[Congressional Record (Bound Edition), Volume 147 (2001), Part 2]
[Senate]
[Pages 1899-1902]
[From the U.S. Government Publishing Office, www.gpo.gov]



                               TAX RELIEF

  Mr. SANTORUM. Mr. President, I understand my colleague from Wyoming 
was talking today about the President's proposal on tax relief. I have 
been watching a little bit of the debate on the floor of the Senate. I 
have to say, this debate is somewhat disturbing.
  We have been discussing taking some of the money people have worked 
hard to earn and have sent here to Washington--and we have a surplus of 
money coming here now; we have a tax surplus for which people have 
worked hard, they have earned it, they have sent it to Washington, and 
we have enough money to pay for all the bills we have right now--and 
now we are talking about how can we take some of this money that people 
worked hard to earn and return it to them.
  In the discussion and debate we hear some saying that people who are 
paying less in taxes are going to get less money back in real dollars 
than people who pay a lot more in taxes are going to get back and that 
somehow is unfair. For example, if somebody who pays $200 in income 
taxes is going to get tax relief of $200--in other words, many people 
under the proposal being put forward are going to simply have all of 
their tax liability eliminated. If they are paying $200 in taxes and 
they are going to get $200 in tax relief while someone who pays 
$300,000 in taxes is going to get $30,000 in tax relief, somehow or 
another that is unfair; it is unfair that this one person who is a 
hard-working person is only going to get $200 under this proposal and 
some fat cat is going to get $30,000, and that is unfair.
  So we see pictures: Here is what the fat cat is going to get, here is 
what the poor working person is going to get, and that is not fair. 
Except for the fact, if you step back and say, wait a minute, how much 
is this person who is paying a lot of taxes--how much are they paying 
and what is their relief versus what someone who has a lower income is 
paying and what is their relief? If we were going to balance this 
according to fairness as described by some, then there should be equal 
tax relief, even though there is not equal payment of taxes.
  When a surplus is created because people have overpaid taxes and we 
want to relieve the tax burden on those who have overpaid, then I think 
fairness dictates we give tax relief to everybody who has contributed 
to the overpayment somewhat in proportion to what they have overpaid. 
That, to me, would be fair.
  What would be unfair is for someone who pays $200 in taxes to get 
$20,000 in tax relief as opposed to someone who pays $300,000 in taxes 
to get $300 in tax relief. Some would suggest that is fair. I suggest 
that is typical Washington wealth redistribution because we know who 
the more deserving are here in Washington.

[[Page 1900]]

