[Congressional Record Volume 153, Number 37 (Monday, March 5, 2007)]
[House]
[Pages H2142-H2149]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE COUNTDOWN CREW: COUNTDOWN TO THE TAX INCREASE BY THE DEMOCRATIC
MAJORITY
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 18, 2007, the gentleman from Pennsylvania (Mr. Shuster) is
recognized for 60 minutes as the designee of the minority leader.
Mr. SHUSTER. Mr. Speaker, we have come to the floor tonight again, my
colleagues and I, to talk about something that is of great concern to
us, great concern to the American people. And that is that, in just
1,398 days, there will be one of the largest tax increases in American
history, over $200 billion, and that is going to occur if the majority
party does not extend the tax cuts that the Republicans put in place in
2001, 2003 and extended some of them in the last Congress.
But that is going to happen. This huge tax increase is going to occur
in America. And the Democrats don't have to do anything but run out the
clock. If they sit on their hands, sit on the ball, we will see, in
1,398 days, as I said, one of the largest tax increases that the
American people will have ever experienced.
Some of my colleagues on the other side have talked about the change
that took place in this body, and there was a change. But I don't know
anybody in America, nobody that I talk to in the
[[Page H2143]]
Ninth Congressional District of Pennsylvania or across Pennsylvania,
that voted to see their taxes get increased.
Over the last several months, over the last few years, several years
actually, we have seen this economy move forward creating jobs. In
fact, over the last 4 years, this economy has created 7.2 million jobs.
{time} 1945
It is because of those tax cuts that we put in place. The
unemployment rate in America is at 4.6 percent. It is the lowest
average unemployment rate in the four decades that we have experienced
over the last three or four years.
Once again, if we don't extend these tax cuts, the American people
are going to see more of their hard-earned dollars being sent off to
Washington. If you look at a family of four that makes $40,000 or so
combined income, has two kids in their family, if we don't extend these
tax cuts, if the majority party, the Democrats in Congress, don't
extend these tax cuts, people in that income range are going to see an
increase of about $2,000 or $2,200 a year.
Some in this body may think that is not a lot of money, but I know to
the hardworking people in central Pennsylvania that earn $40,000 in
income, $2,200 is a lot of money. You can take that money and that is a
nice down payment on a car. You can buy a new washer and dryer machine.
You can save that money for college for your children. If you take that
$2,000 or $2,200 a year over the next 10 years and invest it in a
mutual fund returning about 5 percent income, that would grow to
$30,000 in the next 10 years. That is a significant amount of money to
send your child off to one of the higher education institutions in our
country.
I think that the majority party ought to take a lesson from one of
their own. Back in the 1960s when President Kennedy came into office,
he cut taxes. What happened was that the economy grew and revenues to
the government grew. We look back at history to President Ronald Reagan
in the 1980s. He did the same thing. He cut the tax rates. The economy
grew, it created jobs, and, lo and behold, more revenues flowed into
the Federal Government.
That is again what we did in 2001 and 2003. We cut taxes, and history
has repeated itself. This economy is one of the strongest economies in
U.S. history. We are getting record levels of revenue coming into the
government. So what we need to do is to continue to keep those tax
rates low, extend those tax cuts.
Unfortunately for the American people, and that is one of the reasons
we come to the floor on a weekly basis and talk about this, to make
sure we bring the attention to the American people, make sure they are
aware of what is going to happen, the Democrats, they said it very
clearly in their campaign rhetoric in 2006, that the leader of the Ways
and Means Committee, the new chairman, has said time and time again
during that campaign election that he didn't know of any of President
Bush's or the Republican tax cuts that deserve to be extended.
One of the first things they did when they became the majority party
is they made it easier, not harder, but made it easier to raise your
taxes. When the Republicans controlled the House, we made it the rules
of the House that you couldn't raise taxes unless you had a three-
fifths vote in the House to raise taxes. One of the first things the
Democrats did was to make it easier. They decreased it to a simple
majority to raise your taxes.
They put in place PAYGO. It should actually be PAYTAXGO, because it
is going to make it easier for them. They are not going to touch any
existing programs, but on new spending they are going to have to offset
any new spending; and the way to offset that, the easiest way, is to
increase taxes. I believe, as I believe many Americans believe, that
that is what is going to happen.
The American people need to know this. We hope that people are tuning
in and listening to us as we talk about this. We call ourselves the
Countdown Crew. We are 1,398 days away from this huge tax increase
unless the American people speak up, unless the American people talk to
their elected officials and say they are not going to stand for a tax
increase.
We have created a Web site, and we would love for you to e-mail us
and let us know, give us your story of how the tax cuts, whichever one,
whether it was the child tax credit, or the accelerated depreciation,
dividend tax cuts, the death tax, which one of these tax cuts has
benefited you. We would like to hear your story so we can talk about
it.
There are millions and millions of Americans out there, young and
old, low and medium income, that have benefited by these tax cuts. Our
Web site, I guess it is our e-mail, is [email protected].
Once again, there are some stories tonight. Later on in the evening we
will be sharing with you that people around the country have sent us e-
mails about how important these tax cuts are to them and how
detrimental it will be to their small business or their family or
communities across America.
I am pleased to be joined tonight by one of my colleagues from
Kentucky, Mr. Davis. I yield to Mr. Davis to talk about some of these
issues tonight.
