[Congressional Record (Bound Edition), Volume 145 (1999), Part 12]
[House]
[Pages 16899-16905]
[From the U.S. Government Publishing Office, www.gpo.gov]



                   TAX RELIEF FOR THE AMERICAN PEOPLE

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 1999, the gentleman from Colorado (Mr. Schaffer) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. SCHAFFER. Madam Speaker, I would invite all Members of the 
Republican majority and our Republican conference to join me on the 
House floor for this special order. This is an hour I have secured on 
behalf of our conference, and I know there are many who are eager to 
come to the floor today and have expressed their desire to come to 
speak about the prospect of passing real tax relief for the American 
people.
  The debate over this topic is an interesting one, and it is one that 
we have heard part of so far tonight. But I want to tell the other side 
of that story and alert House Members and those throughout the country 
who are perhaps monitoring tonight's proceedings precisely what is at 
stake with the debate on the projected taxpayers' surplus, or 
overpayment of tax revenues, and the prospect of tax relief for 
American families.
  We just heard the previous speaker talk about his assurances that the 
government will manage the taxpayers' money. And they will propose to 
do it well. I have no question or doubt about that. I believe all 
Members of Congress are sincere and that those of us who are charged 
with the responsibility of keeping track of the taxpayers' cash would 
like to do that in a responsible way and would like to manage that 
money well. But that really neglects the underlying debate, and that is 
who should be managing the money of the taxpayers?
  Now, those dollars that have legitimate cause to come to Washington 
to be spent should be managed well, certainly, and that is our job as 
Members of Congress, but the fact of the matter is the American 
taxpayers are overpaying when it comes to their taxes. They are sending 
more cash to Washington, D.C. than is necessary to legitimately run the 
government. So the question becomes: What do we do with the projected 
taxpayers' surplus?
  Now, the core principles of tomorrow's debate and the debate that is 
ongoing in Washington, in fact the difference between liberals, those 
we just heard, and conservatives, that we will hear now, is on the 
following basis:
  Conservatives, the Republican Party, believes in personal freedom, 
and that is as opposed to our opponents' objectives, those we just 
heard, of government control. And I emphasize the notion of government 
control again by citing the quote that we had just heard on the floor; 
that government will manage the taxpayers' money.
  Conservatives believe in personal freedom; our opponents on the House 
floor, who oppose tax relief, believe that government should control 
the taxpayers' cash.
  Republicans are for lower taxes versus higher taxes. Republicans are 
for limited government versus big government. We are also for economic

[[Page 16900]]

growth versus the bureaucratic control of our economy. And we are for 
more jobs versus red tape.
  The debate on tax relief and what to do with the tax overpayment 
could not be boiled down any more simply than that which we see here.
  So let me carry on on those very points, and let me start by 
referring to some of my own constituents. I, like many other Members of 
Congress, meet with constituents as often as I possibly can. In fact, I 
hold a town meeting in my Congressional District every Monday morning 
before I hop on a plane to come here to Washington. I also send out 
public opinion surveys to my constituency and ask them to give me their 
opinions on a host of issues.
  I ask questions like, ``What is the single most important issue 
facing the country today?'' ``What is the single most important issue 
facing your family?'' ``What do you think are the biggest challenges 
for our schools?'' And so on.
  I just grabbed a handful as I was walking out of the office today. We 
read these as they come in. Question number seven on my ``Congressman 
Bob Schaffer Public Opinion Survey'' is: ``What should be done with any 
Federal budget surpluses?''

