[Congressional Record Volume 158, Number 60 (Wednesday, April 25, 2012)]
[House]
[Pages H2108-H2116]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
GOP FRESHMAN CLASS ON COMPREHENSIVE TAX REFORM
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 5, 2011, the gentleman from New
[[Page H2109]]
York (Mr. Reed) is recognized for 60 minutes as the designee of the
majority leader.
Mr. REED. Mr. Speaker, I rise tonight to join here this evening with
six or more of my colleagues from the freshman class to talk about a
very important issue that we face in this Nation, and that is the need
for our country to engage in an open and honest debate about
comprehensive tax reform as we come to the end of the year with the
expiration of our individual tax rates, our corporate tax rates, and
the potential exposure of the estate tax being reinitiated at levels
that would decimate family farmers and families across all of America.
I am pleased to be joined by so many of my colleagues who understand
the importance and the critical nature of this issue to put us on a
path to make America competitive when it comes to the world economy,
and also to come up with a Tax Code that is simpler and easier for
people to understand and that we don't have to spend thousands of
dollars, hundreds of dollars, paying advisers to fill out forms just to
meet the obligation of a tax burden that is out of control because of
spending that is completely causing this Nation to create a national
debt of $15.6 trillion. As we go forward in this conversation, let us
be open, honest and fair about the issues before us.
With that, I would like to yield, Mr. Speaker, to a good friend of
mine from Georgia.
Mr. AUSTIN SCOTT of Georgia. Thank you. I will tell you the key to
this is open and honest debate.
We hear a lot from the President and from Democrats today about
America's millionaires not paying their fair share. And they, quite
honestly, quote Warren Buffett and talk about the Buffett rule. And
certainly I'm happy that Mr. Buffett lives in a country like I do where
he's able to achieve what he has. But Warren Buffett is a billionaire,
not a millionaire.
Now, let's talk about who America's millionaires are. In my part of
the country, farmland sells for about $3,500 an acre. So if you own 285
acres of land that you farm, you're a millionaire. In other parts of
the country, it may sell for as much as $15,000 an acre. And if you're
a farm family with 66 acres, that's one of America's millionaires.
These are hardworking, middle-income Americans who have saved all
their lives to pay for the farm. We need to work to protect these
family farms so the next generation can carry on their legacy. We hear
a lot about that--protecting the American farmer--from the other side
of the aisle. Yet they propose tax policies that do the exact opposite
and very much would destroy our agricultural industry and the safety
net that it provides this country.
{time} 1740
In fact, if you follow their tax policy, America's farmers will
simply be another statistic. What statistic? As it stands today,
approximately 30 percent of family businesses will be passed on to the
family's second generation--only in America--12 percent will make it to
the third generation, and only 3 percent of all family businesses make
it to the fourth generation or beyond. For a family farmer, for a small
business owner, that's very disheartening. However, if the President
has his way, those percentages will be even lower.
On January 1, 2013, the death tax will rise from the dead again, re-
ordained by President Obama, and return with a rate of as much as 55
percent. Again, in my part of the country, a middle-income family
farmer in my part of the country who owns more than 285 acres of land
could be assessed a death tax of as much as 55 percent of what they try
to leave to the next generation. That's what the President defines as
the family farmer's ``fair share.''
Mr. Speaker, family farms are a significant and reliable food source
for our country and the world, and they play a vital role in our
Nation's national security. However, under the President's death tax
proposal, family farmers will be forced to downsize their operations
chunk by chunk, selling their assets to pay for what amounts to nothing
other than the seizure of the family farm. Many may shut down and have
to sell everything just to cover the cost.
I think of the song by Crosby, Stills & Nash that said: ``Tax the
rich, feed the poor, 'til there are no rich no more.'' This is
certainly the attitude of the current administration.
The truth is you simply can't feed the hungry without the family
farmer. They play a vital role in everything we are and do as
Americans.
Mr. Speaker, you want more hungry people in America? You want a
decline in family businesses and higher unemployment? Follow the
President's proposal on the death tax, because that's exactly where it
leads. It's the seizure of assets of the family farmers and the family
businesses in America. I promise you, if that happens, there will be
more hungry people in America.
Mr. REED. I so appreciate my colleague from Georgia, the president of
the freshman class, for his comments on the family farm and standing up
for family farmers all across America.
One thing that we're going to face at the end of the year with the
expiration of these tax rates and a need for us to commit firmly to
comprehensive tax reform, I hope we all adopt a policy, a policy that I
have heard from folks throughout my district, across my great State of
New York, and across this entire Nation, and that is a firm commitment
that they're looking for from Washington, D.C., to adopt tax policy
that is going to be certain, that we adopt tax policy that is going to
be permanent. Because as we ask our local manufacturers, our job
creators of the United States of America, they need to know that when
they make these decisions on millions, if not billions, of dollars in
local plants to put people back to work that the rules of the road are
going to be clear and they are going to be certain and they are going
to be permanent so that they can rely on that certainty, so that they
can make the investment necessary to get this economy going forward
again, and making sure that they can rely on those rules and that they
won't change midstream as we see with tax policy that extends on 10-
year windows--or tax extenders, the 101 tax extender policies that
either expired last year at the end of 2011 or will expire at the end
of 2012, things as basic as the research and development tax credit for
our manufacturers across America. Those types of policies need to be
done on a permanent nature so that when these investment decisions are
made, the people that are making those choices know that there will be
a forum and a platform on the American market that is secure, certain,
and will allow them to make sure that there is a good thought process
put in place as they make those investment decisions.
At this point in time, I would love to yield to my good friend from
the State of Pennsylvania, one of our leaders in the freshman class,
Mike Kelly.
Mr. KELLY. I would like to thank my friend from New York (Mr. Reed).
Mr. Speaker, I rise today to talk about the things that are certain
in life. People always say there's two things you can be certain of.
