[Congressional Record (Bound Edition), Volume 153 (2007), Part 7]
[House]
[Pages 9694-9697]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           THE COUNTDOWN CREW

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 18, 2007, the gentleman from Pennsylvania (Mr. Shuster) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. SHUSTER. Mr. Speaker, I am coming to the floor this evening, as I 
have been for the past couple of months, to make sure that the American 
people realize what is going to happen in the next couple of years if 
we, in Congress don't act, if the Democratic majority doesn't act.
  In 1,349 days, if we don't act, we are going to see the largest tax 
increase in American history. And this is coming about because the tax 
cuts, the tax reductions that we put in place as a Republican majority 
in 2001, 2003, extended some of those in 2005, they are going to 
expire. And the majority party doesn't have to act. All they have to do 
is run the clock out, and those tax increases will go into effect on 
the American people. The American family, small businesses, all around 
this country are going to feel the pain.
  As I said, my friends and I have been, colleagues and I have been 
coming to the floor for the past few months talking about this, making 
sure that the American people are aware that this is going to occur.
  And I have heard some folks on the other side of the aisle say that 
they are not going to vote for a tax increase, thus it is not really a 
tax increase. Only in Washington do we employ that type of rationale, 
that type of logic.
  If we don't act, there is going to be a tax increase. And for the 
American people, who have just paid their taxes this year, and when 
they go to pay their taxes in 2008 and 2009 and 2010, they are going to 
see that their taxes have increased. Although there wasn't necessarily 
a vote on the House floor to specifically increase those taxes, those 
tax cuts expiring are, in effect, and, in fact, going to increase their 
taxes.
  What kind of tax increase are we talking about? First of all, 
raising, from the 10 percent tax bracket to 15 percent. And more than 5 
million individuals and families previously who owed no taxes will 
become subject to those individual income taxes in 2011, if we don't 
act on the House floor. If the Democratic majority doesn't act, the 
Democratic majority will be responsible for raising taxes on people in 
the lower-income levels in this country.
  It will eliminate the marriage penalty relief that we put in place in 
the early 2000s. By 2011, 23 million taxpayers would see their taxes 
increase an average of $466 just because they are married.
  Cutting the child tax credit in half: if we don't extend those, if we 
don't vote on this House floor before 2011, 31 million taxpayers will 
see their taxes increase an average of $859 in 2011.
  The AMT tax, if we don't act, if we don't do something that rectifies 
that situation, we are going to see people across America that have, 
husband and wife that earn an income, two families, for instance, 
teachers, we are going to see a husband and wife that are both teachers 
in the coming years, if they already haven't been affected by it, they 
are going to be hit with the AMT and pay higher taxes if we don't act.
  An elderly couple, for instance, in America, a senior couple making 
$40,000 in income, this couple will, their tax bill would raise in 
2011, from $583 to $1,489. And for a retired couple making $40,000, 
that almost $1,000 increase is a huge burden on them. We have got to 
make sure that that doesn't happen.
  A family of four with an income of $60,000: that family's income tax 
bill would raise, from $3,030 to $4,898, almost $5,000 in 2011 if we 
don't act. And I know that families in my district, that is a typical 
family, a family of four, $60,000 of income, two people working. That 
is a huge burden.
  And for people across America, we have been calling ourselves the 
Countdown Crew, and we have an e-mail that we would like you to share 
your stories with us on what the tax cuts have done for you, and what, 
for instance, a family, again, of four, $60,000 if you have to pay 
about $1,800, almost $1,900 more in income, $2,000 more in taxes, how 
is that going to affect your family. So we would like for you to share 
those stories with us. You can e-mail us at the 
[email protected]. I will get that up here in just a minute 
and you can see it. But, again, that is [email protected]. 
And share those stories with us because we want to hear, we want to be 
able to have those stories to talk about how it is going to affect, as 
I said, a typical American household.
  A single parent with two children, a woman who has got two children, 
$30,000 in earnings, she would, that parent qualifies at present to get 
about $2,400 back from the Federal Government. But if the tax cuts are 
allowed to expire, she is going to have to pay an $800 tax. That is a 
$3,200 swing from receiving $2,400 from the Federal Government to 
having to pay almost $800 in taxes. Families, individuals are going to 
be hardest hit, small businesses, unless we act.
  Just to give you a brief rundown of the numbers on what is going to 
happen if the Democratic majority doesn't act and increases taxes, 115 
million, taxpayers would see their taxes increase an average of $1,795 
in 2011.
  Eighty-three million women would see their taxes raise an average of 
$2,068 if the Democratic majority doesn't act.
  Forty-eight million married couples will incur an average tax 
increase of almost $2,900. Taxes would increase an average of $2,181 
for 42 million families with children. Twelve million single women with 
children would see their taxes increase an average of just over $1,000. 
Seventeen million elderly individuals would incur average tax increases 
of $2,270. And it goes on and on and on.
  As I said, only in Washington, only in our Nation's Capital is the 
logic employed that says, if we don't vote on a tax increase, it is not 
really a tax increase. But I know and millions of Americans know that 
if they paid $5,000 in taxes one year and they pay $6,000 in another 
year, then that is an increase in taxes. So we need to make sure that 
we are honest and open with the American people and realize what these 
tax cuts have done.
  This economy, which is growing, has grown each year for 21 straight 
quarters, I believe the last number was. We are creating jobs. We have 
created, in the last 4 years, 7.5 million jobs. Unemployment is at a 
4.4 percent unemployment rate.