                              {time}  2100

  A respondent, Kirk and Kathy Brush from Fort Collins, Colorado, write 
in, ``True surpluses should result in tax cuts.''
  Here is another one. Again question No. 7, what should be done with 
any Federal budget surpluses? ``To strengthen Social Security and 
reduce taxes.'' That from James Sanden of Fort Collins, Colorado.
  Mr. and Mrs. Gerald Simmons say of the surpluses, ``Any surpluses 
should be returned to the taxpayers.''
  I have more. Here is a gentleman who sent a letter in with his 
response. This is another individual from Fort Collins, Colorado, Mr. 
Ray. Mr. Ray says that taxes are the number one issue when it comes to 
the surplus. Relief for retired persons living on pension income. While 
the contribution to most allocated pension accounts were made tax-
deferred and the earnings deferred, I believe the tax upon withdrawal 
should be less than the rate for ordinary income. After all, that money 
which mostly goes into the stock market enables corporations to have 
additional capital to expand, thereby advancing our economy which 
generates additional revenue for the government.''
  He hits it right on the head. Here is another one. The McFarlands, 
Mr. and Mrs. McFarland. They wrote in, again the question, what should 
be done with the Federal budget surpluses? My constituents, the 
McFarlands, tell me, ``It should be returned to the taxpayers who 
worked all of their lives to earn it. Don't you agree?'' Mr. and Mrs. 
McFarland, if they were here on the floor which they are not, but I 
would tell them as I do tell them when I see them back home that I do 
agree with them and frankly the majority of Members of Congress agree 
with them as well. And certainly this is the sentiment expressed by the 
McFarlands that will be carried on the House floor tomorrow and upon 
which we will move forward with returning some of their hard-earned 
dollars back to them and all of their friends and neighbors as well.
  The bill which we will be considering tomorrow, H.R. 2488, provides 
approximately $864 billion in broad-based tax relief. The proposal is 
highlighted by a 10 percent across-the-board reduction in individual 
income taxes. The bill reduces the impact of the marriage tax penalty 
by increasing the standard deduction from married couples to twice that 
of a single person. I could not bring newlyweds onto the House floor 
tonight, but I brought a picture of some. Here is a standard newlywed 
couple on their wedding night. What they are about to find out when 
they pay taxes for the first time filing jointly is that this Federal 
Government will penalize them, assuming they are an average family, to 
the extent of about $1,400 per year. That is as a result of a number of 
taxes that when combined and when considered together just increase, 
put a portion of their income into higher tax brackets and they will be 
penalized for getting married. Imagine that. In a country as great as 
ours with a rich tradition of the most essential and central social 
unit being the family and the institution of marriage, why on earth 
would we penalize marriage? Why would we punish people for joining in 
lifelong unions in a way that results in the most civil society in the 
history of human civilization? It is wrong. Everyone knows it is wrong, 
but there is really only one party here in Washington who cares about 
this family and who cares about the tax burden and wants to do 
something to prevent them from getting hit with this unfortunate 
penalty upon their wedding day and each year thereafter.
  You see, there are many of us who believe that American people know 
how to do better with their own income, that they should not send it 
here to Washington unless it is absolutely necessary to run the basic 
programs and services that we have to. In fact, what we have seen 
through a number of Presidents is the power of tax relief on the 
American economy. President Kennedy and President Reagan behind him 
both found that by reducing the overall tax rate, in other words, the 
rate applied to general income to determine Federal taxes, by reducing 
the tax rate the Federal Government actually increased revenues. That 
is right. That is hard for people to grasp in many cases, but it is not 
all that hard if we just look at the economic history in recent years 
in our country. Lowering the effective tax rate on the American people 
leaves more cash in the economy. More cash in the economy creates more 
jobs, creates more wealth. When more people are working and being 
productive and increasing incomes, although they are paying a lower tax 
rate, they are paying more dollars to the Federal Government. In fact, 
in the years of the Reagan administration, and the Kennedy 
administration before them, the result of tax rate reductions was 
increased revenues to the Federal Government. And so once again what we 
see in the core principles is that by focusing on personal freedom of 
the American people, leaving excess taxes in the pockets of those who 
earn those dollars, we believe that we will see increased economic 
productivity in the country again.
  That is contrasted with our opponents' objective of government 
control. People in Washington like government control. Do not get me 
wrong. If you are part of this Washington culture, you would certainly 
understand that. Fortunately most Members of Congress are not part of 
that culture. They go home on weekends and talk to constituents as I 
do, but for those who like it here in Washington, they like your money 
here, too, because, my goodness, they get to make the big decisions 
with it, they get the lobbyist waiting outside their door who wants to 
take them out to lunch or dinner or on the trips and try to figure out 
how they can get their hands on that cash. So if you like being a part 
of that sort of thing, why, keeping more of the American taxpayers' 
cash in Washington can be kind of exciting. I am one who happens to 
have a wife and four children and before entering the United States 
Congress was part of the free market economy and trying to run a small 
business. I can tell you, there is greater hope and optimism and 
prosperity for the American people if we focus on Americans rather than 
on government.
  I want to talk also tonight again focusing on the conflict in vision 
that the two parties in Washington have when it comes to taxes. This is 
a quote from the President of the United States in Buffalo, New York, 
just a couple of months ago. Talking about this budget surplus, he was 
celebrating the surplus, as many people in Washington like to do. Here 
is what he said: ``We could give it back, the budget surplus, we could 
give it all back to you and hope you spend it right. But . . .''
  Once again, ``We could give it back to you and hope you spend it 
right. But . . .'' And the ``but'' was that we perhaps cannot hope that 
American taxpayers will spend it right. Excuse me, but spend what 
right? ``It'' here is the taxpayers' money. It does not belong to 
people in Washington. ``It'' is the hard-earned wealth of the American 
people. It is not something that rightfully belongs under the domain of 
politicians

[[Page 16901]]