One is death and the other is taxes. There's another one that we're
going to be certain of after January 1, and that is you're going to
continue to pay taxes after death.
In a government that borrows 42 cents of every dollar it spends, it
comes as no surprise that we can't even let the dead relax. They're
still going to be taxed beyond what they ever could have possibly
imagined in real life.
So we look at a country that now has the highest corporate tax in the
industrial world; we're going to have the highest or the second highest
death tax in the world. And why? Because of a town that's never learned
to do what it tells all of its citizens to do: live within your means,
play fair, pay your fair share.
Well, I would just suggest to you that, in addition to that, what
we're telling people is, look, you don't have the certainty anymore
that you have planned your estate the right way, because after January
1 this government is going to come up with heavier taxes on its
citizens--not the ones that are on the ground and living, but the ones
that have already died, that have paid their fair share, that have
played within the rules, that have done everything they're supposed to
do as good citizens of this great country. They're going to be told at
the end of their life that you cannot go to your final resting place in
peace. No. Everything that you have accumulated in your life and
already paid taxes on is going to be taxed again.
[[Page H2110]]
And who is it that's going to face that burden? All those people that
we tried to work so hard for, that we tried to put things aside for.
Our children and our grandchildren are facing a hockey stick of
spending that goes up and off the charts. Again, a country that cannot
live within its own means, and yet an administration that tells its
citizenry you have to pay your fair share, the rich are not paying
their fair share.
Listen, farms are not only going to go away because those assets are
going to have to be liquidated to pay death taxes, small businesses are
also going to be harmed by this new tax. They're going to have to
liquidate in order to pay the estate taxes that are left over after
somebody has worked their whole life, paid their fair share, done what
they're supposed to do, lived within their means. But that's not
enough. That's not enough for this administration. They will continue
to rip off from your pocket after death that which you have worked so
hard to earn over your lifetime.
There is nothing more prickly; not even the sharpest cactus in the
desert has more prickly pins on it than this law and this rule in the
way it's coming.
So I would just say to all my friends, if it's really about being
fair, if it's really about playing by the rules, if it's really about a
stewardship where you take what is given to you and you pass it on to
the next generation in better shape than you got it, my goodness, how
have we strayed so far from a basic American principle as that? How
have we strayed so far as to tell those who have worked so hard in
their lifetime that even in their death they cannot rest, they cannot
be assured of that which they have worked so hard in order to pass on
to the next generation is going to be vulnerable? Fifty-five percent
tax on your estate.
The liquidation of family farms, the liquidation of family
businesses, the liquidation of the dreams of our children and
grandchildren, all of them go up in smoke as this tsunami of tax
increases that this administration will be forcing on the American
people after January 1.
I thank my friend from New York for bringing this issue up.
Mr. REED. Well, I thank the gentleman from Pennsylvania for joining
us here tonight.
In listening to your comments, I wholeheartedly agree that what we're
seeing at the end of this year, if Washington, D.C., does not get its
act together--and we as the freshman class, I think, are doing a great
job in holding this city accountable and really changing the culture of
Washington, D.C. The job has just started. We have a lot more work to
do, and we'll continue to go forward on that mission.
But what we have to commit ourselves to is, if we do not act by the
end of the year, the largest tax increase in the history of America
will go into effect with the expiration of the individual tax rates,
the reinstatement of the estate taxes at levels of 55 percent and
beyond, and we need to act.
Mr. KELLY. Will the gentleman yield?
Mr. REED. I yield to the gentleman from Pennsylvania.
Mr. KELLY. I think the other thing that is very important to
understand is that we talk about competing in the global economy. Now,
our friends to the north in Canada do not have a death tax. Our friends
to the south in Mexico do not have a death tax. This, again, is an
example of an administration that is so out of touch with the real
world, that has never had any skin in the game, never understood that
in order to produce a profit you must first know how to create one and
not just how to tax it. But we are, again, taking ourselves out of the
global economy and we are telling our people, You know what? You may be
better off living in Canada or in Mexico, especially if you've
accumulated anything in your lifetime, because you're not going to be
able to pass it on to the next generation.
Mr. REED. I so appreciate that comment.
With that, I would like to yield to another colleague of ours, a
great Member of the freshman class from Florida, Colonel West.
{time} 1750
Mr. WEST. I thank the kind colleague of mine from New York (Mr.
Reed).
Mr. Speaker, as a field artillery officer in the United States Army,
I learned a thing or two about weaponry. Our success on the
battlefields of Desert Storm and Desert Shield depended on choosing the
correct artillery for each specific objective, whether it was halting
the enemy's forward progress, diminishing the strength of its forces,
or completely destroying its capabilities.
Although he has never served our country in uniform or risked his
life to defend its freedoms and liberties on distant shores, it seems
President Obama understands a thing or two about weaponry as well. But
in the President's case, Mr. Speaker, the current weapon of choice is
tax policy, and the enemies are small businesses, investors,
entrepreneurs, and corporations, who seemingly are deemed undesirable.
In short, these are the economic engines of our Nation.
The President's planned tax increases seemed designed solely to
demonize the rich and use them as a propaganda tool to score political
points. But the collateral damage of these policies will spread far and
wide into the heartland of America. After all, the 160 percent increase
in Federal cigarette taxes put in place in 2009 by President Obama and
his administration, certainly affects those earning far less than
$250,000, despite his promise not to raise their taxes.
The fact is, Mr. Speaker, next year, unless changes are made in the
Tax Code, Americans will be bombarded with the heavy artillery of the
largest tax increase in the Nation's history, causing massive economic
injury and destruction.
To begin with, if the Bush-Obama tax rates are allowed to expire, the
current tax brackets of 10 to 35 percent will rise to 15 to 39.6
percent. Other tax provisions scheduled to disappear that will hit
ordinary Americans include the American Opportunity Tax Credit--up to
$2,500 per student for qualified college costs, a tax exclusion for
forgiven mortgage debt, and a tax credit for employer-provided child
care.
