[Congressional Record (Bound Edition), Volume 156 (2010), Part 4]
[House]
[Pages 5678-5682]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                TAX DAY

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2009, the gentleman from Texas (Mr. Burgess) is recognized 
for 60 minutes as the designee of the minority leader.
  Mr. BURGESS. I thank the Speaker for the recognition. I thank the 
leadership on my side for allowing me to talk this hour.
  Mr. Speaker, it is April 15. It is the day that we file our taxes, or 
in some cases we submit a request for an extension. In the interest of 
full disclosure, I did submit a request for an extension, not because--
well, I will tell you, when I was practicing medicine when I was a 
physician, my taxes were a great deal more complicated than they are 
today. But even today it is difficult to keep up with all of those 
various pieces of paper that you must collect after a year's worth of 
living and deliver to your accountant in order that they may accurately 
and correctly assess your taxes. That is one of the things that has 
always bothered me. It is one thing to pay taxes. The previous 
gentleman said it's one of our obligations for living in a free 
society; I don't dispute that--I may dispute the level at which he 
wants to see us taxed--but at the same time, I don't see why it always 
has to be so hard. I would like to give people another option, and 
that's what I want to talk about this evening, Mr. Speaker.
  But, actually, first, I do need to talk a little bit about what we 
just heard over the past hour because it was a wonderful story; but, 
Mr. Speaker, maybe if we're going to tell stories we ought to start out 
with, ``Once upon a time'' and end up with, ``And they lived happily 
ever after.''
  The gentleman was quite correct in quoting a poll that said only 12 
percent of Americans believe that President Obama has cut taxes. But 
what do you think is the reason for that? Maybe it's because in the 
last 15 months taxes in this country have increased by $670 billion and 
counting, according to the Committee on Ways and Means. Many of these 
tax hikes include taxes on people whom the President said during his 
campaign for the Presidency that people would not see a tax increase. 
And what are some of those? Well, the previous gentleman alluded to the 
fact that we just passed and the President just signed a massive health 
care bill. But, really, if we were honest in our discussion about that 
bill, we would call it a massive tax increase bill because honestly 
that's what it was. It didn't really have that much to do with health 
care, but it sure had a lot to do with taxes.
  There is going to be a new tax on individuals who don't purchase 
government-approved insurance. And guess what? That tax will fall on 
Americans, some Americans who earn less than $200,000 a year, violating 
the pledge made by President Obama when he was campaigning for the 
highest office in the land. Now, for most people that's not a great 
surprise because there were so many promises made that were not kept 
during that campaign.
  Oh, remember things like, I'm going to take public financing for my 
Presidential campaign. Remember the great transparency hoax that was 
played upon the American people: oh, sure, we'll create a health care 
bill and I'll have everybody in around a big table and we'll invite C-
SPAN in so you can see who's standing with the special interests and 
who's standing with the American people. Well, guess what? You didn't 
get to do that, did you, because that was another promise that wasn't 
kept.
  Well, promises to not raise taxes on Americans earning less than 
$200,000 a year unfortunately were one of the first casualties of this 
administration, and the sad thing is it continues to be a casualty of 
this administration.
  What about the new tax on employers who fail to fully comply with the 
government health insurance mandates? That might fall on some people 
who earn less than $200,000 a year. It's not going to happen for a 
couple of years because they did stretch some of these things out in 
the health care bill; but what about the 40 percent excise tax on some 
health plans that cost over a certain amount of money? That's the 
health care plan that costs over a certain amount of money, but it may 
belong to someone who earns under $200,000 a year or a married couple 
that earns under $250,000 a year.
  What about the ban on the purchase of some over-the-counter drugs for 
people who happen to have a health savings account or a health 
reimbursement account? What about the increase in Medicare tax on wages 
and self-employment income and the imposition of a 3.8 surtax on 
certain investment income for individuals who earn over certain amounts 
of money? These are significant changes that occurred in our Tax Code, 
but they were passed in a health care bill. That's why you didn't know 
about them; they were hidden in this bill that we passed last month.
  Now, for some people, not for all, but for some people with high 
medical expenses, there is a threshold that has to be met. Your medical 
expenses have to be more than 7.5 percent of your adjusted gross income 
before those expenses are tax deductible. Now, to be sure, if someone's 
medical expenses are over 7.5 percent of their adjusted gross income, 
that's an individual who spent a good deal of money on medical care 
that year. You would think that we wouldn't want to punish that person 
further, but in fact that's just what we did in this health care bill. 
We raised that threshold to 10 percent. So that means people who have a 
lot of medical expenses will now have to spend 10 percent of their 
adjusted gross income before they can begin to deduct those expenses 
from their income tax.
  We've imposed a new $2,500 cap on people who contribute to their own 
flexible spending accounts. There is going to be a new annual tax on 
some health insurance policies. There's going to be a new tax on some 
pharmaceuticals; some of those taxes will fall on people who earn under 
$200,000 a year.
  How about this? A new excise tax on medical devices, a 2.3 percent 
tax on medical devices. These are class 2 and class 3 devices as 
defined by the Food and Drug Administration. So, okay, tongue 
depressors and Band-Aids will not be taxed, but syringes will be. Well, 
who's going to pay that tax on the syringes? Well, in all likelihood in 
that instance it is going to be the doctor in the doctor's office 
because doctors have very little way of passing charges onto the 
patient because most of their arrangements are contractual with 
insurance companies or with Medicare and Medicaid, and they're not 
going to pay the tax. It will be difficult to pass the charge onto the 
patient because those charges are capped. So, actually, that will be 
the physician's office that gets to pay those taxes. In fact, Mr. 
Speaker, everything from lasers to leaches

