[Congressional Record (Bound Edition), Volume 148 (2002), Part 11]
[Senate]
[Pages 15295-15300]
[From the U.S. Government Publishing Office, www.gpo.gov]




             ONE-YEAR ANNIVERSARY OF BIPARTISAN TAX RELIEF

  Mr. GRASSLEY. Madam President I rise today to discuss the one year 
anniversary of the bipartisan tax relief package. On June 7, 2001, 
President Bush signed the legislation. On Friday, June 7 of this year, 
the President marked the first anniversary of that event in Des Moines, 
Iowa. I was pleased to join the President for that anniversary 
celebration.
  One year ago this week, the Treasury Department started sending out 
rebate checks to every American taxpayer. I ask unanimous consent to 
have printed in the Record an announcement from the Treasury Department 
dated July 26, 2001.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  [From the Office of Public Affairs]

           Treasury To Mail Out 8.1 Million Checks On Friday

                            (July 26, 2001)

       Tomorrow the Treasury Department will send out 8.1 million 
     advance payment checks to taxpayers for more than $3.4 
     billion in tax relief. These checks will be sent to taxpayers 
     whose last two digits of their Social Security numbers are 
     10-19.

     Week Two (July 27) Social Security Numbers 10-19
       Number of Checks 8.1 million
       Amount of Relief $3.4 billion
     Week One (July 20) Social Security Numbers 00-09
       Number of Checks 7.9 million
       Amount of Relief $3.3 billion

       The Treasury Department will announce every week the number 
     of checks that are being mailed out for that week, and the 
     amount of tax relief that is being sent to taxpayers. Checks 
     will be mailed over a ten-week period, according to the last 
     two digits of the taxpayers Social Security number. Notices 
     from the Internal Revenue Service that tells taxpayers the 
     amount of their check and when they should expect it have 
     been mailed. Single taxpayers will get a check up to $300, 
     head of household up to $500 and married couples filing 
     jointly will get up to $600.
       Because the Social Security number determines when checks 
     are mailed, taxpayers may receive their checks at different 
     times than their neighbors or other family members. On a 
     joint return, the first number listed will set the mailout 
     time.

------------------------------------------------------------------------
   If the last two digits of your Social       You should receive your
            Security number are                   check the week of
------------------------------------------------------------------------
00-09.....................................  July 23.
10-19.....................................  July 30.
20-29.....................................  August 6.
30-39.....................................  August 13.
40-49.....................................  August 20.
50-59.....................................  August 27.
60-69.....................................  September 3.
70-79.....................................  September 10.
80-89.....................................  September 17.
90-99.....................................  September 24.
------------------------------------------------------------------------