Children of farmers, as my colleague from Georgia talked about, and
small business owners who wish to continue the legacy of their parents
will find it increasingly difficult to do so, as the death tax
exemption will shrink from $5 million to $1 million. Further, inherited
assets exceeding that amount will be taxed at a maximum rate, Mr.
Speaker, of 55 percent, up from 35 percent, and a 5 percent surcharge
on estates over $10 million.
Investors will be battered with a capital gains tax increase from 15
percent to a maximum of 25.8 percent. Seniors who rely on their
dividend returns will also be hampered. Stock dividends, currently 15
percent, will be taxed as ordinary income with a top rate of 43.4
percent. That's 39.6 percent income tax plus a 3.8 percent tax on
investment income proposed in the President's health care law.
In the last few months we've heard a lot about fairness from the
President, Mr. Speaker, especially when it comes to wealthier people.
In President Obama's own message about his proposed budget for fiscal
year 2013, he says everyone must shoulder their fair share. But how,
Mr. Speaker, does he define fair when 47 percent of wage-earning
households pay zero Federal income taxes, while the top 25 percent of
wage-earning households pay 87 percent?
Besides, the spending proposed in the President's fiscal year 2013
budget is far beyond what the revenue base can support. It would be
mathematically impossible to increase taxes on the Nation's highest
earners to close the future trillion dollar-plus deficits if spending
continues as President Obama has planned.
And according to a report by the Joint Committee on Taxation, the
highly touted Buffett rule would raise a paltry 30 to $40 billion over
the next 10 years.
Mr. Speaker, during that same timeframe, President Obama's budget
would create nearly $7 trillion in new debt, which means the Buffett
tax would lower that debt by less than half a percent. This is clearly
not sound fiscal policy. It's the misguided policy of economic
fairness, and it is just as Frederic Bastiat stated in his essay, ``The
Law'': It is legal plunder under the
[[Page H2111]]
guise of benevolence and misconceived philanthropy.
While the President has some understanding of the destructive
capability of his tax policy, he demonstrates little understanding of
battlefield strategy, because those who are on the receiving end of an
artillery barrage seldom stay in place.
When businesses and individuals are being bombarded with higher tax
rates, they will simply change their behavior. Investors will shift
money from taxable to nontaxable investments. Total economic activity
slows, as there is less incentive for employees to work extra hours,
while smaller, potential returns mean investors and venture capitalists
are less willing to shoulder risks. All taxpayers have a greater
incentive to shield their income.
Obviously, President Obama is no student of history either, Mr.
Speaker, for if he were, he would know revenues increased under
Presidents Kennedy, Reagan and yes, George W. Bush, at least until the
2007 financial crisis, when tax rates were reduced.
But increasing tax revenue does not appear to be the President's
strategic objective. If it were, he would be recommending policies to
help increase the revenue base by optimizing the regulatory and tax
environment to encourage businesses to invest, grow, and hire.
The House of Representatives, Mr. Speaker, has passed 26 bills to do
just that, but they currently languish on the desk of Senate Majority
Leader Harry Reid, who will not bring them up for vote in the Senate.
Instead, President Obama seems determined to punish and wipe out
economic success in this country, leveling tax weapons of mass
destruction on all taxpayers. This is a battle our Nation can ill
afford to lose. We must reform our Tax Code, and we must restore the
conditions for economic success for all our citizens because truly,
they are taxed enough already.
Mr. Speaker, unleashing the individual industrialism and
entrepreneurial spirit of Americans does not come from capital
consolidation in Washington, D.C. The American people do not want more
Solyndras and GSA boondoggles.
The American people want economic security, which comes from this
body becoming responsible stewards of their tax resources, not taking
more from them based upon divisive, socioeconomic rhetoric.
The American people, Mr. Speaker, want a constitutional republic, not
a socialist, egalitarian, welfare nanny state. The American people want
an economic future so bright that they will have to wear sunglasses.
Mr. REED. I thank my colleague for his sentiment and the words that
you expressed. And I'm reminded that we here in Washington cannot be
like my children when they used to sit in the TV room and watch their
cartoons, such as Teletubbies and the other ones that are there. We
need to grow up. We need to deal with this issue once and for all.
And one thing that I'm repeatedly reminded of when I hear the
President's proposal about the top 2 percent need to pay their fair
share. I try to deal with this issue in an open and honest way. And if
you do the math on that proposal, you raise $70 billion over 10 years.
We have a $1.3 trillion deficit every year. The math just does not add
up.
And so I always have to remind people as I engage in this debate
about the need for comprehensive tax reform that the solution to our
national debt problem is not going to be a revenue solution unless we
grow this economy. Raising revenue through increasing taxes is not
going to bridge--as my colleague said, mathematically, it is impossible
to raise taxes enough to get to that $1.3 trillion number.
That's why I'm always reminded that this is a spending problem at its
root cause, and that's why we need to continue to focus on that arena.
And I would also like to echo my colleague from Florida in his words.
Essentially, this is going to boil down, in this November 2012
election, to two strategies of moving forward. And if I heard your
statements and your words correctly, we essentially have one strategy
that is going to be deployed by my colleagues on the Democratic side,
on the other side of the aisle, who say it needs to be a revenue-based
solution.
But that is code word back in my living rooms in my district for,
we're going to raise taxes to deal with this situation. And I think
this freshman class and the people that have joined us here on this
side of the aisle in the Republican Party have firmly committed that
the solution is on downsizing government, cutting spending, adhering to
what our Founding Fathers believed in and put forth in the
Constitution, a limited Federal Government, not an all-encompassing
Federal Government that has grown the debt to the level that we see
today.
{time} 1800
I am also firmly committed to not engaging in the debate as to who
caused it be it which President from whatever party. That is not the
solution moving forward, engaging in the blame game. It is about
recognizing the problem is upon us, whoever caused it, Democrat or
Republican, and let's solve it.