Mr. DAVIS of Kentucky. Thank you, Bill. I appreciate the leadership
you have taken on this issue. The one thing that our group is
consistent in is all of us have come from the small business world. All
of us have come from that arena that creates the jobs in America,
pursuing a vision, pursuing opportunity.
For those who have just joined us, you have joined the Countdown
Crew. You can join us at [email protected]. We have gotten
thousands of e-mails from around the United States based on the first
few evenings that we have been talking about the impact of positive,
progressive, pro-growth economic policies that allow working families
to keep more of what they own and create incentives for small
businesses.
As we go into the time right now, the reason we are called the
Countdown Crew is because of the fact that unless legislation is passed
to extend the tax cuts that have been so bountiful and so beneficial to
the American people, to the United States economy, in creating millions
of jobs, those tax cuts will expire at the end of 2010 and every
working family in the United States is going to receive a tax increase.
And 1,398 days from now, there will be a tax increase on every
working family. A family of four making between $30,000 and $50,000 a
year will have a $2,092 tax increase imposed upon them. That doesn't
come with additional legislation being passed. In fact, the chairman of
the Ways and Means Committee, the gentleman from New York, has said
that he is not going to introduce any tax legislation to extend those
tax cuts and they will expire. So for everybody watching tonight, your
tax bill is going to go up by a minimum of $2,000.
When you think about what that means, let's look at the other side,
the positive side of the Republican policy, the conservative policy of
allowing people to keep more of what they earn.
First, by keeping more of what you earn, it is invested in causes
that are important for you, whether it is put into your home, whether
it is put into your family, whether it is saved for education, whether
it is invested in a new car, in clothing. We can think about any wide
variety of issues, but those are the dollars that fuel the economy.
I believe very firmly we see it in the numbers, that when people are
allowed to keep their own money in the aftermath of the 9/11 attacks by
extending those cuts in a time of war, that we have seen unprecedented
economic growth take place in this country and a recovery that shows
right now industrial productivity, our manufacturing productivity in
the United States, is at an all-time record high, which is an amazing
thing as the United States economy continues to churn along. In fact,
the growth that has taken place in the United States economy in the
last 3 years is greater than the entire economic output of China, which
is the largest potential economic competitor to us in the long run.
The reason that I share this is because it has made a difference in
the lives of ordinary people. When folks are allowed to keep more of
what they earn, they are going to make sure that those dollars are
accomplishing things
[[Page H2144]]
for their family, especially over the long term.
I would like to tell one story as we begin tonight that I think
typifies the success that can be seen by allowing people to keep more
of their own money. As Bill said, this is not a partisan issue. John
Kennedy cut taxes and had economic growth take off and record revenues
come into the Treasury. We have allowed people to keep more of what
they earned, and what happened this past year, record revenues have
come into the United States Treasury. And the real issue is controlling
spending, not taking more of people's hard-earned dollars.
Well, pursuing that vision was something that Bill Shuster has done.
It was something that I did back in the early 1990s starting my
business, helping our manufacturing companies compete and keep their
jobs here in the United States.
One person who I would like to highlight tonight, a man who has
become my friend, but also somebody who pursued that vision himself,
was a man named George Hammond. He runs Hammond's Automotive. He
started with its first operation in Covington, Kentucky, over 20 years
ago. He took that chance that many Americans take to pursue the
American Dream.
He started off with a mechanics shop. The reason that his automotive
shop grew in customers was not by popular advertising, it wasn't by
media, it was by word of mouth, because the character of George and all
the folks who worked with him demonstrated a desire to care for their
customers and to make a difference, and they got more business and they
grew. They opened a body shop.
Suddenly, the things that they began to encounter were the regulatory
system that was increasing costs upon them as they were repairing cars.
But even with that, he continued to grow beyond the impact of the
regulatory system, hiring more people.
As a result of the tax policy that has taken place over the last 6
years, where people are allowed to keep more of their own money, unlike
sending it to bureaucrats in Washington, D.C., where we may not know
how it is going to be spent, George took that and he reinvested it. He
reinvested it in his people, in training, and most recently opened
another business in Burlington, Kentucky, moving out into the suburbs
from Covington where he is reaching more and more people, all by word
of mouth, and there a following that is going with that.
But I don't know what would have happened to George Hammond if he did
not have that flexibility, if he had the tax increase that is coming
down the road at the end of 2010, in 1,398 days. He probably wouldn't
have had that opportunity to grow his business and create that
opportunity.
But instead of raising taxes, we have created taxpayers with this
policy. This is a family-friendly policy. That is a policy that allows
people to pay for college tuition. It allows them to invest in their
children's future. And for George Hammond, not only did it benefit him,
but it benefited all of the employees, now going into a second
generation of employees with three different business units that are
creating jobs, creating a future for folks right there in Boone County
and in Kenton County, Kentucky.
Mr. SHUSTER. How many people does George employ?
Mr. DAVIS of Kentucky. It is a typical small business where he has
over 25 employees.
Mr. SHUSTER. That is small business personified, that 25 people.
Those are the kinds of stories that I think we need to bring out.