  Mr. GRASSLEY. Those checks represented the first broad-based tax 
relief in nearly a generation. Generally, single taxpayers got a $300 
check and married couples got a $600 check.
  What I would like to do today is first put the tax cut in historical 
context. Second, I would like to set the record straight in terms of 
the progressivity of the tax relief and its budget effects. Finally, I 
would like to illustrate what the tax relief legislation means in terms 
of typical families across America.
  I am going to use a series of charts as I move through the 
discussion.
  Let's start with historical context. In the last 20 years, there have 
been several pieces of major tax legislation. When I use the term 
major, I am referring to net tax hikes or net tax cuts in the 
neighborhood of $100 billion or more.
  In the last generation, frankly, the American taxpayer has come out 
on the short end of the deal. By and large, the tax-and-spend 
Washington crowd prevailed. There have been four major tax increase 
bills. There have been three major tax cut bills, with one of those, 
the 1997 tax relief package, barely breaking into the major category.
  Let's take a look at the tax increase bills first. There were No. 1, 
``TEFRA'' in 1982, No. 2, ``DEFRA'' in 1984, No. 3, ``OBRA'' in 1990, 
and, as then Finance Chairman Pat Moynihan said, No. 4, the ``world 
record tax increase'' of President Clinton's 1993 tax package. Senator 
Moynihan's description was verified by a Joint Committee on Taxation 
estimate. It showed the 1993 tax increase raised taxes by over $1 
trillion.
  In the same generation, taxpayers have received net tax cuts three 
times. The three events occurred in 1981, in 1997, and last year. In 
1981, the Reagan tax cuts brought down the top rate of 70 percent to 50 
percent. In 1997, modest bipartisan tax relief, had, as its 
centerpiece, the $500 per child tax credit. Of course, last year, all 
taxpayers received a tax relief.
  When you look over the last generation, the bipartisan tax relief of 
last year, in effect, helped tip the balance back a little bit toward 
the American taxpayer. I say a little bit, because, by any reckoning, 
even when fully in effect, last year's bill still leaves the balance 
toward higher taxes and more government. More on that in a minute.
  For another point of historical context, take a look back at the 
fundamental tax reform of 1986. You will recall that effort was a grand 
compromise between liberals, led by Congressman Rostenkowski, and 
conservatives, led by President Reagan. We came up with a revenue 
neutral package by broadening the tax base by shutting down tax 
shelters. The revenue raised was used to create two rates--15 percent 
and 28 percent. In addition, millions of low income families ceased 
paying income tax.
  During the tax reform debate, today's House Democratic Leader, 
Congressman Gephardt, pursued a tax reform plan with former Senator 
Bradley. The Bradley-Gephardt plan contained three rates of tax. The 
three rates were 35 percent, 25 percent, and 15 percent. Former Senator 
Mitchell, who would become the Democratic Leader and a great champion 
of the liberal wing of the Democratic Caucus, supported a top rate of 
35 percent as well. Indeed, the House, at that time controlled by 
Democrats, passed a tax reform bill with a top rate of 35 percent.
  So, at the watershed event of 1986, the leaders of the Democratic 
Caucuses, said individual income tax rates should not exceed 35 
percent. As everyone knows, 35 percent is the top rate when the 
bipartisan tax relief package is in full effect in 2006. I guess I find 
it a bit ironic that today the Democratic Leadership says individual 
tax rates must be above 35 percent.
  It makes you wonder why today's Democratic Leadership, in historical 
context, is so fixated on higher taxes. Why is Congressman Gephardt, 
the House Democratic Leader, insisting on tax rates at higher levels 
than his 1986 era plan? Why is Senator Daschle, today's leader of the 
Democratic Caucus, insisting on tax rates at higher levels than his 
predecessor, Senator Mitchell?
  Isn't 35 percent of a person's income enough of a contribution for 
their share of the burden of the Federal Government?
  That is where the Democratic Leaders were during tax reform. That is 
where the bipartisan tax relief plan leaves us when fully in effect in 
2006. Unfortunately, that's not where the Democratic Leaders are today.
  The question of why 35 percent isn't enough leads in the second part 
of my

[[Page 15296]]

