[Congressional Record (Bound Edition), Volume 145 (1999), Part 13]
[Senate]
[Pages 18457-18458]
[From the U.S. Government Publishing Office, www.gpo.gov]



                    THE TAXPAYER REFUND ACT OF 1999

  Mr. HATCH. Mr. President, we stand here today to celebrate good news. 
This country is now facing the longest peacetime expansion in its 
history; the economy is growing; and the federal government is 
predicted to be running a surplus of $2.9 trillion over the next 10 
years.
  The news is not all good. We are facing some pressing problems as 
well. The world is seeing a shift in demographics. The impending 
retirement of the baby boom generation affects the workplace, 
retirement policy, and entitlement spending. Most notably, both the 
Social Security system and Medicare are in financial trouble and need 
substantive reform. Public debt and the interest payments that go with 
it are continuing to grow. These issues cannot be ignored because of a 
strong economy and good times.
  The bill before us today represents a balanced package that takes 
into account the problems as well as sharing in the good times. The 
bill will provide fiscally responsible tax relief over the next ten 
years while reducing the public debt $200 billion more than the 
President's budget and still save the $1.9 trillion Social Security 
surplus.
  We all agree that the Social Security surplus should be reserved for 
the Social Security system. That is not the debate. The big debate here 
today is how do we best handle the non-Social Security surplus in the 
federal budget.
  Many of my colleagues have argued that this bill is too large--that 
$792 billion is too much. They argue that we should save this money for 
Medicare and other spending. I strongly disagree. It is important that 
we not forget those who are responsible for the surplus--hard-working, 
over-paying taxpayers. After all, what is a surplus--it is excess 
revenues over the amount needed to fund government operations.
  Taxes in this country are at their highest levels since World War II. 
American families have seen the percentage of their personal income 
that goes to pay taxes grow from 23 percent in 1990 to 26%. The average 
taxpayer from Utah, or any other state in America, will pay nearly 
$7,000 more in taxes over the next 10 years than the federal government 
needs, excluding the Social Security program. This is where the surplus 
is coming from--individual taxpayers who are turning over their hard-
earned wages to pay taxes. It is only fair that we return this surplus 
to the rightful owners. After all, we would expect the electric or 
power company to rebate an overpayment, we should be able to expect the 
same from the federal government.
  The $2.9 trillion surplus is large enough to balance our priorities. 
The Taxpayer Refund Act shows that we can provide meaningful tax cuts, 
provide for Medicare reform, and reserve the Social Security surplus.
  The Taxpayer Refund Act of 1999 provides a tax refund for everyone 
who pays taxes by cutting the 15% tax rate and putting more middle 
class taxpayers into lowest income bracket. 98 million taxpayers, 80 
million with annual income under $75,000 would get a tax cut.
  In addition, 19 million two-earner families filing married returns 
will see their marriage penalty eliminated. It is sending the wrong 
signal to American taxpayers when a couple with two incomes in Utah 
faces a higher tax bill when they marry than they do as singles.
  The bill also addresses the need for enhanced retirement security 
through enhanced employer plans and expanded IRAs. The demographics of 
the American workforce are changing and our pension laws must adapt to 
meet these new realities. By improving retirement systems to increase 
access, simplify the rules, increase portability and provide small 
business incentives, we help employers design and offer pension plans 
to meet the needs of today's employees.
  Another important enhancement to our retirement security is making 
tax-preferred savings more widely available through expanded IRAs. This 
is particularly true for those without employer-provided pension and 
middle income taxpayers. In 1994, the median income of families owning 
an IRA was $48,600--hardly wealthy by any measure. This bill would make 
it easier for