here in Washington, D.C. ``It'' does belong to the American people and 
``it'' should be returned as soon as we possibly can.
  The tax relief measure also includes a number of provisions for 
education tax relief. Specifically the bill expands the acceptable use 
of tax-free expenditures from education savings accounts to include 
elementary and secondary school expenses. It increases to $2,000 
annually from $500 under current law the maximum amount of 
contributions to education savings accounts. It allows tax-free 
withdrawals from qualified tuition plans that are maintained by private 
educational institutions, and it includes a public construction 
initiative.
  When the family here who gets married and gets saddled with their 
$1,400 marriage tax penalty progresses in the maturity of their 
marriage and contemplate children and perhaps have them and send them 
to school, they are also taxed to an additional degree. Education, of 
course, is a good thing. I think everyone in Congress would agree with 
that. But there is no reason our tax burden should make it more 
difficult for families like this to secure a good, quality education 
for their child or children, and that is what this provision of the tax 
package is all about.
  The other side will try to suggest that these are rich people here, 
that they are wealthy and therefore somehow do not deserve the tax cut, 
but these are average American families, the same kind of average 
American families who benefit from our tax relief package. We are 
providing tax relief to make greater education opportunity possible for 
millions and millions of American children. We are doing that again by 
taking less out of the pockets of the families who work hard to earn 
it, not doing as our opponents suggest, of keeping those dollars, 
hoarding them here in Washington, D.C. and controlling their use based 
upon the priorities of bureaucrats. We stand for something very much 
different on the Republican side of the aisle.
  The tax measure also includes provisions that are designed to reform 
pensions and enhance retirement security. Specifically the bill 
increases portability of pensions so employers may roll over plans from 
one job to the next. We provide additional salary catchup contributions 
for workers over the age of 50. These are individuals who may deposit 
additional amounts into certain retirement accounts. The bill also 
lowers the vesting requirement of pension plans so employees are vested 
after 3 years instead of 5. It increases the contribution and benefit 
limits in defined contribution and benefit plans and it also simplifies 
pension systems to help businesses offer and improve their pension 
plans. That is an important provision as I mentioned.
  I mentioned the McFarlands from Fort Collins, Colorado. They are 
retirees. Again they say that the Federal Government should return any 
surplus to the taxpayers who worked all of their lives to earn it. They 
want to know if I agree. Of course I do.
  Let me go back to the comments from Mr. Ray in Colorado. He is asking 
for relief for retired persons living on pension income and that is 
what we are doing. We are listening to people like Mr. Ray, real 
people, average Americans, not wealthy, not extraordinarily endowed 
with huge amounts of cash in their personal bank accounts but average 
Americans earning average incomes or on average pensions, those are the 
beneficiaries of the Republican tax plan that we will vote on and 
presumably pass tomorrow.
  The bill also reduces the individual capital gains tax rate from its 
current rate of 20 percent to 15 percent and from 10 percent to 7.5 
percent. Those are for taxpayers in the 15 percent individual income 
tax bracket. This is an important provision. This is one that the 
President says he opposes. Lowering the taxes on those who invest, 
those who create wealth, helps the country create more wealth. It 
almost does not matter what part of the country one lives in, they are 
treated almost weekly to news headlines like these from Colorado. Here 
is one from the Denver Post. ``Average Income Up 6.1 Percent in 
Colorado.'' Here is another one from the Denver Post, a headline: 
``Welfare Rolls Drop 42 Percent.''
  Here are some quotes from that article, an article written by Angela 
Cortez. She interviewed a woman named Teri Higgins who was a former 
welfare recipient and says that welfare reform has meant a new way of 
life. After being on welfare for 3\1/2\ years, she is completely self-
sufficient. She was a full-time student halfway through her associate's 
degree in business administration when welfare reform kicked in nearly 
2 years ago. Under the new system, she had to work, so she decided on a 
work study program at a community college in Denver. Within a year, the 
37-year-old single mother of three boys went from being a welfare 
recipient to the office manager in a business setting. I will not cite 
the specific location but in a business setting in Colorado.
  She says, listen to this quote, this is remarkable, a real statement 
of what a strong economy means for real people. ``What made a 
difference were the extra things, like gas vouchers, day care, so I 
could go to school and a lot of emotional support from counselors.'' 
She once lived in a shelter with her children before entering the 
Arapahoe County social services system. She says she still struggles. 
``I make a decent wage, but it's still hard to make ends meet. But when 
I sit down and write checks out for all my bills and everything is 
paid, that is really a good feeling.''
  The specific components of welfare reform were certainly important, 
but what makes these dramatic numbers possible, this sea change and 
shift from welfare dependency to economic independence is not just the 
reform efforts but it is a strong economy, the kind of strong economy 
that results from employers providing jobs, that results from 
entrepreneurs making the kinds of investments that make our economy 
strong, the kind of investments which we enjoy to a far greater degree 
when we unleash the economic ingenuity of the American people and 
reduce the tax burden that the American people are saddled with.
  There is lots more. ``Workers Coming Off Welfare to Get Job Help.'' 
``Economic Success Filters Its Way Down to Charities.'' Here is a story 
about how the strong economy in America is helping charities receive 
more funds because businesses are contributing more to community-based 
charities that help people and are accountable to those folks back home 
in our districts.