                              {time}  2230

  I have a county in my district that has a 2.8 percent unemployment 
rate. That is incredible, 2.8 percent. I was under the belief that full 
employment is when you have 97 percent of the people working, or close 
to 97 percent of the people, because you are always going to have folks 
transitioning and moving around; but I have got actually two counties 
that are under 3 percent. And as I said, this economy is growing 
because of those tax cuts.
  It comes as no surprise to me, it should come as no surprise to 
millions of Americans, it should come as no surprise to my friends on 
the other side of the aisle, that when you cut taxes, the economy 
grows. When you cut taxes, also the revenues to the Federal Government 
increase.
  And my friends on the other side of the aisle don't have to take my 
word for it. Go back to the 1960s when President John F. Kennedy cut 
taxes on the American people. And what happened? The economy grew and 
revenues grew coming into the Federal Government. In the 1980s Ronald 
Reagan cut taxes on the American people and American businesses and the 
economy grew and revenues grew coming into the Federal Government. And 
in 2000, once again history repeats itself. When you cut taxes, as we 
did, the Republican majority did, when you cut taxes, the economy 
grows, jobs are created, and we have seen record revenues coming into 
the Federal Government. In 2005 the revenues to the Federal Government

[[Page 9695]]

grew by 14.5 percent, and last year, in 2006, they were over 11 percent 
growth in revenues to the Federal Government.
  We have got to make sure that the American people are keeping more of 
their hard-earned dollars, not sending them to Washington, but that we 
are sending them back home. But in Washington we have to make sure that 
we are spending responsibly, and we are trying to balance the budget 
and we are working towards that and working in such a way that the 
budget is going to be balanced, and we have been working towards that 
in the last 4 or 5 years.
  And I know that the Democratic majority, they talk about fiscal 
responsibility, but one of the first things they did was to change the 
rules of the House so that there was no longer a three-fifths majority 
needed to increase taxes. It is now a simple majority, and they can 
increase your taxes.
  They have come out with a budget just last week, or 2 weeks ago, I 
guess, we passed a budget, and they make it seem like it is 
responsible, but a lot of things in that budget just don't add up. The 
PAYGO rule is something that, quite frankly, is difficult to 
understand. And I am privileged to have a colleague of mine on the 
House floor, a colleague of mine from Texas (Mr. Conaway), who is, 
first of all, on the Budget Committee, so he understands the 
complicated budgetary process that we face here in the Federal 
Government. But, more importantly, he is a CPA. He is a certified 
public accountant. So he understands the balance sheet, he understands 
the income statement, he understands not only that of a business, the 
government, but of the average American family and what it takes to 
balance a budget at home, in a business, and here in the Federal 
Government.
  So with that, I would like to yield to my good friend from Texas to 
talk a little bit about the PAYGO rules and the budget and explain to 
the American people what is going to happen here in the next couple of 
months, weeks, and years in the United States.
  With that I yield to Mr. Conaway.
  Mr. CONAWAY. Mr. Speaker, I thank the gentleman for letting me join 
him tonight in this Special Order.
  I want to talk first about PAYGO, and then I want to talk about 
something a little closer to home for Texans, and that is the way sales 
taxes are treated in the budget and under the current Tax Code.
  For the entire time I have been here in Congress, which is a 
relatively short period of time, my colleagues on the other side of the 
aisle have pounded away this idea, using the term ``PAYGO.'' ``Pay as 
you go'' is the phrase, which rolls easily off the tongue but can have 
a multitude of definitions. And most of the folks in District 11 who 
hear the term ``PAYGO,'' in other words, that you are going to pay for 
something as you go along, it really makes a lot of sense to them under 
a more traditional definition of that phrase.
  This past week we had an interesting parliamentary ploy that our 
colleagues on the other side of the aisle used in order to get a vote 
on whether or not the delegate from Washington, DC would have voting 
privileges. And that is, it was debated at length last week, and it did 
pass. But it had a fiscal limit attached to it. It cost money. And our 
colleagues across the aisle, particularly the Blue Dogs, had made a 
huge point over the last 2-plus years of not wanting to pass anything 
where any new spending wasn't offset with either, in their preference, 
tax increases, and the second least likely choice would be to reduce 
spending in other areas to in effect offset that so that any new 
spending would be paid for, as that phrase is used, with tax increases 
or, less likely, spending cuts in other areas.
  Well, the first bill that passed last week had an interesting rule 
attached to it in which our colleagues from the Rules Committee had 
said that if a bill passes on the floor of the House, if the companion 
bill does not pass, then in spite of the fact that the first bill 
passed on its own, neither bill would be able to be sent to the Senate 
if the latter bill didn't pass.
  The latter one is the one I want to talk about tonight, and that was 
the bill that was passed in order to pay for the additional spending 
for the delegate converted to a Member and the new Member for Utah is 
going to cost. Now, in terms of West Texans, it is a lot of money. But 
in terms of the overall budget and the numbers that we typically deal 
with here in D.C., it is a relatively modest amount of money. But, 
nevertheless, it is new spending.
  So the bill that did pass was to, in effect, alleviate the PAYGO 
violation that the first bill created by spending new money without 
offsetting it with increased taxes on someone or decreases in spending. 
And what the bill did was simply accelerate or increase the amount of 
estimated tax payments that taxpayers who make more than $5 million in 
adjusted gross income each year have to pay in.
  Now, admittedly, folks who make more than $5 million a year in 
adjusted gross income are not a particularly sympathetic group. They 
are easy targets; so this increase in the estimated tax payment would 
pay for the additional spending on a strict cash-flow basis.
  Now, what they have done, in effect, with this mechanism is to take 
an advance on next month's salary to pay for this month's expenses, 
which creates a very interesting definition of PAYGO. It is not by any 
means a traditional definition of PAYGO, but as I noted last time I 
looked, most of the colleagues on the other side of the aisle voted in 
favor of what I would call a very twisted version of PAYGO to get out 
from under this taint that their first bill passed.
  The mechanics are that folks who make more than $5 million a year in 
adjusted gross income have to make quarterly estimated tax payments, in 
addition to whatever withholding they may make on their salaries, in 
order that on April 15 of the following year they have paid in all of 
the money that they will owe in taxes that year, estimated to have 
made.
  So they will make a payment on April 15 for their 2007 taxes. They 
will make a payment on June 15 for 2007 taxes. They will make a payment 
on September 15, and then they will make a final payment on January 15 
that should, in effect, pay 100 percent of their 2007 tax bill.
  What this provision does is it creates a safe harbor for those folks 
that says if their income went up substantially from one year to the 
next, then they may have paid in less money than is due for that year.

