[Congressional Record (Bound Edition), Volume 153 (2007), Part 8]
[House]
[Pages 11457-11463]
[From the U.S. Government Publishing Office, www.gpo.gov]




             AMERICA FACES LARGEST TAX INCREASE IN HISTORY

  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, coming to the House floor as I have for the 
past 4 months to talk about the great concern that I have and to draw 
attention to what is going to happen in the United States Congress if 
the new Democratic majority does not act, in just 1,335 days, the 
American people are going to see the largest tax increase in American 
history. I also believe, although I haven't been able to verify this, 
it is probably the largest tax increase in the history of the world. 
And the Democratic majority doesn't have to even vote on it, all they 
have to do is run out the clock and allow the tax reductions, the tax 
cuts that occurred in 2001 and 2003 to expire. And only in Washington, 
and I have heard this said, that the majority party is not going to 
raise taxes because they won't vote on raising taxes, but because they 
are going to expire and people's taxes are going to go up, that is not 
really a tax increase. Well, if you are sitting out there in middle 
America and you are making $40,000 a year and you have two children, 
your taxes will go up approximately $2,000. That is a tax increase. 
Everybody in America knows that. And everybody that knows how to add 
and subtract knows that if your taxes go up $2,000 or if anything goes 
up $2,000, that is an increase. And as I said, the majority, the 
Democratic majority will not have to vote on it, they can just, as I 
have said, run out the clock.
  In 2001 and 2003 and every year in the Republican majority, we cut 
taxes; we cut some tax over the 12 years in majority. And the new 
Democratic majority, it took them about a week, maybe less than 10 days 
to have their first tax increase. They passed it back in January. And 
fortunately it hasn't become law because they haven't been able to pass 
anything of substance that passed the House and the Senate and gone to 
the President. So, as I said, we haven't seen that first tax increase, 
although the Democratic majority did in fact vote on a tax increase and 
it passed here in the House.
  I hope my friends on the other side will take a lesson from history 
and look back to the 1960s to President John F. Kennedy and what he did 
in his term as President. One of the first things he did was to cut 
taxes. And what happened in the 1960s? The economy grew, revenues to 
the Federal Government grew because of those tax cuts. And then look 
back just into the 1980s when President Ronald Reagan came to 
Washington, and with the help of a Democratic majority, he cut taxes. 
And what happened? The economy grew, the revenues to the Federal 
Government grew, and that was a positive thing.
  The same thing occurred in 2001 and 2003 and continues. We cut taxes, 
allowing the American people to keep more of their hard-earned dollars, 
and the economy is growing. Revenues to the Federal Government are at 
record levels coming into the Federal Government. And the facts are 
there. Since 2003, 7.5 million jobs have been created. That is more 
jobs that the European Union and Japan combined have created. Our 
economy has now added jobs for 43 straight months.
  Just last month, in April, 88,000 new jobs were created in the United 
States. Folks that had been unemployed or happen to find themselves 
unemployed are finding much shorter duration of unemployment than they 
had in the past. The national unemployment rate remains at 4.5 percent, 
which is well below the 5.1 percent rate which was in 2005, and below 
the average of each of the past four decades.

                              {time}  2045

  The U.S. has grown faster than any G-7 industrialized nation over the 
past 4 quarters. Wages have increased, and tax relief has helped spur 
economic growth by keeping over $1.1 trillion in the pockets of 
Americans. As I said, if the Democratic majority doesn't act by January 
1, 2011, all those tax cuts, tax reductions we put in place for small 
businesses, for families, for individuals, will expire.
  In my State of Pennsylvania alone, the average worker, the average 
taxpayer, will see about a $3,000 increase

[[Page 11458]]

