[Congressional Record Volume 159, Number 51 (Tuesday, April 16, 2013)]
[House]
[Pages H2056-H2061]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FAIR TAX ACT OF 2013
The SPEAKER pro tempore (Mr. Stockman). Under the Speaker's announced
policy of January 3, 2013, the gentleman from Georgia (Mr. Woodall) is
recognized for 60 minutes as the designee of the majority leader.
Mr. WOODALL. Yesterday was tax day, and I've got taxes on my mind,
Mr. Speaker. You know, as most folks in this Chamber do, that H.R. 25,
the Fair Tax Act of 2013, is the most widely cosponsored, most widely
supported fundamental tax reform legislation in the House and in the
Senate. In fact, both the House and the Senate. Sixty-four of our
colleagues in the House, Mr. Speaker, have put their name on H.R. 25,
the Fair Tax Act. Eight of our Senate colleagues have put their name on
H.R. 25, the Fair Tax Act.
The FairTax is a revolutionary proposal, Mr. Speaker, in that it
takes all of the power of the Tax Code out of Washington, D.C., and
returns it to men and women back home. You know that we can manipulate
the behavior of absolutely anyone in America through the Tax Code. If I
want folks to wear
[[Page H2057]]
more pink ties and fewer blue ties, I'll subsidize pink ties to the
tune of 50 percent and I'll tax blue ties to the tune of 50 percent and
we'll change behavior overnight.
Do you remember, Mr. Speaker, when we had the Electric Vehicle Tax
Credit back in 2010? It was a $7,500 tax credit. And we said we're
going to give $7,500 to every American who goes out and buys an
electric car. Now the plan was folks were going to go out and buy these
$100,000 electric cars and we were going to defray a little of that
price. But it turns out the lawyers got involved and figured out that
golf carts were electric cars. And if only we put seatbelts and
rearview mirrors and brake lights on these golf carts, every American
could get a free golf cart.
Mr. Speaker, I'm not going to ask if you got one of those free golf
carts, and I'm not going to ask my colleagues who are back in their
offices watching on TV to send me a note if they got a free golf cart.
It was the law of the land. And if you got a free golf cart, I guess
you deserved it.
But so abused was that tax provision, Mr. Speaker, that at the end of
2010 the IRS released tax guidance that said, We wanted you to have to
take delivery of these golf carts before the end of 2010 to get the tax
credit, but the demand has been so great, the manufacturers cannot fill
it fast enough. Actually, you just need a VIN number and you can take
delivery into 2011. Well, that's not the way the American Tax Code
ought to be used, Mr. Speaker, and it's not the way American tax
dollars ought to be used.
There are so many challenges we have in the American economy and so
many reasons that American-made products cost more than the products
that our competitors produce overseas--and so many of those reasons we
do not want to change. The fact that American wages are higher than
Chinese wages, I want to celebrate that. I don't want to bemoan that.
The fact that environmental regulations in America are stricter and
protect us in ways environmental regulations in India do not, I don't
want to bemoan that. I want to celebrate that. But the fact that the
American Tax Code places the highest burden on businesses and employers
in America than any other place in the world, that's a problem.
We live in a very fluid economy, Mr. Speaker. Folks can locate their
business anywhere on the planet they want to. They don't have to come
to America. Why is it that America's not the magnet for capital around
the globe? Why do we have the absolute worst Tax Code in terms of rates
instead of the absolute best? And that's what I want to talk about.
Because it's one of those areas of agreement, Mr. Speaker.
This is a quote from President Barack Obama in his 2011 State of the
Union address. He said:
To put us on solid ground, we should also find a bipartisan
solution to strengthen Social Security for future
generations.
I mention Social Security, Mr. Speaker, because the Fair Tax Act,
that bill, H.R. 25, the most widely cosponsored bill in the U.S. House
of Representatives for fundamental tax reform, replaces income taxes
and the payroll taxes--payroll tax is that 15.3 percent that comes out
of every Americans' paycheck in order to fund Social Security and
Medicare. It replaces both of those with this 23 percent sales tax. It
replaces all your income taxes, all your payroll taxes with a sales
tax.
And so for the first time, Mr. Speaker, we would begin to link the
size of the Social Security trust fund not with wages in this country
but with the size of the economy in this country. So when we double the
size of the economy, we double the contributions to the Social Security
trust fund, we protect Social Security for future generations.
