
that our colleagues on the other side put forward today, of substance.
The rules we did last week, that is one thing. But today's piece,
couldn't score it from CBO. They don't have a clue what we authorized
in terms of new spending, new programs, new dollars that we have to
take away from good hardworking Americans. I appreciate the time.
Mr. SHUSTER. I thank the gentleman. It is discouraging to see the
Blue Dogs here tonight. I think most of them, if not every single one
of them, voted for that program. They were talking about fiscal
responsibility tonight; they have no idea how much it is going to cost.
It is going to be a big cost. They all know that.
But it is my pleasure to yield to the gentleman from Georgia, Dr.
Phil Gingrey, who I know is an old pro at these Special Orders and does
a great job. It is something that I think a lot of Americans, myself
included, as I was growing up, we tried to put this group together as
we talked. We wanted small business people, people from the business
background, to be on the floor.
When you introduce a guy, Dr. Phil Gingrey, and say he is a
physician, a lot of Americans like myself in my younger days didn't
realize a physician is a small business owner. He is a man or a woman
who is running a practice. You call them patients, but they are
customers. But it is a practice, and it is a business.
You have to meet a bottom line, and you have to do what many do, the
plumber, the car dealer or the computer business operator, you are
meeting that bottom line and making sure it is profitable.
Mr. GINGREY. I thank the gentleman. No question about it, physicians
are small businessmen and women. I do feel a little bit like a fish out
of water with the economic competitors caucus. Most of my colleagues
who have spoken here are, indeed, without question, small businessmen
and women, and, in fact, of course, Representative Conaway from Texas
is a CPA.
But as Representative Shuster is saying, physicians are small
businessmen and women. Even a small practice like the one I was in with
the four or five OB/GYN doctors, we probably had 40 employees, nurses,
front office people, lab people.
Bill Shuster is absolutely right: we had to meet a payroll, we had to
provide health insurance, we had to provide benefits. We had to worry
about how we are going to have the money to expand and maybe bring in a
new partner and grow the practice.
My colleagues were talking about section 179 under the IRS Tax Code
that under Republican leadership would increase the amount that could
be deducted on capital improvements, bricks and mortar, putting in a
new X-ray machine, whatever, from $25,000 to $100,000, and to allow
that small businessman and -woman to write off an additional $300,000
worth of capital improvement, investment, job growth, over an
accelerated period of time.
That has, Mr. Speaker and my colleagues on both sides of the aisle,
without question, has stimulated this economy. As I listen to my
colleagues in the first part of the Special Order talking about the job
growth, the unemployment rate, the increase, the amount of revenue,
particularly over the last couple of years, I think we are talking
about maybe an additional $400 billion worth of revenue after these tax
cuts that includes low and marginal rates for every single taxpayer,
the increase in child tax credit from $600 a child to $1,000 a child,
eliminating the marriage tax penalty that Mr. Conaway talked about,
eliminating that death tax.
We have, Mr. Speaker, created 7 million additional jobs since the
spring of 2003. When I first got here in the early part of 2003, for
months at a time I heard my colleagues on the other side of the aisle
talk about, watch, we have lost another 30,000 jobs this month, we have
lost another 40,000 jobs this month. Now they can't say that because I
think we have gone something like 18 straight months with job growth.
But what I do hear them saying is, oh, these are service jobs, these
are minimum-wage jobs. They are not important. I didn't hear that
argument when they were wailing away about the fact that we are losing
jobs.
We could have said, well, these are unimportant jobs, these are
seasonal jobs, these are service jobs. They are not that important to
the economy. They are important to the economy, and they create dignity
of work and pride and an accomplishment, people putting out a day's
work for a day's pay.
{time} 2215
So that is really what we have done here. I think that what my good
friend from Pennsylvania was saying cuts right to the chase: PAYGO
rules as adopted in that omnibus rules package for the 110th Congress
that was passed last week is a recipe for making it easier to raise
taxes and more difficult indeed, Mr. Speaker, if not impossible, to
lower taxes. And that is exactly what these new PAYGO rules do. Because
under these rules, as my colleagues know, you can raise taxes without
any offsetting cut by simply going through this process of
reconciliation and raise all this entitlement spending, and that is
exactly what will happen.
Representative Shuster was talking, or maybe Mr. Conaway, a few
minutes ago about this bill that we just passed in regard to completing
the promises of the 9/11 Commission. It doesn't do that; it is an
absolute farce to suggest that it does. But there is no question that
inspecting every single piece of cargo, every single crate that comes
into this country through a maritime port, can you imagine, Mr.
Speaker, what the cost is? They totally ignored how we are going to pay
for that.
So this PAYGO business, it is not law. It is not in legislation. It
does not have the force of that, and our colleagues on the other side
of the aisle can simply waive a rule any time they want to in term of
PAYGO. So we need to be truthful to the American people.