in his taxes. My good friend from Florida, Ric Keller, informs me that 
the average taxpayer in Florida will see an increase of $3,000, if we 
don't act and extend those tax cuts.
  Once again, that is what we are going to do tonight, is talk about 
this countdown. We call ourselves the Countdown Crew, because in 1,335 
days, if the Democratic majority doesn't act, the average American and 
average small business in this country, the individual in this country 
is going to see their taxes increase.
  That money will come out of their pockets, will come to Washington, 
and they will not have an opportunity to spend it as they see fit. They 
won't have an opportunity to save it for their retirement, or their 
children's college education or future education. So it is important 
that we draw attention to what is going to happen here in Congress.
  The Democrats won a majority in the election and they said first of 
all that they were going to have ``6 for 06.'' They have passed all six 
of those in the House, but nothing of what they passed, none of those 
six have made it into law. As I said earlier, very few things we have 
passed here on the floor have made it into law. We have named a couple 
of post offices and Federal buildings, but nothing substantial has been 
able to pass this Congress and become law.
  As I said, I think it is extremely important that the American people 
are aware that just by running out the clock, the taxes for every 
American, every small business, every business in America, will go up, 
without action in this House.
  With that, I am joined here tonight by my good friend from Kentucky, 
a former business owner and a father of several children, I can't keep 
count, five or six.
  Mr. DAVIS of Kentucky. Six
  Mr. SHUSTER. Six. I would like to yield to the gentleman.
  Mr. DAVIS of Kentucky. Mr. Speaker, I thank the gentleman from 
Pennsylvania. I just want to say I appreciate the leadership you have 
shown since the beginning of this Congress on being the lead sponsor of 
the Countdown Crew.
  Both Bill Shuster from Pennsylvania and I were small business owners. 
We have lived out in the real world. We are not attorneys. We come from 
an environment of working and manufacturing and distribution and 
logistics with real people. We know the burdens on making sure our 
employees are covered with health insurance. We know the impact of tax 
increases and tax cuts.
  For those of you joining us right now, we would love to hear your 
stories, the impact on being able to keep more of your own money, what 
it has meant to you and the ability to invest in your children's 
future, to build a future for yourself, to build a nest egg, to start a 
small business, to expand the small business that you have.
  Bill and I have heard literally hundreds of stories since the first 
of the year. We would like to hear yours. You can communicate with us 
directly at C[email protected]. That is 
C[email protected].
  At the end of the day, I believe that the key principle that we have 
shared over and over and over again is that our focus and the focus of 
the government is that the government cannot create value or wealth for 
people. What the government can do, done rightly, is create a playing 
field and a framework to unleash the creativity in the American people, 
to give them the opportunity to pursue their dreams, to pursue a 
future, to build a future for themselves, and ultimately we start that 
process by making sure that people can keep more of what they earn.
  When you have control over your money, you are going to invest it in 
such a way that it makes a difference for you, your family, ultimately 
for your community and the country. That is why we say we want to 
create taxpayers, not raise taxes.
  It has been a few weeks since we were able to get together here on 
the floor as we have been counting the days since our first session the 
second week of January when we began sharing what was ahead. We 
predicted at that time that there would be tax increases coming.
  Much of the change in the election was not driven by fiscal policy. 
It was driven by anger or resentment or emotion related to the national 
security situation. But as people are waking up, I am traveling in 
different parts of my district, many folks upset about that said, ``I 
didn't realize I was voting for a tax increase.'' In fact, what was 
voted on in the House last month with was the largest tax increase in 
American history.
  My friends, that is not a solution to the country's challenges. By 
raising taxes, we limit opportunity. By raising taxes, money comes out 
of our communities, it comes out of working families' pockets, it comes 
to bureaucrats in Washington.
  When some of my colleagues on the other side made comments about 
wanting to reduce the deficit and spending, they didn't want to reduce 
spending. What in fact they wanted to do was reduce defense spending, 
but not reduce spending on other programs. Indeed, that spending has 
increased under this budget. What we are looking at over 5 years is an 
estimated $900 billion tax increase. That is going to be devastating to 
the economy.
  In Kentucky alone, I come from a district that is very diverse with 
agriculture, manufacturing, distribution, logistics. We have river 
industries. We have the largest inland port in North America with the 
Port of Ashland-Huntington, where much of our Nation's energy supply 
transits. Our average working family in Kentucky is going to see a tax 
increase of $2,563, right off the bottom line. When I think what we 
could do with that, I have got my second child going into college now, 
I think of what we could do with $2,500 is immense.
  We look at the counterpoint, I look to the gentleman's point earlier 
regarding what happened when taxes were cut by President Kennedy, what 
happened when taxes were cut by President Reagan, what happened when 
taxes were cut by President Bush and the Republican Congress at that 
time, at a very difficult period in this Nation's history as we entered 
into war, just prior to the 9/11 attacks. There was a recession in 2001 
that was inherited from the prior administration.
  What we have seen is record revenues to the Federal Government by 
reducing taxes. By raising the ceiling, in fact pushing the burden 
upward on taxes and reducing the burden on working class families, 
taking millions of people off the tax rolls, by creating a 10 percent 
tax bracket, has resulted in the creation of 7.5 million jobs, record 
revenues to the Federal Government, and that done in a time of war. 
What that tells me is that these principles work; that Republican, 
conservative fiscal principles work by allowing people to keep more of 
their own money.
  My question in fact to folks is if you had to write that $2,500 
check, what do you want to get in return for that? At the end of the 
day, we want to get something that is going to make a difference for 
our family, our community and our country, and not fuel empty rhetoric, 
particularly spending on programs that aren't necessarily going to add 
any value.
  180,000 jobs were created in March alone. As we travel throughout our 
districts, I hear stories in a wide variety of industries, many of them 
I have shared here on various evenings as we have come back to 
Washington, D.C., the successes that people have had by being allowed 
to keep more of their own money and build a future in their hometown, 
in the heartland, and not send it to bureaucrats far away.
  I would like to invite my colleagues from Texas, Congressman Conaway 
and Mr. Shuster, to continue the dialogue with some of these examples. 
But if you just joined us again, we are the 
C[email protected]. We would like to hear your stories. We 
would like to hear your testimonials, how it has made a difference for 
you in creating jobs and small businesses in our local communities 
where 88 percent of all new jobs created in this country come from.
  It is not going to come from giant corporations. It is certainly not 
going