Mr. Speaker, in a poll, I think it's been 3 years ago now, they asked
young people, college-aged students, Do you believe in UFOs? Folks said
yes, folks said no. They said, Do you believe you're ever going to see
a Social Security check? Folks said yes and folks said no. Do you know
that more of those young people believed in UFOs than thought they'd
ever see a Social Security check, Mr. Speaker? That's outrageous.
Because Social Security, by the very nature of its name, is to provide
security. And if you don't believe it's going to be there, it provides
no security whatsoever.
We can guarantee Social Security not just for the current generation
but for future generations by reforming the way that we pay for it, by
reforming our Tax Code, by moving to a pro-growth system like the
FairTax.
{time} 1440
The President knows we need to, and yet in his budget this year we
did nothing to extend the life of the Social Security trust fund. In
fact, the Social Security disability trust fund, Mr. Speaker, that
trust fund that so many Americans depend on, that runs out of money
before this President even leaves office. It runs out of money within 4
years, Mr. Speaker, and yet the budget proposal this year provided
absolutely no certainty that changes would be made in order to protect
that for future generations. That's wrong, and it's an opportunity for
us to come together and do things that we all agree on.
Here's another quote, this time from President Obama's 2013 State of
the Union Address:
Broad-based economic growth requires a balanced approach to
deficit reduction, with spending cuts and revenue, and with
everyone doing their fair share.
Who disagrees with that, Mr. Speaker? We talk so much about fair
share here; I can't find anyone who disagrees with fair share.
I think about Dr. Carson at the annual Prayer Breakfast. Did you see
that, Mr. Speaker? Dr. Carson was speaking at the Prayer Breakfast
right down the street this year, and he was telling a tale of
billionaires and someone who might have made $10 billion but they were
taxed to the tune of $1 billion. They chipped in $1 billion to help
fund America and folks were complaining that they hadn't done enough. I
have not chipped in $1 billion, Mr. Speaker, far from it.
What does it mean to do your fair share? For me, it means having skin
in the game. One of my great regrets, Mr. Speaker, is that during the
Bush administration, for the first time in American history, we cut
taxes and went to war at the same time. I think that's wrong, Mr.
Speaker. I think about all the young people who had skin in that game.
In my part of the world down in Georgia, Mr. Speaker, a lot of folks
are in the military, a lot of sons and daughters in uniform. Those
families have skin in the game of foreign policy. But if you don't have
a son or daughter in uniform, if you don't have a husband or wife in
uniform, where is your skin in that game when you're not paying for
those decisions? And when we make decisions that we don't have to pay
for, we make bad decisions.
I agree with the President: folks need to pay their fair share. I
think we all need to have some skin in the game. Folks who make more
ought to pay more; folks who make less ought to pay less. But we are
all members of the board of directors of the United States of America,
Mr. Speaker. All 320 million of us sit on the board of directors of the
United States of America, and, yes, you ought to have skin in the game
when you're making decisions about how this organization runs. How do
we create revenue? How do we reduce deficits? How do we make sure that
folks are paying their fair share?
Well, the good news is, Mr. Speaker, the President is aware of the
FairTax. I'm not willing to call him a FairTax President yet--again,
the Fair Tax Act, that's H.R. 25, Mr. Speaker. I don't think the
President is quite on board. We're not going to wait on the President
to get on board though. We're going to go ahead and drive forward here
in the House.
The chairman of the Ways and Means Committee here in the House, Mr.
Speaker, that committee that has jurisdiction over all tax legislation,
they are serious about fundamental tax reform in this Congress like I
have never seen in my lifetime. I dare say that folks with a lot more
gray hair than I have, Mr. Speaker, who've been here since 1986--the
last time we did fundamental tax reform--looked at the kind of work
that Chairman Dave Camp and his entire committee, majority and
minority alike, have put into fundamental tax reform. And I have more
hope that we are going to see fundamental tax reform--not just in this
Congress, Mr. Speaker, but in this calendar year--than I have ever had
before. The FairTax is going to be a part of that discussion.
[[Page H2058]]
The White House, to its great credit, Mr. Speaker, the White House is
just leaps and bounds ahead of other White Houses in terms of how it
deals with the public. They have this online petition process, Mr.
