[Congressional Record (Bound Edition), Volume 157 (2011), Part 10]
[Senate]
[Pages 13787-13789]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               TAX REFORM

  Mr. WYDEN. Mr. President, I am going to take just a little time this 
morning to make some remarks with respect to the issue of tax reform 
and particularly try to lay out why the naysayers, those who say tax 
reform is not going to make any difference anytime soon or there has 
not been a lot of groundwork laid--those are the two major arguments 
they are making--I am going to try to lay out why those arguments are 
wrong.
  To start with, they reflect a misunderstanding about markets, about 
free enterprise and about what drives the American economy. One of the 
major reasons consumers are not spending and businesses are not hiring 
workers is uncertainty about taxes. Enacting fundamental tax reform 
that encourages the use of free enterprise and markets would start 
changing consumers' behavior very quickly and business would be in a 
position in West Virginia and Oregon and everywhere else to start 
making judgments with respect to investment.
  They cannot make judgments right now when we have these piecemeal tax 
changes that might last 1 year or even less. That is not the way the 
American economy works. Businesses in West Virginia and Oregon are 
thinking about investments that can last 5, 10 years and even longer 
and they need some certainty. I am going to spend some time talking 
about permanent tax reform, enacted early next year, and making a start 
at it with our supercommittee. We have the good fortune of having 
Chairman Baucus on it. I serve on the Finance Committee with him. 
Chairman Dave Camp, chairman of the House Ways, and Means Committee is 
also on it. What I feel very strongly about--as does the cosponsor of 
the tax reform legislation I have offered, Senator Coats--is they can 
make a good start on tax reform in the supercommittee and I am going to 
outline how that could take place and then Congress could finish it up 
early next year.
  Let's start by talking about how we might see people's behavior start 
changing and getting consumers back into the marketplace and businesses 
start making investment decisions. My own view is, if working families 
knew at the end of the year or early next year they would get real tax 
relief as we get underway with the tax legislation I have been part of 
with Senator Coats and Senator Begich and former Senator Gregg and if 
middle-class folks knew reduced tax rates were going to be in place not 
just for 1 year but for the long term, they would start making the 
kinds of decisions they are putting off now because they are uncertain 
today and they are going to be uncertain next year and the year after 
if we continue to make these changes in tax law by piecemeal.
  My view is, if we saw permanent tax reform enacted early next year, 
we would see consumers making the kind of purchases they have been 
postponing in major appliances, new cars, and the other investments 
they make when they know the economy is going to start picking up 
because millions of others are going to go back into the marketplace, 
just like themselves. When businesses see additional demand for their 
products, they will go out and start hiring more workers.
  Let's talk for just a minute about how fundamental tax reform puts 
more money into the pockets of the middle class. Under the legislation 
I have been a part of, with two Republicans and Senator Begich, a 
typical couple making $90,000 would pay close to $5,000 less in taxes, 
according to estimates by the Congressional Budget Office.
  The reason that is the case is our bipartisan tax reform triples the 
standard deduction for that middle-class couple. It triples the 
standard deduction. Let me emphasize it is permanent. I wish to say 
that again--permanent. It is not something that is going to be jerked 
away in 1 year. It is something that would be locked into the Tax Code 
on a permanent basis. Economists and others have repeatedly said, when 
we make those kinds of changes and typical families know on a permanent 
basis they will have more money in their pockets, they will go out and 
make the major purchases they have put off in West Virginia and Oregon 
over the last few years.
  I have talked to folks at coffee shops and know the Presiding Officer 
spends a lot of time getting out and talking with folks in his state. 
When I go into coffee shops and I ask people, in particular, about why 
they are putting off major purchases--they talk about appliances and 
cars--they say: I don't know what is going to happen. I heard there was 
this tax break I was going to get for 1 year, and I don't know what is 
going to happen after that.
  We need to make permanent changes in the tax law, give permanent tax 
relief to middle-class people, and then, based on everything we know 
about economics, people start changing their behavior. They are not 
going to do it in a big way without permanent and predictable changes, 
changes they can count on that will not be jerked away from them in 
another year or so.
  The same principle goes for business. Once they know there is going 
to be a new tax system in place with reforms. By the way, virtually all 
the reform plans take the corporate rate today, which is now the second 
highest in the world, down to somewhere in the mid-twenties as a 
percentage. Senator Coats and I, with Senator Begich, are at 24 
percent. The Bowles-Simpson proposal is a little bit higher, but 
everybody is pretty much in the same place. If we do that on a 
permanent basis, businesses will be able to start planning, and they 
will start planning immediately for the beneficial effects of consumers 
going back into the marketplace because of permanent changes in the 
individual Tax Code and because they know that the tax rates are going 
to be lower. Once a reform tax system is signed into law, we have more 
certainty and we would begin to see the spending, hiring, and 
investment decisions that are not being made today in the American 
marketplace by the consumer and by business.
  It would also be possible to further jump-start the process and 
generate economic growth even more quickly. For example, as part of 
permanent tax reform we could allow the consumer an advanced refund of 
the reduced taxes they will be getting under tax reform. The Congress 
did that a few years back. It helped a bit in terms of consumer demand 
but, again, it was short term. Since it was not combined with permanent 
reform of the Tax Code to provide future certainty, it didn't stimulate 
as much demand either in the short term or the long term as it might 
have if it were coupled with permanent reform. But it did help.
  The bottom line is that enacting fundamental tax reform now would 
provide immediate benefits to the economy by ending the uncertainty 
that I happen to believe is strangling our prospects for real, 
significant, long-term economic growth. We all understand the American 
tax system is an anti-growth mess. It is riddled with loopholes and tax 
dodges. I sit on the Senate Finance Committee, and for a big part of 
the tax system today the language is pretty much incomprehensible 
gibberish. So we do need to make these changes.
  Now I wish to get into this issue of whether it is not going to be 
possible to do tax reform now because the groundwork hasn't been laid. 
I am sure the distinguished Senator from West Virginia has heard this 
argument: Gosh, we could do it in 2013; we ought to spend more time 
studying it--and all of that. I will tell my colleagues that the 
uncertainty of putting it off again going to continue to harm the 
economy--in fact, I predicted after the lameduck session of the 
Congress in 2010 that unless we get people moving in a bipartisan way 
on tax reform, we would have the same debate in the lameduck session of 
the 2012 Congress--exactly the same debate--about whether we are going 
to extend the Bush tax cuts on a temporary basis.