  What we are putting forward is as fair as we could possibly do it. In 
fact, if you look at the numbers, the top income earners and the top 
taxpayers in this country are going to end up with an increased burden 
of taxes. If you look at all the people paying taxes and whose share of 
the tax burden is going to go up after this proposal if it is passed as 
the President suggested, the tax burden on the higher income people 
will actually go up relative to everybody else.
  Some would argue that is unfair. Some would argue that we are not 
giving enough tax relief to those who are higher income to keep the 
distribution of who pays taxes the same. But we are shifting the 
distribution to higher income.
  We are going to hear lots of arguments about fairness. I always use 
this example--I think it is the best example--between what we are 
trying to accomplish and what some on the other side would suggest is 
fair.
  I use the example of people who buy tickets to a baseball game. You 
pay and the game gets rained out. It is the last game of the year, so 
they have to refund your money. There are people who paid different 
prices for different seats in the baseball stadium. Some paid for the 
seats right down in front, maybe $25 a ticket. Then you paid for some 
up here in the loge boxes, maybe $15 a ticket. And then there are some 
folks up here in the outfield and they paid $5 a ticket. The game got 
rained out. So what do the owners of the baseball team have to do? They 
have to refund your money. You have overpaid. But you didn't get what 
you were promised. You overpaid. Get your money back.
  What I would suggest as fair is, people who pay the $25 get $25 back, 
people who pay the $15 get $15 back, and people who pay $5 get $5 back. 
The guy outside who just happened to be driving by and didn't buy a 
ticket does not get any.
  To some on the other side of the aisle, here is what they believe is 
fair. The guy who paid $25 gets $5; because he obviously can afford 
$25, he doesn't need all of the money returned. It is the guy up there 
who paid $5 who probably needs more money, and not only are we going to 
give him $5 but we are going to give him $15 back. The guy in the 
middle who paid $15, we will give him $15. We feel so bad about the guy 
outside who didn't get a chance to pay and come in that we are going to 
give him some money, too.
  Is that fair? No. I do not know of an owner of a baseball team who 
could get away with something like that. It is patently unfair to do it 
that way. I think most Americans would agree that is fundamentally 
unfair. That is what we were talking about. For people who have paid a 
tremendous amount of money for which they have worked hard, we are 
suggesting they get back somewhat in proportion to what they paid as 
well as everybody else.
  In fact, we are not suggesting that. We are suggesting they not get 
back quite as much proportionately, but we do in fact shift it. If you 
are going to take the example of the baseball stadium, instead of 
giving $25 back, they get $20 back. The guy paying $15 maybe gets $17 
back, and the guy up here, instead of getting $5 back, may get $8 or 
$10 back.
  There are those who would suggest that is unfair. I would suggest 
that is more than fair. For the folks who are paying the $25 for the 
ticket, some would suggest it is unfair to them. It is more disturbing 
if we look at the underlying motive behind this discussion. It really 
is a discussion that I think is not really worthy of us in Congress; 
that is, this idea of class warfare; that somehow or another, if you 
have worked hard and you have been successful starting a business or 
creating a company, if you have tremendous capital talent as a great 
singer or a great athlete--whatever the case may be--and you have been 
successful financially, somehow or another that is bad and you should 
be punished and should be paying exorbitantly more than people who have 
not been as successful.
  Obviously, there is a small group of people who are very wealthy in 
this country. It is very small--about 4 percent. It is a lot more 
popular to go out and argue for the folks who are in the middle class, 
the large majority of Americans. We say: We are for you, and we are 
going to give you more money in this tax relief. Under the Bush 
proposal, they get proportionately more money. But somehow they argue 
they are undeserving: They pay the vast majority of taxes, but they 
need to pay more, and they don't deserve relief because they have 
money. I don't think that is necessarily an enobling argument.
  I think the argument President Bush puts forth that no one in America 
should pay more than one dollar out of every three to the Federal 
Government in taxes is a statement with which most Americans would 
agree. Right now, higher income individuals pay about 40 percent of 
every dollar they earn in Federal taxes, not to mention other taxes 
they have to pay. When we have a surplus and the surplus has been 
generated by the fact that a lot of people have overpaid their taxes, 
my feeling is, what is unfair if you give every taxpayer tax relief?
  To the extent we can, yes, we should help others. There are going to 
be proposals you are going to see considered to give people relief who 
didn't get in the stadium and pay for the ticket. They will get some 
relief, if you will. Even though they did not pay, they are going to 
get some money out of this. Why? Because we want to create more 
opportunity for people so someday they get inside the stadium.
  We would like everybody to pay taxes in the sense that everybody 
would be economically successful, and enough that they would be in a 
tax bracket that would require it. We are about providing 
opportunities. We are also about fairness. I think that dictates that 
we provide tax relief across the board to those who pay.
  The other thing we should think about when we put a tax bill together 
is: What are we trying to accomplish? What is the goal? Obviously, as I 
stated before, we have too much money. I would like to get it out of 
Washington before we spend it.
  There are those of us who come to the floor year after year to say if 
we don't give tax relief, and if we don't get this money out of 
Washington, rest assuredly it will be spent. Just at the end of last 
year, we added to the 10-year budget of the United States $600 billion 
in new spending. I did not hear a word from those who now say we don't 
need tax relief and who have suggested we were spending the surplus 
that we didn't have. We hear a lot of people say we can't do tax relief 
because we don't know that the surplus is going to be there and 
therefore we shouldn't commit ourselves to this relief. They did not 
make that complaint when we were talking about spending the $600 
billion surplus that we didn't have last year.
  I argue that if the money stays in Washington and we don't provide 
tax relief, the money will be spent, as sure as anything I can promise. 
It will be spent if it sits on the table. We just can't help ourselves. 
I think it is important to get that money back out. Why would we want 
to do that other than just do it so we don't spend it?
  We have heard lots of reports about what the economy looks like now 
and in the future. We have had an unprecedented string of years of 
economic growth. But I think it is important, as several other 
economists said--and Alan Greenspan--that in the future to avoid an 
economic slowdown we have lower rates of taxation and more money in the 
economy for investment and job creation.
  By the way, who is creating the jobs? We have heard many times some 
of my colleagues on the other side of the aisle talking about not 
having to provide tax relief for higher income individuals. But who 
creates the jobs? The employer. They seem to like employees but hate 
employers. I do not know of too many employees who find jobs if there 
are not employers. Providing tax relief to people who will take that 
income and go out, as some have suggested, and buy a Lexus--if you are 
earning $2 million or $3 million a year, you already have a Lexus, if 
you want one. But they will go out and take that money and invest it to 
create jobs, and create opportunities so we can take