                              {time}  2240

  The mechanics of this is the Tax Code creates a safe harbor for these 
taxpayers. It says if you've paid in 100 percent of what your actual 
was the year before, and you've paid that in by April 15 and your 
ultimate tax liability is a lot more than that, then there are no 
penalties and interest associated with it if you do the catch-up on 
April 15.
  So what the bill last week did is it increased that safe harbor 
number by one-tenth of a percent. Now, this is a bunch of mumbo-jumbo 
for most folks back home, but basically what this does is we have 
borrowed the money to pay for these additional expenses from someone 
that may or may not owe additional taxes. And, in fact, the bill 
sponsor from the other side specifically said at the end of his 
conversation on the floor last week that his bill raised taxes on no 
Americans, did not raise any new tax, did not raise any taxes.
  So what we had here is a cash flow issue that accelerated some cash 
flow to the Federal Government, and under this scoring mechanism that 
we use, it appears that PAYGO has not been violated, it has been 
honored. But basically what we've done with this version of PAYGO, and 
apparently there are going to be multiple versions of PAYGO that get 
talked about on this House floor, this version of PAYGO simply says 
that if we can take an advance from next month's salary to pay for next 
month's expenses, then we're okay, and we will worry about next month 
next month. So this is a very interesting concept for PAYGO. It is not 
the traditional PAYGO that most folks

[[Page 9696]]