[[Page 18458]]

people to increase their savings for retirement.
  This tax bill helps our families struggling to finance a quality 
education for themselves and their children through tax-free treatment 
for participants in college savings or prepaid tuition plans and 
recipients of employer-provided educational assistance. The bill would 
also expand the student loan interest deduction. This is real relief 
that will help make education more affordable.
  There are important provisions relating to school construction in 
this bill. The need for more resources and innovative ideas to address 
the issue of school construction and rehabilitation is reaching crisis 
proportions. My home state of Utah is expected to build 10-15 new 
schools a year. In the Jordan school district alone, 6 schools are 
currently under construction. In addition, Utah will spend $350 million 
a year in new repairs. This bill would reduce the burden on small 
school bond issuers in complying with cumbersome arbitrage rebate rules 
and will allow school districts to engage in public-private 
partnerships. The reduction in the cost and time of school construction 
projects will result in more schools being built.
  We have all heard about the challenge that providing adequate health 
care that is facing the American families. The Taxpayer Refund Act 
provides meaningful help for those who are struggling with the costs of 
insurance through tax benefits for the self-employed, employees not 
covered by employer plans, and consumers of long-term care insurance. 
There is also an additional personal exemption for care-givers.
  The bill also contains provisions that would help keep the economy 
growth strong. There is a package of international tax relief that 
provides simplification and helps American companies which have 
operations overseas remain competitive and continue to grow.
  The expiring tax credits are extended for five years and the research 
and experimentation tax credit is made permanent. This tax credit 
enhances and encourages the development of new technologies and 
products. This is the only way the U.S. can maintain its leadership in 
the high-tech world of today into the next millennium. This is very 
important to future economic growth. It has been said that innovation 
is the leading factor driving increased productivity and job creation. 
Innovation predominantly derives from the private sector research and 
development which are encouraged by the tax credit.
  This bill is not perfect, however, and there are some things that I 
would like to change. For instance, the bill does provide some relief 
from the estate tax by cuts in the top estate tax rate and an exemption 
that rises to $1.5 million per estate. This will provide tax relief for 
estates of all sizes. However, I strongly believe that we should go 
even further and repeal this tax altogether.
  The ``death tax'' is unfair and inefficient. For every dollar that we 
collect, roughly 65 cents is spent complying and collecting this tax. 
This is the wrong way to use up our resources. I know that many of my 
colleagues on the other side of the aisle have labeled this a tax on 
the wealthy. They are wrong. The wealthy hire lawyers and advisers to 
create trusts and do estate planning to minimize the amount of tax they 
will pay. It is the small business owners and family farmers that are 
hit the hardest by this tax. We must find a way to remove this crushing 
burden from their backs.
  Another important area that is not addressed in this bill is the 
capital gains tax rate. This too has often been labeled as a tax cut 
for the rich. This is not true. Million of Americans are becoming 
investors. They purchase stock and mutual funds directly or they invest 
directly through stock options, employee stock ownership plans or 
401(k)s. Roughly half of American households now have some sort of 
stock ownership, and the number grows every year.
  A recent DRI study has shown that the 1997 capital gains tax rate 
cuts contributed to the strong economic growth we have experienced in 
the last couple of years. Cutting the capital gains tax rate from 28 
percent to 20 percent reduced the cost of capital, increased business 
investment and contributed to the increase in stock prices. We need to 
continue along the same path and continue to reduce the capital gains 
rates.
  It is easy to get lost in the debate over numbers and how we should 
spend the surplus. But we must remember who sent us the revenue that 
created the surplus. We are talking about families struggling to make 
ends meet, provide an education for their children, or save for their 
retirement. They are the family running the corner grocery store or 
landscaping business. They are bus drivers, day care providers, 
carpenters and students. They work 3 hours a day on average just to pay 
their taxes.
  The Taxpayer Relief Act of 1999 is a balanced tax cut package that 
provides relief for middle class taxpayers. It gives American families 
a well-deserved tax break, simplifies the tax code, and provides pro-
growth incentives to help keep the economy strong and growing. This 
$792 billion bill is the biggest tax cut since the Ronald Reagan 
presidency. Yet, it still represents a rebate of only one quarter of 
the surplus dollars that the federal government has collected. We owe 
the American taxpayers that much.

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