                              {time}  2115

  ``Jobless Rate in Colorado Hits Record Low.''
  I point out all of these headlines because these headlines are the 
way we help.
  See, our Democrats, friends on the other side of the aisle, believe 
in the principle that I showed you earlier, not in personal freedom. 
Their goal and their vision is government control.
  You see, government can be very charitable; government can help a lot 
of people when it takes your cash and spends it on the government-run 
charity of the politicians' choice. But personal freedom, tax freedom, 
greater amounts of liberty, lower tax rates allows for American 
entrepreneurs, allows for the free market to rise up and treat us still 
more to these wonderful headlines about former government dependents 
becoming self-sufficient and living the American dream and being 
treated as real Americans.
  There is more in this tax package. It gradually eliminates the estate 
and gift tax over a 10-year period, also another topic important to me 
and my constituents back home in Colorado.
  My district consists of the eastern plains of the State, 21 counties 
in Colorado, generally everything that is flat. Many people think of 
the mountains and the mountains that start right down the front range 
of the center of the State, but everything east of that out to Nebraska 
and Kansas is part of the high prairie, high plains, and it is one of 
the richest agriculture areas on the planet.
  Many of the farms and ranches that have been established were 
established by homesteaders, people who headed

[[Page 16902]]

west in search of new opportunity and really led to the sense of rugged 
individualism and independence that represents the West; and families 
like to pass their farms on down to their children. Family farmers look 
forward to that, to leaving that legacy for their kids, and the 
agricultural lifestyle of the West is something that all Westerners are 
very proud of.
  But when the old farmer starts to get old and have a difficult time 
working the land, teaches his children how to manage the ag business 
and work the farm, he eventually starts thinking about how he is going 
to hand that asset over to his children and keep that farm in the 
family. The estate and gift tax makes that virtually impossible for 
many farmers, and, Madam Speaker, I know you in your district see a lot 
of farmers just as I do, those who are confronted with the farm sale to 
sell parts of the farm off, the equipment, the inventory, in order to 
pay the taxes, in order to when a family member, when the head of the 
household, dies and tries to pass that farm on to his or her children.
  This bill gradually eliminates the estate and gift tax over a 10-year 
period. Let me state that again. It eliminates the estate and gift tax, 
not just tinker with it, not just fiddle around the edges, but 
envisions a day when we will no longer be taxed upon death.
  The measure also includes provisions to make health care and long-
term care more affordable and accessible. For example, the bill 
provides 100 percent deduction for health insurance premiums and long-
term care insurance premiums.
  Now again I ask my colleagues to think about that for a moment. You 
see, back in World War II, when all of the young men were overseas 
fighting the war and winning, we had a real work problem, a labor 
shortage, here in the United States, the government imposed a wage 
freeze, and employers had a hard time keeping people in the factories, 
and it was at that point in time that the Federal Government, the 
Congress, created Section 106 of the IRS Tax Code.
  Section 106 is that provision that says, well you cannot, at the 
time, cannot increase wages; but we can make it easy for you to provide 
this benefit of health insurance for your employees. We will give you 
100 percent deductibility if your business is large enough. Small 
business owners did not get that benefit, neither did their employees; 
but we believe fully that any contribution, any investment that an 
employer, whether you are a large employer or a small one makes into a 
health insurance program for their employees, should not also be taxed 
on that investment. They should receive 100 percent deduction for 
health insurance premiums.
  Now this will go a long way to helping health insurance become more 
affordable, more available for more people in the workforce than those 
who have a difficult time affording health insurance today, and once 
again I want to contrast this value with those or with that which is 
represented by our Democrat friends over on the other side of the 
aisle.
  My colleagues may recall that the First Lady had proposed to 
socialize the health care industry in the United States to have 
government basically run health care and run one gigantic insurance-
providing mechanism for the American people. Well, that idea was 
rejected as being somewhat ludicrous. Thank goodness for that because 
the sentiments of the American people are in quite the opposite 
direction.
  The American people realize that if you tax employers less, if you 
tax health care coverage less, if you remove the tax burdens on those 
who wish to provide health insurance for themselves and their families, 
guess what? You will have more health insurance coverage for yourself, 
for your families, for employees.
  The bill also provides an additional exemption which is currently at 
$2,750 for individuals who care for the elderly and who care for 
elderly family members in their homes. It expands the availability of 
medical savings accounts and makes these medical savings accounts 
permanent, and it allows employers to offer long-term care insurance to 
cafeteria plans.
  Now some of our Democrat friends on the other side of the aisle, and 
you did not have to listen very long just a few minutes ago to hear 
them say that the tax cuts in the Republican bill favor the rich. Well, 
this is what they are talking about, those tax cuts which are designed 
to make it easier for employers to provide health insurance for their 
employees, to make it easier for those individuals who stay home to 
take care of elderly family members.
  Those are the rich people that they speak of with such venom and such 
disdain, but it is these employers who are providing the jobs, these 
employers who would like to offer higher incomes, that would like to 
offer greater benefits, that would like to offer health insurance 
coverage for more employees and a better insurance product perhaps. 
Sometimes the barrier is simply the expense, the expense of the Federal 
Government, the cost of being an American citizen.
  We want to lower that. We want to lower that to help real people, 
average families, real citizens who are working very hard today and 
every day and sending too much money to the Federal Government under 
the present set of circumstances.
  The bill also authorizes the Housing and Urban Development Secretary 
to designate 20 renewal communities in both urban and rural areas, 
allowing them to qualify for special tax incentives. Now these renewal 
communities are communities that are designed to help those who seek 
low-income housing. These provisions are designed to create jobs, 
stimulate investment, and assist families in impoverished 
neighborhoods.
  Now once again, if you look at who gets the special tax incentive, it 
is really not the individual who moves into the low-income housing 
unit. It is the developer and the construction people who build that 
renewal community who actually do the construction. So from the 
Democrats' perspective, this looks like a rich person getting a tax 
break, but in reality we are talking about 20 new communities around 
the country in urban and rural settings where low-income families will 
have the new hope, the new promise, of housing and home ownership, an 
opportunity that today they do not have under our present high tax 
system.
  The provision also phases out, the bill also phases out the 
alternative minimum tax for both individuals and corporations. It 
extends the number of expiring tax credits, including the research and 
development tax credit, for 5 years through June 2004, the work 
opportunity and the welfare to work tax credit through December 2001.
  Again, the welfare to work tax credit. Here is another tax that our 
Democrat friends will say goes to rich people in America. What is the 
welfare to work tax credit? Well, this is a tax credit that tries to 
achieve the goals that are implied in the name, those individuals who 
help welfare recipients move out of welfare and into self-sufficiency.
  The ultimate beneficiary of that transaction is not the employer 
exclusively, the rich guy, as the Democrats would describe that 
entrepreneur. The real beneficiaries are the people who have no jobs 
today, those who are having a difficult time making transition from 
welfare to work, those who have still not seen the benefits of the 
Republican welfare reform initiative that was passed in 1994 and 
implemented at the State level across the country.
  Those are the individuals who still need our help, still deserve our 
compassion and still need our attention. Providing this tax credit will 
put many, many more back to work and once again treat them like real 
Americans.
  The bill also provides an above-the-line deduction for individuals. 
Currently individuals may, under the provision individuals may take the 
deduction whether or not they itemize a deduction for prescription drug 
insurance coverage for Medicare beneficiaries contingent upon certain 
Medicare changes. This suggests a bigger plan that we are moving 
toward.
  Once again, the President announced that he wanted to dip into the 
Social Security savings, the Social Security Trust Fund, to pay for an 
additional