in District 11 would understand and agree to. It is a new version.
  Mr. SHUSTER. Can you explain that PAYGO so people understand it 
better, what PAYGO really means, what it should mean.
  Mr. CONAWAY. In its purest form it would mean that any new spending 
that this House decides is good Federal new spending, whether that's 
new, new spending or a growth in expenditures that is built into 
current mechanisms, would be paid for, in effect, by raising taxes, new 
taxes from somewhere, or reducing expenses in some other place in this 
Federal Government so that you have a net zero. In its purest form it 
would apply to both new programs as well as existing entitlements that 
grow on their own, that we would continue to keep the number, in 
effect, flat if we are using offsets against expenses; or if we 
increased it, we would increase taxes to pay for it so that the deficit 
wouldn't get any worse or any better under PAYGO. We wouldn't cause any 
problems with new legislation that would cause the Federal deficit, in 
effect, to go up by either doing like we do at home, getting a part-
time job to help pay for those other expenses, or making some tough 
hard choices on priorities, setting priorities to reduce spending in 
some other area to provide for monies for this new spending that may be 
coming in.
  So that is PAYGO in its purest form. It's unusual, not likely that we 
would get, collectively, both sides of the aisle to agree to that 
strict a term of PAYGO. The PAYGO that will probably be used often is 
some variation of what you may have heard about tonight, and others. 
Spending that grows on its own under the entitlements programs that are 
out there probably isn't subject to PAYGO. We won't have to offset that 
or increase expenses anywhere else. We just let that continue to grow 
out. So there will be a variety of definitions.
  So what I hope to be able to communicate to the folks in District 11, 
and, Mr. Speaker, what I hope other Americans understand is that when 
they hear the phrase ``PAYGO,'' it is all in the definition. It is all 
about what does it mean. Because apparently PAYGO has a variety of 
meanings in these Chambers from time to time. And the one that was used 
last week, in my view, is flawed in the purest sense of PAYGO.
  So if you would indulge me a couple more minutes to talk about sales 
taxes, that is particularly important to folks from Texas.
  The tax extensions and the tax changes that were brought about 2001-
2003 and more recently extended into 2006 address some inequities 
between States that have State income taxes and States that don't. 
Texas is one of those States that does not have a State individual 
income tax and, as such, funds its State and local governments through 
property taxes and sales taxes, along with a lot of other fees and 
excise taxes, those types of things.
  But under our current Federal Income Tax Code, all States that have 
income taxes, those citizens get to deduct their income taxes from 
their Federal taxable income in order to get to a net tax; in other 
words, they are not paying Federal tax on the monies that they have to 
pay into their State governments. They get a deduction for that, and 
that's fine.
  But to States like Texas, since we have no income tax, we don't get a 
deduction. In the past, beginning in 1986 and forward, off and on 
again, Texans were allowed to deduct their sales taxes in lieu of a 
State income tax. So a citizen could look at whichever tax they paid 
and deduct that, and it would put those citizens on a more equitable 
footing with citizens from States that pay taxes. In effect, what you 
get, if citizens from non-income tax States don't get to make that 
deduction, then they in effect are paying a higher Federal income tax 
than taxpayers in equivalent circumstances in States with an income 
tax, and that is inequitable and should be addressed.
  So the impact specifically on Texans, if this is not fixed, would be 
that the average tax increase per taxpayer, as computed by the Heritage 
Foundation, the average tax increase per taxpayer, not family, but per 