discussion. What I would like to do is set the record straight on the 
progressivity and budget effects of the bipartisan tax relief plan.
  It seems to me that the Democratic leadership has moved its tax 
reform target away from tax relief for a very simple reason. The reason 
is to provide resources to grow the Federal Government by increasing 
spending.
  It is part of a larger agenda of moving a society, America the engine 
of capitalism, to look more like European socialism. It means more 
Government and less individual responsibility. It means less reward for 
work and more money from the pockets of working people for the Federal 
Government. It means opportunity defined less by a dynamic market and 
more by political criteria.
  Now, a lot of inaccurate information has been spread about the 
bipartisan tax relief package. At the head of this campaign, is the 
Democratic Leadership. Perhaps unwittingly, perhaps by design, much of 
the media has worked hand in glove with this partisan campaign.
  The misinformation comes forward in three bogus assertions. The first 
incorrect assertion is that the bipartisan tax relief was a partisan 
Republican product. The second is that the bipartisan tax relief 
package is the source of our current budget problems. The third 
incorrect assertion is that the tax relief favored the wealthy over low 
and middle income taxpayers.
  I would like to turn to the first incorrect assertion. Often we hear 
the phrase Republican tax cut or partisan tax cut. In fact, the tax cut 
was bipartisan. Twelve Democratic Senators voted for the conference 
report. Senator Jeffords also voted for the conference report. That is 
over one-fourth of the Democratic Caucus.
  The tax relief legislation was bipartisan by design. In a Senate 
divided down the middle, the tax relief had to be bipartisan to pass. 
There was no other way.
  Democratic members of the Finance Committee played a key role in 
crafting the bill. Led by our current Chairman, Max Baucus, they 
insisted on a bill that reflected their priorities. Senators Breaux, 
Torricelli, Lincoln, all contributed to the formation of this bill. 
Republican moderates like Senator Snowe also played a key role. Without 
these Senator's input and support, we would not have the tax relief in 
place.
  Anyone who characterizes the tax relief as partisan is flat out 
wrong.
  I would like to move on the second incorrect assertion. How many 
times have we heard on this floor or seen written in the media the 
charge that the bipartisan tax relief caused the current and projected 
deficits. If I have a dollar for every time I've heard or read this 
point, I could put the budget in balance.
  Cold hard numbers tell a different story. Cold hard numbers from the 
Congressional Budget Office, the Office of Management and Budget, and 
private sector sources reveal the truth.
  Here is what the numbers say. You can check it out on the CBO 
website.
  According to CBO's January baseline, for the current fiscal year, the 
tax cut represents barely 14 percent of the total change in the budget 
since last year. For instance, for the same period, increased 
appropriations outranked the tax cut by $6 billion. So, spending above 
baseline, together with lower projected revenues, accounted for 89 
percent of the change in the budget picture. Let me repeat that. 
Bipartisan tax relief was a minimal, 11 percent factor, in the change 
in the surplus.
  Over the long-term, the tax cut accounts for 45 percent of the change 
in the budget picture. Stated another way, the 10 year surplus declined 
from $5.6 trillion to $1.6 trillion. Of that $4.0 trillion change, the 
tax cut represented about $1.7 trillion of the decline. That is less 
than one-half of the change. Let me repeat that for our friends in the 
Democratic Leadership and their allies in the media. The tax relief 
package accounts for less than 45 percent of the decline in the 
surplus.
  The second incorrect assertion, that the tax cut ate the surplus, is 
incorrect, according to CBO.
  I would like to turn to the third incorrect assertion about the 
bipartisan tax relief package. That assertion is that the tax relief 
package was a tax cut only for the wealthiest Americans.
  How many times have we heard the statistic that 40 percent of the 
benefits of the tax cut went to the top 1 percent of taxpayers?
  Where did the statistic come from? Did it come from the non-partisan 
Joint committee on Taxation? The answer is no. The statistic cited by 
the media and the Democratic Leadership came from the liberal think 
tank known as the Center on Budget Policy and Priorities. How do they 
get their numbers? Here's an example. Let us talk about how they 