Mr. DAVIS of Kentucky. I think the one thing that he has experienced,
too, the discussions that we have had when I have taken my F-250 pickup
truck in or our Chevy Astro van to get worked on, the one thing we talk
about is health insurance. And I remember as a small business owner
having to deal with the issues of the high cost of health insurance,
dealing with tax policies. He has gone the extra mile to help his
people, probably similar to some the experiences that you have had.
Mr. SHUSTER. Absolutely. I didn't mean to interrupt you, but I just
wanted to know what size business that was and make sure the American
people know that we are talking about people in their neighborhoods, in
their communities, that employ 25, 30, 50, 100 people and that start
from small and turn these enterprises into successful businesses. In
most cases, my experience has been those small business owners, they
are the backbone of the community. They are the ones that give to the
local little league team. They are the ones that contribute to the
hospital and the hospital boards. They are the ones making sure their
communities are wonderful places to live, or are helping to make sure
they are wonderful places to live.
Mr. DAVIS of Kentucky. I think that is a great point. George is an
institution in the community. The one thing is that his attitude toward
service has spiraled down to his employees, to their vendors, and that
kind of dedication and devotion is I think not necessarily found in the
very large corporations that are out there. It is those small
businesses, like you say, that are connected.
For those folks who are watching, we invited you to join the
Countdown Crew. You can contact us at [email protected]. We
encourage you to tell us your stories, your thoughts, your desires for
policy.
In particular, what we are seeing over and over again in hundreds and
hundreds and hundreds of messages that are shared back to us is the
impact of a positive economic policy that allows people to keep more of
what they earn. What we have coming, if we don't take action, if the
House doesn't pass legislation by the end of 2010, every working family
in this country is going to have a $2,092 increase. So many benefits
are going away.
What we want to do is keep positive policies that empower people,
create jobs, and create a future.
With that, I yield back to the gentleman.
{time} 2000
Mr. SHUSTER. As soon as next week, the Democratic majority will be
introducing their budget. It is my guess that they are going to spell
out exactly how they are going to increase taxes on the American people
to pay for that budget. They are going to have a choice. The choice is
going to be either to continue the tax policies which have resulted in
record job growth, 7.2 million jobs over the last 4 years, 40 quarters
of an expanding economy; or they are going to choose to put the brakes
on the growth of this economy by raising taxes.
I am going to predict tonight that if they decide to choose to raise
taxes, which all indications lead me to believe they will, the brakes
will go on this economy in very short order.
One of the important reforms that we as Republicans made when we were
in the majority was to reduce the taxes on dividends and capital gains.
In past history, dividends and capital gains were sort of viewed as
only the fat cats in society, only the wealthy get to benefit by a
reduction in taxes on dividends and capital gains. But that is not the
case today.
Over 60 percent of the American population is invested into mutual
funds and the stock market, into various other financial vehicles. It
is widespread in the economy who invests and who can benefit from a
decrease in the tax on dividends and a cut in the tax on capital gains.
Prior to 2003, tax cut dividends were subject to individual income
taxes up to 38.6 percent on top of corporate taxes of 35 percent. It
was double taxation. The corporations in America that you invested in,
if you invested in General Motors or you invested in Wal-Mart and they
made a profit, they got hit with a 35 percent tax increase, and then
they paid out their dividends to the millions of people from all walks
of life who invested in those corporations, and the dividend, it was
hit at a tax rate of 38.6 percent or below. Among developing countries,
only Japan has had higher tax rates on investment income than us.
In 2003, the top individual tax rate on dividends was cut by more
than half down to 15 percent. Starting next year, there will be no
dividend tax at all for lower income Americans which is absolutely
essential to continue growth in this economy.
In addition, capital gains tax increased, with the top rates on long-
term capital gains dropping from 20 and 10 percent down to 15 and 5
percent. The 5 percent rate will drop to
[[Page H2145]]
zero next year for those in the bottom two tax brackets. Again, for
families in the middle and lower income that have investments, they are
not going to be taxed on those types of investments, or it is going to
be significantly decreased.
Those lower tax rates have promoted a strong and growing economy, and
has created 7.2 million new jobs. Our job creation in the last 4 years
is greater than the European Union and the Japanese economy combined.
This has been an economy that has grown strong and created millions and
millions of jobs.
Again, if the Democrats fail to extend the tax relief, in 2010, those
rates will return to where they were before we lowered them, and the
American people are going to experience significant tax increases.
Because seniors rely on income from investments, they have benefited
greatly from those lower taxes. That is why it is important. They are
one of the key groups in our economy that have benefited by it.
The Treasury Department has estimated that 8.5 million seniors saved
an average of $1,144 on their 2005 taxes as a result of lower rates on
dividends and long-term capital gains. And $1,100 goes a long way
towards buying something new for your home, whether it is a washer and
dryer, or whether it is a senior giving it to their grandchildren to
help them out as they make their way in the world and go to college and
try to get an education.
According to the Tax Foundation in an analysis of IRS data, more than
half of all taxpayers over the age of 65 received dividend income in
2004. Over half of the folks over 65 years of age are receiving
dividend income. That is double the national average for all taxpayers.
Seniors also rely upon capital gains income. That same Tax Foundation
report found that while nationally less than 13 percent of taxpayers
claim capital gains income in 2004, that figure cost 30 percent, a
third for taxpayers between the age of 65 and 74, and more than 27
percent for those over the age of 75. Seniors benefit greatly by the
dividend and capital gains tax cuts.