When we come to November of 2012, the American people will not be
stupid. They are not stupid individuals. They will see that the math
doesn't add up with a solution based on my colleagues on the other side
of the aisle of increasing taxes to bridge this national debt problem.
It is about truly being fiscally responsible and getting our fiscal
house in order.
Does my colleague have any additional comments?
Mr. WEST. I just want to say you are absolutely right, and I thank
you for yielding an additional minute.
It is truly the choice between two futures: it is a future of
economic freedom, or a future of economic dependency. It is a future
that talks about the entrepreneurial will and spirit and the individual
industrialism of the American people or collective subjugation. I think
that the American people will make the right choice in November 2012.
Mr. REED. I so appreciate it, and I wholeheartedly agree with that
sentiment.
At this point in time, I would like to yield to my good friend from
Kansas (Mr. Huelskamp).
Mr. HUELSKAMP. Thank you, Congressman Reed. It is a very timely
topic.
I come from western Kansas, and big skies and big dreams, and big
visions; and I tell you, we can see an approaching storm brewing
sometimes hundreds of miles away. You can see the dark clouds. You can
feel the gusting winds. Though the skies are wide open, sometimes it's
hard to predict which path the storm will take.
We've heard tonight, and I'll say it again, there is a storm brewing
here in Washington that may seem like miles, perhaps hundreds of miles,
away; but it's not. Unlike our Kansas storms, it's pretty evident this
storm is going to hit America unless this Congress and this President
act.
Every American will pay higher taxes next year. Let me rephrase that.
Every tax-paying American--because you know half of Americans pay no
Federal income taxes. So I'm talking about the half that actually pay.
Income and the capital gains rates will go up; the death tax will go up
as well. The child tax credit and the standard deduction will decrease.
All of this is certain to happen unless we act.
It's been mentioned that this would be the biggest tax increase in
American history. I think it actually might be the biggest tax increase
in human history. It could be. We'll look forward to those figures. Our
economy is just starting to show signs of life again, however weak. Can
you imagine what it will mean for the economy if taxes go up at the end
of the year? Can you imagine where the stock market is going to go in
the final quarter if Congress goes home before the election without
acting to extend the lower capital gains rate?
I know my colleague, Colonel West, noted the President might not be a
great student of history. Actually, all he has to do is study his own
comments and go back less than 2 years ago. The President said, ``You
don't raise taxes in a recession.'' That's President Obama, the
President of our country, if he could study his own history. I agree
with him. I don't agree with him on a lot of things. But he said you
don't raise taxes in a recession.
Sure, we might have emerged from a formal definition of a recession,
but I
[[Page H2112]]
don't think there is anyone out there who believes the economy is
growing by leaps or bounds, and I don't think you can shoehorn a
massive tax increase onto an already overburdened American economy. You
just can't.
America needs and deserves a Tax Code that's not premised on pitting
American versus American in a class warfare struggle. Unfortunately,
that seems to be the only real solution this President has. The so-
called Buffett rule is just a gimmick trying to distract the American
people from the reality that he wants the biggest tax increase in
American history, and he's going to get it unless we can change this
before the end of the year.
I have proposed a bill called the American Opportunity and Freedom
Act, which would make permanent the Bush-Obama tax cuts. Yes, the Bush-
Obama tax cuts. Look back at history. This President extended the tax
cuts. He signed them. They are the Bush-Obama tax cuts.
Remember, he called those tax cuts ``a substantial victory for middle
class families.'' This was President Obama out on the campaign trail,
today I believe, saying we have to extend these tax cuts. I agree.
I also support comprehensive reform, including the Fair Tax. I think
my colleague from Georgia is going to visit about that, I hope. I've
cosponsored the Jobs Through Growth Act and numerous other proposals to
make our Tax Code fairer, flatter, and more simple.
The bottom line is we need to do something now. Our Tax Code should
not outpace the Bible in number of words. It certainly doesn't outpace
the Bible in wisdom, and families shouldn't have to read 100-page
booklets to fill out their tax return. I'm told if you call the IRS one
hour, you call the next hour, you call another hour later, you will get
a different answer every time you call in, because even the folks who
are implementing the Tax Code, they don't know what the answer is.
Americans out there are just trying to do the right thing, trying to
do their fair share, Mr. President. Your IRS agents can't even tell
them the right or same answer.
The most fundamental purpose of the Tax Code is to raise enough
revenue in order to fund essential functions that fall within the
purview of government.
I just got off a Skype phone call with fourth and fifth graders in
Peoria, Kansas. They had a lot of great questions. I thought the best
question was from a young man who said, Why are taxes so high? Of
course, he probably doesn't pay much taxes. He probably heard that at
home. The answer I gave him was this: because we spend too much money,
and on top of that, we borrow another $1.1 trillion under the Obama
budget. So not only are taxes high; they're still borrowing money so
they can spend it. It comes down to how much we spend.
I think we can agree that Washington's problem isn't not enough
revenue, it's too much spending.
Washington has created this storm. But unlike the tornadoes that
sweep across the plains, we have an opportunity to avoid the
devastating consequences of the approaching storm that's coming at the
end of this year.
I'm excited to be here to talk about that because I must tell you, I
am optimistic. We can solve this problem. We can take advantage of the
approaching storm, actually do comprehensive tax reform that can change
the future for all Americans. We can pull this economy out of the
doldrums, go back to the days when the economy actually grew, when jobs
were being created.
But in today's environment, the uncertainty created by this
administration and by a tax law that's not permanent, that is dragging
down our economy. We can't avoid that, and we can do much better. I'm
happy to be here tonight to talk about that.
Mr. REED. I thank you so much, my colleague from Kansas, for coming
down this evening to talk about this issue. You are exactly right. When
I listened to the comments you had to offer, and as we go into this
debate about comprehensive tax reform, I think there is somewhat of an
agreement on both sides of the aisle that tax reform needs to be done
because our Tax Code is way too complicated--70,000 pages of tax
regulation and statutory language, legislation on top of legislation.