distribute the benefits of the death tax. The liberal think tank 
assumes that the person benefitting from death tax relief is the dead 
person. Imagine that. Only in Washington, D.C. do they assume you can 
take the benefit of tax relief with you to the grave.
  It takes these kinds of distortions in methodology to get the 
conclusion the liberal think tank wants. That's why our friends in the 
Democratic Leadership rely on the Center for Budget Policy and 
Priorities. Unfortunately, some in the media accept these statistics at 
face value.
  Once again, facts can be ugly things for harsh critics of the 
bipartisan tax relief package. According to the Joint Committee on 
Taxation, Congress' official non-partisan scorekeeper, the tax code is 
more progressive with the tax relief package. Let me repeat that fact. 
Joint Tax, not a liberal or conservative think tank, says the 
bipartisan tax relief package made the Tax Code more progressive.
  I ask unanimous consent to place in the Record a distribution 
analysis, prepared by Joint Tax.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                           DISTRIBUTIONAL EFFECTS OF THE CONFERENCE AGREEMENT FOR H.R. 1836\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Change in Federal      Federal taxes\3\ under    Federal taxes\3\ under     Effective tax rate\4\
                                                          taxes\3\                 present law                proposal         -------------------------
               Income category\2\                ------------------------------------------------------------------------------ Present law    Proposal
                                                    Millions     Percent      Billions     Percent      Billions     Percent     (percent)    (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
-------------------------------------------------------------------CALENDAR YEAR 2001-------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than $10,000...............................         -$75         -1.0           $7          0.4           $7          0.4          8.7          8.6
10,000 to 20,000................................       -2,989        -11.5           26          1.5           23          1.4          7.5          6.7
20,000 to 30,000................................       -5,790         -9.4           62          3.5           56          3.3         13.4         12.2
30,000 to 40,000................................       -5,674         -6.4           89          5.1           83          4.9         16.1         15.1
40,000 to 50,000................................       -5,490         -5.4          102          5.9           97          5.7         17.4         16.4
50,000 to 75,000................................      -11,546         -4.5          256         14.6          244         14.4         19.1         18.3
75,000 to 100,000...............................       -8,488         -3.5          244         13.9          235         13.9         21.7         21.0
100,000 to 200,000..............................      -10,488         -2.6          408         23.3          397         23.5         24.2         23.6
200,000 and over................................       -6,997         -1.3          555         31.7          548         32.4         27.8         27.4
                                                 -------------------------------------------------------------------------------------------------------
      Total, All Taxpayers......................      -57,536         -3.3        1,748        100.0        1,690        100.0         21.4         20.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CALENDAR YEAR 2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than $10,000...............................          -75         -1.0            7          0.4            7          0.4          9.2          9.1
10,000 to 20,000................................       -3,596        -13.3           27          1.5           23          1.3          7.6          6.6
20,000 to 30,000................................       -7,124        -11.3           63          3.4           56          3.2         13.5         12.0
30,000 to 40,000................................       -6,849         -7.6           91          4.9           84          4.8         16.1         14.8
40,000 to 50,000................................       -6,198         -5.8          106          5.8          100          5.7         17.5         16.5
50,000 to 75,000................................      -13,251         -5.0          267         14.5          254         14.4         19.0         18.0