On May 10, 2006, Flora Gramma Green, a national spokeswoman for the
Seniors Coalition, described the importance of lower dividend tax rates
for seniors living on a fixed income. She said, ``When I planned for my
retirement, I needed the dividend income just to have a secure
retirement. I am not wealthy. I worry every day if I will have the
money to buy the gas I need to get to the doctor, I worry if I will
have the money I need for proper nursing care as I get older, and I
worry that the monthly income I plan for will stretch far enough each
month to let me pay my bills. The millions of fellow seniors who
benefit from this tax reduction are in the same boat I am in. We need
this tax break just to continue the safe and secure retirement that we
planned for.''
Those are the words of a senior who is certainly involved in the
fight to continue to keep these tax rates low, to see that the tax
rates are extended so that in just 1,398 days, which will be January 1,
2011, which is a short period of time away, we will see this $200
billion tax increase, and it is going to cut across all income
spectrums, from low income to high income.
These folks are going to have to send more of their money to the
Federal Government and not be able to put it back in the economy,
creating jobs in the most efficient way that an economy can create
jobs.
Mr. DAVIS of Kentucky. One thing I would highlight, a few examples to
share just from back in our district, and feel free to jump in with
your experiences from Pennsylvania, growing up in the Ohio Valley and
seeing our industry having problems competing, I know one of the
choices I had when I left high school was to go in the mills or go in
the military. I am so glad I went in the military because when I came
back years later, those mills were gone. The environment had changed
dramatically, and expectations had changed dramatically.
The people who are allowed to keep more of what they earn are going
to invest it locally and invest it in their family. As our dollars stay
in our community, there is going to be increased opportunity.
In northern Kentucky where I live, in Kentucky's Fourth District,
which runs on the south side of the Ohio River, right across from
Cincinnati, we have one of the largest air hubs in North America, the
Cincinnati-Northern Kentucky International Airport. Being in Kentucky,
we are very proud of the fact that Cincinnati's airport is located in
the great commonwealth of Kentucky, but there is a story which affects
the Tristate area in a profound way that has taken place over the past
couple of years.
Delta Airlines, one of the great flagship carriers of this country,
has a major international hub located there. They also have a home
grown regional carrier, Comair, which started out as a small commuter
airline, which has grown into quite a presence.
They have gone through a very, very tough time over the past several
years, since 9/11, dealing with the fluctuations in fuel prices and the
issues of security costs, the challenges that have been faced in the
economy turning around. The tax cuts that have been so beneficial to
America's families that have created 7 million new jobs, that have
allowed people to keep more of what they earn, on average between
$2,000 and $3,000 per family in this country, has had a direct impact
on this company.
The reason I want to highlight Delta and Comair and all of the
businesses in our region, they have gone to great lengths to sacrifice
and do something different than other airlines have. Rather than
cutting their pensions for the expediency of institutional investors on
Wall Street or other creditors, they worked with their creditors and
all of their vendors not only to keep the airline going at a world
class level, but to make sure that they kept their benefits and pension
plans in place for their employees.
The commitment of the employees have been so great through all of
this. Many of them have made tremendous sacrifices. The one thing I can
see is that these employees who are making 40 percent or less than what
they were making 1 year ago, 2 years ago, are now suddenly faced with
not only having substantial reduction in their income to keep their job
moving, but, in 1,398 days, according to this regressive policy, they
are going to have an additional $2,092 on average added on top of those
families.
I think it is entirely unreasonable because the impact can ripple all
of the way across the economy, not only in terms of demands on those
families, but the consuming families, some of the ways people spend
that money, is travel. They travel for business. They buy products from
companies that fuel that business travel economy. One of the great
gateways to Florida, people traveling to vacation in the south from
different parts of the United States, are flying on low-cost fares from
Delta through Cincinnati and other gateways in the region. And that
$2,000 on average per family will have an impact on that aspect of the
economy, too.
You might ask, why are you bringing this up? Our economy is so
complex, so interconnected, we are so interdependent on one another, by
having a significant impact on one side will eventually have an impact
on the other side. It is kind of an economic butterfly effect, not in
the extreme like the proposition in chaos theory, but it will create a
lot of chaos in our economy.
Another benefit I will share, I have a very good friend who is head
of the Manufacturers Association, a committed, small business community
executive, named Rick Jordan, who is chairman of the board of our
Gateway Technical Community College which focuses on advanced
manufacturing and information technology education to train our next
generation workforce.
He is also the president of LSI Industries, which does extremely
innovative engineering for lighting systems and retail display systems.
One of the companies that has been driven by an increase in consumption
in a very literal and physical sense is a big client of theirs, is
Dairy Queen. Because people have had a little more discretionary
income, they are able to meet their needs, and they want to take their
family out for that treat, that hamburger, that ice cream. It just
doesn't end there. When they hit the drive-through and they get that
Blizzard for their kids, then it starts through the supply change and
works its way back.
[[Page H2146]]
LSI, being one of our premier businesses in the Cincinnati-North
Kentucky area, has their employees manufacturing all of the signage for
all of the Dairy Queens in this competitive environment in the entire
country. They won that contract because of the increased growth that
has taken place when, over the last 4 years, when the full impact of
this positive tax policy has been felt.
As we share other stories, I think those are two, one from
manufacturing, from the leisure industry, from transportation, from the
restaurant industry, which show this connectedness.