[[Page 13788]]

  So if we aren't successful in pushing permanent tax reform onto the 
agenda, that is what will happen. We will have the same debate in the 
lameduck session in the 2012 Congress that we had during the lameduck 
session in the 2010 Congress, which will be about, once again, trying 
to patch up this dysfunctional anti-growth tax system we have in our 
country.
  So I wish to spend a few minutes addressing the claim that it is not 
possible to do tax reform now because the groundwork hasn't been done. 
That is awfully puzzling to me, given all of the tax reform proposals 
that are out there now and how similar they are. For example, when 
Erskine Bowles and Alan Simpson came to the Senate Budget Committee, 
they said point-blank that they modeled their tax reform 
recommendations after the bill that Senator Gregg and I had spent week 
after week for 2 years working on. That was, of course, flattering. We 
were happy about that. But the fact is, going all the way back to some 
of the studies done by the Commission appointed by President George W. 
Bush and then highlighted by the work done for President Obama, the 
Volcker Commission, there has been an awful lot of common ground.
  For example, the tax rates under all of these major proposals 
involve, on the individual side of the Tax Code, taking the country 
from six major brackets to three major brackets. The Bowles-Simpson 
proposal comes in around 12 percent for the lowest rate, 22 percent for 
the rate in the middle, and 29 percent for the rate at the top.
  The proposal I have been part of with former Senator Gregg and 
Senator Coats and our colleague and friend, Mark Begich, we are a bit 
higher than that. That is because under our proposal we didn't make 
changes with respect to the mortgage interest deduction and the 
charitable deduction or the changes with respect to middle-class folks 
who depend on their employer for their health care and their 
retirement. So the point is, we have something we can have a real 
debate on right now.
  Let me highlight one other point. We touched on it yesterday when our 
group of more than 30 senators got together. The Wyden-Coats-Begich 
proposal has been scored by the Joint Committee on Taxation, the 
committee that specifically looks at the impacts of changes in tax law. 
So if the distinguished Senator from West Virginia, the Presiding 
Officer of the Senate, wants to come in and make a modification in tax 
law--for example, adjust the rates, say, in these three brackets one 
way or another, because we have the numbers now from the Joint 
Committee on Taxation, and it is the only proposal--our bill, the only 
proposal--they have scored, we can give to the Senator from West 
Virginia and any other Member of the Senate--the other 98 Senators not 
here--we can give them the actual numbers that have been furnished by 
the official scorekeeper, the Joint Committee on Taxation, so we can be 
in a position to have a real debate.
  There has been an enormous amount of groundwork done on this issue. I 
have already mentioned the similarity and reforms on the individual 
rates. The corporate rate reform proposals are similar. Repealing the 
alternative minimum tax is in our bill. It is in all of the bills. We 
understand what a crushing burden this alternative minimum tax is.
  We have middle-class folks all over America, and the Presiding 
Officer probably has somebody who, say, is on the police force in a 
town in West Virginia, and perhaps that police officer's spouse is a 
teacher, and they can be filling out their taxes twice with this 
bureaucratic nightmare called the alternative minimum tax. It wasn't 
intended for those kinds of people. It was intended for wealthier 
people who had managed to get out of paying taxes altogether.
  So we are in a position to move forward. What I and others have said 
is that if we started in the supercommittee by laying a baseline, a 
foundation--they already have an opportunity for simplicity by moving 
from those six brackets to three; they already have an opportunity on 
the corporate rate where essentially all of the reforms are in the 
vicinity of going from 35 percent to the mid-twenties, all of the 