[[Page 15297]]

 
75,000 to 100,000...............................      -10,227         -4.0          255         13.9          245         13.9         21.7         20.8
100,000 to 200,000..............................      -14,416         -3.3          442         24.1          427         24.3         24.2         23.4
200,000 and over................................      -16,557         -2.9          578         31.5          562         32.0         27.9         27.1
                                                 -------------------------------------------------------------------------------------------------------
      Total, All Taxpayers......................      -78,294         -4.3        1,836        100.0        1,758        100.0         21.5         20.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CALENDAR YEAR 2003
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than $10,000...............................          -83         -1.1            8          0.4            8          0.4          9.7          9.6
10,000 to 20,000................................       -3,516        -12.9           27          1.4           24          1.3          7.6          6.6
20,000 to 30,000................................       -7,135        -11.0           65          3.3           58          3.1         13.6         12.1
30,000 to 40,000................................       -6,946         -7.5           93          4.8           86          4.6         16.0         14.8
40,000 to 50,000................................       -6,155         -5.7          108          5.6          101          5.5         17.4         16.4
50,000 to 75,000................................      -13,554         -4.9          279         14.4          266         14.3         18.9         18.0
75,000 to 100,000...............................      -10,553         -4.0          265         13.7          255         13.8         21.7         20.8
100,000 to 200,000..............................      -15,487         -3.2          479         24.8          464         25.1         24.2         23.4
200,000 and over................................      -17,453         -2.9          609         31.5          591         31.9         28.1         27.3
                                                 -------------------------------------------------------------------------------------------------------
      Total, All Taxpayers......................      -80,882         -4.2        1,933        100.0        1,852        100.0         21.5         20.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CALENDAR YEAR 2004
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than $10,000...............................          -69         -0.9            8          0.4            8          0.4         10.0          9.9
10,000 to 20,000................................       -3,429        -12.6           27          1.3           24          1.2          7.6          6.6
20,000 to 30,000................................       -7,121        -10.8           66          3.3           59          3.1         13.6         12.2
30,000 to 40,000................................       -6,964         -7.3           96          4.7           89          4.6         16.0         14.8
40,000 to 50,000................................       -6,320         -5.8          110          5.4          103          5.3         17.4         16.4
50,000 to 75,000................................      -15,049         -5.2          288         14.2          273         14.2         18.7         17.8
75,000 to 100,000...............................      -12,913         -4.6          279         13.8          266         13.8         21.5         20.5
100,000 to 200,000..............................      -22,095         -4.3          512         25.2          490         25.3         24.1         23.0
200,000 and over................................      -21.671         -3.4          642         31.6          620         32.1         28.2         27.3
                                                 -------------------------------------------------------------------------------------------------------
      Total, All Taxpayers......................      -95,630         -4.7        2,028        100.0        1,932        100.0         21.6         20.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CALENDAR YEAR 2005
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than $10,000...............................          -76         -1.0            8          0.4            8          0.4         10.1         10.0
10,000 to 20,000................................       -3,867        -14.0           28          1.3           24          1.2          7.6          6.5
20,000 to 30,000................................       -7,937        -11.6           68          3.2           60          3.0         13.7         12.1
30,000 to 40,000................................       -7,720         -7.9           98          4.6           90          4.4         16.0         14.7
40,000 to 50,000................................       -6,945         -6.2          112          5.3          105          5.2         17.2         16.2
50,000 to 75,000................................      -16,630         -5.5          303         14.2          286         14.1         18.7         17.6
75,000 to 100,000...............................      -14,709         -5.1          287         13.5          273         13.5         21.4         20.3
100,000 to 200,000..............................      -24,654         -4.5          547         25.7          522         25.8         24.0         22.9
200,000 and over................................      -21,182         -3.1          678         31.9          657         32.4         28.3         27.4
                                                 -------------------------------------------------------------------------------------------------------
      Total, All Taxpayers......................     -103,720         -4.9        2,129        100.0        2,025        100.0         21.6         20.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CALENDAR YEAR 2006
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than $10,000...............................          -76         -0.9            8          0.4            8          0.4         10.4         10.3
10,000 to 20,000................................       -3,789        -13.6           28          1.2           24          1.1          7.6          6.6
20,000 to 30,000................................       -7,853        -11.4           69          3.1           61          2.9         13.7         12.2
30,000 to 40,000................................       -7,839         -7.9           99          4.4           91          4.4         16.0         14.7
40,000 to 50,000................................       -7,570         -6.5          116          5.2          108          5.2         17.2         16.0
50,000 to 75,000................................      -18,755         -6.0          313         14.0          294         14.0         18.6         17.5
75,000 to 100,000...............................      -17,212         -5.8          297         13.3          280         13.3         21.3         20.0
100,000 to 200,000..............................      -30,208         -5.1          588         26.3          558         26.6         23.9         22.7
200,000 and over................................      -44,177         -6.1          719         32.1          675         32.1         28.3         26.6
                                                 -------------------------------------------------------------------------------------------------------
      Total, All Taxpayers......................     -137,476         -6.1        2,238        100.0        2,100        100.0         21.7         20.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Includes provisions affecting the child credit, individual marginal rates, a 10% bracket, limitation of itemized deductions, the personal exemption
  phaseout, the standard deduction, 15% bracket and EIC for married couples, deductible IRAs, and the AMT.
\2\The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, [2] employer
  contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, [5] nontaxable Social Security benefits,
  [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, and [8] excluded income of U.S. citizens living abroad.
  Categories are measured at 2001 levels.
\3\Federal taxes are equal to individual income tax (including the outlay portion of the EIC), employment tax (attributed to employees), and excise
  taxes (attributed to consumers). Corporate income tax and estate and gift taxes are not included due to uncertainty concerning the incidence of these
  taxes. Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis. Does not include indirect
  effects.
\4\The effective tax rate is equal to Federal taxes described in footnote (3) divided by: income described in footnote (2) plus additional income
  attributable to the proposal.
 