[[Page 5679]]

are taxed under this new excise tax that's coming on certain medical 
devices.
  What if you earn under $200,000 a year and happen to go to a tanning 
salon? Well, guess what? A 10 percent tax on that activity for you even 
though you earn under $200,000 a year. And there will be a new tax on 
some self-insured health plans; and, yes, some of those may fall on 
people who earn under $200,000 a year.
  There will be new penalties for nonqualified health savings account 
distributions. Now, people shouldn't take money out of their health 
savings accounts unless it's for a health expenditure; but rather than 
just having that money then convert to taxable income, there is 
actually going to be a double penalty on those types of purchases. And 
the list goes on.
  The other gentleman did this, so I'll do the same thing. As you can 
see, there is a significant amount of writing on this page of paper. 
No, you can't read it from your distance, but I did read many of the 
things that are contained on this page. And get this, get this: all of 
these additional taxes, and what did we hear the other day?
  Someone floated the notion of a value-added tax, a VAT tax, as a way 
to deal with the deficit and some of the increase in Federal spending 
that's going to occur as a consequence of this health care bill that we 
passed. We heard it a couple of times last spring when we first started 
talking about this health care bill. Some people came on the Sunday 
shows and talked about--some people from the administration came on the 
Sunday shows and talked about a value-added tax, and then all of that 
talk was tamped down pretty quickly when that trial balloon was met 
with so much disfavor. But now that the bill has passed, maybe we will 
need that VAT tax in order to pay for it. That will be a tax increase 
on some individuals who earn under $200,000 a year.
  There is no question that unless this Congress takes some action 
before the end of the year--and quite honestly, I don't know where the 
time and energy will come for this Congress to do this, but the tax 
policies that were enacted in 2001 and 2003 expire at the end of this 
year. Many of those tax policies will affect people who earn under 
$200,000 a year. The expiration of a tax policy means we revert to tax 
levels that were present in 2001. Guess what? That's going to be a tax 
increase on some people who earn under $200,000 a year.
  And what are we going to do about the inheritance tax, the 
appropriately named ``death tax''? We haven't even talked about that. 
That is one of those other things that will have to be tackled before 
the end of the year. Time is running out. It's an election year. People 
aren't willing to do difficult things during an election year, so it 
becomes problematic as to whether or not those things will be fixed.
  Mr. Speaker, it's often said that there is nothing certain in this 
life except death and taxes. And I will tell you from the standpoint of 
a physician that sometimes death is less complicated than our tax 
system. Let me just give you an example here.
  Most of us are familiar with the name Sam Rayburn because, after all, 
that's who the Rayburn Building is named for. Sam Rayburn was, in fact, 
my Congressman when I was a small child in the north and northeast 
Texas area. He served for a long time. When he first came to Congress 
back in 1913, he was part of a Congress that enacted the Federal income 
tax. Back in 1913, it was a bill by standards in those days, it was 400 
pages. But look what's happened over time. By the end of the Second 
World War, it was 8,200 pages; by the time a man landed on the Moon it 
was 16,500 pages. In 1979, when Ronald Reagan won his second term, it 
was 26,300 pages. When the Republicans took control of Congress, it was 
over 40,000 pages. In 2004, 60,000 pages. And here we are today, 2010, 
and it is 71,684 pages long. That's a lot of Tax Code for people to 
keep up with. And as the complexity has increased, the cost for 
individuals to comply with their obligations under the Tax Code has 
increased as well.
  And why has this happened? Whose fingerprints are all over all of 
these pages of the Tax Code? Well, it's the fingerprints of people here 
in the House of Representatives because under the Constitution all 
revenue bills have to originate with the House of Representatives.
  The Committee on Ways and Means is charged with that tough duty and, 
as a consequence of trying to appease one constituency or punish 
another, we've added pages and pages and pages of complexity to the Tax 
Code. I dare say in various committees today there have been proposals 
discussed that would either punish or reward American citizens because, 
in trying to drive a certain type of behavior--maybe towards green jobs 
or renewable energy as we did in our Committee on Energy and Commerce 
today--we're going to drive things in a direction where we want the 
social transformation to occur, and we're going to do that with the Tax 
Code. Any time we want to punish a special interest group or reward a 
stakeholder, we add a new credit or a new law to the Tax Code.

