[Congressional Record (Bound Edition), Volume 153 (2007), Part 6]
[House]
[Pages 8808-8812]
[From the U.S. Government Publishing Office, www.gpo.gov]




         REPUBLICAN TAX CUTS REDUCE THE TAX BURDEN ON AMERICANS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 18, 2007, the gentlewoman from North Carolina (Ms. Foxx) is 
recognized for 60 minutes as the designee of the minority leader.
  Ms. FOXX. Mr. Speaker, tomorrow is the day that Americans are 
required to pay their taxes. It is the last possible day in this year 
that they can do that. We call it ``tax day.'' It is normally on April 
15th, but because of the calendar and because today is a holiday in the 
District of Columbia, it has been delayed.
  I want to say something about the fact that our taxes are something 
that people feel obliged to pay the Federal Government and to State and 
local governments too, but many people do it grudgingly. We do it 
grudgingly because we feel concern about the way too many of our tax 
dollars are being spent. However, this year, taxpayers are paying less 
than they have paid before as a result of the tax cuts that have 
occurred in 2001 and 2003, tax cuts that were pushed through under a 
Republican Congress and asked for by a Republican President.
  Children often ask me when I speak to them in school groups, what is 
the difference between Democrats and Republicans? I tell them that the 
most simple definition that I can give them

[[Page 8809]]

is that Republicans believe that Americans should keep more of their 
money than Democrats do and that Democrats believe that very often the 
government is the answer to the problems that we have in this country, 
while Republicans think that individual Americans have the capability 
for solving most of their problems. So Republicans believe that the 
government that governs least governs best, and that is the philosophy 
that I have.
  The tax cuts that were instituted in 2001 and 2003 were designed for 
Americans to keep more of their money than the government had been 
taking from them, and those tax cuts have been very effective. We see 
that our economy is doing extremely well as a result of those tax cuts. 
We have the lowest unemployment rate in this country in many, many 
years, the highest home-ownership rate, the highest level of income in 
many, many years; and just on and on and on the economic indicators go 
that are very, very positive in this country. Those are as a result of 
the tax cuts.
  Democrats will talk about ``investing in government.'' Well, we don't 
invest in government when we give money to the government to spend. Our 
investments come from individual Americans who are entrepreneurs who 
create new jobs and create new businesses. That is where investments 
come from, and that is where a good return on investments come from.
  Mr. Speaker, I yield to the gentleman from Nebraska.
  Mr. SMITH of Nebraska. Mr. Speaker, I rise today to express some 
thoughts and concerns about taxation. Certainly, as taxes are due 
today, I know that post offices around the country are well staffed, up 
to midnight. It is interesting as I have paid my taxes in the past, 
kind of pushing it up to the last minute, to see everyone else who 
pushes up the payment of their taxes to the last minute. But the fact 
is, it does take place.
  But I rise today to very briefly reflect on what today means. 
Certainly I realize that paying taxes is a necessary function of a 
civilization, but I also rise to express my concern that some tax 
policies that have been working over the past few years are in 
jeopardy. The tax relief packages offered by President Bush and 
certainly those in the House and Senate who supported tax relief have 
done good things, in fact, great things, in terms of revenues to the 
Federal Government, but I would say so in terms of revenues to the 
household budget even more importantly.
  We in Congress cannot utilize what we call ``dynamic scoring,'' the 
reflection of what lower taxes can do in terms of tax revenue. I 
understand that. I think it is unfortunate. Be that as it may, we are 
faced with some tough decisions, decisions impacting the budget long 
term, and I wish to speak of my concern for the long term.
  I have learned over the years that government spending compounds once 
a new program is started. We have to be very mindful of that. We have 
to be mindful that as we look down the road, we have to come up with 
ways to cover the expenses of new programs. That is why I believe we 
should be careful when we talk about adopting new programs.
  When it comes to the tax burden in general, certainly April 15th, and 
now the 16th, speaks volumes not only in the 3\1/2\ months it takes to 
prepare taxes owed from the prior year, but we often hear about ``tax 
freedom day.'' Preliminary research tells us most recently this year's 
tax freedom day is actually April 30. It takes a full 4 months, on 
average, for Americans to earn enough money in their household to pay 
their Federal income tax.
  Now, throw on top of the Federal income tax State income tax, and in 
a State like my State of Nebraska, property tax, it is a heavy burden 
in Nebraska, and sales tax, plus the other fees and taxes associated; 
and I just think it is important that we reflect on this.
  We heard earlier about financial literacy. Yes, we have an issue with 
credit card debt, for example. But I think that it would serve us well 
to make sure that for consumers and citizens of all kinds, that we 
teach them about the tax burden, tax freedom day, and not just paying 
taxes by April 15th or 16th, but more so what it might mean to take 
some of those dollars paid in taxes and perhaps invest those.