We need to firmly attack that Tax Code in a way that focuses on the
primary goal of what our Tax Code was originally enacted for, to raise
revenue, not to engage in policy determination or picking winners or
losers through the Tax Code and advancing social policy through the Tax
Code, but focusing on a Tax Code that raises revenue to cover our
lawful, legitimate government expense as put forth in the United States
Constitution of a limited Federal Government.
If we adhere to that principle and that goal, I am confident that
both sides of this aisle will come together and achieve what could be
one of those historical moments in this Chamber again where we set the
country on a path to a more competitive and prosperous future moving
forward.
With that, does the gentleman from Kansas seek recognition?
Mr. HUELSKAMP. If I might ask you a question, Have you read the
entire Tax Code?
Mr. REED. I've tried. I've read numerous parts of it especially when
I'm up late at night and I can't sleep. It seems like a panacea for
those sleepless nights because it immediately puts me back to bed.
Mr. HUELSKAMP. It would probably be my guess that there isn't a
colleague of ours that has read this Tax Code. Now, there are probably
some special attorneys in this town that claim to have read that whole
Tax Code. As you mentioned, how many pages?
Mr. REED. Seventy thousand.
Mr. HUELSKAMP. Seventy thousand pages. It's my understanding it's
3\1/2\ times the size of the Bible perhaps, longer than all of
Shakespeare's works, and it's all about to be centralizing power in
Washington.
We have a grand opportunity, I agree. With challenges come
opportunities. We have a tremendous opportunity, and it will have to be
a bipartisan opportunity. I agree with you. We have to have the
President propose a solution and his only solution right now is let's
just raise taxes.
{time} 1810
If he does nothing, if he refuses to help us make America more
competitive, if he refuses to help us, we'll have, as you mentioned,
the single largest tax increase in American history. We can't stop it
if he's not willing to help out, but I think the American people are
demanding comprehensive tax reform. They're demanding us to get this
right because we cannot afford the massive tax increases in the current
law. I am very fearful about that, but I am optimistic that we can and
will do the right thing.
I've got a friend of mine in Junction City, Kansas. I met him at a
town hall. His name is Tom, and he's a small business owner. He said,
You know, I'm going to start a small business--or I would--but because
of those tax increases at the end of the year, I'm not going to do
that. He said, I would have hired seven people. Those seven people not
hired in Junction City, Kansas, don't show up on any list, but they
show up in Junction City as seven more people--seven families--that
don't have the income they need, and they probably end up having to
have some government assistance or having to get help from their
churches and their neighbors. Those are the things that get lost.
We can't forget in this town that it's not about us, that it's not
about special interests. It's about the American people and about
getting this economy going again. I appreciate the opportunity to talk
about that. The common goal of those of us sitting in the Chamber
tonight is to get this economy moving again and to actually be
competitive internationally. I appreciate your leadership on that,
Congressman Reed. You are doing a fantastic job here tonight.
Mr. REED. I appreciate the gentleman's comments, and I appreciate
those kind words.
As we move forward, I'd like to bring a good friend of ours from
Wisconsin into this conversation. He has been a stalwart down here on
the House floor, and has joined us numerous times in these
opportunities when we have a chance to debate the issues of the day.
With that, Mr. Duffy, it is an honor to yield you time.
Mr. DUFFY. I appreciate the gentleman from New York for yielding.
As we talk about these issues--and I've been listening today as my
colleagues have been discussing the tax
[[Page H2113]]
policy--if you take a step back, if you look at all of the different
rules and regulations and bills that have taken place over the course
of the last 3\1/2\ years, it's a torrential rain. We have to take it
almost raindrop by raindrop, looking at each policy, each rule, each
law that has gone into effect. I want to take a moment to step back
from the tax debate and first start with the conversation in regard to
the budget because I think most Americans that I talk to, they are very
nervous about what's happening with this ever-expanding government and
ever-expanding debt. Many Americans know we owe now $15.6 trillion.
They know we've borrowed $1 trillion every year for the last 3 years.
So they will step back and go, Well, what's the plan? How do we
address this really difficult problem?
I know a lot of the moms in my district are concerned about who's
lending us that money. Ask the Chinese. They're concerned about their
kids that they're raising so well, are educating so well. What kind of
an America are they going to grow up in?
So they say, Listen, what kind of budget are you going to have? How
are you going to fix it?
If they were to look to the Senate, they would look and see that for
the past 3 years the Senate wasn't willing to pass a budget, that they
weren't willing to put out a plan on how they would deal with this
daunting issue that this country faces. If they were to look over to
the President and ask the President, How do you deal with this cancer
that is growing in America, which is our debt? How do you deal with it?
I think they'd say, Well, Mr. President, you've given us a budget, but
it's a budget that never balances. It's a budget that includes all the
tax increases you've ever discussed, but it doesn't balance. It's a
budget that we've brought to this House floor, and it was such a
political document that doesn't accomplish the goals that the moms and
dads of America want accomplished that not one Republican or one
Democrat voted for that budget.
We need real ideas to be put on the table, and we need bold
leadership to address the large issues that we face in this country.
For the last 2 years, the House Republicans have given that bold
leadership. We've been willing to put ideas on the table on how we fix
the great problems of our generation. I'm proud of our freshman class,
and I'm proud of our House Republicans for willing to step out and
lead. Part of that leadership has been the reform of our tax system, of
our Tax Code, making it more competitive and more fair, and I want to
talk about that a little bit, which is the conversation tonight.
I think many Americans may not know this, but as of April 1, April
Fool's Day, we had the highest corporate tax rate in the industrialized
world, and that's because the Japanese on April 1 were the last ones to
lower their taxes, making us the highest tax country. That's a problem.