[[Page 1901]]

some of those people outside the stadium who didn't have the chance to 
buy the ticket and give them a job so they can become taxpayers.
  It is important not just to get the money out of Washington, but it 
is also vitally important to help our economy and create economic 
opportunities for people who need economic opportunities down the road.
  There are some other things we need to do, again in the name of 
fairness. There is a lot of discussion about fairness. The President's 
proposal is that we have marriage penalty relief. It is unconscionable 
that on Valentine's Day there are people in America who will get 
married and, by virtue of the fact that they get married, have to pay 
more in income taxes. At a time when we want to encourage marriage 
through the Tax Code, we penalize it. That is unconscionable and 
unfair. Under the President's proposal, we go a long way to eliminating 
that marriage penalty.
  Mr. President, death should not be a taxable event, but it is. What 
we are suggesting is that over a 10-year period of time we phase out 
estate taxes on people who die. I think most Americans would agree that 
if someone has a piece of property and they die and pass it on to the 
next generation, when that next generation sells the property, they 
should be taxed on the capital gains. But if in fact the person dies, 
it should not be a taxable event on the next generation. The greatest 
impact of that is on the family farm, the small business man or 
business woman when they want to pass that business on to the next 
generation after they die. They have to sell the farm or the business 
so they can pay the taxes that are due.
  Whom does that hurt? Obviously, it hurts the businessperson. But how 
about the people who work for that business, where that business has to 
go out of business simply to pay taxes or where the business has to be 
sold simply to pay taxes.
  So, again, it is the old story. Most Americans realize this. When you 
stand up here and say: ``We are going to go after and get the rich, we 
are going to make sure they pay even more and more and more taxes,'' 
ultimately who gets hurt is the people at the bottom and the middle 
because they do not get the quality jobs or they do not get the kind of 
strong economy that makes for a better quality of life.
  So I think what we are talking about here is tax relief for every 
taxpayer. Some suggest that is not fair. I would suggest that is the 
only fair way to do it; when you have a tax surplus, you give it back 
in proportion to how much the people paid. That, to me, would be fair.
  If you think your job is to not be fair but to redistribute wealth--
that is the object here, to redistribute the wealth based upon who we 
believe, in Washington, are more deserving. Let's be clear about it; 
that is what we are doing. We are saying some people are more deserving 
than others, and we are going to choose to take some people who worked 
hard, earned this money, sent it to Washington--we are going to take 
their money and give it to other people because we believe that is 
fair. We do a lot of that already. But now we are suggesting, because 
there is an overpayment, here is an opportunity to do more of that.
  I argue that is not what we should take advantage of. We should take 
the opportunity to create an across-the-board, fair tax reduction for 
every working American, every taxpayer.
  So that is what the debate is going to be about. I hope we will look 
at the underlying policy of why we are trying to do this, not just here 
is how much X gets and here is how much Y gets but look at the 
underlying policy: Are we trying to pass tax relief that is going to 
accomplish economic growth? If so, how do we best do that? Let's have a 
discussion about that.
  Are we trying to eliminate provisions in the Tax Code that are 
unfair, such as the marriage penalty and the death tax? I argue that 
the alternative minimum tax has become unfair on a lot of middle class, 
working Americans who now have to pay that tax.
  If we look at it and we take it a step at a time, we will deal with 
the fairness issue. Let's take care of that issue, and then let's try 
to do something across the board that does something for economic 
growth; we must have as part of our agenda not just fairness but growth 
because the ultimate equalizer, if you will, the ultimate creator of 
opportunity, is economic growth.
  I believe that unless we do something to create a tax system that 
enables more economic growth in the future, then a lot of folks to whom 
we are going to shift a little money--as some suggest, that you take 
from higher income and give it to lower income--they are going to find 
themselves either in lower paying jobs down the road or with no jobs. 
That is not a good result for anybody.
  So again, let's keep our eye on the ball. Yes, get the money out of 
Washington; yes, provide some tax fairness; but also, let's make sure 
we do a tax reduction that is going to result in a growing economy over 
the long term. That, to me, dictates, as Alan Greenspan said yesterday, 
a rate reduction. The best way to assure economic growth is an across-
the-board rate reduction.
  So if what we care about is avoiding a deep recession or a recession 
altogether in the next 3 or 4 or 5 years, the best way to accomplish 
that is a rate reduction for all taxpayers.
  One other point. Some have mentioned what we are talking about here 
is Federal income taxes: You have a lot of taxpayers who have to pay 
FICA taxes and Medicare taxes, and they are not getting any tax relief.
  I would make two comments on that. No. 1, FICA taxes or Social 
Security taxes, when they are paid, obviously, fund a program, the 
Social Security program, or the Medicare program in the case of 
Medicare taxes. But they also make you eligible for a benefit. The 
benefit is so structured today where lower income individuals get a 
much higher percentage benefit than higher income individuals. So the 
program is already structured, No. 1, that you pay the tax to assure a 
benefit down the road.
  So it is not like income taxes, where you just sort of pay the tax 
and it goes to the general welfare. But this actually earns you, if you 
will, a particular benefit. It is the same with Medicare. So you are 
getting something directly for you for the dollars you are 
contributing.
  Secondly, we are paying too much in Social Security taxes now. We 
have a surplus. Some of us have argued--and I will continue to argue--
instead of bidding up what I consider to be a phony surplus, with just 
basically IOUs in the Social Security trust fund, which are future 
obligations for taxpayers, and nothing more than that, I would suggest 
we take this surplus and allow younger workers to invest that money, to 
create real opportunities for them so they can have real money, real 
assets that can pay real benefits 20, 30, 40 years from now, instead of 
creating IOUs which are simply a claim on their children's taxes 30 
years from now or 40 years from now. And that would not be a real 
economic asset; it would simply be a real economic obligation of future 
generations.
  I argue that the better way to accomplish that, instead of overtaxing 
current workers, which we do with Social Security and Medicare--I am 
going to focus on Social Security right now--instead of overtaxing 
Social Security payers, people who pay Social Security taxes today, 
let's give them the opportunity of setting that money aside, investing 
it over the long term, accumulating assets, and then using that real 
asset--a real economic asset--to come back 30 years from now to help 
pay for those benefits. That would be instead of, in a sense, putting 
that IOU away.
  I will use this as an example. I think it is a good example. I went 
to a group of high school students the other day, and I asked: How many 
of you out here work? About half the hands went up. I asked: Where do 
you work? One kid said: Burger King. I said: Right now you work at 
Burger King, and you have to pay Social Security taxes. And 12.4 
percent is what the Social Security tax is. You pay 12.4 percent, but 
all that money does not go to pay benefits. That is what it 
traditionally has done.