taxpayer, for Texans, would be $2,755 per year beginning in 2011. The 
loss of income per capita, and this is income lost on top of the 
increased taxes, is $510 per person. And Texas will lose, as a result 
of this, estimated in 2012, 75,000-plus jobs.
  Let me talk in a little further detail on District 11, which I 
represent. The tax increase there per person will be a little bit less 
than the state-wide average. We will have a tax increase per taxpayer 
of $2,091 a year, about $200 a month almost. And then on top of that 
there will be another $974 that each taxpayer will lose in income on 
top of this tax increase. And there will be 2,153 jobs lost across the 
district.
  This happens if we allow this unfair, inequitable circumstance to 
exist between States that have State income taxes and States that don't 
at the Federal level. And I am hoping that, while it's not provided for 
this year in the budget that was passed, I am hopeful that our 
colleagues on the other side of the aisle will see this as one of those 
opportunities for tax equity in our Tax Code, and we will put in the 
right provisions in the next tax bill that would allow Texans to deduct 
sales taxes in lieu of their Federal income tax.
  My colleague from Pennsylvania, I appreciate you giving me this time 
tonight, and I yield back.
  Mr. SHUSTER. I thank the gentleman. I appreciate you coming down and 
talking about the budget because I know you understand it; but as I 
said earlier, more importantly as a CPA, you really understand what the 
Tax Code means to individual businesses and families.
  In fact, just last week I had a conversation, I would say it was an 
unfortunate conversation with my CPA as we went through my tax returns 
and had to pay taxes, as millions and millions of people across this 
country had to do.
  I know the gentleman said he had one more point to make.
  Mr. CONAWAY. I had one more comment. I was also sitting with my older 
son, who is a broker with Merrill Lynch. And while his CPA was handing 
him his tax return, he was going through it, looking at it and he 
suddenly discovered that he owed a relatively sizeable amount of 
alternative minimum tax. And we will go through that concept on another 
night, but this is a tax that is going to catch a growing number of 
middle-income Americans that is, in effect, a tax increase on him. So 
once he discovered that he had now become subject to the alternative 
minimum tax, he was, shall I say, less than pleased with that number 
and is looking forward to this Chamber addressing the alternative 
minimum tax as a part of the overall tax fix. We are trying to come up 
with a tax scheme that collects the minimum amount of money needed to 
fund this Federal Government.

                              {time}  2050

  Mr. SHUSTER. That ATM which I mentioned earlier and this conversation 
I have had over the past couple of weeks with my accountant, he is 
seeing married couples, both husband and wife are teachers, and they 
are real close to getting caught up in that minimum tax. Again, two 
teachers making a decent living, and they are getting caught up in a 
tax code that is increasing their taxes. We need to address that.
  As I said, talking to my accountant last week, as millions of 
Americans had, to fill out the paperwork and write checks to pay their 
taxes, it is a yearly ritual that is unavoidable. The government has 
made this an incredibly complicated process to go through. Not only 
does it seem we are ignoring the need to extend these tax cuts so 
Americans pay less, but we are ignoring the fact we need to reform our 
Tax Code to make it simpler.
  I recently read an article by John Stossel from ABC, and he wrote in 
2005 Americans spent 6.4 billion hours complying with the Federal Tax 
Code. He further stated that a Washington-based group, The Tax 
Foundation, calculated that that 6.4 billion hours was valued at $265 
billion, was what Americans spent on complying with the Tax Code. That 
is more than the Federal deficit last year.
  If we could cut that in half, imagine $130 billion going into the 
economy,