[[Page 16903]]

entitlement, additional benefit with respect to prescription drugs. Our 
idea is very different and that is to allow individuals to take a 
deduction whether or not they itemize for prescription drug coverage 
for those who are in the Medicare program.
  This means keeping those dollars in your pocket, not sending them 
here to Washington, keeping those dollars in your pocket. Just think 
about that for a moment. Under the current law a taxpayer, senior 
citizen, sends their tax payments to the Federal Government, they come 
here to Washington. We politicians sit around here and establish the 
priorities for the Nation, and if we decide it is prescription drugs, 
then we will take the Nation's wealth and spend it on that particular 
priority on that given day, and at the next election we will decide it 
is another priority, and maybe we will change the priorities at that 
point in time to serve our election causes, and we redistribute the 
wealth of the American people.
  Well, that is just nuts. As my colleagues know, what we really ought 
to do is just not bring it here to Washington in the first place. Let 
us just be efficient about it, why do we not? Why do we not just leave 
that cash in the hands of those who have worked all of their lives, 
people just like the McFarlands who worked all of their lives to earn 
it, leave it in their pockets, let them spend it as they see fit, let 
them spend it on a growing economy that helps us pay down the national 
debt quicker, saves Social Security more completely, and pay for those 
truly legitimate causes the Federal Government has constitutional 
jurisdiction over.
  The provision also includes a number of revenue offset provisions 
accounting for approximately $5 billion over 10 years, and that means 
that we will attempt to spend less in many areas, eliminate a lot of 
waste in our government and a lot of other provisions that, frankly, 
the American people do not want and do not need and will never miss in 
order to help make this tax relief possible.
  Let me provide a little background for a moment.
  Do you remember when the Republican party took the majority of the 
Congress? We did so on the basis of the Contract with America, 10 bold 
promises that we issued to the American people: if elected, we will 
deliver and bring to the House floor for a vote, 10 various provisions. 
One of those was the 1995 Tax Fairness and Debt Reduction Act, and that 
provided Americans with comprehensive tax relief. That bill included a 
$500 per child tax credit, outlined measures to alleviate the marriage 
tax penalty, it created tax-free American dream savings accounts, it 
repealed the 1993 tax increase on Social Security benefits and provided 
a 50 percent exclusion for capital gains, and we indexed that for 
inflation.
  Now these are tax provisions which many of which we already have, but 
the President vetoed that measure, and we had to try it again. In 1997 
we provided further additional tax relief. We provided tax relief 
through the education saving accounts. 1998 we passed a Taxpayer Relief 
Act, again reducing the tax burden on American families and giving 
Americans new rights in defending themselves against the intrusive 
practices of the Internal Revenue Service.