                              {time}  2130

  The result is a Federal law that is literally fraught with 
opportunities for avoiding taxes. There are loopholes within the law 
that people will try to exploit, and some will do it quite 
successfully. For everyone who exploits a loophole and avoids taxes, 
some other honest American is going to have to make up that difference 
or is going to be added to the deficit, and that honest American's 
children or grandchildren are going to pick up the difference. So, 
these are things that are not done without consequence and that are not 
done without penalty. Now, think of this:
  The Internal Revenue Service for fiscal year 2010, the current fiscal 
year, was appropriated an amount of money of almost $12 billion--$11.6 
billion, so almost $12 billion--to administer the activities of that 
Federal agency.
  What is a comparable amount?
  Well, I'll tell you that is more than what this country spent in 
defending itself with the missile defense program. Arguably, as to what 
may become our first line of defense against a rogue state or a nation 
that means us ill, we spent more on administering the Internal Revenue 
Service. Guess what? That is only going to increase under the health 
care bill that passed out of this House a mere 3 or 4 weeks ago.
  In fact, within the health care bill, there are provisions for 
hiring--I do not remember the number exactly, but I think it was over 
16,000 new agents for the Internal Revenue Service. We didn't really do 
much for hiring or for training new doctors or new nurses, but we did 
add a ton of new IRS agents to administer and to force the new Tax Code 
changes that were incorporated into that bill. As a consequence, you 
may have to go to H&R Block for your prenatal care.
  The current Tax Code is a significant burden on all Americans. We 
spend billions of hours and billions of dollars complying, and that 
doesn't even count the billions of hours that we spend complaining 
about the Tax Code. The average taxpayer loses about 30 percent of his 
or her income to Federal, State, and local taxes. That is a greater 
share of income than is spent on food, clothing, and housing combined. 
According to the National Taxpayers Union, in 2009, American families 
and businesses spent almost 8 billion hours complying with the Tax 
Code. That is 8 billion hours that they weren't spending with their 
families or engaged in some productive activity. The cost of all of 
that time spent on complying with the Tax Code is estimated in excess 
of $110 billion.
  In addition to the lost time, last year, Americans paid nearly $30 
billion for help in preparing their taxes, using either software 
programs or tax preparation professionals. That is a little more than 
$200 for the average taxpayer in the course of the year. Per person, 
that $200 to comply with the Tax Code doesn't sound like a great deal, 
but we are in a recession, Mr. Speaker. Americans are struggling to 
make ends meet. Who wants to be in favor of making Americans waste 
money that they can ill afford?

[[Page 5680]]