                              {time}  1530

  And it is interesting, as we look at our economy in general, what 
available capital means to a business, to an individual.
  I am inspired to hear of individuals who wish to start a business but 
for the available capital. When we look at what available capital can 
do in a house, whether it is a project around the house or whether it's 
a small business incubating, I think that we should look at various 
ways we can avail capital to our citizens, primarily through tax 
relief.
  It is absolutely vital that we always keep this in mind, especially 
as we constantly need to look at growing our economy. And that it is 
not just coincidence, as some might suggest, that tax relief actually 
led to job creation and increased revenues to the Federal Government. I 
don't believe that that's just coincidence. I believe that that is 
through fashioning good tax policy and allowing individuals, individual 
taxpayers, to keep more of what they earn because when they spend those 
dollars, they spend them more wisely, and those dollars are leveraged 
into actually greater Federal revenue so that we can provide for those 
who cannot provide for themselves.
  Ms. FOXX. I want to thank my colleague. He is in his first term in 
Congress, but he speaks very, very eloquently of this issue and other 
issues. I am very grateful to him for his sharing his concerns and his 
perspective on this.
  As I said earlier, when people ask me what is the difference between 
a Democrat and a Republican, I say, well, Republicans think that you 
should keep more of your money and spend it and take care of yourself; 
and Democrats want to take more of your money away from you and give it 
to the government. And let me give you an example of what is happening. 
I don't have to just talk about that in the abstract; I can talk about 
it in concrete terms.
  The tax decreases that were put through by a Republican Congress and 
advocated by a Republican President are due to expire in 2010 because 
of the rules of the Senate, which would not allow those tax cuts to be 
made permanent. Now, 2 weeks ago, the Democrats, who are now in a 
majority here in the House, and our Constitution requires that spending 
bills and budget bills have to begin in the House, they passed their 
budget. It passed, and it assumes that the 2001/2003 tax cuts will 
expire. The effect of that will be to impose the largest tax increase 
in American history, nearly $400 billion over 5 years, mainly to 
finance their immense new spending. And as my colleague from Nebraska 
said, we have to be very much concerned about the long term, and we are 
concerned about the long term.
  Now, if the Republican tax relief is not extended, what happens when 
the clock strikes midnight on December 31, 2010? Well, here's what 
happens: the tax rates are going to go higher. In 2010, the top income 
tax rate will be 35 percent. The Democrats propose that that tax rate 
goes to 39.6 percent in 2011. The capital gains tax, 15 percent in 
2010, 20 percent immediately thereafter. The tax on dividends, from 15 
percent to 39.6 percent. The death tax: the death tax has been 
gradually going down since the tax cuts of 2001/2003. In the year 2010, 
the death tax will be zero. In 2011, it goes back to 55 percent.
  I am particularly offended by the death tax, and I think most 
Americans are. It is probably the third time that that same income is 
going to be taxed when you impose a death tax, because we are paying 
taxes on our income, if you have an opportunity to invest any of that 
money you are going to pay capital gains tax on it, and then you are 
going to pay 55 percent on whatever is left over. Again, I think it is 
a particularly offensive tax to most Americans.
  But how do the Democrats, who talk so much about the value of 
children, act about the child tax credit? The

[[Page 8810]]