[[Page 9697]]

our small businesses being able to buy more equipment, employ more 
people, build a new building, expand their operations; the American 
family, having $130 billion to buy a new washer and dryer, save for 
college. What will it do for this economy? We have to make sure we pay 
attention to that.
  As we were talking earlier tonight, the Democrat budget put out last 
week, in Pennsylvania alone it is going to increase taxes by 2009 on 
the average Pennsylvanian by over $3,000. We hope that people will e-
mail us at [email protected] and let us know what $3,000 
would mean to your family, how important that would be, that you would 
have that $3,000 to spend, instead of sending it to Washington.
  As we keep pointing out, by 2011, if we don't act, the Democrat 
majority is going to increase taxes by almost $400 billion. It will be 
the largest tax increase in American history. I haven't been able to 
document this, but I think it is probably the largest tax increase in 
the history of the world. The American people need to understand that. 
That is the sad reality. We are taxing too much. We have got to make 
sure that we in Washington are making this government work efficiently 
and not wasting their money, but making sure that they continue to keep 
more of their hard-earned dollars.
  Next Monday night is going to be Tax Freedom Day, April 30 this year. 
That means Americans will, after April 30th, starting May 1, will be 
able to start working for themselves. The first 4 months of the year 
they have been working to pay their taxes, and on May first they work 
for themselves.
  Mr. CONAWAY. Mr. Speaker, I need to correct something. The sales tax 
issue that I was talking about is included within the overall numbers 
that I talked about. Those overall numbers are the same ones that 
compare to the $3,000 tax hit that you will have. The sales tax issue 
is included with the other expiring Tax Code provisions that we were 
able to implement in 2001 and 2003.
  So the numbers I quoted was not just sales taxes, but sales tax is an 
element in Texas of $2,755 increase, in District 11 a $2,391 increase. 
So it is more than just a sales tax. I think I misspoke earlier in our 
conversation when I was talking about sales taxes. That sales tax issue 
is included in that number as well.
  Mr. SHUSTER. I appreciate the gentleman for pointing that out.
  As I said, next Monday night, April 30, Tax Freedom Day, Americans 
will begin to start working for themselves. In 2003, Tax Freedom Day 
was April 18. We have slowly grown to April 30. It will be even longer 
than that if this Congress doesn't act. The percentage the Federal 
Government is going to take from people will grow. People will earn 
less. As I said earlier, the average Pennsylvanian, and there are 4.7 
million Pennsylvanians that will pay taxes, on average that tax will go 
up by $3,000.
  So we hope the American people communicate with us at countdowncrew
@mail.house.gov and let us know what they could do with that $3,000, as 
well as over the past 4 or 5 years what it has meant to them, whether 
it is their family, whether it is a small business, how they have been 
able to utilize those tax cuts in expanding their business and saving 
for their children's future. These are extremely important matters that 
this Congress has to address.
  As we started off saying, in 1,349 days, if we don't act, if the U.S. 
Congress doesn't act, there is going to be the largest tax increase in 
American history.
  So I appreciate the gentleman from Texas. I don't know if you have 
anything else to add. If not, I will yield back the time. I know some 
of our other colleagues have come to the floor here to talk about 
important things.
  But we want to make sure the American people know what is going to 
happen if the flawed logic is employed that if we don't vote on a tax 
increase, it is not really a tax increase, when in fact if people pay 
more money, that is a tax increase. The American people need to know 
that.
  I appreciate my colleague coming down to the floor tonight.

                          ____________________