  The National Taxpayer Union estimates the cost for Federal tax 
compliance by corporations was nearly $160 billion, which was 54 
percent of the corporate income tax collected in fiscal year 2008. In 
other words, we are spending just as much to comply with the Tax Code 
but are collecting half as much. The time and money should be spent by 
families and businesses who are growing the economy and creating jobs.
  I mean, after all, what is the one thing the American people want us 
to do this year? They really weren't so interested in health care. They 
were interested in national defense, but it still falls pretty low on 
the scale. The one thing they want us to do is to create a climate, to 
create an atmosphere, where small businesses feel comfortable about 
creating jobs and about adding employees. That's our number one charge 
this year--to grow the economy and to create jobs. It's so simple. I 
wonder why we can't remember that.
  A Gallup Poll out today, Tax Day 2010, shows that 63 percent of 
Americans believe their taxes will increase in the next 12 months. 
Again, 63 percent believe their taxes will increase in the next 12 
months. That's right. They're not buying that stuff that President 
Obama cut their taxes, because, as we know, he did not. Only 4 percent 
expect a change that will reduce their taxes. The tax climate is 
unsteady and unpredictable for Americans. In addition to not being 
right, that instability is one of the things that is responsible for 
the very poor showing we have had with job creation in the last 15 
months.
  Now, this is some polling done by a group called American Solutions. 
It is from last year, but I think it is still apropos to the discussion 
at hand.
  Sixty-nine percent of people think that the Federal income tax system 
is unfair; 70 percent favor tax incentives for companies that keep 
their headquarters in the U.S. That is not a surprising figure, but 
look at this: 82 percent of Americans think the option of a single-rate 
system would give taxpayers the convenience of filing their taxes with 
just a single sheet of paper. That's 82 percent. As Ronald Reagan used 
to say, those 80 percent issues are ones that he likes to get behind.
  The fact is, if the system were fair and simple, you probably 
wouldn't have such a high number of people thinking it's unfair. The 
fact is, if the system were fair and simple, you wouldn't have those 
billions of dollars spent in tax compliance. It would be pretty 
straightforward. Now, I talked a little bit about it with that opening 
list that I went through; but again, it is important to sort of 
underscore some of the changes that people are going to see this year, 
not 4 years from now but this year, as a result of the health care bill 
that was passed last month.
  Beginning January 1, 2012, according to the Joint Committee on 
Taxation, ObamaCare will limit the medical expense deduction, which 
will raise taxes by $15 billion over 10 years. Under current law, if 
out-of-pocket medical expenses, including health insurance premiums and 
medical procedures, are not covered by health insurance and if they 
exceed 7\1/2\ percent of adjusted gross income, these expenses are 
fully deductible, but it will increase to 10 percent under the bill 
that we passed. Some of the most expensive and comprehensive health 
insurance plans don't cover some high-cost medical procedures, such as 
in vitro fertilization where the cost for the procedure and for the 
prescription drugs can run as high as $20,000 per treatment cycle, and 
some families can have multiple cycles within a year. Those are the 
people who are going to be hit by this change from 7\1/2\ percent of 
adjusted gross income to 10 percent on most Americans. The Joint 
Committee on Taxation estimates this new limit will affect 14 million 
taxpayers--or 14.8 million taxpayers, 14.7 of whom will earn less than 
$200,000 a year at the time that it is put into effect.
  There are some things I would like to point out which Steve Forbes 
wrote in a book a couple of years ago, in a book on the flat tax. It's 
called the ``Flat Tax Revolution.'' It's probably still available on 
Amazon. There are some interesting facts that he relates in the book of 
how Washington really just doesn't get it when they write tax law.
  Quoting from the book, in 1989, Senator Bob Packwood requested a 
revenue forecast from Congress' Joint Committee on Taxation on a 
hypothetical tax increase, raising the top rate to 100 percent on 
incomes over $200,000.
  So, just as a study, just as an exercise, let's just see what their 
projection is if we just take all income, every scrap of income, away 
from people who earn over $200,000. The Joint Committee on Taxation 
responded by forecasting increased revenues of $204 billion in 1990--
and again, these figures are somewhat old--$204 billion in 1990 and 
increased revenues of $299 billion in 1993.
  Essentially, the Joint Committee on Taxation predicted that people 
would continue to work even if the government taxed them out of every 
penny they earned. It doesn't sound like they're living in the real 
world, does it? If you take every penny that people earn, why are they 
going to set their alarm clocks and go to work the next day? It's 
likely not going to happen.
  A second point that they quoted in the book is that the Congressional 
Budget Office predicted that the 1986 corporate tax rate increase would 
raise government revenues from $89 billion to $101 billion. So this is 
over $10 billion because of the increase in the corporate tax rate. Yet 
what actually happened is that corporations altered business practices, 
and revenues decreased to $84 billion. So, instead of getting an 
additional $10 billion, they actually scored $5 billion less than they 
would have had they left the tax rate alone.
  It's tough because Americans get that. They understand that. If you 
tell the average American, Hey, next year, your taxes are going to be 
100 percent of everything you earn, they're going to say, Fine, I'm not 
going to work. See ya.
  When we think about it, in our committees here in Congress, we say, 
Well, if you tax everybody at 100 percent, yeah, you're going to bring 
in some additional revenues. In fact, it will be significantly 
increased next year and the year after that. Well, that's nonsense. 
That's not taking into account fundamental human behavior. If you take 
away everything from people, they're not going to show up for work the 
next day.
  Now, we know what works when it comes to changing the Tax Code. We 
got a glimpse of it in Ronald Reagan's administration when he cut the 
taxes in half in 1986. As a result of that reform, the economy grew; 
revenues increased, and jobs were created.
  Nina Olson, in writing in 2007 the National Taxpayer Advocate, talked 
about simplifying the Tax Code as one of her recommendations, and I'm 
quoting here: The complexity of the code increases the likelihood that 
honest taxpayers will make inadvertent mistakes. It creates 
opportunities for taxpayers to avoid paying their fair share of taxes 
and makes it difficult for the Internal Revenue Service to administer 
the tax system. Simplifying the tax law could improve the audit process 
and allow less of a taxpayer burden.
  Well, what a phenomenal idea, simplifying the tax law. Now, who could 
be against that?
  In 1981, there was a simple concept put forth by Robert Hall and 
Alvin Rabushka. This was revisited in 1995, 15 years ago, by my 
predecessor in this body, who was former Majority Leader Dick Armey, 
and most recently in the book that Steve Forbes published on the ``Flat 
Tax Revolution.'' All of those authors were calling for the same type 
of tax reform in our Tax Code--that it be flatter, fairer, and more 
simple.
  So what would it look like if we were to do something like that, 
flatten the tax and broaden the base? Okay. I want everyone to close 
their eyes and visualize that shoe box or that suitcase full of 
receipts you took down to your accountant, and then visualize the 
sheets of paper you're going to get back from your accountant that 
you're going to have to file unless you file online.
  What if it were a great deal more straightforward? What if it were a 
great deal simpler?
  That blueprint would be the flat tax. In fact, there has been 
legislation that