[[Page 11459]]

to be created from liberal policies of the folks on the other side of 
the aisle. It comes by you producing your future, chasing your vision 
and investing your dollars to build that.
  With that, I yield back to the gentleman.
  Mr. SHUSTER. Mr. Speaker, I appreciate the gentleman talking about 
this tonight. I think it is important that you point out that it is not 
the government that creates jobs, it is small businesses. We do want to 
hear your stories. We want to hear what you have been able to do with 
that tax cut that you received, either in your business or your family, 
and those stories, we would like you to e-mail them to us at 
C[email protected].
  If you don't want to send them to us, send them to your Member of 
Congress. Let your Member of Congress know how important it is that 
this Congress acts to extend those tax cuts before they expire. They 
are going to expire anywhere from the end of this year in 2007 to the 
end of 2010, and if we don't act, run out the clock, we are going to 
see this huge tax increase and you are not going to have that money in 
your pocket. It is going to be spent to Washington and the bureaucrats 
and politicians are going to spend it.
  It is a great privilege to have with us here tonight a colleague of 
ours from Texas, who more importantly than that is a CPA. He 
understands the Tax Code better than most of us, although I don't know 
that anybody understands the Tax Code, as large and complex as it is. 
But we appreciate his coming down and being able to walk us through 
some of what is happening in the Tax Code and the burdens it is placing 
on businesses and families.
  With that, I yield to a good friend from Texas, Mr. Conaway.
  Mr. CONAWAY. Mr. Speaker, I thank my good friend from Pennsylvania 
and good friend from Kentucky for coming down here tonight to talk 
about what the Countdown Crew has been talking about, and that is the 
pending tax increase that is looming large on the horizon.
  Part of the problem as I toured District 11 during the Easter break 
was that because the actual tax law change is still years away, many 
people in the district are not paying as much attention to it as I 
think they should. It is kind of like the fellow who fell off the 10 
story building. As he passed the 5th floor, he was heard to say, ``so 
far, so good. So far, so good.''
  We have fallen off the building. January 2, when the Democrats took 
over the House, we fell off the edge. It took them 14 days to raise 
taxes on the oil business, the first tax increase, and we are much like 
that gentleman who was in midair headed to an abrupt halt when he hit 
the ground, and that is the misguided idea that so far, so good; so 
far, so good.
  Back in March, these chambers heard an incredible amount of rhetoric 
about the budget and if you had just tuned in, you didn't really know 
which side was which. Basically what you heard was a schoolyard 
squabble in which our side said yes, you are, and their side said no, 
you're not, and yes, you are; no, you're not. We went back and forth, 
and I don't know that any of us really adequately explained to the 
people listening, Mr. Speaker, why both sides claimed the exact same 
set of facts with two totally different interpretations. Let me try to 
be a little instructive on that tonight, as best I can.
  The current tax law says that in 2011 most of the tax breaks as we 
refer to those that were enacted in 2001 and 2003 will expire on their 
own. Back in 2001 and 2003, the Senate, the Democrats particularly in 
the Senate, invoked the Byrd amendment or the Byrd rule, I guess, which 
restricts tax law thinking to a 10-year window. In other words, we 
handcuff ourselves with respect to tax policy in some artificial time 
frames that may or may not make sense.
  It is unfortunate that we do it that way, but that is kind of the 
ground rules we have. We could spend nights and nights talking about 
how we could reset the ground rules and have a much better way of 
developing tax policy in this House that would make much more sense.
  But, nevertheless, that 10-year window restricted the elimination of 
the death tax, the tax rate decreases, the marriage penalty, the earned 
income credits, that we wanted to make permanent that left this House. 
The bill that left the House would make all of those things permanent. 
But the compromise in the Senate, in order to get it out and passed the 
obstructionist Senators, Democrat Senators at that time, we were 
limited to 10 years.
  We are now coming on to the end of that time frame and existing law 
says that on January 1, 2011, tax rates, as an example, the top rate, 
which is now 33 percent of earned income, will rise to 39.6 percent, a 
20-plus percent increase. The bottom rate, which is currently 10 
percent, goes to 15 percent, a 50 percent tax increase on the folks who 
make the least amount of money in our society. So what is happening is 
that the Democrats are hiding behind the operation of law as it 
currently exists to say that they are not raising taxes.
  But the proof is in the pudding, because in their 5-year budget 
window that they have presented and passed through the House and that 
we will appoint conferees on tomorrow, spends the money that gets 
raised in the budget window of 2011 and 2012. So the Democrats actually 
let it work as it is supposed to, as it is going to, without 
intervention by the Republicans, and the Federal tax collection scheme 
will collect an extra $400 billion in 2011 and 2012.
  Our colleagues on the other side of the aisle say they are not 
intending to allow the tax increases on those 10 percent brackets, et 
cetera, et cetera, to actually happen. That we need to trust them. That 
their intent is to not allow that to happen before this 2011 timeframe.
  But the problem is, they spent the money that is raised. So in order 
to offset under their definition of PAYGO, that they invoke from time 
to time, and they change this definition, by the way, from time to 
time.