We find ourselves in a situation in America where one party is asking
for a more competitive Tax Code that will encourage investment and
growth in America. We have the other side, which is the President's
side, that encourages, under the auspices of fairness, that we increase
taxes.
As I talk to people back at home, these conversations oftentimes come
up, and I'll ask my friends at home. I'll say, Listen, if you look at
businesses in America, can you name a few of them that don't pay taxes?
Are there a few businesses here that you can identify that don't pay
taxes?
Virtually everyone in the town hall will shake their heads and go,
Yeah, yeah. I can name that business that doesn't pay taxes.
So I'll ask them, Well, if you want that business to pay taxes, if
you were just willing to raise the tax rate from 35 percent up to 40
percent, which is what the President wants to do, will that business
that's in your head that doesn't pay taxes now pay taxes if you just
increase the rate by 5 percentage points?
No. The Tax Code is broken--for generations, long before I got here.
I was riding my trike when people were carving out special interests in
the Tax Code. There are 70,000 pages in the Tax Code that are for
special interests, special loopholes. The people of my district don't
take advantage of those 70,000 pages. It's for the special interests
that come to this town day after day and ask to carve themselves out.
What have we done? We in this House have said that's not fair; that's
not right.
Let's carve them all back in. Let's reduce the complexity of the Tax
Code, bring all these people back in and make them, yes, pay their fair
share. What we've said that we can do is take the top rate from 35
percent and bring it down to 25 percent, and then the other rates down
to 10 percent. If you do that by eliminating all the loopholes in the
code, you'll bring in more revenue, and it will be fair. Doesn't that
make sense? Raise and raise doesn't accomplish it. Reforming the Tax
Code is where we have to go. Let's get a bipartisan group together,
carve out those special interests, reduce the rates, and make us more
competitive.
We hear a lot about the Buffett tax, right? It's a tax on investment
income. Listen, there are two different kinds of income. You have the
income that you get from your salary. Your salaried income, that's
taxed at a certain rate. You're guaranteed to get that every week or
every 2 weeks because you put your 40 or 80 hours in, and that paycheck
comes to you and you're guaranteed to get it. But there is also
investment income. In America and around the world, investment income
is taxed at a little bit of a lower rate.
You say, Well, why? Why would that be taxed at a lower rate? The
reason is--let's say you invest $100,000. You're not guaranteed to make
anything on that $100,000. Actually, you might lose the whole
investment--you might lose that $100,000--but if you're lucky enough or
smart enough or savvy enough to make some money on that $100,000
investment, we've said you should have a tax rate that's a little bit
less than that which is guaranteed in the salary. So we have a little
less of a tax rate on investment income.
But there is something else. We want to encourage investment in
America because we know, if you're investing in our infrastructure, in
our manufacturing facilities, in our businesses, if we have investment,
what happens? We create jobs. There is job growth in America when you
have investment in America, and we want to make sure this is a great
home for investment. If you raise the taxes on investment, you will get
less of it. Let's make sure we have a great investment tax rate so
money around the world wants to pour into this country and wants to
take advantage of one of the best workforces in the world, which is
right here in America.
One other point I want to make before I yield back to the gentleman
is that there are a lot of people who talk about raising taxes to bring
in more revenue. I think it's important that we're very clear: that
when people are talking about raising taxes to bring in more revenue in
order to pay down the debt, that's not what's happening. People are
asking to raise taxes to spend more money. There is no effort to reduce
spending in this town. Those who want to increase taxes want to spend
more--they don't want to spend less--but if you want to actually bring
in more money to the Federal coffers, you should look at the tax
history, because every time we're raising tax rates, there is not a
correlation in bringing more money into the Federal coffers.
{time} 1820
Raising tax rates doesn't mean more money. What does mean more money
into the Federal coffers is a growing economy. If you can grow your
economy, if you can put your people back to work, more people pay
taxes.
If more people pay taxes, more money comes into the Federal coffers,
and we have more dollars to pay down our debt. Not only that, there's
less people on food stamps and energy assistance because they have a
job.
This is some commonsense reform that this group in the House is
talking about. If we could just implement it, take the weight of a
burdensome Tax Code off the shoulders of our entrepreneurs, our job
creators, and our investors, we can see expansive growth, explosive
growth.
I look forward to being part of a team who is willing to engage in a
great debate to make sure we are again the most competitive and best
placed in the country to invest.
Mr. REED. I thank the gentleman from Wisconsin for joining us and the
[[Page H2114]]
sentiment and the words that you have expressed. As we go into the
election and as we go into November 2012, I think what we are
articulating on the House floor tonight as we are having this
conversation about tax reform is that there are some differences that
the American people are going to be able to choose between.
One of the fundamental differences, when it comes to tax policy, is I
see a base philosophy differential between my colleagues on the other
side of the aisle from the Democratic Party and those of us on this
side of the aisle in the Republican Party, and that base differential
and philosophy is what I hear from my Democratic colleagues on the
other side of the aisle when they propose such things as let's increase
taxes on the top 2 percent or this group or that group. It's a
fundamental belief, I would submit, that they believe that that money
is better given to them here in Washington, D.C., to then dole out as
they in Washington, D.C., feel is appropriate.
The philosophy on this side of the aisle that I am firmly committed
to, and I am sure many of my colleagues here tonight are firmly
committed to, is that that money is the individuals' money, it is the
American citizens' money. They are the ones who earned it. They are the
ones who punched the clock around the hour--24/7 or 8 o'clock in the
morning until 4 o'clock in the afternoon or midnight till 8 a.m. They
are the ones earning that money, and that is their money. The more that
we can keep that money that they earned as citizens and individuals in
their pocket, they will do the right thing. We believe in the
individual.
From the arguments that I have heard from my colleagues on the other
side of the aisle, I would say that they differ in that opinion. They
truly do believe that Washington should be the judge of where those
resources go, because for some odd reason they sit here in Washington
and try to come up with one-size-fits-all answers to the problems of
the day. It fundamentally is a philosophy that that money is
Washington, D.C.'s money and not the individual's.