[[Page 5681]]

was introduced early last year--H.R. 1040 for the individuals who want 
to look it up on Thomas. H.R. 1040 allows for a person to opt into a 
single-rate tax system, to opt into a flat tax.
  Why would you have it as an optional? Why would you have it as an 
opt-in?
  Well, we have created this Tax Code, remember, of many, many 
thousands, tens of thousands of pages, and we've done that to drive 
behavior in a certain way. So one of the things you wouldn't want to do 
is change things suddenly. After all, we've encouraged people to comply 
or to live these very complicated tax lives in order to get the 
benefits of the tax system. You can't very well just say, well, we're 
going to change everything overnight, but we could allow people to opt 
in to a single-rate system. I, for one, would gladly do that. Even if 
it meant I paid more taxes, I would gladly do that and give up that 
shoe box full of receipts that I've got to sit down and go through 
every year with my accountant.
  Now, a lot of people are concerned about the home mortgage deduction 
on things like a flat tax, but if it's an optional flat tax, then you 
make the decision. You know, the home mortgage deduction in some 
markets doesn't really amount to as much as it does in other markets. 
In some areas in Texas, the home mortgage deduction really may be as 
little as $1,000 a year in real dollars saved by itemizing and going 
through that exercise with your taxes. In other markets, where real 
estate prices are quite, quite high--and there are still some of those 
markets in this country--then it may be prudent to continue with taking 
that mortgage deduction.
  Let's give people the option. Let's give them the choice. If someone 
has constructed their finances around being in the IRS code, fine. They 
may stay there. Yet, if someone wants the freedom to get out from 
beneath that code, we ought to allow them the freedom to do so. We 
ought to trust Americans to be able to make up their own minds on what 
would work best for them.