                              {time}  2100

  Mr. DAVIS of Kentucky. You might want to share about the idea of 
PAYGO which means something to us as Americans and means something very 
different in this Congress. It is not how you balance your checkbook at 
home.
  Mr. CONAWAY. Yes. We recently passed the D.C. Voting Rights bill 
which is a separate conversation. It had a modest amount of money in 
terms of D.C. modesty. In terms of District 11, there aren't very many 
people out there who have a deposit slip big enough to deposit the $14 
million that it is going to cost. It will cost $14 million to add two 
additional Members of Congress.
  The bill that was passed violated PAYGO on its face. They had a 
convoluted rule that said even though that bill has passed the House, 
if we don't pass the fix, the PAYGO fix, then neither bill will 
actually pass. So they winked at themselves on the first bill, saying 
we are going to fix the $14 million hole.
  Then the next bill that came forward to fix their PAYGO issue did not 
raise taxes on anyone to pay for it. They did not cut spending 
anywhere, and it didn't raise the taxes necessary to do that.
  The manager of the time that afternoon actually said from the 
microphone right over there in the middle, we are not raising taxes on 
any American. What they are doing, though, is basically taking an 
advance on next month's salary. What they did was said taxpayers who 
have an adjusted gross income of more than $5 million, which is a 
relatively small group of people and not a crowd that draws much 
sympathy among folks, we are going to insist that they advance their 
tax payments a little quicker than they would have otherwise. The 
overall tax that they are going to owe is not going to change, but we 
want them to pay in an amount a little quicker.
  However the CBO scored that cash flow, they scored it as a positive 
which allowed them to wink and say yes, we now have conformed with our 
own PAYGO rules.
  So the Blue Dogs have to explain to us how their new version or 
definition of PAYGO works where they can simply advance moneys out of 
next

[[Page 11460]]

month's salary, in effect, and that somehow meets the PAYGO standard.
  Tomorrow we will debate this issue that the tax rates happen on their 
own. We intend to not let it happen. But in order to do that, they have 
to raise taxes somewhere else. So they have to take that 39.6 new rate 
in 2011 and raise it even higher in order to make up for reducing taxes 
on the folks at the bottom of the deal.
  Republicans have said that this is a tax increase. You allow it to 
happen. You have the choice to not allow it to happen. You allow it to 
happen and you spent the money. So both sides have got arguments that 
have some substance of truth, some version of truth in them, and you 
have to look at the total package.
  But at the end of day, at the end of their 5-year budget window that 
we will be debating tomorrow, good Americans will pay in another $400 
billion in taxes. And guess what, our colleagues on the other side of 
the aisle found a place to spend it. They didn't reduce the deficit. 
They didn't reduce the national debt or put it into a rainy day fund, 
or save it. They spent it. Their rhetoric to the contrary that they are 
not raising taxes is hollow at best given the action that their budget 
will actually do.
  I want to talk a little bit about overall tax policy in this country, 
if I can. I pose this idea. We tax capital gains, dividends and 
interest at rates that are less than the rate we tax earned income. So 
what we are saying is as a policy of this government, we think that 
hardworking people who sweat should pay higher taxes than our money 
does when it is working for us in the capital markets. Now that is an 
interesting philosophy and one that has been accepted around these 
halls for a long, long time, and we can have a debate whether or not 
that makes sense.
  But what is the correct tax rate on capital gains? I know what the 
Tax Code says, but what should that rate be? What should we tax 
earnings from capital gains and interest and dividends? What should the 
tax rate be? What is magic about the current number? Should it be twice 
that, half that?
  It is not like math classes where you went to the back of the book 
and the even or odd-numbered questions had the answers. There is no 
back of the book. I will pose the same question about earned income. A 
person working for Parker Drilling Company in West Texas or UTI 
Patterson Drilling Company, folks who work hard and understand what 
work is, what you and I do here, we call it work but it is not work in 
the tradition that I understand hard work is. What should we tax that 
guy or that woman for their earned income, their work? What should we 
tax accountants and doctors and lawyers for the work that they do day 
in and day out, providing the services and goods we want? What is the 
correct rate?
  We have rates in the code. We think the rates that have been in place 
for the last 7 years may or may not be right, but they have helped 
produce an economy that has boomed and is continuing to grow.
  Now Ronald Reagan said the stuff you don't like, you ought to tax it. 
If we don't like people working, we raise taxes.
  As we have this debate night after night and year in and year out, 
let us talk about the idea what should the correct rate be. Regardless 
of the Byrd rule and regardless of the 10-year plan and regardless of 
the budget act nonsense that we have to tie our hands with, what ought 
to be the rate? Is there a better tax collection scheme than the one we 
currently have? Should we go to a national sales tax or flat tax? Let's 
begin to have those discussions.
  I have spent 30-plus years helping clients comply with this 
incredibly difficult Tax Code. No, I am not an expert in it. I have 
some background and some depth, but this thing is incredible. We have 
narrow experts in the accounting world who take on various segments of 
it who don't know the full deal. It is incredibly complex. Let's begin 
to discuss how should we collect money? How should we collect the 
minimum amount of money needed to fund this Federal Government in ways 
that are fair, simple, straightforward, easy to comply with, and don't 
cost the estimated $260 billion a year that Americans spend complying 
with this incredibly complex code.
  This code has all sorts of winners and losers. As we begin to talk 
about PAYGO, and you look at the tax increases that the Democrats will 
propose, every one of those have winners and losers. Every one of those 
pit some segment of society against the other, some level of wealth 
against another, and I don't think that makes for a good way to do 
things, to create this constant tension between taxpayers. We are in 
this all together. We all want the Federal Government to work as 
efficiently as we can.
  Mr. DAVIS of Kentucky. I go back to Yogi Berra's old saying about 
deja vu all over again. You talk about what the right tax rate is and 
how do we explain it to the American people. I think it would be 
helpful if the Democrats would simply tell the truth.
  The reason I lay this out, as a former small business owner, I 
remember in 1992 being told stories by then-candidate Bill Clinton how 
he was not going to raise taxes. President Bush at the time made the 
statement that Clinton ran saying he wouldn't raise taxes, and then 
turned around and made a deal that raised taxes, damaged his 
credibility and hurt the economy at the time.
  I was getting ready to step out into the entrepreneurial world and 
leave the software industry to start my own business. I had 
manufacturing clients that wanted me and eventually some of the folks 
that I hired to work with me and assist them in improving their 
competitiveness nationally. We started that business in late spring of 
1992, getting it up off the ground. We managed to feed our families 
that first 6 months and do all right in that time, but our real 
opportunity was going to come in 1993.
  All of a sudden after Mr. Clinton became President, he came before 
the American people and he didn't say I am going to keep my promise and 
cut those taxes because we know that allowing people to keep more of 
their own money creates a future for them. He offered me a new 
alternative as a new small business owner with employees, with health 
plans to pay for, with taxes to pay for, with regulatory fees to pay 
for, dealing with workmen's compensation and disability and costs that 
I had never known in the large corporate world, and he invited me to 
invest in the United States Government.
  I looked at this as a small business owner and a former military 
officer. I thought my investment in the United States Government should 
be first in providing for the national defense, how was I going to 
promote the general welfare as the Constitution would ask us to do, I 
would hope in infrastructure, in projects that were going to be seed 
money to create more jobs and to stimulate the economy in our area. But 
what did we get, the largest tax increase in American history at that 
time, actually a fraction of the one that was passed in this recent 
liberal Democratic budget.
  We reduced the size of our military and we weakened national defense 
by taking several divisions out of the standing Army, reducing the size 
of the Marine Corps, reducing the size of the Navy, reducing the 
airlift capability in the Air Force.
  We increased spending in social programs. We increased the mandatory 
spending rate in social programs to nearly twice the rate of inflation 
while shorting our men and women in uniform in the mid-1990s as an 
administration priority.
  Then radical Islamic extremism intruded itself upon the United States 
on 9/11. We had been dealing with it before then, but like the old 
saying of the Purlator man commercial, ``you pay me now or you pay me 
later.''
  Now we are in a big catch-up situation from a national security 
standpoint of things that could have been handled 10 years ago.
  I think back as a small business owner, what were the costs that were 
taken away when I invested in the government? Well, the additional tax