Source: Joint Committee on Taxation. Detail may not add to total due to rounding.


               TAX CODE BECAME MORE PROGRESSIVE--1979-2000
                              [In percent]
------------------------------------------------------------------------
            Income category                 1979       2000      Change
------------------------------------------------------------------------
$0-$10,000.............................        0.6        0.4       -0.2
$10,000-$20,000........................        2.3        1.5       -0.8
$20,000-$30,000........................        5.4        3.6       -1.8
$30,000-$40,000........................        7.8        5.1       -2.7
$40,000-$50,000........................       10.2        6.4       -3.8
$50,000-$75,000........................       24.6       16.8       -7.8
$75,000-$100,000.......................       14.8       13.0       -1.8
$100,000-$150,000......................       12.5       14.4       -1.9
$150,000-$200,000......................        5.1        6.9       -1.8
$200,000-Over..........................       16.7       32.0      -15.3
                                        --------------------------------
      Total............................        100        100  .........
------------------------------------------------------------------------
Source: CBO, October 2001, Table H-1b.


       BIPARTISAN TAX RELIEF MADE TAX CODE MORE PROGRESSIVE--2001
                              [In percent]
------------------------------------------------------------------------
                                          2006 w/o   2006 w/
            Income category               tax cut    tax cut     Change
------------------------------------------------------------------------
$0-$10,000.............................        0.4        0.4        0.0
$10,000-$20,000........................        1.2        1.1       -0.1
$20,000-$30,000........................        3.1        2.9       -0.2
$30,000-$40,000........................        4.4        4.4        0.0
$40,000-$50,000........................        5.2        5.2        0.0
$50,000-$75,000........................       14.0       14.0        0.0
$75,000-$100,000.......................       13.3       13.3        0.0
$100,000-$200,000......................       26.3       26.6        0.3
$200,000-Over..........................       32.1       32.1        0.0
                                        --------------------------------
      Total............................        100        100  .........
------------------------------------------------------------------------
Source: JCT, May 2001, JCX 52-01.

  Mr. GRASSLEY. Madam President, some might ask how does Joint Tax 
conclude that the bipartisan tax relief made the tax code more 
progressive.
  The answer is that the bipartisan tax relief returns to taxpayers, on 
a progressive basis, a small portion of the record level of Federal 
taxes.
  Take a look at this chart. It shows that the largest tax cut went to 
taxpayers in the lower and middle income brackets. For instance, 
taxpayers with incomes between $10,000 and $20,000, will see their 
taxes reduced by almost 14 percent when the tax cut is fully in effect. 
Taxpayers with over $200,000 will see their taxes reduced by barely 6 
percent.
  The Democratic Leadership and many in the media, will focus, not on 
the burden taxpayers bear, but on the benefits of the tax cut. In other 
words, they will try to ignore the progressive nature of our current 
system and use isolated examples. For instance, they will say that a 
taxpayer at $50,000 of income gets more of a tax cut than a taxpayer at 
$10,000 of income. In fact, a