It has been said during this hour that, in 1960, we had a Democratic
President, President Kennedy, and he cut taxes, and we raised revenue;
President Reagan did it in 1980; and President George W. Bush has done
it in 2001 and 2003. We have not lost revenue because of lower rates
and tax incentives mainly for small businessmen and women; we have
created an additional 7 million jobs. And, yes, they are paying taxes
at a lower rate. Yes, they are getting to deduct certain things to help
them be able to grow their businesses. And so you have a lot more
people, 7 million, indeed who are paying taxes or paying at a lower
rate. But when you crunch the numbers, and I am not a math major, but
that is where you come up with an additional $450 billion. Whereas, on
this static scoring system that we get from OMB and CBO, they say,
well, because you have cut the rate here and you cut the rate there and
you have given $1,000 instead of $600 per child and you are finally
getting rid of the death tax, over 10 years, this is going to cost $1.3
trillion. Well, yes, if it didn't work, it was going to cost $1.3
trillion. But the fact is, it did work. Instead of costing money, we
raised revenue, as Representative Shuster has pointed out.
But I will guarantee you one thing, Mr. Speaker and my colleagues, if
you let these tax cuts expire, and there is no question about the cost
to the American taxpayer and it is real, it will be an additional $2.4
million.
Mr. Speaker, with that I am going to turn it over to the real experts
on business. But I appreciate the opportunity of joining them tonight
and weighing in on this.
Mr. SHUSTER. I thank the gentleman. And as you pointed out, the PAYGO
rules, the decrease from a three-fifths majority to a simple majority
to pass tax increases, that should make every American sit up and say,
my goodness, the Democrats do plan on raising taxes. But if they still
aren't sure about it, I have got just a couple of quotes here.
[[Page H244]]
The incoming chairman of the Ways and Means Committee told Bloomberg
News that he cannot think of one of the tax cuts passed under President
George Bush that merits renewal. He also told the Congressional Daily
when he was asked whether he considered tax increases across the income
spectrum, and his quote was, ``No question about it.'' He said,
``Everything has to be on the table.'' ``Everything'' would mean
repealing the 10 percent low income tax bracket, the child tax credit I
talked about, the marriage penalty, all of which was passed in 2001
and, of course, the death tax. And my good friend from Texas knows full
well what it is going to do to a lot of business owners on Main Street.
We are not talking about Wall Street, we are talking about Main Street
America and in the farms of the Midwest.
So with that, I yield to my good friend from Texas.
Mr. NEUGEBAUER. The gentleman from Pennsylvania is correct. I think
one of the concerns I have about the death tax is, in many cases, it
has the potential to rob some of the smaller communities in America
from some of the mainstays in their community. I think about the farmer
who worked for 20, 30, 40 years putting together pieces of land, making
his operation a little bit larger so that he can compete today in a
global economy and wants his son, our sons to be a part of that
business in the future. But as the gentleman, my good friend Mr.
Conaway, my neighbor to the south, said: Depending on what day he dies,
he may not have any land to leave his sons, or they may have a new
partner.
I do a number of town hall meetings as I travel through out my
district. I have a very large district, 29,000 square miles, 27
counties. And one evening I was talking to a group of citizens in a
little small community, and after that was over, I had a young woman
come up to me and say, ``You know, Congressman, we have had this ranch
in our family for nearly 100 years, and recently my father passed away,
and we are faced with the fact that we may have to sell a part of this
ranch to keep some of it.'' And I think about a small auto dealership
that the founder of that built up over the years, worked hard, paid
taxes already.
I think the egregious thing about this death tax is we have been
talking about the taxes that have been imposed on these small
businesses over the years, and they work hard and in spite of paying
all those taxes, property taxes, income taxes, employment taxes, then
at the end, we say, ``You did such a great job of building that
business, we are going to tax it one more time.'' And in many cases, it
has the potential to put those businesses out of business and take away
in some cases a fairly major employer in that community.
So I think one of the things that we have been kind of saying
tonight, and my colleagues, is that we are at a crossroads here, and we
have some very important decisions to make on behalf of the American
people here for the next few years, and I am concerned, as many of you
are, that some of these businesses, if we don't act in a way to be
friendlier to small business, keeping many of these tax cuts permanent,
and if we don't look at permanently eliminating the death tax, that
again we could really penalize these small businesses.
Mr. CONAWAY. Let me just add a little bit to what my good friend is
talking about.
In 2011, the portion of your estate that is not taxable drops back to
$1 million. You know, $1 million sounds like a lot of money, and it is,
don't get me wrong. I had a staffer the other day who made the comment
that $12 million wasn't much money. And I said, ``Well, who has got a
checkbook?'' So one of them got out a personal check, and I said,
``Tear a deposit slip out of that checkbook.'' So they tore it out, and
I handed it to the staffer, and I said, ``Put $12 million on that
deposit slip.'' And they said, ``Well, it won't fit.'' I said, ``Okay,
well, $12 million is a lot.''