[[Page 11461]]

money, we saw no benefit of that. I saw my clients hurt. I saw 
manufacturing companies hurt, and I saw other machine tool companies 
hurt by increased environmental compliance and the increased cost of 
regulation. And the attempts to manage health care from a national 
perspective actually drove costs up. In Kentucky, by doing a plan that 
was called Hillary-lite, something that was a lesser plan of the 
Democrat health care proposals of that same year of 1993, we drove 45 
of 47 insurance carriers out of the State, quadrupled the cost of 
health care for small business owners in a relatively short period of 
time. To me that was the opposite of the original intent.
  If I invest in something, I would like to see a return. If we spend 
money in our community, we would like to see a benefit accrue for our 
community and it certainly didn't happen there.
  Just on the taxes that we paid, and we don't know where they went to 
support all of these programs with this increased investment, we could 
have hired probably three more consultants or nearly a third larger 
workforce which would have created more taxpayers and which would have 
been helping more businesses to compete and would have been putting 
more dollars into the Federal treasury.
  But on the other hand, now we found ourselves at the end of the 
Clinton administration needing to come out of a recession. We have 
reduced taxes and we have moved to simplify regulation. But because of 
the actions last November, I believe that my colleagues on the other 
side of the aisle sincerely but incorrectly have interpreted that 
election as another opportunity to affirm their desire to have small 
business owners invest.
  And the truth of the matter is that if 88 percent of our jobs are 
created by small businesses owners, the last thing we want to do is tax 
those who are going to be starting those companies and starting those 
family enterprises.
  Again, in 1,335 days from now the average family in my State will 
have a $2,563 tax increase. You mentioned the 50 percent increase that 
is coming for those in the 10 percent tax bracket. That benefited 1.2 
million people in my State, but let's look at senior citizens.
  My mom lives on a fixed income right now. She draws Social Security 
and her retirement. Fortunately, she has a supplemental Medicare 
insurance plan to help offset some of the additional cost.
  But if you take an elderly couple with a $40,000 income, their tax 
bill is going to rise 156 percent in 2011 from $583 to $1,489. So we 
have helped them reduce the average cost of their prescription 
medication by $1,200, but we will increase their taxes by $1,400 by 
what the Democratic Congress intends to do by simply not doing 
anything.
  They are going to allow these cuts which have had so much positive 
impact on the communities and the country expire.
  Mr. SHUSTER. I think it is extremely important to point out that only 
in Washington, DC and the accounting we use here, and I know that the 
Democratic majority when they were the minority would say that we were 
cutting spending on programs when we were in the majority when actually 
it would go up by 2 or 3 percent instead of the 4 or 5 percent that 
they wanted it to, and they would say that is a cut when it is not a 
cut.