                              {time}  2130

  Our 2000 budget proposal provided real leadership by setting aside 
dollars in our long-term budgets, long-term budget to allow for tax 
relief to take place and did so while protecting Social Security, 
protecting Medicare, increasing spending on our national defense, and 
outlining a plan that allows us to create the best education system in 
the world.
  Now, we have heard the President talk about the budget surplus. We 
expect, over the next 10 years, to have approximately $3 trillion in 
surpluses here in Washington. Those are dollars that the Federal 
Government receives over and above the expenditures of the Federal 
Government at that point in time. It is a little bit complicated and 
confusing, because some of those dollars are devoted directly to the 
Social Security Trust Fund or attributable to Social Security taxes. 
Those are dollars we do not want to touch. We want to leave those 
dollars for Social Security. In fact, over that 10-year period, what 
the Republican plan entails is providing a dollar of tax relief for 
every $2 of Social Security savings.
  The President does not agree with us, that we ought to lock that 
Social Security fund away, put it aside and leave it exclusively for 
Social Security. The President would prefer to spend a portion of those 
dollars, reduce the size of the allowable tax relief package, and 
increase the spending of the Federal Government and ultimately the size 
of the bureaucracy in Washington, D.C.
  Madam Speaker, let me talk about some of the provisions that I just 
enumerated and in perhaps a little bit more detail. The bill provides 
for $534.2 billion in family tax relief over the next 10 years. As I 
say, I mentioned this earlier. Let me mention that number again, $534.2 
billion over the next 10 years for family tax relief.
  Now, if one makes over $40,000, the Democrats believe one is rich and 
believes that one should not earn, one should not be able to save that 
additional income. One should continue to send it here to Washington, 
D.C. so that it can be squandered and wasted and controlled by people 
here in Washington. Well, average families are the ones who benefit 
from the Republican tax package that we will vote on tomorrow.
  Let me restate that it reduces the individual income tax rate by 10 
percent over a 10-year period. Think about what a 10 percent reduction 
in one's income tax obligation to the Federal Government will mean. For 
many States, for example, the State of Colorado is a perfect one, the 
State income tax is indexed to the Federal income tax rate.
  So a reduction in Federal income taxes corresponds to an equivalent 
reduction in one's State income taxes as well. By the year 2009, our 
bill reduces the 15 percent, 28 percent, 31 percent, 36 percent and 
39.6 percent tax rates to 13.5 percent, 25.2 percent, 27.9 percent, 
32.4 percent, 35.7 percent respectively. Those are the individual tax 
brackets of every American who earns income, unless one is a very low 
income, falls within one of those tax brackets.
  Let us use the 31 percent tax bracket as an example. Most Americans 
are in that ballpark. If one is paying 31 percent of one's income in 
taxes today, next year we propose, for 2001, from 2001 to 2004, we 
propose that that rate drop to 30.3 percent. Then from 2005 to 2007 to 
29.5 percent. In fiscal year 2008 we want that rate to drop to 28.7 
percent, and after 2009, we want that rate to drop to 27.9 percent. It 
is a pretty substantial reduction, about a 3 percent reduction in 
income taxes for individuals in that category.
  I mentioned the student loan interest rates, because I know there are 
many students today who are trying to finance their college education, 
their college degrees through debt financing. This Congress passed 
legislation last year that affected the student loan interest rates 
somewhat. There was a scheduled decrease in those interest rates. We 
slowed that decrease a little bit; it was not the best part of the bill 
certainly, but nonetheless, there is some attention being paid here in 
Washington to the cost of financing college education.
  We are going to adjust that student loan interest deduction for 
married couples who file joint returns to twice that of a single 
taxpayer, so that the married couple that I showed you their photo of a 
little earlier, those individuals will see some relief when they try to 
secure a greater education opportunity for themselves.
  Let me talk about the alternative minimum tax for a moment as well. 
The bill reduces and phases in a repeal of the alternative minimum tax 
for individuals. The bill accomplishes this by gradually reducing AMT 
liability. Specifically, beginning in the year 2003, only 80 percent of 
the full AMT liability will be imposed. The bill reduces this 
percentage to 70 percent in 2004, 60 percent in 2005, 50 percent in 
2006 and 2007, and the tax is fully repealed after 2007. The repeal of 
the individual AMT

[[Page 16904]]