One million dollars is a lot of money. But in today's environment,
with property values having gone to what they are, it doesn't take a
super successful individual to get at that $1 million and much above
that when you add in their house and life insurance and those kinds of
things. So when the other side talks about the death tax, they
typically throw out Warren Buffett or Bill Gates or these other
bazillionaires as examples why we need to redistribute that wealth.
The truth of the matter is this tax hits smalltown America. I was at
dinner tonight with an individual who had some property west of Fort
Worth, west of Aledo, actually, maybe in your district, that 4 or 5
years ago was selling for $750 an acre. And because of the growth in
population, growth of Aledo and other areas, now that land is $46,000
an acre, and so that family has suddenly gone into a pretty good
sizeable estate.
Now, it is their money. They took the risk of owning that property.
They took the risk of trying to make a living off that property, paying
the property taxes year after year after year on that property, and now
the Federal Government in January 1, 2011, becomes a 55 percent partner
in that deal.
This is the one tax that I think is just fundamentally wrong. We are
always going to have taxes collected in some way or another. We have
got to find the minimum amount of money needed to fund the Federal
Government, and that has got to be taxes. But the death tax ought to be
one that we wean ourselves from and get away from it because it is
fundamentally flawed. It is unfair, and it is really one that hurts
small America, and it has generational ripple effects. You and I both
have constituents who tell us time and again they are paying for their
own property a second and third time because when grand-dad died, they
had to borrow money to pay it off. They just got that paid off, and
then their dad died and passed it down, they had to borrow money to pay
the estate taxes, and now they have got it paid off. So that cycle is
just flat out fundamentally unfair.
Mr. NEUGEBAUER. The gentleman makes a great point. Not only does, in
many cases, it affect the families that own that property, but in many
cases, let's say you have got a heating and air conditioning business
here that employs 50, 60 people. And all of a sudden the founder passes
away, and the next day the family has to come and say to these
employees, ``I don't know whether we are going to be able to continue
this business or not because we are going to have to borrow a bunch of
money to pay the taxes.'' And in many cases, putting a bunch of debt on
a new business or even an existing business requires servicing that
debt and has an impact. And so then it is a ripple effect because that
tax base that has been in that community for a number of years is in
jeopardy, and the commitment and the contribution that that small
business has made to that community sometimes disappears.
I think the fact that we said earlier, and I think all of us said,
that America was built by these small businesses, small ranchers,
doctors, entrepreneurs all across this country, we built this country
that way, but we have the danger of tearing it down with a poor taxing
policy.
Mr. SHUSTER. I would like to recognize the gentleman from Tennessee.
Mr. DAVID DAVIS of Tennessee. I think it is vitally important that it
is individuals and small business owners and businesses across this
country that pay these taxes. And I want to put a personal face on
this.
If the majority party allows taxes to be increased, it will cost us
nearly $2.4 trillion in new taxes to American taxpayers. What does that
mean to people across America tonight and the people in the First
Congressional District of Tennessee? It means that there will be 115
million taxpayers who would pay an average of $1,716 more each year. It
means that 48 million married couples would pay an average of $2,726
more every year; and it means that 17 million seniors would pay an
average of over $2,000 more a year. It is real people paying real
dollars, and I hope the people in this body will remember that as we
move forward.
I am disappointed that we changed the rules last week with the
majority vote to decrease the amount of people that it takes to
increase taxes. I think it should have been left at three-fifths, not a
simple majority. I think that was a mistake last week when the majority
party did that. I hope they will protect taxpayers in America over the
next 2 years.
Mr. SHUSTER. I thank the gentleman from Tennessee.
[[Page H245]]
Our time is running out, but I want to just talk about a real world
experience. There is a family, Mr. and Mrs. Smith living in my hometown
of Hollidaysburg or maybe even Youngstown, Ohio, or a small town in
Florida or California; that person, Mr. and Mrs. Smith making $40,000
combined income, if these tax cuts are allowed to expire, they are
going to pay about $2,100 more in taxes a year. And there are some
people in this country who may think that $2,100 isn't a lot of money;
but for that family struggling in Youngstown, Ohio, $2,100 a year, if
you put $2,100 in the bank every year, at 5 percent interest return on
that $2,100 and you invested it every year for 10 years, that turns
into over $30,000. That is a good nest egg for that family to put their
son or daughter through college or pay a good chunk of that if you are
going to a great State school. So these things are serious, they are
real life, and I just want to thank all the Members who came down here
tonight who come from, whether it is a home care business, as Mr.
Davis, or CPA or Mr. Neugebauer being a builder and a developer, myself
running an automobile dealership, people just like us all across
America that have to be concerned about what is going to happen here in
the next 2 years. And all Americans need to understand that they have
to talk to their Members of Congress and put the pressure on them to
make sure that these tax cuts stay in place so that the American people
can keep more of their hardearned dollars in their pockets and they can
spend it as they see fit and not send it here to Washington, D.C. to be
spent by faceless, nameless bureaucrats in many of these agencies.
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