                              {time}  2115

  Now, they are saying that it is not going to be a tax increase 
because we did not vote on it, but all of us know that those of us 
balancing checkbooks at home and people who run small businesses, 
people that are trying to save money, know if the Federal Government 
takes an average $2,000 more out of your paycheck a year, that is a tax 
increase.
  As I pointed out earlier, in my State of Pennsylvania, the average 
taxpayer will pay $3,000 more in taxes, and that is a tax increase. 
Whether the United States Congress votes on it or does not vote on it, 
if you pay $3,000 more in taxes, that is a tax increase.
  This PAYGO rule, which I always thought PAYGO meant that if you are 
going to increase spending, you have got to find a way to fund it, and 
that is increase taxes or offset it by cutting spending elsewhere. 
Quite frankly, I do not know what PAYGO means under the Democratic 
majority anymore because they find loopholes and exceptions and make 
changes to it. So, once again, this funny accounting in Washington, DC 
continues to proliferate under the Democratic majority.
  I think it is important that, as my friend from Kentucky talked about 
his experiences with small business, that we get Americans to e-mail us 
at the [email protected]. E-mail us what you have been able 
to do over the past couple of years with those tax cuts, whether you 
are putting it back in your business and increasing your workforce or 
making it more efficient, selling more products by expanding markets; 
or if you have a family and you are able to save $2,000 or $3,000 
because of the elimination of the marriage penalty or the doubling of 
the child tax credit, how were you able to take those dollars and 
employ them in your household and your business to make your lives 
better.
  I think that is extremely important that we hear those kinds of 
stories. Once again, I want to point out if you are unable to or do not 
want to e-mail them to the [email protected], send them to 
your Member of Congress; let them know what you were able to do with 
those funds.
  Again, I know all across America we hear those stories. My good 
friend from Florida and I were talking, Ric Keller, and talked about 
what the seniors in Florida, how they have been able to improve their 
housing, invest that money in a nicer house, a bigger house, a 
different house because of those tax cuts.
  So I know that, once again, we are joined by our colleague, the CPA, 
from Texas, and it is always educational to hear him talk about some of 
these tax issues. I think he wants to talk a little about the ATM.
  I went to my accountant a month or so ago. He was talking to me about 
how it is catching people in this web. He said in Pennsylvania, a 
household where there is two teachers, they are now approaching and 
some of them have surpassed that level where two teachers, modest 
income, are getting caught up in the ATM, paying more taxes.
  So, with that, I yield to the gentleman from Texas (Mr. Conaway).
  Mr. CONAWAY. Mr. Speaker, I thank my good colleague from 
Pennsylvania. It is actually the A-M-T. ATM is a money machine. It is 
an ATM for the Federal Government.
  Mr. SHUSTER. It is confusing to me because you put the card in and 
you get money out.
  Mr. DAVIS of Kentucky. One point of order here to point out. The ATM 
right now is going to be the American people for the Democrat tax 
program. They are going to have the largest tax increase in history.
  Mr. CONAWAY. There is plenty of truth in the ATM issue, but the 
alternative minimum tax is AMT.
  Mr. SHUSTER. I apologize. Like I said, it is confusing to me because 
they just keep on take, take, take just like the cash machine at the 
banks.
  Mr. CONAWAY. That is exactly right. I thank my colleague.
  The Internal Revenue Code, 1986, as amended, is incredibly 
complicated, as we have already talked about. If you look at most of 
the provisions in there, many of the provisions in there, they have a 
history. They have a reason for being. We are trying to manipulate our 
economy. We are trying to manipulate conduct. We are trying to do 
something, manage something. If you look at the alternative minimum 
tax, there is actually a story there. There is a history there.
  Back in the late 1960s, Congress discovered that there were 155, no 
commas, 155 taxpayers who made more than $200,000 in 1966, but they did 
not pay any taxes. So, in an attempt to get at those deadbeats making 
all that money, and now in all likelihood those folks hired folks who 
will say this argument, I have talked about that, but nevertheless in 
an attempt to get at 155 taxpayers, Congress created what is now known 
as the alternative minimum tax. In other words, Congress was offended 
that you could have people so structure their compliance with