Speaker, where anybody can go out there, and if you have enough folks
sign your petition, you can ask the White House to do whatever you want
to do. Well, here in FairTax world--which is where I come from down in
Georgia, Mr. Speaker, where folks believe in the FairTax, believe in
its power to reenergize the economy, believe in its power to return
freedom to families and individuals and take it away from the Federal
Government--we started a petition to say, Mr. President, please meet
with Neal Boortz. He's one of the leaders of the FairTax movement. He
has a radio program and has spent a lot of time investing in the kinds
of freedom and opportunity the FairTax would bring us. It said, I want
you to meet with Neal Boortz to talk about the FairTax. I want you to
give Neal Boortz 1 hour.
Well, we got all the signatures that were required on that petition,
and the White House's response was this:
The FairTax would apply to virtually all expenditures on
goods and services, including tuition, medical care, and new
homes, all typical family purchases.
Well, he's partly right. I highlighted tuition here, Mr. Speaker,
because the FairTax doesn't tax tuition; it taxes all consumption.
Tuition is more of an investment in your future, so it's not taxed. But
the question isn't: Why does the FairTax tax everything? The question
is: Why are some things exempted in the current Tax Code, Mr. Speaker?
Why do Americans get free golf carts? Why is that? Is that a real
national priority that we make that happen? Why is it we subsidize some
loans and we don't subsidize other loans? Why is it folks are able to
deduct some interest but not other interest? Why is it that we're
willing to help people get some businesses started but not other
businesses started? That doesn't speak to fair share to me, Mr.
Speaker.
Running for Congress, you get this voting card and you slide it in
the little slot here on the House floor, Mr. Speaker, and you get to
make some decisions. For me, it's on behalf of about 640,000 people
back home in Georgia. But even more power than that voting card, Mr.
Speaker, is the way people use their wallet. Those 640,000 people back
in Georgia, Mr. Speaker, use their wallet every day to make millions of
decisions: Am I going to buy this or that product? Am I going to
support this service or that service? Am I going to be involved in this
activity or that activity? We run this country, Mr. Speaker, not just
through our votes in November, but through the power of our wallet
every single day.
In order to find the broadest tax base of all--because economists
tell us, Mr. Speaker, if you have a lower tax rate and a broader tax
base, you get more economic growth in your economy. The Joint Tax
Committee did a symposium on that, Mr. Speaker, in the late 1990s--
because we didn't have a computer model at that time that would model a
consumption tax system--and they asked eight macroeconomic modeling
groups: What would happen if we switched from the income tax America
has today and moved to a consumption tax? Well, these economic modeling
groups from the left and from the right, Mr. Speaker, some in the
center--you know, economists, for Pete's sake, they don't agree on
much. In fact, the results of these modeling groups were all across the
charts, across all of the metrics that they were working on, except for
one.
When the question was would the economy grow faster under a
consumption tax than under the current income tax system, every single
group said yes. Now, some of those said it would grow a little bit
faster, some of those said it would grow a lot faster, but every single
macroeconomic modeling group said the economy would grow faster, that
Americans would generate more wealth, that employment would be more
available if we moved to a consumption tax system.
The question isn't, Mr. Speaker, why we tax some things. The question
is, today, in the current system, why don't we tax everything, tax
everything once, but only once, because when we don't, we pick winners
and losers.
Again, through the power of my voting card here in the House of
Representatives, Mr. Speaker, I can manipulate the lives of every
single American back home by taxing this good and subsidizing that
good. That's wrong. That's wrong. Because as all members of the board
of directors of the United States of America, Mr. Speaker, the entire
United States of America, all of our citizens, we have the power to
make those decisions with our wallet; we don't need the law to tell us.
Now, what price, Mr. Speaker, today do we pay for that law? Thirteen
hours is the time the average taxpayer spends paying their taxes.
Mr. Speaker, #taxreform will bring folks to all the information that
has been coming out of the House this week during tax week--hour after
hour, 13 hours of productivity for the average tax filer. Now, of
course, some people's taxes are simple and some people's taxes are
complicated, Mr. Speaker, and we're sucking that time out of their day.
What does it turn into in dollars, Mr. Speaker? $168 billion American
taxpayers spend each year to comply with tax rules. $168 billion
produces nothing. It doesn't help us with our trade deficit with China.
It doesn't help us export more grain to Russia. $168 billion we ask
American taxpayers to dig into their pocket and pay for the pleasure of
paying their income taxes.
More and more Americans every year, Mr. Speaker, find they cannot do
their own taxes, that they have to go to a professional tax preparer.
Doggone it, Mr. Speaker, I don't mind paying my taxes. In fact, I think
America is a great country and I think I'm getting my money's worth,
but to have to pay somebody to help me pay the taxes makes me angry.