child tax credit went to $1,000 under the tax cuts of 2001/2003. It 
will be cut back to $500. We all know that you can't raise children 
even on $1,000 as a tax credit, let alone on $500.
  The lowest tax bracket, hurting the lowest income people in our 
country, and Democrats say that they stand for the little people and 
they want to help the low-income people in this country, but what they 
propose to do is take the taxes on the lowest income people in our 
country and go from 10 percent to 15 percent. I think, again, that is 
an abomination. Why in the world do we want to burden those folks who 
are making the lowest income in this country?
  Another part of the problem that we have in this country is the fact 
that our Tax Code is so complicated. We believe now that more than 60 
percent of tax returns are prepared by a professional. If you add the 
number of Americans who use computer tax software to file a return, the 
proportion of people who seek outside help rises to 90 percent. We 
shouldn't live in a country where the Tax Code is so complicated that 
the average American citizen cannot complete his or her income tax 
forms.
  The Office of Management and Budget estimates that we spend about 6.4 
billion hours, and we did in 2006, complying with the Federal Tax Code. 
That many hours is the equivalent of a 40-hour work week for every 
employed person in America. Take your pick: do your taxes or go on a 
week-long vacation.
  While the tax cuts of 2001 and 2003 have lowered taxes across the 
board and encouraged investments that lead to job creation, we are 
still saddled with an incomprehensible Tax Code that costs more than 
$265 billion a year to comply with.
  As a supporter of the Taxpayer Bill of Rights, I pledge to work 
towards scrapping the Tax Code in order to build a new one that 
promotes transparency and common sense. By signing on to the Taxpayer 
Bill of Rights, I have also promised to work to balance the budget, to 
exercise the fiscal discipline needed to rein in the growth of the 
Federal Government, and to protect the Social Security trust fund from 
congressional raiding.
  Let me say something about Social Security here, even though we're 
talking about taxes today.
  Many people don't understand the or origin of the Social Security 
fund. After the Depression, President Roosevelt was desperate to raise 
money for the social programs that he wanted to institute in this 
country, but he knew that if he wanted to raise taxes that would raise 
a hew and cry among the people. At that time, 1936/1937, the average 
life expectancy of Americans was 59 years. People still weren't living 
very long in this country. We had come a long way from the early part 
of the century, but still life expectancy was only 59 years of age. So 
they came up with a scheme to take money away from Americans and have 
it available to spend on social programs, and they came up with a 
Social Security fund. It was for every American to pay a small amount. 
It was designed to provide a retirement income, or at least that is the 
way it was sold to the American people. But what most people didn't 
realize again at the time, the life expectancy was 59 years of age. And 
when did they set Social Security up to be redeemed? Age 65. The idea 
was that they would take in a lot of money to develop the programs that 
they wanted to develop, and that very few people would ever draw on 
Social Security for their retirement. So that's why the average age was 
set at 65, way beyond the average life expectancy for Americans at the 
time.
  And immediately the money was going into other programs other than 
into what most Americans thought would happen, which was a fund to pay 
for Social Security. That has continued to the present time under both 
Democrats and, I am sorry to say, under Republicans. Rather than 
putting that money into a special fund and leaving it alone just to pay 
for Social Security, most of that money is going into paying for 
government programs, and those programs have become dependent on that 
Social Security money, which is why you find people very reluctant to 
create that mythical lock box that has been talked about so much. But 
we now have groups who are trying very hard to make sure that the money 
being paid into Social Security stays in the Social Security account. 
That's what I believe in, and I think that is what most Americans 
believe in.
  The President proposed personal accounts so that people could take an 
interest in where their Social Security money was going and manage that 
money better than the Federal Government has been able to manage it. 
That has been demonized as a way to do something bad with the Social 
Security fund. But if people had a way to manage their own money, they 
would get a lot more from Social Security.
  The average Social Security payment right now is about $1,000 a 
month, and I know of very, very few people who can live on that. And we 
know that Social Security is going to be in deep trouble in the next 
few years because there will be more people drawing on Social Security 
than are paying into Social Security. So not only are we going to have 
to come up with the money to pay for Social Security; we are going to 
have to either cut the funding that is dependent on the Social Security 
money or cut out programs or raise taxes. Republicans are opposed to 
raising taxes and continuing to fund those programs, most of which were 
begun in the 1930s.
  What people can do in this country is to sign an online petition with 
the grass-roots group Freedom Works to support the initiative of the 
Taxpayer Bill of Rights. They can sign this petition at 
www.freedomworks.org/action/taxpayer. I am sure if you put in the words 
``freedom works,'' you can probably find out how to get on to that. But 
we need to do everything we possibly can to keep the tax rate low, 
protect Social Security, and reduce the burden of government on our 
citizens.
  I want to go back over the effects of the Democrat tax hike, which 
were in the budget that the Democrats passed 2 weeks ago here. They 
will be raising the 10 percent tax rate bracket to 15 percent. More 
than 15 million individuals and families, who previously owed no taxes 
under the Republican plan, would now become subject to the individual 
income tax if the Democrats were successful in raising the 10 percent 
tax rate bracket to 15 percent and reducing or eliminating other low-
income tax benefits.
  That budget eliminates the marriage penalty relief. Most Americans I 
think now know that if you are married and you file jointly, you pay a 
penalty for being married in this country. Twenty-three million 
taxpayers would see their taxes increase on average by approximately 
$500 when that goes into effect. As I said earlier, it would cut the 
child tax credit in half. Thirty-one million taxpayers would see their 
taxes increase on average by $859 when this goes into effect.