[[Page 11462]]

the tax code in existence at that point in time that they did not owe 
any tax. So they set in place an alternative minimum tax which started 
with your taxable income and then it added back certain preferences 
that folks, quote, unquote, took advantage of so that everybody paid 
some taxes. There is some value in that.
  In 1969 that went into effect. Thirty-eight years later, millions, 
literally millions, of taxpayers are now caught up in what is known as 
the alternative minimum tax. Now, today's alternative minimum tax is 
not your daddy's alternative minimum tax. This is a separate 
computation. So most taxpayers who are in this wreck have to keep a 
regular tax set of computations and an alternative minimum tax set of 
computations. You have got different basis on your assets. You have got 
different basis in your stock if you bought a set of stock options, all 
kinds of things that you have to do separate under alternative minimum 
tax. You have got an alternative minimum tax net operating loss that is 
different from your net operating loss on your regular tax. So two 
schemes trying to get at how much money you owe the Federal Government.
  Mr. SHUSTER. If I can interrupt the gentleman for a minute, if I am 
going to my CPA or the person who does my taxes, because she has to 
calculate two different sets, it costs more money to calculate your 
taxes.
  Mr. CONAWAY. Oh, absolutely. When you turn on a television program 
that is going to have some adult content in it, most of them say, 
viewers, give you a warning that this next program may not be suitable 
for young children. Well, I am going to give a warning that what I am 
about to go through may not be suitable for young children.
  This is Form 6251. Form 6251 is a 2-page form that every taxpayer who 
is caught up in the alternative minimum tax has to complete. Internal 
Revenue Service agents, when they audit you, if you have not put this 
form in your tax return, they will fill one out for you, thinking that 
maybe you screwed up and did not fill it out. It is in the instructions 
on how you audit taxpayers.
  It is a 2-page form. There are 10 pages of instructions to Form 6251, 
and it is relatively mind numbing to go through these instructions. I 
want to just kind of walk you through the first 28 lines quickly on 
this form. So hang on for dear life.
  It starts off: Line 1, ``If filing Schedule A (Form 1040), enter the 
amount from Form 1040, line 41 (minus any amount on Form 8914, line 6), 
and go to line 2. Otherwise, enter the amount from Form 1040, line 38 
(minus any amount on Form 8914, line 6), and go to line 7.''
  Mr. DAVIS of Kentucky. Our tax dollars pay for somebody to actually 
write this, too.
  Mr. CONAWAY. ``If less than zero, enter as a negative amount.'' That 
is line one.
  Line 2, ``Medical and dental. Enter the smaller of Schedule A (Form 
1040), line 4, or 2\1/2\ percent of Form 1040, line 38.''
  Line 3, ``Taxes from Schedule A (Form 1040), line 9.''
  Line 4, ``Enter the home mortgage interest adjustment, if any, from 
line 6 of the worksheet on page 2 of the instructions.''
  Line 5, ``Miscellaneous deductions from Schedule A (Form 1040), line 
26.''
  Line 6, ``If Form 1040, line 38, is over $150,500 (over $75,250 if 
married filing separately), enter the amount from line 11 of the 
Itemized Deductions Worksheet from page A-7 of the instructions for 
Schedule A (Form 1040).''
  Line 7, ``Tax refund from Form 1040, line 10 or line 21.''
  Line 8, ``Investment interest expense (difference between regular tax 
and AMT).'' Here is where we get that two scheme thing going.
  Line 9, ``Depletion (difference between regular tax and AMT).''
  Line 10, ``Net operating loss deduction from Form 1040, line 21. 
Enter as a positive amount.''
  Line 11, ``Interest from specified private activity bonds exempt from 
the regular tax.''
  Line 12, ``Qualified small business stock (7 percent of gain excluded 
under section 1202).''
  Line 13, ``Exercise of incentive stock options (excess of AMT income 
over regular tax income).''
  Line 14, ``Estates and trusts (amount from Schedule K-1 (Form 1041), 
box 12, code A).''
  Line 15, ``Electing large partnerships (amount from Schedule K-1 
(Form 1065-B), box 6).''
  Line 16, we are halfway there, folks. ``Disposition of property 
(difference between AMT and regular tax gain or loss).'' Again, two 
separate computations.
  Line 17, ``Depreciation on assets placed in service after 1986 
(difference between regular tax and AMT).''
  And line 18, ``Passive activities (difference between AMT and regular 
tax income or loss).''
  Line 19, ``Loss limitations (difference between AMT and regular 
income tax or loss).''
  Line 20, ``Circulation costs,'' that is not physical circulation. I 
think that is newspapers. ``(Difference between regular tax and AMT).'' 
Here they reverse the order. Previously it was alternative minimum tax 
versus regular tax.
  Mr. SHUSTER. They claiming a circulation off of my brain.
  Mr. CONAWAY. Line 21, ``Long-term contracts (difference between AMT 
and regular tax income).''
  Line 22, ``Mining costs (difference between regular tax and AMT).'' 
They keep switching back and forth.
  Line 23, ``Research and experimental costs (difference between 
regular tax and AMT).''
  Line 24, ``Income from certain installment sales before January 1, 
1987.'' Glad you are keeping up with that.
  Line 25, ``Intangible drilling costs preference.''
  Line 26, ``Other adjustments,'' you have always got to have other, 
``including income-based related adjustments.''
  Line 27, ``Alternative tax net operating loss deduction.''
  And finally, line 28, you get to ``Alternative minimum taxable 
income.'' And there are some instructions, though. ``Combine lines 1 
through 27. (If married filing and line 28 is more than $200,100, see 
page 7 of the instructions).''
  That is just Part I. We will save Part II and III for a future date 
to work you through that.
  Mr. SHUSTER. I do not know if I can take it. You have just made the 
case on why we need to scrap this tax code and start with something 
new. I do not know.
  Mr. CONAWAY. This is the alternative. The regular tax code is much 
simpler. It is straightforward.
  Mr. DAVIS of Kentucky. I think the one thing that gets lost in all 
this, too, I remember when I was young and I did a little work on the 
side when I was first in the aerospace industry and I thought it was so 
great to make a little bit of extra money basically to pay for 
Christmas, and when I went in to do my taxes the following spring, I 
found out that at the very low-income level I was at, because it was 
independent contractor work, that heralded the alternative minimum tax 
and almost made it not worthwhile to have expended the many hours that 
I did on the project.
  I think what gets lost, what Mike was reading here, I still am 
marvelling that our tax dollars paid to create such a behemoth, that we 
were investing in something like that, which gave me a headache just 
listening to it. Although I could see the goose bumps there.
  But other than being a job creation program for accountants, most of 
whom do not like the complexity of many of these rules because of what 
it does to their clients, I think we need to look at a more human side 
of the impact that regressive taxes have. By reducing taxes, by 
allowing people to keep more of their own money, it created jobs, over 
7 million jobs. It has kept our money local.
  I think that one of the things I would like to point to for folks 
here who are watching the Countdown Crew, and you can contact us at 
[email protected], we want to create taxpayers, not raise 
taxes. By creating taxpayers, there will be more revenues that go for 
all of our communities.
  But at the local level, oftentimes the question comes up and I hear 
it from