My colleague from Georgia (Mr. Woodall) is a strong advocate of the
Fair Tax proposal that's been out there and that's being debated. That
is one of the things that I have to say about this freshman class is
that we have changed the culture of Washington, D.C., and that we are
going to allow all alternatives to be on the table and have an open and
honest conversation with all of America about reforms that are going
forward and then going forward in a way that solves our Nation's
problems, and everyone will be given a fair shake to express those
ideas.
I'm sure my colleague from Georgia is rising today to offer his
insight and his proposal as to an alternative to the income tax
structure that we presently exist under, and that would be the Fair
Tax. If I'm wrong on that, I apologize to the gentleman from Georgia;
but knowing his reputation and his words around this town, I'm sure we
are going to hear a little bit about that.
With that, I yield to the gentleman from Georgia.
Mr. WOODALL. I appreciate my friend from New York for yielding.
You are absolutely right. I have some Fair Tax passion. I believe
that there is a better way to create a United States Tax Code, and I
believe the Fair Tax is that. H.R. 25, for folks who haven't read it.
But the truth is I came down here tonight because I knew that we were
going to have that debate of ideas that you're talking about. I mean,
whether it's your leadership on this Special Order, whether it's the
enthusiasm my friend from Wisconsin brings to the floor, we're talking
about the challenges that we face using a different language than we've
used in this body before. This is a floor that has been taken over by
freshmen here tonight. This is an institution that's been taken over by
new ideas. I don't mean just new freshman ideas; I mean new ideas from
all aspects of this institution.
I hear my friend from Wisconsin talking, and he comes from a
competitive district. There is all this talk about these rabid
freshmen, crazy Republicans. The people of Wisconsin, they can choose
anybody they want. They don't have to choose Republican. They can
choose a Democrat. They can choose an independent. They can choose
anybody they want, and they choose him.
His message is not: Look what I am going to go to Washington and get
for you. His message is: We don't need a subsidy here because we've got
the hardest-working workforce in the world. His message is not: How can
I give you an unfair advantage over your neighbors? His message is: How
can we make the American economy the most competitive economy in the
world, because if we do that, the American worker will succeed because
we work harder, better, and longer than anybody else on the planet.
That is a different take on what happens in Washington, D.C., and it's
a different take on what happens in the Tax Code.
I know my friend from New York sits on the powerful Ways and Means
Committee, as does my friend from Tennessee, and you have to have a
Ways and Means Committee. For folks who don't sit on that committee,
they're the ones who write all the Tax Code. The Tax Code is a
complicated thing to do.
What this Ways and Means Committee is doing--and it's important to be
said because this is an election year, and a lot of crazy things happen
in an election year. There are crazy things like people supporting a
Buffett rule to solve deficit problems, a rule that if it had been in
place this year and collected that same amount of revenue for the next
250 years, it still would not have balanced the budget from last year.
That's right.
This great savior of all that's good that ails us in this country,
President Obama's Buffett rule, had it been in place this year, and not
just this year but the next 250 years, it had raised that revenue, it
still would not have balanced the budget from last year, just the
budget gap from last year. We have all this nonsense in a political
year.
But what we're getting out of the Ways and Means Committee--and I
know my two friends from the Ways and Means Committee wouldn't brag on
themselves, so I'm going to brag on you for you. We have had more
serious hearings about fundamental tax reform in this Ways and Means
Committee over the last 16 months than we've had in the last decade.
This is a committee that, by virtue of simplifying the American Tax
Code, is going to undo the work of the Ways and Means Committee for
decades and decades and decades in the past. They're doing it not to
exploit the power of their position; they're doing it to help grow the
American economy.
As an alternative to the Buffett rule, I have brought down a chart to
demonstrate what happens in today's Tax Code. My friends on the Ways
and Means Committee know it all too well. But in today's Tax Code, the
folks who have the money benefit from all the loopholes and exceptions
and exemptions and carve-out. Of course they do. It makes sense. I will
tell you, the folks who have the money are the ones who are paying the
taxes, so it certainly makes sense that they are the ones benefiting
from the carve-outs.
We have a choice of two futures here. We can either implement the
President's Buffett rule, which again, by simple mathematics, will have
absolutely no effect either on growing the economy or paying down the
deficit, or we can simplify today's Tax Code to make it flatter and
fairer.
That's what my friends on the Ways and Means Committee have been
working on, Chairman Dave Camp and the rest of the committee, in ways
that I have never seen before, with a sincerity that I have never seen
before. You're absolutely right, and I appreciate my friend from New
York for saying it.
They've said, Bring all comers. Bring all comers. We're not the
smartest people in the room. If the idea comes from Lawrenceville,
Georgia, bring it. If it comes from Seneca, New York, bring it. If it
comes from Chattanooga, Tennessee, bring it. We want all the ideas, and
we'll just let the chips fall where they may. That's what's different
in this town.
I say to my colleague, what is different in this town with this
Republican class is we don't have to rig the game to get to the
outcome. We just bring the debates to the floor. Bring the facts to the
floor. Let the facts speak for themselves. And then guess what. Have a
vote. If it's a good idea, it wins, and if it's a bad idea, it loses.
We see both of those happen on this floor
[[Page H2115]]
every day, and the Ways and Means Committee is leading in this tax
process.
This would have been a great year for the Ways and Means Committee--
putting my political hat on for a moment--a great year for you all to
play some sort of game with the Tax Code. I have seen it happen in
Congresses past.
{time} 1830
Oh, this is going to be good for reelection. We're going to go do X,
Y, or Z. It's not going to happen. It's not going to be real. But we're
going to play the game. The folks on this committee this year, the
freshmen in the body this year, would rather lose in November, having
tried each and every day to do the right thing, than win in November,
having played the game the way it's been played for so many years.