                              {time}  1545

  Elderly couples with $40,000 in income would see their tax bill rise 
by 156 percent from $583 to $1,489. And a single parent with two 
children and $30,000 in earnings would see their tax benefits decline 
by 67 percent. With tax relief, the single parent qualifies to get back 
$2,214. With the Democrat tax hike, this single parent would get back 
only $799.
  So we would see a major impact on the American family with the 
effects of the budget that the Democrats passed here a couple of weeks 
ago. It is not the way we should be going in this country.
  The tax cuts of 2001 and 2003 have brought us one of the most vibrant 
economies this country has ever seen. The stock market is at a new 
high. Home ownership is at a new high. Personal income is at a new 
high. Unemployment rates are at an all-time low. New business creations 
are at an all-time high. Job creations are at an all-time high. All of 
the things that should be positive in this country are positive; all of 
the things that should be negative are negative in terms of our 
economy, and those come as a result of the tax cuts that were made in 
2001 and 2003.
  I personally cannot take any credit for that because I was not here, 
but I

[[Page 8811]]

applaud those who voted for those tax cuts in 2001 and 2003 because 
they have had an extremely positive effect on our economy and on 
American families.
  I want to talk some more about the dysfunctional Tax Code that we 
have and the impact that it has on Americans. I mentioned earlier how 
much it costs to file income taxes and how much is being spent by 
Americans because they have to go to professionals to get their taxes 
done. But I want to put this into sort of an allegory.
  Can you imagine a business that with every passing year grows more 
difficult to manage, gets harder for its customers to understand, and 
becomes increasingly susceptible to theft? You would be right to think 
that such an operation would quickly go out of business.
  Unfortunately, this imaginary business is more of an apt description 
of the United States tax system. Every year the Federal Tax Code grows 
larger and more complex. New rules and guidelines are added. Deductions 
and special exemptions proliferate. As a result, each tax season more 
Americans are throwing up their hands in disgust and calling in a 
professional to do their taxes.
  According to the IRS, more than 60 percent of tax returns are 
prepared by a professional; and if you add the number of Americans who 
use computer tax software to file a return, the proportion of people 
who seek outside help rises to 90 percent.
  Congress puts out a little-known tax law report each session that 
serves as a chilling picture of the obscene complexity of our tax 
system. The most recent version entitled ``The General Explanation of 
Tax Legislation Enacted in the 109th Congress'' runs to 806 pages and 
purports to explain the 109th Congress' changes to tax law. As you 
might imagine, it is mind-numbing. That we need a publication of this 
size simply to explain the 109th Congress' Tax Code additions is ample 
evidence that we have a massive problem on our hands.
  What ails our Tax Code is not just the fact that it is 7,000 pages 
long. Rather, the real ailment is the burden, above and beyond the 
actual financial burden of tax day, of complying with a chameleon Tax 
Code.
  As I said earlier, the government's Office of Management and Budget 
estimated that we spent about 6.4 billion hours in 2006 complying with 
the Federal Tax Code. That many hours is the equivalent of a 40-hour 
work week for every employed person in America. While the tax cuts of 
2001 and 2003 have lowered taxes across the board and encouraged 
investments that lead to job creation, we are still saddled with an 
incomprehensible Tax Code that costs more than $265 billion to comply 
with each year.
  Our tax professionals can't even understand it. I am sure you have 
read and heard the horror stories about how 10 different people will 
call the IRS to ask for an interpretation of a rule, and get 10 
different interpretations. That, again, is a really sad commentary on 
our Tax Code that you can't call 10 employees from the IRS and get the 
same answer from 10 different people on a code that millions of us are 
supposed to be adhering to because the way the Tax Code is written is 
so incomprehensible.
  While the tax cuts of 2001 and 2003 have lowered taxes across the 
board and encouraged investments that lead to job creation, we are 
still saddled with this incomprehensible Tax Code.
  The IRS reports that the tax gap, the difference between what people 
owe and what they pay is around $300 billion. This gap is composed of 
the cheaters and those who simply don't know any better because the 
system is too murky for the average taxpayer to accurately decipher.
  Realities like the tax gap, the 6 billion hours of annual compliance 
time, and the thousands of pages of rules and regulations have led me 
to join with the approximately 100 fiscal conservatives of the 
Republican Study Committee in support of the American Taxpayer Bill of 
Rights. We need a taxpayer bill of rights passed. Many States have 
passed a taxpayer bill of rights, and we need to do that at the Federal 
level.
  Those of us who have signed that pledge have pledged to work towards 
scrapping the Tax Code in order to build a new one that promotes 
transparency and commonsense. I have also promised to work to balance 
the budget. I have done that every chance that I have had since I have 
been in Congress, to exercise the fiscal discipline needed to rein in 
the growth of the Federal Government.
  I want to say that 2 years ago, when we dealt with the Hurricane 
Katrina relief, I am very proud to say that I pushed for an offset in 
Federal spending at that time. We were faced with spending outside the 
budget, $52 billion in one fell swoop, to offer relief to the victims 
of Hurricane Katrina. We had no good plan for how that money was going 
to be spent, and we needed a plan. We did not have an offset set up 
when we first passed that $52 billion. I urged the Republican Study 
Committee to demand offsets.
  In just a few weeks' period of time, we were able to come up with $39 
billion in offsets to the $52 billion. We weren't able to come up with 
$52 billion, but we came up with $39 billion. One of my colleagues who 
gives me the credit for that, calls me the ``mother of offsets.'' It is 
a title I wear proudly. All of us need to be doing that here in the 
Congress. We all need to make sure that when we ask for any funding, 
that we are looking for ways to offset that funding, and certainly any 
new funding.
  Unfortunately, the war supplemental that was passed 3 weeks ago did 
not have offsets in it because the rules here in the House say that 
emergency spending, such as the Katrina bill, don't have to have 
offsets in them; and yet our Democratic colleagues promised that in 
this session of Congress they would not do what the Republicans did and 
that was spend outside the budget and expand the growth of the Federal 
Government.
  They just ignored that. They had $24 billion in new spending, pork-
barrel spending, I would call it, spending to buy votes to pass the war 
supplemental, which were outside the budget and expanded the scope of 
spending, violating all of the promises that they made last year to do 
PAYGO. They found ways to get around those promises to pay as you go 
and not expand spending by putting it within the supplemental which was 
supposedly for the war and is emergency spending. That, to me, is one 
of the most cynical things that a person can do.
  But as we file our taxes on April 17, we need to imagine the 
alternatives to piles of tax forms and schedules and endless hours 
calculating Uncle Sam's take. We need a system that is fair, simple and 
transparent. It is time for radical change in the way we collect taxes.
  The first step is ditching the leviathan code we have inherited from 
decades of congressional tinkering and start a real tax debate over how 
to collect taxes responsibly, efficiently and fairly. I challenge my 
colleagues on the other side of the aisle to bring forth legislation 
that will relieve the burden that so many Americans feel at this time 
of the year where they have to spend hours and hours and weeks at a 
time preparing their taxes and paying a lot more out to the Federal 
Government than we should be paying.
  Many years ago I read an article in the Wall Street Journal where 
they had done a survey of every segment of our society and asked, what 
do you think would a fair amount of money that you should be paying to 
the Federal Government in taxes. Most people felt 25 percent was about 
the fair amount that they should pay, and they would pay that 
willingly. But once you get beyond that, then people begin to begrudge 
it and avoid trying to pay their taxes.
  We have way too many people in this country at this stage of the game 
paying approximately 48 percent of all of their income in taxes at all 
three levels, so we are at twice the level that most people feel is the 
fair amount to pay. I think most people would say that much of their 
money is being wasted. Not only do they think that they should pay only 
approximately 25 percent, but they want to know that the Federal 
Government is spending their money wisely.