And it's wrong. It's wrong.
I look at what's happened in those former Soviet Bloc countries, Mr.
Speaker. Do you know those former Soviet Bloc countries have all moved
to flat taxes? What they found is, when they had really high tax rates
and they were very difficult to comply with, folks just didn't pay
their taxes at all; but when they lowered that rate, made it flat and
applied it across a very broad base, folks began to voluntarily remit
their taxes. That's not rocket science.
{time} 1450
Well, that's not rocket science. That's exactly what we've seen in
example after example after example around the world; $168 billion, Mr.
Speaker, Americans waste simply trying to pay their taxes each year.
Now, why is tax reform so complicated? I have another quote from the
President here, Mr. Speaker. This is from his weekly address back in
December. He was talking about the fiscal cliff, to be fair, to put
this into context. He said:
We've got to do what it takes to protect the middle class.
Now, there's great disagreement about who the middle class is, Mr.
Speaker. When I go back home to townhall meetings, absolutely everyone
I meet believes they're in the middle class. Whether they're at the low
end of the income spectrum or at the high end of the income spectrum,
that's who we are in America. We believe in that middle class dream,
that upward mobility to move from that space on the bottom rung of the
economic ladder up to that middle class rung.
Folks worry about the middle class, as well we should. FairTax takes
that into account. The big knock, Mr. Speaker, on consumption taxes, is
that rich people have to spend less of their income buying things than
lower income people do. Now, that's absolutely true. At my first job
out of school, Mr. Speaker, I was making under $20,000 a year. I was
trying to pay rent and pay back student loans and pay insurance on my
automobile. It was tough to sort all those things out in a high-rent
district, high cost of living. I had to spend every penny of that
$20,000 just to make ends meet.
Now, if I had been making $100,000 at that time, Mr. Speaker, I would
have had a lot left over. So, yes, if you make more, as a percentage of
that income, you consume less.
Well, we take that into account with the FairTax, Mr. Speaker. This
is what we say. The poverty level--the poverty level in America--is
calculated on
[[Page H2059]]
what it takes for the average individual, the average family to pay for
their basic necessities. We all have rent, we all have clothes, Mr.
Speaker, we all have to eat, we all have health care expenses. What is
it that is kind of that basic level of subsistence? We call that the
poverty level.
Now, what the FairTax does is through a tax rebate check--it's
actually a prebate check because it goes out the beginning of the month
instead of the end of the month--it indemnifies every American, every
American family from the tax consequences of spending up to the poverty
level. So that, in effect, if you're a miser, Mr. Speaker, you save
every penny you have, and you're only spending up to the poverty level,
you would pay no taxes. I don't care if you're Warren Buffett, I don't
care if you're Bill Gates, I don't care if you're that young person
just graduating from high school and getting your first job. No one
taxed up to poverty level spending; everyone taxed on every penny of
spending beyond that.
Here's the thing. When you open up The Wall Street Journal, Mr.
Speaker, and it bemoans consumption declining in America, it hurts me.
Because when consumption is declining, that means savings are rising.
We need more savings in this country, Mr. Speaker. Oversaving is not a
problem in America. I wish that problem upon us all. And we have a
unique--a unique--window in the world economy right now, Mr. Speaker.
For years, it's been America that has been consuming everything that
the world has been producing. We used to be the manufacturer for the
world; now we're the consumer for the world. But as literally millions
and millions and millions of new middle class consumers are coming
online in China and in India, millions and millions and millions that
are going to continue to grow, we have a window of opportunity right
now to quit being the consumer for the world, as we have been for the
past few decades, and return to our status as manufacturer for the
world.
We're having this natural gas boom right now, Mr. Speaker, that's
driven the cost of manufacturing down in America, the likes of which we
haven't seen in decades; that's made us competitive, even with our
higher wages, even with our more aggressive environmental protection
regulations, made us more price competitive with goods from all across
the world. We can be the producer for the world, Mr. Speaker. We don't
need to be the consumer.
That's why the FairTax taxes consumption. We shouldn't tax people
based on what they earn. If you're earning a lot and you're saving a
lot, we should applaud you for that, not punish you for that. Mr.
Speaker, when you're in the low-income class today and you're trying to
move into the middle class, you begin to lose benefits--you lose your
health care, you lose your education subsidy, you lose some food
subsidies.