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All the money would go right out to pay benefits. But in this case, you 
are paying more than you need to.
  You only need to pay a little over 10 percent to pay for current 
beneficiaries. Money comes in, goes out to beneficiaries, but we have a 
surplus, a little over 2 percent. So you pay more than you need to now. 
So we are taking more money out of your paycheck than we need.
  What do we do with that surplus money in Social Security? Social 
Security has cash. Can Social Security hold cash? It would be a smart 
thing for them to do. No. They have to invest that money. Where do you 
think they invest the money? Treasury bonds. What are Treasury bonds? 
Debt of the Federal Government.
  So Social Security gives money to the general fund, and the general 
fund puts a note back into Social Security. It is an IOU. It is a 
Treasury bond that pays interest.
  Now let's talk about that 18-year-old 30 years from now. Thirty years 
from now, that 18-year-old is still paying taxes. He is 48 years old. 
Then, instead of having a surplus in Social Security, we have a 
deficit. So then what we will have to do is raise Federal taxes because 
we will have to start repaying those bonds. We have to put the money 
back into Social Security.
  So what are we going to have to do? Thirty years from now, we are 
going to go to that person who paid too much in taxes in the first 
place to create the IOU, and now we are going to have to increase their 
taxes so they can pay back the IOU they created by paying too much 
taxes in the first place. So they get to pay twice for this benefit. 
That is not fair.
  So I think we do need to create personal retirement accounts. That is 
one way we can solve the problem of Social Security taxes.
  The Senator from Colorado is here, and I am happy to yield the floor 
to him.
  The ACTING PRESIDENT pro tempore. The Senator from Colorado.
  Mr. ALLARD. Mr. President, I thank the Senator from Pennsylvania for 
yielding and certainly appreciate his hard work and dedication on the 
issue of taxes. I served with him in the House and now serve with him 
in the Senate. He is certainly a great American.
  I understand that we are moving into time controlled by Senator Bond 
and Senator Collins. I have a number of points I want to make in 
relation to national defense. I would like to yield to my colleague 
from Missouri to visit with him a little bit on how he plans to manage 
the time and what his plans are.
  The ACTING PRESIDENT pro tempore. The Senator from Missouri.
  (The remarks of Mr. Bond and Mr. Allard pertaining to the 
introduction of S. 336 are printed in today's Record under ``Statements 
on Introduced Bills and Joint Resolutions.'')
  The ACTING PRESIDENT pro tempore. The Senator from Colorado is 
recognized.

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