                              {time}  2145

  Well, how would this form work? It's really pretty simple. Yes, you 
are going to need a little personal information. I know the 
sensitivities to that with the census right now, but some personal 
information so that the taxes can be properly allocated to the proper 
individual. Income on one line: wages, tips, compensation. But this 
does exclude interest, dividends, and capital gains. Interest and 
dividends would be taxed at the point of origin, not at the point that 
they are received by the individual. Personal exemptions.
  This form was drawn up a couple of years ago. These numbers, in fact, 
depending upon how incomes have grown, may change a little bit. But 
essentially the first $36,000 for a family of four would be exempt from 
income taxes. Married, filing jointly, $25,580. Single head of 
household, $16,330. Number of dependents multiplied by $5,510. Add 
those all up. Taxable income, line 1, all income; minus deductions, 
line 3; line 4, calculate the tax; multiply line 4 by .19; taxes 
already withheld, subtract that, get a refund or the taxes you owe.
  What did that take? Thirty seconds? Forty-five seconds? I read fast. 
The print was large. How different is that from what you just went 
through with your accountant? How different is that from what you have 
been doing with the Tax Code?
  If we gave the people the option of simplifying their lives or 
continuing the Tax Code, I think that over time you would see so many 
people leave the Code and opt for a simplified system as their lives 
became more simple, and you would no longer have the need for this 
great behemoth of an agency we now know as the IRS. It would just 
simply be a collection, a clearinghouse, for receiving these forms and 
tallying up the bills.
  Now, I went through some of the calculations on the number of hours, 
the number of dollars. There is no way to calculate, no way to 
calculate, the hours of stress that the current IRS Code imposes on 
average, law-abiding Americans. It's impossible to calculate or 
quantify the number of migraine headaches or tension headaches that are 
caused by trying to keep up with the IRS forms.
  One of the things that people tell me repetitively is, yes, they want 
to save money where they can, but one of the things they really want is 
they want some time back in their lives. How important would that be to 
give that time that is now devoted to compiling and going through check 
stubs at the end of the year and keeping receipts and keeping up and 
chasing papers all over the house and trying to run down expenses that 
you didn't keep up with and now you're trying to go back and recreate 
those trails--how about giving all that time back to Americans who 
would prefer to be under a flat tax?
  You really do eliminate the special preferences. No double taxation 
of interest and dividends. This bill creates a single-rate structure. 
No taxes on dividends. No taxes on savings. We are told all our lives 
we have got to save money, and how insulting is that when passbook 
savings rates are extremely low but, on top of that, you have got to 
pay 25, 30 percent of that in income taxes? It erodes the incentive for 
saving.
  I will give you an example. When I was in the practice of medicine, I 
thought at one time I need to keep 3 months of what it would cost me to 
run my practice. I need to keep 3 months in cash where I could get to 
it quickly if I needed to in order to keep the wolf from the door, if 
things weren't going well financially.
  So I did that, and I got through the year, and everything went okay. 
And what I found was I was paying the business tax then on that money 
that I had kept in the business, and when that money was eventually 
distributed to the partners, the doctors, it was taxed again. So we 
were doubly taxed on that money.
  I didn't do that very long because there's no reason to do that. Tax 
the money only one time when it's distributed to the partners. 
Otherwise, there's no reason to keep the money in the business and have 
to pay taxes on it twice, once when you earn it and once when it's 
distributed.
  But the behavior behind wanting to keep 3 months of operating income, 
operating capital available to me, that was a good concept. It that was 
a sound concept. But the Tax Code punished me for doing that. The Tax 
Code punished me for sound thinking. The Tax Code punished me for being 
reasonable.
  Now, doing the tax via a flat tax would also remove the Clinton tax 
on Social Security earnings. And one of the things that really got me 
thinking about the flat tax when Congressman Armey wrote the book in 
1995 and introduced the legislation, the tax year 1993, just out of 
pure serendipity, out of pure coincidence, Bill Clinton's first year in 
office as President of the United States, he and I earned about the 
same amount of money. I think I earned just a little bit more, but I 
may have had a better year.
  Of course, the President's income tax filing and the amount of income 
taxes the President paid were public knowledge. That was printed in a 
story in the newspaper. So I did a very simple calculation. His salary 
was X. This was the amount of money he had paid in taxes. So what 
percentage of his salary did he end up paying in taxes? And the number 
was within a percentage point or two of around 20, 21 percent. I did 
the same for my taxes, and I paid 31 percent.
  So that led me to a conclusion that there was within our Tax Code the 
Clinton paradox. Why should two people who earn essentially the same 
amount of dollars pay a substantially different tax rate?
  A flat tax would make a great deal more sense. There would be no 
reward for perhaps a questionable deduction from your income tax; and, 
at the same time, we could give people back a significant amount of 
their time and energy during the course of the year with keeping up 
with receipts and that quality time that we all spend with our 
accountant every year. So I credit President Clinton with making me a 
believer in the concept of a flat tax, because it really came home at 
that point.