Mr. SHUSTER. Mr. Speaker, I don't want to mention his full name, but
I had a conversation with a gentleman today who is a local businessman
and employs about 120 people in one of my counties back in
Pennsylvania. I am just going to call him Harold. I had a conversation
with Harold on the phone today, and it was about the negative impact of
these tax increases if we don't act on them.
As I was talking to Harold, he has been in business. Actually, his
father started the business. Harold has been in it for 40 or 50 years.
They started out with a couple of dump trucks and a bull dozer. Today
they have a tremendous amount of equipment. They are an excavating
business. They employ 120 people. But Harold's wife, Delores, just had
a health scare, and so Harold has been looking at the business and what
would happen if he were to pass away.
He said, you in Congress need to pass the death tax because if you
don't, if I pass away, it is going to cost his children millions, up to
several millions of dollars in taxes that they are going to have to pay
in Federal and State tax, mainly Federal tax, to keep the business. He
said, my children won't have access to that kind of cash, so they will
have to liquidate the business if I were to die.
There are thousands of stories like that across America, that we need
to make sure that we are extending the death tax and making sure that
small-business owners like Harold and Delores, if they pass away, that
their children will not have to liquidate a business because you have
120 families that they employ making a good living, living in rural
Pennsylvania, that are potentially not going to have jobs if that were
to happen.
Also, something that I think is important, as you mentioned, you were
a small business owner, and I was a small business owner before I got
here. Harold is the kind of guy in Pennsylvania, he is one of the
pillars of the community. He is the guy that is always contributing to
the community, giving back, whether he is on the hospital board or the
economic development board. He is the guy making sure that he is
contributing to the local Boy Scouts, to the Little League, making sure
that the firemen have money, that he is supporting their efforts to
raise money as they struggle to keep their ambulance and fire service
going.
Those are the kinds of people, small-business owners, that have been
in business for many, many years, that give back to their community,
give back to their community and give back to their community.
{time} 2015
Those are the kinds of people and those are the kinds of communities
that are penalized with a tax like the death tax that would cause a
business, one of the pillars of the community, to have to liquidate to
raise the money to send it down here to Washington, to come into the
Federal Treasury, and it would go out again probably 50 percent or 60
percent less of what came in. It would be less efficient than Harold
being able, or Harold's family being able, to give back to the
community and get the most impact out of a dollar.
Again, those are the kinds of people. I had a lunch with a gentleman
in a similar business as Harold, gentleman by the name of Dave I will
call him, who is the same type of person, started a business, told me
about growing up on the farm in rural Pennsylvania, saying he did not
have any money; he did not know any better. But he started out a with a
flatbed truck hauling coal from the coal region of northeastern
Pennsylvania back down to central Pennsylvania. That is how he got
started, and today he has 200 employees, three different businesses,
and is another gentleman who gives back to the community again and
again and again.
That is what we are talking about. That is what makes America great,
coming from a poor farmer to a prosperous business owner and a pillar
of the community. Again, that is what makes America great. These are
the kinds of people all across this country we have to make sure that
we are not penalizing for being successful.
I yield back to the gentleman.
Mr. DAVIS of Kentucky. I think you have hit the nail right on the
head there, and for those who just joined us, you are watching the
Countdown Crew. You can contact us at [email protected]. We
come to the floor the first night of every vote to talk about the
positive impacts of tax policies that let people keep more of what they
earn, keep more of what they own by default, and ultimately create the
jobs and create a future for folks here.
Most folks do not realize that with the vote that took place,
changing the House's Congress in 2006, put us on the clock for a tax
increase that will come. The chairman of the Ways and Means Committee,
the tax-writing committee in the House, has said that there is no tax
cut that he sees that is worth keeping.
I think that shows a blindness to the dramatic economic impacts that
have hit where we are at all-time manufacturing productivity and all-
time low unemployment that is remarkable in these times, that we have
created 7 million new jobs. What is going to happen in 1,398 days is a
tax increase that will hit the average working family in this country
with a $2,092 tax increase, and that will happen without any
legislation being introduced.
The way the prior tax cuts were drawn, we would extend them every 2
years. That extension right now appears to not be happening. On behalf
of the Countdown Crew, we would encourage you to write your Member of
Congress to encourage your Member for the district that is represented
by you watching at home to make sure that those are extended.
More than that, we would like to hear your stories, if you would send
to us [email protected] and tell us what you have done with
that additional money. We have heard stories of folks who have been
able to meet personal needs, start businesses and create jobs. The goal
of a constructive government policy related to revenue is not to raise
taxes, not to create taxes for their own sake, but to create taxpayers
to have an empowering policy that lets people work, pursue their
vision, and pursue opportunity in the long run.
Probably one of the most interesting stories that I can share I think
has a little bit of humor in it. If we go to a shopping mall in the
United States right now, you can look out and see there is always a
group of kids somewhere in the mall, the Goth group, that is dressed in
black, black shirts, black shoes, black pants, black hair, black
garments that they will have on them.
There is a little secret that I will share with America's youth and
the Goth movement tonight. The color black, the person who owned the
patent on the color black comes from the Fourth District of Kentucky. A
brilliant chemical energy engineer named Bill Stoeppel some years ago
discovered that there was a real problem in manufacturing waste in
paints and in dyes for clothing and paint for the automotive industry.