The marginal tax rate, Mr. Speaker, when you're trying to get from
the lower rung of the ladder to the next rung of the ladder, can be
upwards of 60 percent--60 percent on folks who are trying to make it.
The FairTax says, no, no, we shouldn't tax anyone up to poverty level
spending, and we should applaud anyone who finds a penny to save,
because savings is what drives an economy, not consumption.
So here we have a chart, Mr. Speaker, of what happens to the FairTax
rate for a two-adult, two-child household. And what you see is if
you're down at a lower income bracket, Mr. Speaker, earning under
$20,000 a year, you're not going to pay a penny in taxes, not a penny
in taxes. In fact, you're actually going to get some money back through
the FairTax rebate. If you get up to $30,000 a year, you're still not
going to pay a penny in taxes; you're going to break even paying zero.
If you're doing better, if you're making $45,000 or $60,000 or
$121,000, you're going to see your rate continue to climb. Not the
marginal rate, Mr. Speaker, but the effective rate. That's what's so
lost in this body.
So often when we have our tax debates, I can have a single flat rate
for everyone, a single rate; but based on what the standard deduction
is at the bottom of that rate, I make that rate progressive such that
folks at the bottom end of the income spectrum are getting a check back
so that folks in the middle aren't paying a penny at all and so the
folks at the top are paying more and more and more, depending on how
much they spend. Progressive tax with the FairTax, Mr. Speaker.
You can't see this chart, Mr. Speaker, but it's the most dangerous
chart that anyone is going to have on the House floor today. It shows
two diverging lines. It's a chart that goes back to 1979, Mr. Speaker.
The last time we had a President from the great State of Georgia was
Jimmy Carter. We go back to 1979, and we chart who's paying the taxes
in America, going back to the President's vision of having a FairTax
system.
This blue line, Mr. Speaker, is the bottom 80 percent of all
Americans, bottom 80 percent. Most of us--80 percent. It's tough to
call yourself the bottom when you're the majority. But 80 percent of
income earners, just distinguishing that part of America from the top
20 percent--80 percent of income earners.
What percentage of the American tax burden, income tax burden, is
that 80 percent of America paying? And conversely, because we talk so
much about the 1 percent, Mr. Speaker, what percentage of the American
tax burden is the 1 percent paying?
And I have something that's just staggering, Mr. Speaker. Folks
wouldn't believe it if you didn't see the data. Back in 1979, when
Jimmy Carter was leaving office, 80 percent of Americans paid 35
percent of all the tax bills in this country, all the income tax bills;
80 percent of Americans paid a total of 35 percent of the burden. Now,
we can argue whether that's too much, too little; but 80 percent were
paying 35 percent of the burden.
Today, Mr. Speaker, go all the way out to 2009--it's the last year
for which the IRS produced this record, that's why it's the last year
that we have information for--come out to 2009, 80 percent of Americans
are now paying 6 percent of the bills in this country. Eighty percent
of Americans, 80 percent of the voters, are paying 6 percent of the
bills. That's staggering. Most of us are in the 80 percent, Mr.
Speaker, and we think that we are paying our fair share. In fact, so
many of us think we probably ought to cut taxes a little bit more, and
yet we're only paying 6 percent of the bills.
I want to tell you that that's dangerous. It's dangerous because that
free golf cart I talked about earlier, there is no way I'm paying
$7,500 for a golf cart. I would rather walk. I don't need a golf cart,
don't have any place to put a golf cart, don't know how much it costs
to charge a golf cart, don't really have any place I can go on a golf
cart. I'm not paying $7,500 for a golf cart. But if you give me the
golf cart for free, I'm going to tell you where to deliver it. I'm
going to phone it in today--free golf cart--and tell you right where to
send it.
{time} 1500
When we don't have skin in the game, we make different decisions. In
fact, we make bad economic decisions. They may be good decisions for
us, right? It's a good deal if you can get a free golf cart. I
recommend it to everyone. But it's a bad deal for the American taxpayer
who's giving away those free golf carts.
When we, the 80 percent, Mr. Speaker, are only paying 6 percent of
the burden, we begin to make bad voting decisions about what the cost
of government is. And here's the other thing: it goes again to that
innate sense of fairness that everyone in America believes in. We all
believe in fairness. We may not believe in equal outcomes, but we
believe in equal opportunity, that everyone should have a fair shot at
success.
