[Congressional Record (Bound Edition), Volume 145 (1999), Part 6]
[Senate]
[Pages 8816-8818]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             MACK TAX PLAN

  Mr. MACK. Mr. President, I thank Senator Gramm for providing this 
time to me to make a statement with regard to a tax cut proposal that I 
have.
  Mr. President, my job as chairman of the Joint Economic Committee is 
to help Congress stay focused on the right policies to keep the U.S. 
economy energized. What that comes down to is finding ways to make sure 
Washington does less of what today it does most--tax, spend, and 
regulate--in order to let the American people do more of what they do 
best--which is to build, create and innovate.
  With that in mind, I instructed the JEC staff to focus on creating a 
tax plan that would accomplish three goals: first, provide tax relief 
for all American income taxpayers; second, promote even stronger 
economic growth; and third, ensure continued technological leadership 
in the 21st century. The plan I would like to talk about today 
accomplishes these three goals, and does so within the parameters of 
the on-budget surplus as estimated in this year's budget resolution. It 
does not use one penny from the Social Security surplus.
  As Ronald Reagan once said, when he was defining a taxpayer--``that's 
someone who works for the Federal Government but doesn't have to take a 
civil service examination.'' This comment really gets to the heart of 
how the size and scope of the Federal Government affects the way we 
live our lives. Americans are spending more and more time working to 
give more and more of their hard-earned dollars in taxes every year to 
the Federal Government.
  According to the non-partisan Tax Foundation, the average dual-income 
family will work until May 11 this year to pay their federal state and 
local taxes. So, as of today, the average American family has not even 
finished working to pay off their taxes for 1999.
  This year, the Federal Government will collect more tax revenue as a 
share of GDP than at any time since 1944. This is the highest level in 
peacetime history--20.7 percent of GDP consumed by the Federal 
Government.
  Since 1993, federal tax revenues have grown 52 percent faster than 
personal income growth. Last year alone, federal revenues grew 80 
percent faster than personal income.
  We have a balanced budget in 1999 and we've got balanced budgets as 
far as the eye can see. Soon, we'll have a federal surplus as far as 
the eye can see.
  Our challenge now is to deal with that surplus. And, I think it's 
easy to see what will happen to this overpayment by the American 
taxpayer--if we leave it in Washington's hands. There will be numerous 
new government programs and they will be paid for by the Federal 
surplus.
  We have to change the terms of debate--and we have to do it now 
before the surplus is spent. First, let's not forget that the American 
economy does not exist to feed the Federal budget. Now that the budget 
is balanced, we have to get our priorities straight.
  To begin with: there is no such thing as ``public money.'' Every 
dollar of the Federal surplus was paid into the U.S. Treasury by 
American taxpayers. If we have a persistent surplus, we have to give 
the money back.
  For years, my fellow Republicans and I argued that it was wrong for 
the Government to spend more than it took in. We were right. But now, 
it is equally wrong for the Government to take in more than it spends.
  Yes, we should cut taxes so that people can keep more of what they 
earn. Yes, we should cut taxes because lower taxes spur economic 
growth. But the real rationale for lowering taxes--the reason tax cuts 
are an article of faith in the Republican Party--is that high taxes 
trespass on our freedom--our freedom to work, our freedom to invest, 
our freedom to support our families.
  So in my mind, it is not a matter of if we cut, but how much, and how 
can we maximize the pro-growth impact of whatever tax cuts we decide to 
enact.
  With these thoughts in mind, I would like to focus on what they Joint 
Economic Committee staff has come up with as a way to give the American 
income taxpayer meaningful tax relief,

[[Page 8817]]