He developed a unique solution dispersion to carry the graphite that
would be that color black. He named his little company Solution
Dispersions. He took the idea from the experience that he had. He ended
up buying a company that at one point he worked for. He started another
facility in this business and it grew. He had an exclusivity, made a
very, very small profit on processing this graphite for the large
coatings and coloring companies that support our manufacturing industry
around the United States.
Right there, in Cynthiana, Kentucky, is the headquarters of the color
black. The reason I bring that up is there is one person, one man, who
has created hundreds of jobs in different parts of the country and also
is fueling a supply chain at a reduced cost to be able to compete not
only domestically but
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internationally as well, with strong and high-quality products.
He did not just stop there and bury his money in the ground. The
profits that he made he reinvested in his community. He was one of the
people that you had alluded to earlier when you talked about Harold.
Well, Bill was one of those pillars of the community that worked with
the hospital and the school system, was somebody that was active in the
Rotary Club, made sure that the hospital board had resources and
assets, and he also invested back in the land, a personal love of his.
He was ranching quality, very high quality grade, again creating more
jobs and opportunity and participating in the consumption economy.
Many of those opportunities literally have the chance to go away on
December 31, 2007. When we talk about tax policy, oftentimes there is a
misnomer, this class warfare idea, that it is always the super-rich who
get off or the rich who get off and do not pay their burden, that it is
always unfairly pushed down on working families and on the poor.
The truth of the matter is with these tax cuts the ceiling was
actually moved up. The burden was moved up. Millions were taken off the
tax rolls. A new tax bracket was created for 10 percent which will
disappear, a transitional tax bracket for those who were coming into
the workforce, who are moving upward.
There is a $1,000 child tax credit that is coming. Just in my family
alone, when that went from $500, and that was set a long time ago when
$500 had a different value in the economy than it does now, to $1,000
that made a difference. Patty and I have six children. Right there that
is a $3,000 tax increase to my family that will take place at the end
of 2010.
The marriage penalty is going to be restored, and I think practically
the one thing that we must do is make sure that we have policy that is
friendly to families, that encourages jobs, and encourages and
strengthens the family. By putting the marriage penalty back in place,
it actually makes it more profitable to be single, and I think that
flies in the face of our American values here.
You mentioned the estate tax earlier. It is a pernicious tax that
confiscates money from families once that money has already been taxed.
It is not the super, super-rich of the world, the Bill Gateses of the
world, the multibillionaires of the world. They are not the ones that
are going to have to worry about paying that. It is the small business
owners who have capital-intensive businesses. It is going to be
farmers, small manufacturers that have the most dramatic negative
effect from that.
We had one took place in my county that is a perfect example of this,
a farmer. When the patriarch died, they did not understand. They loved
farming. They wanted to focus on that business. They did not understand
the impact of an estate tax, having a farm in a growing county with
appreciating real estate values. Because they had gotten some
incomplete legal advice, they came to find out that they literally were
going to have to sell half of a farm that had been in the family for
five generations because they wanted to keep farming just to pay the
tax bill. I think that flies in the face of American values. It flies
in the face of creating opportunities.
Mr. SHUSTER. Absolutely. You talked earlier about the stories that we
want to have sent to us, talking about real-life stories out there in
America, how these tax cuts have helped them or what they are feeling
in the economy or what they are feeling about their government. You can
e-mail us at [email protected]. That is
[email protected].
I received an e-mail, and I wanted to read some of it to you. It is
from Kent Berry, who is a small business owner from Gravel Ridge,
Arkansas. I have never been to Gravel Ridge, Arkansas. It is about 15
miles north of Little Rock; and over the past months, Kent has been
watching us.
Kent says he is swamped by Federal tax regulations which are driving
him down. He goes on further to say: ``More and more I feel that the
deck is stacked against me. I witness so much nonproduction being
rewarded with money which I had to struggle to remit. I'm beginning to
feel that the American Dream is an optical illusion. I'm starting to
envision the American Dream a lot like the carrot and stick. I keep
pressing but it ain't gettin' no closer.''
Kent continues: ``I'm no constant agitator or perpetual malcontent,
but I do enjoy C-SPAN and I did hear your e-mail address several times,
and I'm writing to say that I'm struggling here.
``Government, like a lot of things, is a good thing. But like all
good things, moderation.''
And as Kent points out there, he is struggling out there because he
has got a small business. He works hard to earn the money that he
earns, and then he has to turn around and pay a tax bill that is bigger
than he can probably handle. If we do not extend some of these tax
cuts, the tax bill is going to be even greater for Kent.
I know his story and his feelings are like millions of Americans out
there that want to make certain that if they are going to invest their
capital, if they are going to invest their blood, sweat and tears into
a small enterprise, that they have the ability to get a return, that
they have a ability to save some money, that they have an ability to
make sure that their family lives a little better life than they have.
This is the American Dream, as we have talked about a couple of these
folks from your district and some from mine, that they start from
meager beginnings and with hard work, with ingenuity, they grow a
business and become significant parts of their communities, giving back
to their communities. Those are the types of people that we want to
make sure that they are not penalized, that they are not driven out of
business because they have to have some big tax bill when they pass
away, you know, whether it is taking that money and investing it into a
mutual fund so they can get a nice dividend back and they are not
overburdened with taxes, whether they take their company or their
business or their property and sell it and do not have an oppressive
capital gains tax.