That top 1 percent that we talk about so much about, Mr. Speaker, I'm
not in it, but I aspire to be in it one day. I hope I'm successful. I
don't see the pathway from here to there yet, but I'm going to keep
working at it. In 1979, when Jimmy Carter was President, that 1 percent
paid 18 percent of all the bills in the country. Today, Mr. Speaker, 1
percent of the people pay 38 percent of the bills. The 1 percent are
paying more than 80 percent combined. In fact, the 1 percent is paying
more than 90 percent combined.
When you live in a land of self-governance, the biggest experiment in
self-governance the world has ever known, an experiment about which
Alexis de Tocqueville said, when he wrote about
[[Page H2060]]
it in the mid 1800s, As soon as the American people can decide they can
vote themselves benefits, that will signal the end of the Republic.
They wonder how does America work, how can self-governance work. And
de Tocqueville said, It's working today because everybody is pulling
the wagon together, but as soon as they figure out that 51 percent of
the Americans can tax the other 49 percent of the Americans, that's
going to signal the end of self-governance.
We all believe in the fair share, Mr. Speaker. Folks ought to do
their fair share of the work; folks ought to get the fair share of the
benefit. We all believe in fairness. It's something that every
preschool in America is teaching children, every family in America is
teaching their children. But in the past four decades in my lifetime,
every single year we've shifted the burden so that most of us don't
have to shoulder the burden as heavily as we did the year before, such
that 80 percent of us in 1979 were carrying 35 percent of the weight,
and now we're only carrying 6 percent.
I don't know whose definition of fairness that falls into, Mr.
Speaker. It threatens self-governance. I want a seat at the
decisionmaking table. I want to be a part of the solutions for
everything that happens in this country. I want to pay my fair share,
and I want to do my fair share. And I think that is the feeling, the
sense, the commitment of every single American today, Mr. Speaker, but
we hide those results in a Tax Code that folks can't see: 80 percent of
the people paying 6 percent of the bills.
Now, I know what you're saying Mr. Speaker. You've looked at some of
those income distribution tables too, and you're thinking, Well, golly,
Rob, maybe that 1 percent is just earning that much of the income. No,
that's not true. Again, this is the latest year, 2009, for which the
IRS has produced records. The top 1 percent, as the share of the pretax
income, all the income earned in America, the top 1 percent earned 13
percent of the income and paid 38.7 percent of the taxes.
Now, here's the question, Mr. Speaker: If the top 1 percent--again,
I'm not there. I don't know if I'll ever get there. If I stay in public
service, I will absolutely never get there. If the top 1 percent are
paying 38 percent of the bills while earning 13 percent of the income,
in what world are they doing less than their fair share?
Here's the thing: I need to borrow money from time to time, Mr.
Speaker. I borrowed money for my house. I borrowed money for my car. I
need to borrow money. If folks aren't saving money, I can't borrow the
money they put in the bank. I want folks earning money and saving money
so that I can borrow money. Every single one of us who borrows money,
we're not borrowing the bank's money; we're borrowing another citizen's
money who put that money in the bank so the bank could lend it to us.
We need those savings in this country, Mr. Speaker. I'm glad folks are
successful. I'm glad they're creating businesses. I'm glad they're
employing me and my neighbor's and my neighbor's children. I'm glad
they're building my community back home.
I don't demonize success. I celebrate success. You know, Bono from
U2, Mr. Speaker--I don't know if you're a fan of U2 like I am. Those
were some coming-of-age albums they were producing back in my youth.
Bono said what he loved about America is that in America you put your
arm around your son, you take him and you look up at the big house on
the hill, and you say, Son, one day if you work hard, that could be
you. Bono then said over in Ireland, they put their arm around their
son, they look up at the big house on the hill, and they say, Son, one
day we're going to get that guy.
That's not who we are in America. We celebrate success, and we
believe--in fact, we're certain of it--that if we work hard, we apply
ourselves by the power of our ideas, the sweat of our brow, we can move
our fate from yesterday to tomorrow. We can elevate ourselves pursuing
whatever it is that we want to pursue from yesterday to tomorrow
because we live in America. But something has gone on in this body, Mr.
Speaker, not just in the House of Representatives, but across the
street in the Senate and down the street at the White House, where
folks have begun to demonize success.
Home Depot came out of the great State of Georgia, Mr. Speaker. I
love Home Depot. I encourage everybody to get themselves an orange
apron, put that on and get some work projects done. They do great
activities for the kids on Saturday morning. They get folks started
with building activities at an early age, Mr. Speaker. That company was
started in the great State of Georgia, and the four men who started
Home Depot--and you all know Home Depot as well as I do--they said if
they got together today to try to start Home Depot, they would fail.