eliminates the present law marriage penalty in the individual AMT. The 
bill also makes permanent the provisions allowing nonrefundable 
personal tax credits to be used fully without regard to the AMT.
  This was originally designed to ensure that high income taxpayers pay 
some minimum tax and not escape their fair share of the income tax 
burden. There will be a significant increase in the number of middle-
income taxpayers subjected to the alternative minimum tax. Currently, 
about 600,000 taxpayers are subject to the AMT, but estimates indicate 
that more than 20 million taxpayers will be subject to that tax by 
2007.
  As I mentioned, when it comes to savings and investment, the 
Republican tax package provides $77.1 billion in tax relief to 
encourage savings and investment over the next 10 years. I mentioned 
capital gains taxes; I think capital gains tax relief is a rather 
important topic to discuss. This is the tax that is applied to 
increases in earnings, the growth portion of investments that many 
people make. Sometimes it is a financial transaction; sometimes it is 
the sale of property, maybe one's home.
  Right now, there is a 20 percent tax rate applied to that for most 
people. Some people in lower income tax brackets pay a lower tax, but 
for most people, that is a 20 percent application to any interest, any 
financial growth that accrues as a result of the sale of an asset or so 
on, as I mentioned.
  That capital gains tax causes an awful lot of the Nation's wealth to 
go nonproductive, to be held in nonproductive holdings, nonproductive 
assets, and those that could be generating more wealth for the American 
people. I have actually met people who take their cash and put it in 
the proverbial, under the mattress. There are people who really do that 
sort of thing. They are afraid of being hit by the capital gains tax 
rates of 20 percent, and so they will do ridiculous things with that 
cash sometimes to avoid paying taxes. They despise the IRS that much.
  Alan Greenspan, the Chairman of the Federal Reserve Board, estimated 
to the Senate Finance Committee that there is approximately $11 
trillion in capital, private sector capital that is available in the 
economy, and it is underutilized, and that what Congress should do is 
focus on a sound tax policy that encourages the American people to 
unleash a portion or all, if possible, of that $11 trillion into the 
free market economy. Imagine what that could do for the country.
  Well, our imagination does not have to be that long in duration, 
because tomorrow, this provision is slated for a vote on this floor. 
That capital gains tax rate reduction is the tax that makes job 
creation possible. It is that provision, that portion of our Tax Code 
which encourages the kinds of investments that creates wealth, creates 
opportunity, allows individuals to become financially independent, 
self-sufficient, and to avoid the government dependency that many 
Americans fear and seem to be trapped in today.
  There is also a partial exclusion for interest and dividends. The 
bill allows individuals to exclude up to $200, $400 for married couples 
filing jointly of income earned in any given taxable year. This 
provision is phased in and will take full effect in December of 2002. 
The current definition of gross income includes all income from 
whatever source derived. That expands the net greatly from the current 
law. Thus, it makes no exceptions for smaller amounts of savings and 
investment income earned by taxpayers that, when subject to the tax 
rate of most small investors, discourages savings and investment for 
low and middle income taxpayers.
  Once again, this is a provision that our Democrat friends will try to 
suggest applies only to the wealthy. But as we can see, we are talking 
very plainly about average middle-income taxpayers, the kind of people 
that go to work every day, go to work, work hard, come home, raise 
their children, maintain their families, go to church, get involved in 
the softball game on the weekends and go back to work and do it all 
again. Those are the folks we are reaching out to.
  I mentioned school construction before. That is another provision of 
the tax bill. We want to encourage school construction. Let me 
elaborate a little bit on that component of the tax package.
  H.R. 2488 increases to 4 years the period during which a State or 
local government may avoid paying arbitrage rebates to the Federal 
Government on public school construction bonds. Under the current law, 
State and local governments may issue tax-exempt bonds to finance 
school construction activities as well as a variety of other public 
facilities and services. The proceeds from those bonds may be invested, 
but State and municipal governments must pay profits to the Federal 
Government. This revenue must be repaid to the Federal Government in 5-
year intervals. However, certain bonds qualify for exemption from 
repayments.
  In the case of school construction bonds, the current law requires 
that money from the sale of the bonds must be spent within 24 months of 
their sale in the following increments: 10 percent of the bond revenue 
must be spent within the first 6 months of being issued; 45 percent 
must be spent within the first 12 months; 75 percent within the first 
18 months, and 100 percent within the first 2 years.
  Our bill expands this interval period to a total of 4 years, and 
finally, the bill increases the amount of governmental bonds for public 
schools that localities may issue without being subject to the 
arbitrage rebate requirement from $5 million to $10 million. The bill 
is designed to give school districts greater flexibility when issuing 
bonds in building public schools.
  Let me focus on that for a moment, because once again, we hear the 
President and many of our friends on the Democrat side of the aisle 
talking about investing in our local schools and in our local 
communities, and once again, their vision involves having the American 
taxpayers work hard, pay more taxes than they need to, and send those 
dollars here to Washington, D.C., so that Members of Congress and 
lobbyists and bureaucrats from over at the White House can all get 
together and decide how those funds will be redistributed across 
America to help the people that they want to help. So the dollars come 
to Washington, a certain portion of those are lost and wasted in the 
transaction; a smaller portion of those dollars go back to our States, 
those States that are privileged to receive those dollars back to 
construct schools and to be spent on worthwhile endeavors.
  Our solution is much different. Our solution is to leave that money 
back home in the first place, to reduce the tax burden on the 
investments that are made to help finance the construction of schools. 
Not only does it make more sense and is it more efficient and is it a 
process that represents more accountability in the school finance 
process, but it allows for more school construction. It allows for more 
children to be helped around the country, more children to be helped 
through the guidance and leadership of local elected school board 
members, the kind one can name, the kind one knows, the kind one sees 
at the grocery store when one goes there with one's family, it allows 
those individuals to put together a package that offers greater hope 
and opportunity and expanded opportunity for the children that they 
serve and that they care about. And that is different, I would submit, 
than the President's plan to bring those dollars here to Washington, 
D.C., waste half of them, send a fragment of it back to the States, and 
pretend we care about children.
  Reducing the tax burden on the American people is true compassion. 
Reducing the tax burden on the American people is a way to build more 
schools. Reducing the tax burden on the American people is the way we 
help instill pride in more and more family households so that those 
children who go to school realize that there is a greater goal toward 
which they should work, that of full employment, self-sufficiency, 
economic participation, being an American as we know it.

