[Congressional Record (Bound Edition), Volume 154 (2008), Part 5]
[Senate]
[Page 7026]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            TAXING THE RICH

  Mr. KYL. Mr. President, I wish to compliment my colleague for his 
cogent analysis and remarks just now. He is absolutely right about the 
way we need to deal with our energy crisis today.
  I wish to talk very briefly about another subject, frankly the 
challenge and a refrain that we have often heard from the other side; 
that is, that the so-called rich are an endless well that can be tapped 
to fund limitless spending priorities.
  My colleagues across the aisle frequently argue that the 2001 and 
2003 tax cuts were a giveaway to the so-called rich and that that 
should be allowed to expire, in effect, raising the tax rates to their 
pre-2001 level.
  The marginal rate cuts enacted in 2001 and accelerated in 2003 
reduced the tax burden for all Americans. In fact, the effective tax 
rate for the middle fifth quintile of taxpayers dropped more than 2 
percentage points, from 16.6 to 14.2 percent as a result of these cuts.
  Let's assume that the other side would not only let the tax cuts 
expire but actually repeal them this year. How much would taxing the 
so-called rich raise? The 2005 Internal Revenue Service Statistics of 
Income report notes that those earning over $349,700, putting them in 
this top marginal tax rate of 35 percent, earned a total of $1.1 
trillion. Of that amount, $565.4 billion was taxed at the top rate.
  These 950,000 taxpayers, or the top .9 percent, paid a total of 
$315.4 billion in taxes, $198 billion at the top marginal rate. So if 
the 2001 and 2003 tax cuts were repealed today, taxes on those filers 
would increase $26 billion, an increase of $27,300 per top marginal 
taxpayer, not an insignificant sum for those taxpayers, but clearly not 
enough to offset the cost of the Democratic spending plans.
  What about broadening the definition of the ``rich'' by including 
those taxpayers in the upper middle class, or those in the second 
highest tax bracket of 33 percent? Would that bring in enough money?
  Well, these 1.5 million taxpayers, or 1.4 percent of filers, paid 
$92.4 billion in taxes; $26.1 billion was paid at the marginal rate. If 
you increased their tax rate from 33 percent to the pre-2001 level of 
36 percent, it would raise $2.4 billion in additional taxes.
  Reinstating the 39.6-percent and 36-percent tax rates for the 
taxpayers in those two top brackets raises $28.4 billion more than 
under current rates, still just a fraction of what my colleagues on the 
other side of the aisle want to spend.
  What if one reaches down a little deeper and includes the middle 
class by increasing taxes on people in the 25- and 28-percent tax 
brackets?
  The ACTING PRESIDENT pro tempore. The Republican time has expired.
  Mr. KYL. I ask unanimous consent for 1 additional minute.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. KYL. A back-of-the-envelope calculation using the same data shows 
that raising the top four marginal rates would increase taxes for 28 
million Americans, increasing revenue on a static basis $37 billion 
this year and $111 billion over the next 5 years, not even enough to 
offset the cost of the additional discretionary spending assumed in the 
Democratic budget resolution.
  When someone claims to want to increase taxes only on the rich, 
taxpayers should view such a proposal with a healthy dose of 
skepticism. Our experience with the AMT should convince us of that. 
Taxing the so-called rich never raises as much revenue as the other 
side claims and usually manages to hit a lot more taxpayers than just 
the rich. Invariably, when one talks about raising taxes to pay for new 
spending, a lot of people who would otherwise not consider themselves 
to be wealthy end up paying more in taxes.
  The PRESIDING OFFICER (Mr. Cardin). The Senator from North Dakota.

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