In America today, we are so demonizing success, we are so punishing
success, we are making it so difficult for entrepreneurs to get
started, that if the same four people with the same good idea got
together today, they would fail. The only way this country works is if
entrepreneurs succeed.
The Department of Labor, Mr. Speaker, they keep statistics on these
things. They say today in America, these years during the President's
administration, we've had the lowest level of entrepreneurial activity
since the Department of Labor began keeping records. It's not the
lowest level of people succeeding, but the lowest level of people
trying. The word is out, Mr. Speaker, that you cannot succeed in
America any longer, and it's just not true. If it is true, we have the
power to change it. We get to decide the rules of this country, Mr.
Speaker. We sit on the board of directors of America, and we get to
make these rules.
Success, Mr. Speaker. Opportunity. America. Those are synonyms. They
have been synonyms since 1776. They will be synonyms until the day that
I die unless you and I trade those things away.
The FairTax says we're not going to be in the business of punishing
people any longer; we're going to be in the business of celebrating
success. The more you save, the less you'll be taxed; the more you
spend, the more you'll be taxed.
Now, you all know, Mr. Speaker, about jealousy just as well as I do.
I don't know if you had this same issue, Mr. Speaker. When I got ready
to apply for college, I applied for all the Federal grants. I filled
out that big FAFSA form trying to get some help from the Federal
Government. I got nothing. They said, Sorry, your family has saved too
much money.
Now, we come from a single-income family, Mr. Speaker, but my buddy
down the street, he came from a two-income family. His mom was an
architect and his dad was a lawyer. They had money stacked up in the
windows, Mr. Speaker. They had vacation homes. They went skiing in
Vail. They had boats. They all drove--I say all. There were four of
them in the family, and three of them drove Mercedes and one of them
drove a BMW. They all were new. When he applied to get money from the
Federal Government, the government said, You know what, we've looked at
your savings account for the family and you don't have a penny in it.
You need help. Here's some money for you.
Something's wrong in our Tax Code, Mr. Speaker. It celebrates the
consumption of goods, and it penalizes savings. We need to be in the
opposite camp. The reason we have to go to China and to Germany to
borrow money to fund America is because Americans can't fund it any
more. Back in the 1970s, Mr. Speaker, we were still borrowing money, we
still had a national debt, but Americans lent the Federal Government
the money to fund the processes of the Federal Government.
{time} 1510
Today, almost 50 percent of the money we spend and 50 percent of the
money we borrow comes from foreign nations. We as a people can't even
save enough money to fund the United States Government any longer, and
our Tax Code encourages that conspicuous consumption at every level.
Mr. Speaker, let me just show you some of the things that are in the
Tax Code. Again, these are all complicated questions. You've got to
make these decisions for yourself. If they were easy questions, Mr.
Speaker, they wouldn't need you and me and these two new freshman
classes to sort them out. The easy questions were sorted out long, long
ago.
[[Page H2061]]
Again, Mr. Speaker, you wouldn't believe this unless you dig deep
into the numbers. We spend more in tax credits and tax loopholes and
tax giveaways than we do on all other discretionary spending accounts
combined.
What do I mean by that?
We have what we call ``mandatory spending'' here. That's Medicare,
Medicaid, Social Security, and interest on the national debt. We call
that ``mandatory spending.'' Everything else--roads, bridges, courts,
parks, the environment--is what we call ``discretionary spending.''
Everybody knows what the tax rate is. Everybody knows they're paying
into the tax system. We give away things in the tax system--promote
this idea; promote that idea; give away this pot of money. We give away
more through the Tax Code--we spend more through the Tax Code--than we
spend on all other aspects of government combined, but the spending is
hidden.
I've put up a few of what we'll call ``income tax expenditures''
here. Let's see what that is.
For example: exclusion of interest on public purpose State and local
bonds. Right? That seems pretty innocuous, State and local bonds. We
want to encourage State and local governments to take responsibility,
so we're going to allow those bonds to pay interest tax-free. Well,
okay, but it's not free. Somebody else is paying for it. Those folks
who have those bonds aren't paying for it, but the rest of America has
to pick up the tab.
Here is one: individual retirement accounts. Right? If you put money
in your IRA, we want you to save for your retirement. We don't tax you
on that money, but it's not free. Somebody else is paying that tax.