[[Page 15298]]

taxpayer at $50,000 of income, pays considerably more tax than a 
taxpayer at $10,000 of income. Comparing two different taxpayers' tax 
relief benefits without looking at the burden is comparing apples to 
oranges.
  Let us compare apples to apples. That is, the burden born by groups 
of taxpayers before and after the tax relief bill.
  What I showed you before was the change in the tax burden for 
different categories of taxpayers. This chart allows you to see how 
progressive the current system is and how the tax relief bill made the 
tax system even more progressive. Keep in mind that this table includes 
all taxes. That's income taxes, payroll taxes, excise taxes, and 
corporate income taxes.
  Let us compare the same two groups I talked about before. Taxpayers 
with incomes between $10,000 and $20,000 bore 1.2 percent of the 
Federal tax burden before the tax relief bill and 1.1 percent after the 
tax relief bill. Taxpayers with over $200,000 maintained their burden, 
32.1 percent, before and after the tax relief bill.
  You can see the bipartisan tax relief bill lightened everyone's 
Federal tax burden but did it in a progressive way.
  What the tax relief bill aimed to do was send back to the American 
people a portion of the record-high levels of taxation. But the 
bipartisan tax relief bill sent the money back in a progressive manner.
  Let us take a look at where we were early last year. You'll see the 
Federal Government was taking in record-high levels of individual 
income taxes. For instance in 2000, Federal taxes were taking 20.5% of 
GDP and individual income taxes were taking 10.2 percent of GDP.
  According to CBO, those upward record-high level trends were going to 
continue throughout this decade. In fact, even when fully in effect, 
the bipartisan tax relief bill leaves both Federal and individual 
income taxes at near record levels.
  Chairman Greenspan gave us a green light to provide broad-based tax 
relief because he foresaw a long-term economic problem. The record 
level of taxation, if left on track, would have been a drag on economic 
growth.
  As a matter of fact, there is substantial agreement that the tax cut 
came at just the right time. The rebate checks and other relief arrived 
just as the recession started to hit home. According to the Department 
of Commerce, the tax relief boosted personal incomes by the highest 
amount in almost 10 years.
  You can now see that those three widespread incorrect assertions 
about the bipartisan tax relief package have been countered. One, the 
tax relief package was bipartisan; not partisan as its critics claim. 
Two, the tax relief package did not cause either the short-term or 
long-term budget problems we face. Three, the tax relief package 
provides broad-based relief in a progressive fashion.
  I would like to turn to the final part of my discussion. This is the 
most important part because it describes what the tax relief package 
means to typical taxpayers.
  We took as a starting point President Bush's efforts to provide 
income tax relief to all Americans. This legislation includes the four 
main elements of President Bush's goals of providing tax relief to 
working families.
  These goals are to: No. 1, provide tax relief for working families 
through reducing marginal rates; No. 2, reduce the marriage penalty; 
No. 3, expand the child tax credit; and No. 4, eliminate death taxes. 
Let's look at each one.
  First, this legislation reduced marginal rates at all levels and 
creates the new 10 percent level proposed by the President. We also 
began to address the hidden marginal rate increases such as PEPS and 
PEASE that complicate the Code.
  The 10 percent bracket means a tax cut for every American taxpayer. 
It was the source for the rebate checks that every taxpayer received 
last year. That's $600 for every family and $300 for every single 
person.
  America is a society of opportunity. Over 60 percent of all families 
will at one time or another be in the top fifth of income in this 
country. A man will make more at 55, after 30 years of hard work, than 
he did at 25. A family should not face a crushing marginal rate tax 
burden when they finally get a good paycheck for a few years as a 
reward for years of hard work.
  For those that have worked hard over the years, there is some 
marginal tax rate relief. Here, I am referring to small business. Small 
business generates 80 percent of the new jobs in this country. Small 
business owners receive 80 percent of the benefits of the marginal rate 
reductions. When fully phased in, the marginal rate paid by a 
successful small business will be the same as that paid by General 
Motors. I don't know how Senators can argue that 35 percent is an 
appropriate top rate for General Motors, but too low for Joe's Garage.
  While I am on the topic of marginal rate relief one political 
development continues to surprise me. Those on the other side most 
opposed to the marginal rate relief come from the higher income states, 
the so-called high-tax or ``blue states'' that tend to be on each coast 
and around the Western Great Lakes. Taypayers in those states, in 
particular, bear the brunt of higher marginal rates.
  It continues to surprise me that Senators from those high-tax paying 
states attempt to obstruct tax relief that is most meaningful to their 
constituents.
  Federal taxes squeeze harder in those states where incomes are higher 
and the cost of living is higher. To this day, I do not understand the 
virgourous opposition these members have to relieving the high tax 
burden their constituents face. Instead, members from these states tend 
to focus on those who don't pay income tax. Maybe members from the 
other side of the aisle and who are from these states seem oblivious to 
this disproportionately heavy tax burden. Or maybe they think Federal 
taxes should be higher. Maybe it's liberal guilt. I cannot figure it 
out. One has to wonder what the folks in those states who work hard and 
pay high taxes would think if they took a look at these charts. One has 
to wonder what they'd think about higher taxes those on the other side 
seem to yearn for.
  The first part of the package provides progressive income tax relief 
to every American that pays income tax. Let's move on to the second 
part.
  The second part provides income tax relief for married families--for 
families where both spouses work and where only one spouse works. In 
addition, thanks to the advocacy of Senator Jeffords, we expanded the 
Earned Income Credit for married families with children. Further, there 
was wide bipartisan agreement to simplify the Earned Income Credit 
which will mean that hundreds of thousands of more children will 
receive the EIC benefits.
  This package contains the first marriage penalty relief in 33 years. 
Let me repeat that. For the first time in 33 years, we're delivering 
marriage penalty relief.
  Third, the President's desire to expand the child credit to $1000 was 
met in the bipartisan tax relief package. And in response to the 
concerns of Senators Snowe, Lincoln, Breaux, and Jeffords the child 
credit was expanded to help millions of children whose working parents 
do not pay income tax.
  Let's take a look at an example. For a single mother with two 
children at $16,000 of income, this tax relief package means $600 more 
in her pocket for this year. That's an increase of almost 4 percent in 
this single mother's budget. I'm sure she can use the money.
  The fourth part of the package dealt with the death tax. The death 
tax is reduced and finally eliminated--as called for by President Bush. 
We were successful in this effort due to the work of many Senators but 
I would particularly note the efforts of Senators Kyl, Phil Gramm, and 
Lincoln.
  Thus, this legislation contained the four main elements of President 
Bush's efforts to provide tax relief for working families--marginal 
rate reduction, relief for married families, the expansion of the child 
credit and the reduction and ultimate elimination of the death tax.
  I would remind my colleagues again that the hallmark of this 
legislation is