[[Page 16905]]



                              {time}  2145

  Madam Speaker, can I inquire as to the amount of time remaining in 
this special order?
  The SPEAKER pro tempore (Mrs. Wilson). The gentleman from Colorado 
(Mr. Schaffer) has 10 minutes remaining.
  Mr. SCHAFFER. Madam Speaker, let me talk about health care one more 
time before I close out this hour.
  Our Republican proposal phases in a 100 percent above-the-line 
deduction for health insurance medical care expenses where taxpayers 
pay more than 50 percent of the premiums. The bill applies the 50 
percent rule separately to health insurance and qualified long-term 
care insurance. The bill also phases in the deduction at 25 percent in 
2001, 40 percent in 2002, 50 percent in 2003 through 2006 and 75 
percent in 2007, and eventually gets us to 100 percent in 2008 and 
thereafter.
  That bill also allows employers to offer qualified long-term care 
insurance through cafeteria plans and allows qualified long-term care 
services to be provided under flexible spending arrangements.
  Let me also mention medical savings accounts. This bill expands the 
availability of medical savings accounts to include all employees 
covered under the high deductible plan of the employer.
  The measure also eliminates the cap on the number of taxpayers that 
may benefit annually from medical savings accounts contributions. 
Currently that is capped at 750,000 Americans, and the bill modifies 
the definition of a high deductible plan by decreasing the lower 
threshold for annual deductions. Thus, under this bill, a high 
deductible plan will have an annual deductible of at least $1,000 and 
not more than $2,300, which is also indexed to inflation for individual 
coverage and at least $2,000, and not more than $4,600 for family 
coverage. Present law limits those out-of-pocket expenses and those 
limits will still apply.
  Once again, I know that was a lot of details and there is more that I 
will spare the House at the moment. We will save those for tomorrow. I 
want to use that example to show the difference in vision between what 
our opponents who oppose this tax package stand for and what the 
proponents who support this tax package want to achieve for the 
American people.
  Once again, the Democrats have been pushing for something I will 
just, for the sake of simplicity, refer to as the Hillary model. That 
is the model where the government runs health care in America, 
socializes health care, much as in the case of England or Canada or 
Sweden or many other socialist programs that provide health care for 
all citizens of many of these countries. Their goal is to increase the 
amount of revenue American taxpayers pay, send that cash here to 
Washington, D.C. so that the government can pick those privileged 
individuals who will benefit from the government-run, government-owned 
and government-managed health care delivery system.
  Ours is very different, as I just outlined in so many details. It is 
very different because we believe that by lowering the tax rates 
associated with providing health insurance, we will provide more health 
insurance. Health insurance will become more affordable, more 
available. There will be more options, more convenience, more choice, a 
higher standard of quality, a higher standard of delivery. The free 
market works; it always works. It works in the area of health care. 
There is no doubt about that, and that is the direction we hope to move 
toward by providing more freedom and more liberty for seniors and young 
families and young children who prefer to look to themselves, to look 
inward to providing for their economic prosperity in the future, rather 
than looking eastward to Washington, D.C. and all of these nice people 
around here who just want to help.
  Madam Speaker, tax relief is a big topic. It is one of the four key 
action and agenda items of our Republican Congress. When we started 
this session, our Speaker, Speaker Hastert, talked about our Republican 
vision for America, lined it out in an agenda that was presented to 
Republicans and Democrats alike. If people would like information about 
this, they can just contact my office. I will be happy to provide any 
of this information, detailed or simple, as this bullet point suggests.
  It is the BEST agenda. ``B'' standing for bolstering our national 
security; ``E,'' standing for education excellence; ``S,'' standing for 
strengthening retirement security; and ``T,'' providing tax relief for 
working Americans.
  This tax relief portion is the fourth part that we have been eagerly 
awaiting on the Republican side of the aisle. We have focused on the 
rest and will continue to focus on a strong national security, our 
education system and saving our Social Security system and retirement 
security. We will continue to move forward and make progress on those.
  Tax relief is the linchpin. Tax relief is where we go to strengthen 
the national economy. Tax relief is what we look to to reduce the 
impact and the scope and the size of the Federal Government and instead 
increase the scope, the effect and the size of American families, 
American businesses, American entrepreneurs. Tax relief is what has 
strengthened our economy. Tax relief is what has allowed a 50 percent 
reduction in the Nation's welfare caseload. Tax relief is what is 
allowing communities today to build more schools and to put more 
resources into local priorities. Tax relief is the best way to deal 
with the overpayment of about $800 billion in a 10-year period that the 
American people will pay.
  We have to prevent that from occurring. We can save Social Security. 
We can save Medicare. We can provide for the best schools on the 
planet. We can defend our country and we can do all of that by honoring 
the notion that American families matter, that American taxpayers do 
count, and that the dollars that they work so hard for should be 
applied at home rather than here in Washington by the White House and 
the bureaucrats who answer to the White House.
  Madam Speaker, I thank my colleagues for their attention and for 
their indulgence here on the House floor. We will be back tomorrow 
night for another special order on the same topic.

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