[[Page 8812]]

  I want to say that as far as I am concerned what we should be doing 
at the Federal level is funding primarily defense, the Federal system 
of interstate highways, and national parks. Beyond that, we should not 
be doing it.
  Our Constitution shows that the things that are not mentioned in the 
Constitution, and in the 10th amendment we say those things not 
mentioned in the Constitution are the responsibility of the States. 
What we have done at the Federal level is we have taken on many, many 
more responsibilities than the framers and the founders of this country 
envisioned that we would do. What we need to do is step back, look at 
what we are funding at the Federal Government level and say, is it 
constitutional, is it something that we should be funding, and if not, 
then how can we get out of funding this and allow the States to do it. 
If it is a project that is worthy to be funded, then the States and 
localities should be doing it and not the Federal Government.
  Our Federal Government was formed to provide for the defense of this 
Nation. The States and localities cannot do that; only the Federal 
Government can do it. That is our responsibility.
  When people talk about the fact that we are taking money from 
education and putting it into the war effort, that is not accurate. We 
should not be funding education at all at the Federal level because 
that is not one of the parts of the Constitution that we should be 
funding. So I say if we could take the Federal Government back to its 
roots, to those things that we should be funding, then we would be able 
to lower the tax burden tremendously because much of the money that is 
taken at the Federal level is wasted.
  President Jefferson said: ``The government which governs least 
governs best,'' and I think that is accurate.

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