[[Page 15299]]

that relief for low income families comes first. The marginal rate drop 
to 10 percent was immediate, the child credit expansion to low income 
families was immediate, the expansion of EIC was immediate.
  The greater progressivity of the tax relief legislation is certainly 
due in no small part to the work of Senator Baucus.
  Everyone knows Senator Baucus and other Democrats who crafted this 
package took a lot of heat from the liberal core of the Democratic 
Caucus. His objective, like mine, was a bipartisan tax relief package. 
It seems that while many are happy to talk about bipartisanship they 
can't stand to see bipartisanship practiced.
  In addition to President Bush's proposals to provide tax relief to 
working families, the tax relief package included legislation that had 
been considered by the Finance Committee previously.
  I believe that not all good ideas come from just one end of 
Pennsylvania Avenue. Thus, we included the Grassley/Baucus pension 
reform legislation which probably would not have made it in the bill 
without the longtime support of Senators Hatch and Jeffords.
  That package means $50 billion in tax benefits for enhanced 
retirement security. That figure will be compounded many times over in 
retirement assets. A lot of folks like to play political football with 
retirement security issues. The bipartisan tax relief package actually 
moved the ball forward on retirement security.
  Let's take a look at an example. Under the tax relief legislation, 
workers will be able to raise their IRA contributions to $5,000 
annually. Workers will also be able to put away up to $15,000 annually 
in their 401(k) accounts.
  In addition, the legislation contained over $30 billion in tax 
benefits targeted for education. Elements of this package included 
language to expand the prepaid tuition programs to help families pay 
for college--long advocated by Senators Collins, McConnell, and 
Sessions. In addition, the package provided a college tuition deduction 
thanks to Senators Torricelli, Snowe, and Jeffords, private activity 
bonds for school construction in response to Senator Graham's concerns, 
as well as an expansion of the education savings accounts--in honor of 
Senator Coverdell--thanks to the work of Senator Torricelli and Senator 
Lott.
  Let's take a look at an example. Under this legislation, a young 
couple can contribute $2,000 per year per child to an education IRA. 
The account enjoys inside buildup tax-free and is available to pay 
tuition and other college costs.
  None of us should forget the great winners of this legislation--the 
American taxpayer. We provided the American taxpayer the greatest 
amount of tax relief in a generation. And they deserve it.
  With the bipartisan tax relief legislation in place, all taypaying 
Americans have a little bit more of their money in their pockets. 
Struggling families will have more money to make ends meet; parents and 
students will be able to more easily afford the costs of a college 
education; a successful business woman will be able to expand her 
business and hire more people; a father finally getting a good paycheck 
after years of work will be able to better provide for his aging 
mother; and, a farmer can pass on the family farm without his children 
having to sell half the land to pay estate taxes.
  As an illustration of the breadth of this relief, I ask unanimous 
consent to have printed in the Record a State-by-State analysis of the 
per taxpayer benefits, prepared by the Tax Foundation.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              BUSH 2001 TAX REDUCTION BY STATE FY 2001-2002
------------------------------------------------------------------------
                                      Total
                                   (Dollars in   Per capita      Per
                                     millions)                household
------------------------------------------------------------------------
Alabama..........................       $1,151         $257         $663
Alaska...........................          233          363          939
Arizona..........................        1,689          320          826
Arkansas.........................          603          224          578
California.......................       15,539          451        1,165
Colorado.........................        2,044          463        1,196
Connecticut......................        2,558          750        1,938
Delaware.........................          309          388        1,003
Florida..........................        6,532          400        1,032
Georgia..........................        2,928          350          903
Hawaii...........................          336          272          703
Idaho............................          330          247          638
Illinois.........................        5,789          465        1,201
Indiana..........................        2,003          327          845
Iowa.............................          852          291          752
Kansas...........................          899          333          859
Kentucky.........................        1,033          254          656
Louisiana........................        1,112          249          642
Maine............................          337          263          678
Maryland.........................        2,354          438        1,130
Massachusetts....................        3,611          567        1,465
Michigan.........................        3,860          388        1,001
Minnesota........................        2,045          411        1,063
Mississippi......................          584          204          527
Missouri.........................        1,785          317          818
Montana..........................          209          228          589
Nebraska.........................          547          318          823
Nevada...........................          913          436        1,127
New Hampshire....................          615          488        1,261
New Jersey.......................        4,953          585        1,511
New Mexico.......................          420          227          586
New York.........................        9,392          496        1,283
North Carolina...................        2,534          310          800
North Dakota.....................          159          248          641
Ohio.............................        3,788          333          860
Oklahoma.........................          819          236          611
Oregon...........................        1,123          322          833
Pennsylvania.....................        4,566          372          960
Rhode Island.....................          363          344          890
South Carolina...................        1,081          267          689
South Dakota.....................          228          299          772
Tennessee........................        1,820          316          816
Texas............................        7,719          362          936
Utah.............................          595          260          673
Vermont..........................          197          320          828
Virginia.........................        3,069          426        1,102
Washington.......................        3,169          527        1,362
West Virginia....................          363          201          518
Wisconsin........................        1,888          349          902
Wyoming..........................          207          411        1,061
District of Columbia.............          317          559        1,445
                                  --------------------------------------
      Total......................      111,571          392        1,013
------------------------------------------------------------------------
Notes. Includes provisions that only affect individual income tax
  liabilities.

[[Page 15300]]

 
Source. Tax Foundation.

  Mr. GRASSLEY. Madam President, this chart illustrates the benefits of 
the income tax rate reductions State by State. As you can see, all 
taxpaying families in all States benefit. The examples are endless of 
the great benefits that we realize when we give tax relief to working 
families.
  While I am pleased about the first anniversary, I won't be satisfied 
until we make these bipartisan measures permanent.
  Let's tell every taxpayer they can count on the 10 percent bracket 10 
years from now. Let's tell the small business owner that, after 10 
years of hard work, they won't face a tax rate of 39.6 percent. Let's 
tell the single mother with two children that her taxes won't rise by 
$1,200. Let's tell the newlyweds that 10 years from now they don't have 
to face a marriage penalty. Let's tell family farmers they won't face 
the death tax 10 years from now. Let's tell workers saving for 
retirement that they can put away $5,000 in their IRA 10 years from 
now. Let's tell a young couple that 10 years from now they will 
continue to be able to save $2,000 each year per child for college 
savings.
  I would like to sum up. In historical context, the tax relief package 
provides a modest refund to all taxpayers at a level previously 
supported by the Democratic leadership. Over time, the Democratic 
leadership's notion of what the top rate of tax should be has moved up.
  Three assertions about the tax relief package, repeated almost daily 
by its critics, are incorrect. I will correct them once again. The tax 
relief package is bipartisan. The tax relief package did not cause our 
current or long-term budget problems. The tax relief package is 
progressive.
  Finally, and most importantly, the tax relief package provides 
important resources for families, small businesses, retirement 
security, and education. These resources are valuable and should be 
available to the American people on a permanent basis.
  The PRESIDING OFFICER. The Senator has used his 20 minutes.
  Mr. GRASSLEY. I yield the floor.
  The PRESIDING OFFICER. The Senator from Louisiana.

                          ____________________