[[Page 11463]]

children a lot in the schools who go around talking with my own kids, 
Daddy, where do the police come from, where do the school teachers come 
from, where does the library come from. Ultimately, that comes from our 
local communities, from taxes. It is property taxes in the vast 
majority of our taxes that pay for our schools.
  My oldest daughter is about to graduate from college soon, and she is 
going to become a schoolteacher and getting ready to move out into the 
economy and very excited on the one hand, but also concerned about the 
tax structure that is going to be facing her and the incentives to 
advance her education, the burdens that are going to be placed upon her 
just from what she has seen in the workforce. The quality of our 
schools is largely funded by local jobs in our communities that pay 
those property taxes, people who can buy homes, and if you do not have 
a job, it becomes very difficult to make that investment in a home.
  If we do not have small business owners creating jobs, we are not 
going to have those local taxes to be able to make the investments that 
are necessary in public safety, in public works, that keeps the water 
running in our house, that keeps the electricity moving, that keeps our 
roads paved and being able to expand and ultimately to be able to 
invest in quality of life in our communities.

                              {time}  2130

  This is one of the reasons we have this 1,335-day countdown to the 
largest tax increase in history, that the American people need to know 
that when they can keep more of their own money, there are results. I 
don't want to see the average Kentucky family have an unnecessary tax 
increase of $2,563. We will find the benefit, not in complex tax 
documents like that, but simply by allowing people to keep their money 
to invest in the future to follow their vision and ultimately to build 
that nest egg for their children.
  Mr. SHUSTER. I am getting ready to close. The gentleman from Texas 
seemed pretty worked up about getting something out. Do you have 
something else you want to get out here?
  Mr. CONAWAY. The IRS on some of the forms gives an estimate of how 
much time they think it takes taxpayers to comply with a particular 
form. I was looking through the instructions real quickly to see if 
they had this made that estimate.
  Mr. SHUSTER. I have the time estimate, if you are filling out your 
own taxes it's anywhere from 8 hours to 27 hours, if you did it 
yourself, which is a considerable amount of time for an individual.
  Mr. DAVIS of Kentucky. I think it was 6.4 billion hours were taken 
this year.
  Mr. SHUSTER. Right, $265 billion.
  In closing, I just wanted to point out, as the gentleman mentioned, 
the importance of keeping your own money, being able to invest it, 
being able to save it. I think a lot of times Americans feel helpless, 
hopeless over this tax situation.
  You get that paycheck, and as my 18-year-old daughter just got a 
paycheck, came home, showed it to me and said, why did they take so 
much out? I said, well the good news for you is they are going to give 
you most of most of it back, because you're not going to make the 
minimum.
  But as I said, Americans feel helpless or hopeless in a tax 
situation, but they're not. Americans really have to pay attention to 
what's going on here in Washington. As we said tonight send us your 
stories at CountdownC[email protected] or send them to your Member of 
Congress and tell them what you have been able to accomplish with those 
dollars that you get to keep in your pocket because they are not coming 
to Washington.
  Make sure you are talking to your Member of Congress, communicating 
with him, telling them that you don't want to see taxes go up. You 
don't want to see the largest tax increase in American history. You 
want them to keep their tax rates low. Although many Americans are 
looking at those tax rates today, think they are high, they are lower 
than they were 4, 5, 6, 7, 8, 10 years ago.
  This Congress has to act. This Congress has to act before all those 
tax cuts expire by December 31, 2010, and the gentleman is signaling 
me. We want to make sure that the American people are communicating to 
their Members of Congress that they want us to stop this tax increase 
that's going to occur, a tax increase that the Democratic majority is 
saying, they are not going to increase taxes because they are not going 
to vote on it, which is just hogwash. The taxes are going to go up for 
individuals across this country, businesses across this country, if 
this Congress fails to act in just 1,335 days.

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