So serious is the effort in the Ways and Means Committee that it was
included in the House-passed budget this year--flatter, fairer rates,
eliminating exemptions, loopholes, carve-outs--all of those things that
the American people look at and lose faith in this body. You've stood
up to them all. You've stood up to them all in the Ways and Means
Committee. We've stood up to them in the Budget Committee to say, No
more. There's a better way. And we're going to share with the American
people.
I appreciate my colleague for taking on the time tonight. And I ask
him to commit this chart to memory. I say to all my other colleagues
who might be watching back in their offices that on budget.house.gov,
you'll find myriad charts to talk about all the things that my friend
from Wisconsin discussed and my friend from Kansas discussed and my
friend from Florida discussed. It will lay them out in easy-to-see and
visualized ways.
But if we want to get a handle on what's happening in America with
the discrepancies--call it fairness, call it economic growth, you name
your ill--a flatter and fairer tax code is the beginning of that
solution, it's not the end. But the Tax Code was not designed to
implement social policy. It was designed to collect revenue so that we
can run the national defense of this country. And if we get back there,
the American economy and the American taxpayer is going to be the
beneficiary.
I thank my friend for his leadership tonight.
Mr. REED. I so appreciate the gentleman from Georgia and the
expression and sentiments you bring to the floor and the passion that
you bring to the floor on this issue and all the issues that you bring
to our attention. And you are so right. We are committed to having an
open and honest debate with all of America, because the American
hardworking taxpayer deserves no less.
We are here to do what needs to be done. We are here to lead. And
that's why I appreciate my colleague from Georgia on the Budget
Committee, because I know there was some political heat put on that
Budget Committee to back away from coming up with a budget that we
could stand for in this Chamber. But we took the stand and you took the
stand as part of that Budget Committee to say, You know what, we're not
going to engage in the politics of old. We're not going to be afraid to
lead. Because the problems that face us in America today are
generational. They are the same level threats that generations before
us faced.
And that most recent example, possibly, that jumps to the top of my
mind is World War II, when the real fate of the American Government,
the American symbol of freedom and democracy, was at risk with a threat
from Europe with fascism and the expressions coming out of that area of
the world. And what did America do? That's the history lesson that I
bring to this Chamber tonight.
American leadership, our President, our leaders did not look to
divide America on that issue. That leadership led by uniting America to
come together to face the generational threat and survive so that the
America that they had could be passed on to our generation and this
generation and grandchildren's generations to come so they have the
opportunity to succeed and take care and live that American Dream. It
is time for our Nation to come together, not be divided. And I am very
confident because I have faith in the American individual that come
November, 2012, the American people will make the right call. And
between the choices that will be clearly articulated between both sides
of this aisle we will see what needs to be done, and the right
decisions will be made, and we will overcome this generational crisis
that faces us in our national debt and this economy that has bogged
down in stagnation, debt, doubt, and despair. And we will overcome it,
because failure is not an alternative.
With that, I'd love to yield to a great lady on the Ways and Means
Committee, a fellow freshman and a good friend, Mrs. Black from
Tennessee.
Mrs. BLACK. Thank you for yielding to me. I want to thank you as a
fellow member of Ways and Means and a freshman for bringing us together
tonight for this Special Order. This is such an important issue, and
the American people really need to hear that there is a choice. There's
a choice between a system or a plan that is going to take more money
out of the pockets of our hardworking taxpayers or one that's going to
put more money in those pockets and make a system that is fairer,
flatter, and simpler.
As I traveled throughout my district over the last 16 months now,
I've continued to hear from my businesses in particular that there's so
much uncertainty out there. And I ask them, What is the uncertainty?
What is it that's keeping you awake at night that keeps you from
growing your business, and as a result of that creating more jobs?
Obviously, when people have jobs, they have money in their pocket. And
what do they do when they have money in their pocket? They spend that
money. And they spend that money to buy other products and services,
which means that the economy grows.
And what they tell me is there are really three things. One, they
feel like they don't know when a new mandate is going to come down,
such as the health care. And that's going to cost them money. They also
don't know when we're going to put another regulation on them. And many
of the businesses are very burdened by regulations that, frankly, those
are not the same regulations that you see when they do take their
businesses offshore, which means we are just driving them offshore.
And the third is the one we're here tonight to talk about, and that
is tax. We have heard in a number of our hearings in Ways and Means
that all the way from the corporate tax down to the individual tax and
the pass-through tax that many of our small businesses use that they
are willing to give up those deductions and loopholes that are
currently in the Tax Code to get something that is fairer, flatter, and
simpler.
This Tax Code has not been reformed in 25 years. What it has had is a
lot of things that have been added to it. And with everything that's
added to it, it only complicates it more. But it does something else.
It picks winners and losers. And by having a tax reform that would make
things fairer, flatter, and simpler, we wouldn't be picking winners and
losers. It is far too complicated.
Most of the American people don't realize that the United States has
the highest corporate tax in the world as of April 1, when Japan
lowered their corporate tax. I don't know that we want to be very proud
of this, but we became the country that has the highest corporate
income tax. Talk about driving people offshore.
So in our tax reform we bring the corporate income tax down to a
level that is an average for all of the countries that we do trade with
and that we are in competition with, and we bring it down to 25
percent. We do something that makes sense. It's a commonsense reform.
Likewise, when we take a look at our other businesses that are not the
large businesses that are corporations, but the small businesses--and
about 60 percent of the small businesses are pass-through. That means
they're in the individual tax system.
Am I hearing that we're out of time?
Mr. REED. We are coming to our end of time.
Mrs. BLACK. If I may then just conclude with a couple of words.
Mr. REED. I would be honored to yield to my colleague from Tennessee
for her closing.
[[Page H2116]]
The SPEAKER pro tempore (Mr. Young of Indiana). The time of the
gentleman from New York has expired.
____________________