As you mentioned, most Americans do not take the money and bury it in
the backyard. They put it back into the economy. They invest it in a
mutual fund. They invest it into another business or a property that
builds something, but that money goes back into the economy to create
jobs and to hopefully when they invest that money create a return for
them so they can continue to live a good life.
Again, through my district, there are a number of people. I have
mentioned the name before, a B.C. Stone, another one of those
operations started out in a garage. I visited with those folks about a
week or so ago. They started out in a garage and today with a couple of
employees, and today they employ 70 people. Their business is
prosperous. It is growing over the last 4 years, and Travis Collins,
one of the owners, says it is directly because of the various tax cuts
that we put in place. The economy is moving, booming, and so his
business right along with it.
As I mentioned before, he has taken on an old hotel in my hometown of
Everett, Pennsylvania, an over 110-year-old hotel, and he is restoring
it and turning it into a 12-bedroom hotel with a first-rate restaurant
in it. By doing this, he hopes he is going to make some money, but he
really wants to give back to the community and this beautiful, small
town that he grew up in and this hotel, quite frankly, was dilapidated.
He is putting a fresh face on it, and he is going to try to attract
people to come into the community, to spend money through tourism.
Again, these are the kinds of things that happen when you allow
people to keep more of their own money. They invest it, they grow their
business, they try to create jobs and make their communities better
places to live and to work.
Mr. DAVIS of Kentucky. One of the things that relates to that, too,
is that money just does not end at the personal savings account or even
at the grocery store, the auto shop or dealership, or the Dairy Queen
for that matter, as we mentioned earlier.
There are others who are very, very dependent upon the benefits, the
profits of these small businesses, the revenue from salaries, from jobs
that are created, and that is all of our public servants.
I have a daughter who is now doing her student teaching practicum.
She is
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getting ready to go out and become a public school teacher in our
district. Her salary ultimately is paid by the salaries of those who
are employed, who own houses, who have jobs, who can contribute to the
payroll tax in the community. Our policemen, our world-class law
enforcement that we have, is funded. All the training that they receive
is funded by taxpayer dollars that come from folks who are out in the
economy, who are in jobs that are creating that value. They are
creating that tax revenue that comes into the government, that pays for
them. We have to make sure in order to keep them strong and to keep
them well-funded we have to have a robust and strong economy.
{time} 2030
The key to keeping those services world class, whether it is in
education, whether it is public safety, whether it is even funding our
military at a Federal level; a strong and robust economy is critical to
that in the long run, because the entire supply chain, the entire chain
of individuals is interconnected. We are in a society, in an economy,
where everybody is connected, one to another, in some way. It is not
just a circle of folks that we interact with, but it is those that we
interact with. That chain moves on and on throughout the entire
economy, rippling back and forth in a very positive way, in all,
ultimately, being very beneficial.
I have two friends who are in the insurance business. Ironically,
they are both not only good friends and strong supporters of mine, they
are extremely active in the community. I think the only place that they
are not working in concert together is with insurance offices. Bob
Boswell and Bob Kelly of Florence, Kentucky, are literally across a
mall road together.
But they get along well together, they work together on projects to
benefit the community. They see it firsthand, introducing folks to
financial planning. As they are trying to build a future, they are
trying to look to the future for retirement savings. My friend, Dale
Viniard, who is an insurance agent in Crestwood, Kentucky, was one of
the very first people that Pat and I met when we moved to East
Crestwood, Kentucky, at the opposite end of the district, experiences
of people having a concern over their ability to provide for their
family and the future, having that ability to make sure that they can
have a job, make an income and ultimately have some type of retirement,
build that nest egg.
When you touched on the impact of the capital gains tax earlier, I
think it's a huge, huge issue, because the majority of Americans now
don't have these defined pension plans like somebody might have gotten
50 years ago, working for the large automotive company. Because most
people are coming out of the small business world that creates 88
percent of the new jobs in this country. Their retirement plans are
going to be in some form of deferred compensation of 401(k). Some type
of retirement savings are diversified, spread over different types of
investments. In most cases, they will have some degree of control over
that.
Just the change in these taxes could have a dramatic impact on senior
citizens. They could literally see their tax burden double overnight
when they seek to access their retirement funds just to live.
Again, once that money comes out of the economy, it is not creating
jobs. That investment is there; not only is it benefitting them, but it
is creating jobs for the future.
Mr. SHUSTER. Just in our closing minutes here, I want to reiterate,
first of all, say we have been getting up here for the last several
weeks talking about the coming tax increase, unless Congress and the
Democratic majority acts, which will occur in 1,398 days, which will be
January 1, 2011, and that occurs in 2008, some of the taxes, if they
are not extended, will expire, 2009, 2010. Again, we want to hear from
citizens around the country that have benefitted by these tax
increases, tell us your story about your small business, how it has
grown or how you started it.
You can get those stories to us at the [email protected].
We want to hear those stories. Again, I want to close with just talking
about what's going to happen with the dividend and the capital gains
tax cuts if we don't act.
January of 2010, those rates will go back up. As I mentioned earlier,
when folks think about those dividends, whether you have a mutual fund,
you have an IRA, you have a 401(k), you have some pension fund out
there. By and large, if not all of them, almost every one of them, is
dependent on investments to put income in and pay out to the
beneficiaries.