promote savings and economic growth, and ensure the United States 
remains a technological leader in the 21st century. And, Mr. President, 
I would like to elaborate on how this plan will accomplish each of 
these goals.
  The first goal is tax cuts for all American income taxpayers.
  Under this plan we would double the standard deduction to $14,400 for 
married filers and raise the standard deduction for single filers to 
$7,200. Increasing the standard deduction would provide much-needed 
relief to all low-income taxpayers. Moreover, this provision would 
significantly reduce the much-discussed marriage penalty and simplify 
the Tax Code. Nearly three- quarters of all taxpayers use the standard 
deduction and would benefit from this increase.
  In addition, our plan would repeal the 1993 Clinton tax increase on 
Social Security benefits. In 1993, President Clinton imposed this tax 
increase on the elderly's benefits because he said it was needed to 
eliminate the budget deficit. Since there is no longer a deficit, we no 
longer need this tax. It is time to repeal this unnecessary surcharge 
on Social Security recipients.
  The second goal is economic growth.
  The U.S. economy is enjoying unprecedented prosperity. In fact, our 
economy has grown for more than 16 years with only 9 months of 
recession. That is the longest period with only 9 months of recession 
since at least the 1850s! But while my Washington colleagues and I may 
be able to take pride in the performance of the economy, we really 
cannot take credit. The credit for the strength of our economy belongs 
to the American people--because the strength of our economy is a 
tribute to every American who uses his or her freedom to turn work into 
reward. To every individual who turns energy into a business plan--an 
idea into a new product.
  These are the heroes of the American economy--the entrepreneurs and 
innovators who are creating economic growth, generating trillions in 
new wealth and reordering the global economy. We must provide pro-
growth tax cuts that will ensure the continued strength of our economy 
and allow our entrepreneurs and innovators to flourish.
  My plan would provide pro-growth tax cuts that would spur economic 
growth in four ways: by cutting capital gains tax rates 25 percent to 
7.5 percent and 15 percent and indexing them for inflation; by cutting 
dividend taxes to 7.5 percent and 15 percent, making them uniform with 
capital gains tax rates; by repealing estate and gift taxes; and by 
indexing the individual AMT exemption amount.
  Lowering capital gains tax rates will stimulate greater investment 
and keep the economy humming. Indexing capital gains for inflation will 
end the Government's unfair practice of taxing people on phantom gains 
due to inflation.
  Currently, people earning dividends face among the highest tax rates 
in the Tax Code--as high as 60 percent--because they are double-taxed. 
Many investors, particularly the elderly, count on their dividends as a 
major source of income during their retirement years. Therefore, this 
change would have a significant, positive impact on their standard of 
living. Furthermore, the Tax Code would no longer encourage companies 
to hold onto locked-in earnings that investors could use more wisely. 
By making the dividend and capital gains rate uniform, this plan 
eliminates the current bias against dividend income, making investing a 
more level playing field.
  Another major problem with the Tax Code concerns the alternative 
minimum tax, AMT. The AMT was designed to ensure that all taxpayers 
paid their fair share of taxes, but in recent years it has become an 
additional tax burden on middle income taxpayers for whom it was never 
intended. Since the AMT exemption amount was never indexed for 
inflation, each year more and more taxpayers are subject to it. My plan 
would stop this AMT creep by indexing the exemption amount for 
inflation, and relieve the unintended consequences of this 
counterproductive tax that undermines other tax relief already provided 
in the Tax Code.
  My plan also calls for the elimination of the estate and gift tax, 
sometimes referred to as the death tax. Death and taxes may be 
inevitable, but they should never be simultaneous. Death taxes are 
among the worst provisions in the Tax Code, imposing tax rates as high 
as 55 percent. After paying taxes all your life--surely people 
shouldn't have to pay even more taxes upon their death. That is just 
not fair, and this tax should be abolished.
  The third goal is to maintain U.S. technological leadership in the 
21st century.
  Last, but definitely not least, my plan recognizes the importance of 
the technology industry to the success and continued growth of the U.S. 
economy. We need to maintain policies that give the strongest possible 
support to innovation, and my plan seeks to do this in two ways: by 
making the research and development tax credit permanent, and by 
raising the capital expensing limit from $25,000 to $500,000, indexed 
for inflation.
  Studies have shown that the R&D tax credit creates $2 of research and 
development for every one dollar of credit. It more than pays for 
itself, and we need to quit playing games with it. Our current 
practice--extending it one year at a time, letting it expire and then 
bringing it back to life--is completely counterproductive. No company 
can plan and invest for the long-term against a policy that changes 
every 12 months. This inefficiency impedes innovation and will make it 
more difficult for the United States to maintain its technological edge 
in the 21st century.
  Especially in high technology industries, rapid innovations are 
rendering equipment obsolete within a year. We are all familiar with 
this phenomenon regarding computers. But, the same problems arise with 
medical, telecommunications and other high-tech equipment. Under 
current law, companies are required to spread these costs over time 
periods of five or more years. Under my plan, the capital expensing 
limit would be raised from $25,000 to $500,000 so companies would be 
able to keep pace with ever-changing technology. This will particularly 
stimulate investment in small firms.
  Mr. President, to sum up my tax plan, it would provide $140 billion 
in tax relief over the next 5 years and $755 billion over 10 years--
well within the estimated $800 billion surplus in this year's budget 
proposal.
  I think it is important to take a minute to look at who would benefit 
from the majority of the cuts I discussed today. In the context of my 
plan, I think it's important to stress that over one-half of the tax 
relief associated with the individual tax cuts would flow to households 
earning less than $75,000 a year. In addition, nearly one-third of my 
tax plan would go to people with incomes under $50,000, who currently 
pay 22 percent of taxes. So, in addition to providing cuts for economic 
growth and ensuring the U.S. remains a technological leader, my plan 
provides substantial relief for all American income taxpayers, and 
simplifies our burdensome Tax Code.
  Mr. President, we are living in a new economy. And right now, the 
world is playing America's game. We can out-perform, out-produce, out-
compete, and out-create anyone in the world. We need to ensure the 
United States keeps its status as an economic powerhouse in the 21st 
century. The Federal Government's role in ensuring this happens is to 
get out of the way and give the American people freedom--the freedom to 
work, the freedom to invest, the freedom to support our families, and 
the freedom to continue strengthening our economy. Our plan does just 
that--cuts taxes and gets the Government out of the way to give the 
American people the freedom to pursue their own dream--not 
Washington's.
  Mr. President, I yield the floor.
  Mr. GRAMM. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GRAMM. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.

[[Page 8818]]

  The PRESIDING OFFICER. Without objection, it is so ordered.

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