It's just not those folks who are saving their money in their IRAs.
I'm not saying these things aren't good ideas. I'm saying we have to
talk about where this money is coming from. I'm closer to death than I
am to birth, Mr. Speaker. This $16.7 trillion that we've borrowed from
America's kids, I'm going to be dead before we pay that back, but it is
going to be an albatross around their economic neck for another
generation or two or three, and we're making those choices today. We're
spending money through the Tax Code instead of through the
appropriations process.
The FairTax says: no more. The FairTax says: a tax isn't about
manipulating behavior. A tax is about collecting revenue to fund the
necessities of a government.
We can argue about what those necessities are. Should it include the
President's health care bill? Should it not? Should it include wars in
Iraq and Afghanistan? Should it not? Should it include environmental
protections? Should it not? We can argue about all of those things, but
that's what revenue is for. You collect the revenue to fund those
priorities that we, the American people, believe in.
But what we use our Tax Code for today is for the Congress of the
United States, for the President of the United States and other folks
with political power and influence to pick winners and losers through
the Tax Code, so much so that we spend more money through the Tax Code
than all other aspects of government combined--everything on the
discretionary side.
It wasn't this way when we got started. Back in 1913, the passage of
the 16th Amendment allowed Americans to have an income tax for the very
first time. Do you know what they said, Mr. Speaker? You've probably
heard this before. They said, This is only going to be a very small tax
on the very wealthiest of Americans.
My calculations, using CPI, Mr. Speaker, tell me that it was a 1
percent tax on folks who made over $9 million a year. On $9 million a
year, a 1 percent tax--I'm pretty sure we could get 51 percent of the
folks to vote for that--but over time, that income tax grew so that it
touches every single American family. Thirteen hours, on average, an
American family spends to comply with the Tax Code. And for what? It
destroys opportunity. It hides spending. It protects from scrutiny
those items that this U.S. House of Representatives has decided are
worthy of taxpayer expense.
We have a choice: don't lower wages in America. In fact, study after
study says, if we pass the FairTax, we're going to see wages go up.
It's going to increase economic activity and make us a magnet for
capital from around the world. Why in the world are we borrowing money
from China when we could just change our Tax Code, and money that
American companies have already earned would flow back into this
country in order to create jobs?
The FairTax says: no more. Let's have one tax rate on everything that
Americans buy and consume.
I'll close with this, Mr. Speaker. Here is the catch. We are the only
OECD country in the world--the Organisation for Economic Co-operation
and Development--that does not have a consumption tax.
Now, what does that mean?
It means, when we build a Ford right here in the United States of
America, that Ford has buried in the cost of that Ford that 15.3
percent payroll tax that every employee and employer has to pay, the
income tax that every employee and employer has to pay--all of the tax
burdens of the United States of America. Again, the highest corporate
tax rate in the world is buried in the price of that Ford. When it gets
to Germany, they add their Value Added Tax on top of that, and they
ask, Who wants to buy a Ford? But the BMW that's leaving Germany, where
they have a consumption tax, doesn't have those taxes buried in it, Mr.
Speaker. In fact, it's tax free because the tax goes on top of it at
the sale. So, when they ship that BMW overseas, it comes over here
completely tax free, and then we add on top of it our income taxes, our
payroll taxes, our corporate taxes.
That's an unlevel playing field, and the person it disadvantages is
not the owner of Ford. The person it disadvantages is the employee at
Ford, who needs that job. We used to have a Ford line and a GM line in
the city of Atlanta, Mr. Speaker. They're both closed. They are both
closed today because they couldn't make it work.
We can bring those jobs back to America. More importantly, we can
prevent jobs from leaving America, not because we're making them stay,
not because we're going to tax them if they leave, but because we make
America the magnet for job creation and economic activity across the
planet. Today, we're the worst. Tomorrow, we can bring ourselves back
to the middle.
My question to the body today is: Why don't we commit ourselves to
making America the very best place to do business on the planet?
We can continue to borrow money from the Chinese if we want to. We
can continue to add burden to all the young people in America if we
want to--or we can take America back to our roots. There is no more
productive worker on the planet than the American worker. If we free
the American worker, if we free the American entrepreneur through a Tax
Code that the American people can understand, we will bring a new era
of prosperity to America, the likes we have not seen in my lifetime.
With that, Mr. Speaker, I yield back the balance of my time.
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