Prior to a 2003 tax cut, dividends were subject to an individual tax
rate up to 38.6 percent and on top of a corporate tax rate of 35
percent. Those types of rates are coming back unless this Congress and
unless this Democratic majority acts. In 2003, the top individual tax
rate on dividends was cut by more than half, down to 15 percent; and
starting next year, that dividend, no dividend tax on income, on lower-
income Americans. That is substantial.
In addition to capital gains tax decreased with the top rates on
long-term capital gains dropping from 20 and 10 percent down to 15 and
5 percent, and, again, the 5 percent rate will drop to zero next year
for those in the bottom two tax brackets.
If the Democrats fail to extend this tax relief, again, in 2010, they
are going to come back, and anybody out there in America that is
retired, anybody out there, as I said, that has a 401(k), a mutual
fund, they are going to be taxed at a higher rate on those
dividends. So it is important that we act. That is, again, why we come
to the floor once a week and remind the American people that this tax
increase is coming.
You need to talk to your Member of Congress. I do not believe that
anybody in the November elections voted to increase their taxes, and
your Member of Congress needs to hear about it. We have to stop it
because we want to see this economy continue to grow and to prosper.
Does the gentleman from Kentucky wish to close? The gentleman from
Texas arrived, too.
Mr. DAVIS of Kentucky. Thank you. For those of you joining us at the
end here, you are with the [email protected]. Our motto is
create taxpayers, not taxes. We want to allow you to keep more of what
you earn, because when your dollars are in your pocket or in your
community, it is creating America's jobs and advancing the economy.
One person who has joined us tonight is a former certified public
accountant from the great State of Texas, and his name is Mike Conaway.
We have worked together on numerous issues in the committees, and I
think that he would like to share something for a couple of minutes
here.
Mr. CONAWAY. Just to set the record straight, I am still a CPA. I am
keeping my license current,
Mr. DAVIS of Kentucky. We were hoping you were a recovering CPA.
Mr. CONAWAY. Because, as you know, I am only one election away from
being back in public practice. So maintaining my credentials that I
have used for 30-plus years is important. Part of that work I did was
with taxpayers, folks who actually make money and then pay taxes on
that money.
There is nothing inherently moral or immoral about a tax rate. The
number in itself is not magic. We have gotten ourselves into a real
ugly box in comparing or contrasting or linking spending issues with
particular tax rates. In my view, those are entirely two different
issues all together.
We ought to determine what we ought to spend and what that
appropriate amount is and then figure out how to collect the minimum
amount of taxes needed to spend that. To the extent we try to link tax
cuts on one type of a taxpayer to spending in other areas is a false
argument. It is a straw man that is irrelevant in the grand scheme of
things. I can assure you that the Federal Government's accounting
system does not put cash from this particular tax rate into this bucket
that is only spent on welfare; from this tax rate into one bucket, only
goes in the Defense.
Cash is fungible. I think we should reformulate the debate away from
this idea that there is some link between the specific tax rates and
specific spending issues, because I believe that is just a false
argument, and it leads us down a bad path. Let's focus on what we ought
to be spending in a variety of
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areas, whether it is defense or health care whatever it might be, let's
figure out what the right amount is for that area. Then let's look for
a system that allows us to collect that in a straightforward, easy to
comply with, fair basis. I don't think our current Tax Code meets any
of those criteria.
I have made a living for a long time helping people comply with the
complexity of it. You know, a lot of my colleagues are in the same
boat. But this current system is unworkable, and it leads us down the
wrong path.
As you have mentioned, we are now under 1,400 days away from the
largest tax increase America has ever seen with the expiration of the
current tax rate and the current tax schemes as it relates to the death
tax.
We don't know if those are the right ones or not, but they are the
ones we have got. The ones we have had in place since 2001, I think, in
no small part have contributed to the growth of this economy, have
contributed to taxpayers being able to have more of their own money, to
put that investment back into their families, businesses and other
things. The current tax rates are working, and to the extent that they
expire and have automatic increases is unfortunate.
I understand we are about out of time. I appreciate getting to join
you late in the hour.
Mr. SHUSTER. We certainly appreciate you coming here over the past
several weeks. It is always good to have a CPA on the floor to be able
to correct us when we spout off a number that is not quite accurate.
You have been able to do that a number of times with us. We appreciate
it.
I just want to point out again to people that may be watching
tonight, such as a CPA, a small business owner. I was a small business
owner. We all have children. Your children, I know, are grown now.
Mr. CONAWAY. Grandchildren.
Mr. SHUSTER. But it is important in America that small business
owners and families are not burdened with these heavy taxes. We have to
keep them low.
I think the gentleman from Kentucky might have a final passing word.
Mr. DAVIS of Kentucky. I want to thank everybody for joining us. For
those of you who are regulars and are corresponding with us, we
appreciate your joining us and contacting us at
[email protected].
We believe that the key is not raising taxes; it is creating
taxpayers to project economic growth and opportunity for the future.
Our backbone is of small business owners that have created the jobs,
created the vision, have created the innovation that have help make
this country great. We want to continue standing by you and the working
families of America.
With that, Mr. Speaker, we yield back the balance of our time.
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