[[Page 5682]]

  What would happen with a flat tax? You think savings would increase 
if we stopped punishing people for saving money? It might. Businesses 
also would be taxed at a flat 19 percent with deductions for goods and 
services, materials, wages, salaries, and pensions and the purchase of 
capital equipment, structures, and land. And those capital outlays 
would be immediately expensed. We saw the power of that in 2003 when 
the tax policy of 2003 was enacted.
  You know, in 2003, a lot of people don't remember it now but we were 
having trouble with the unemployment rate being high. I think it was up 
to 6 or 7 percent. And it was a terrible thing that it was that high, 
and President Bush was to blame for this, and we really needed to hold 
him accountable for this high unemployment rate.
  So, okay, he did something about it. He did something about it with a 
change in the Tax Code, and that was passed in May of 2003. It was a 
contentious vote when it happened. But after it passed, by July of 
2003, job creation started on an upward trajectory; and really, until 
September of 2008, every quarter there was an increase in the number of 
jobs created in this country.
  We have got to create between 120,000 and 150,000 jobs every month in 
this country just to keep up with people that are entering the 
workforce. So that was an extremely important change in the Tax Code, 
and one of the things it did was it allowed for immediate expensing of 
capital outlays rather than a long depreciation schedule in businesses, 
that the cap on capital outlays was increased significantly, from 
$10,000 to $30,000. The result was businesses did go out and make that 
capital investment, did improve their businesses; and, as a 
consequence, the tax receipts really increased. Jobs increased. And it 
appeared to me that that was a sound way to go about dealing with a 
downturn in the economy.
  And, Mr. Speaker, I frankly do not understand, do not understand why 
we will not undertake similar policies today with our unemployment 
hovering around 10 percent. And one of the most pernicious aspects of 
that is young people just completing their education are ending up in 
the ranks of the unemployed and they are losing those early productive 
years, which may have a deleterious effect on the remainder of their 
productive lifetime.
  It seems like almost any group with whom you speak, regardless of the 
age demographic, the beginning of the working years in the late teens 
and early 20s, the pre-retirement age, or those in between, everyone is 
having difficulty. Every one of those demographic groups is having 
trouble finding work. And, as a consequence, we are creating what may 
well turn out to be a longitudinal problem that, should we take the 
time to solve it now, would really be to our great benefit.
  The long-term unemployment numbers are startlingly high. The 
unemployment numbers for minorities are startlingly high. The 
unemployment numbers for people who are in their late teens and early 
20s are startlingly high. Why wouldn't we consider something that 
worked as recently as 8 or 9 short years ago? In fact, those policies 
are going to expire, and we may well make things worse rather than 
better.
  One of the things that I do want to address, and we heard this in the 
last hour, on Tax Day 2010, are you better off this Tax Day? The little 
cartoon here says, ``I'm sorry, sir, but you can't claim Citibank, 
Goldman Sachs, AIG, Bank of America, Wells Fargo, Fannie Mae, Freddie 
Mac, GM, and Chrysler as dependents.'' So are you better off this Tax 
Day? You answer the question.
  There is an option that we could take to fundamentally transform the 
tax system in this country, and it would be liberating for individuals 
and businesses alike. Fundamental tax reform in this country is 
something the American people are crying for. Eighty percent, according 
to the American Solutions Study from a year or two ago, want us to do 
something about that. Through both Democratic and Republican 
majorities, we have talked about it, but we haven't taken that work on. 
President Bush convened a tax panel during his second term. The result 
of that was disappointing. The recommendations were all over the place, 
and no one really proposed legislation as a consequence of that tax 
reform panel.
  It is incumbent upon this Congress, the next Congress. Regardless of 
which party is in the majority, it is incumbent upon them to come to 
some realistic conclusions about simplifying the Tax Code. For too long 
we have put this burden on our citizens in order to get them to comply 
with what the previous speaker said was our obligation for living in a 
free society, and that is the payment of income taxes. For too long we 
have made that too difficult. We have made that too onerous. And, as a 
consequence, we have had a deleterious effect on our economy. Right 
now, our economy is suffering. We would do people a great service by 
simplifying the Tax Code, unleashing the power of the American economy.
  Look, this economy is too vibrant to keep down for too long. Even the 
United States Congress is not capable of keeping this economy 
suppressed. The economy will recover. But the recovery will be more 
robust and more prolonged if we will create a sensible tax policy to go 
along with that recovery.

                          ____________________