reforms talking about abolishing the alternative minimum taxes, all of 
the reforms talking about getting taxpayers, individuals, and 
businesses off the roller coaster of constant tax changes--the 
supercommittee could make a very significant start on major tax reform 
by the end of the year, and then early next year we could have a 
guaranteed legislative process.
  Let me use those words specifically. We could have a guaranteed 
legislative process where the Finance Committee, under the leadership 
of Chairman Baucus, and the Ways and Means Committee, under the 
leadership of Chairman Camp, could enact permanent tax reform by early 
next year.
  I have already talked about how markets work. I think if this holiday 
season the American consumer can have a sense that we are going to make 
a break with tax policy as we know it today--we are going to stop all 
of these piecemeal, temporary changes, and we are going to make 
permanent changes that are going to be built around reform principles 
which are widely accepted--ever since the 1980s when Democrats and 
Ronald Reagan worked together on tax reform, the fundamentals of tax 
reform have been very clear. They are all about eliminating 
preferences--all of these special interest tax breaks and dodges and 
loopholes and preferences, eliminating them--and using those dollars to 
hold down the marginal rate, the rate we pay on the last dollar we earn 
while keeping progressivity, while keeping a sense of fairness.
  Those principles are very clear. All the reform proposals are based 
on them. It sure seems to me if middle-class people can have the 
certainty of knowing that tax policy is going to change so they can 
start making decisions about their economic future and have a real 
sense that it isn't going to just change in a year, that it isn't just 
temporary, I think we will start seeing beneficial changes in the 
American marketplace very quickly. That, of course, is what tax reform 
is all about. It is about getting consumers back into the marketplace 
and about businesses growing again because they know they are going to 
have more consumers and they know they are going to be in a better 
position to compete in tough global markets. That means jobs.
  I wish to wrap up by talking about tax reform and jobs--and, 
remember, we have not had fundamental tax reform for a quarter century. 
For a quarter century, this country has been making almost one tax 
change a day--almost one tax change a day--thousands and thousands of 
tax changes cumulatively. Talk about what that means for uncertainty 
for a business and a consumer. We can make a break with that and do 
what was done in 1986, which translated into a big boost for our 
economy.
  I wish to give the numbers specifically so folks will see what this 
tax reform issue is all about. According to the Bureau of Labor 
Statistics, in the 2 years after the 1986 tax reform bill our country 
created 6.3 million new jobs. I said 6.3 million new jobs. That sounds 
pretty good. I think that would go over pretty well at a coffee shop in 
West Virginia, and it certainly does in Oregon.
  I am not going to come to the floor and say every one of those jobs 
is due to tax reform. There are a host of issues that go into judgments 
with respect to why consumers buy those appliances and those basic 
necessities and why businesses invest and hire. But I will tell my 
colleagues one thing: We couldn't have generated 6.3 million new jobs 
in the 2 years after the 1986 tax reform bill if we had seen a tax 
reform proposal enacted that didn't make sense for the American 
economy. It wouldn't have happened.
  Clearly, consumers and businesses believed this was a proposal moved 
by a Republican President, Ronald Reagan, and a host of very 
progressive Democrats--folks such as Congressman Dick Gephardt who 
later ran for President with strong backing of American labor. They 
came together and created 6.3 million new jobs in 2 years with the

[[Page 13789]]

kinds of reforms that Senator Coats and former Senator Gregg and 
Senator Begich and I advocate now, that are in line with the 
fundamental thinking of the Bowles-Simpson proposal, the reforms 
proposal by former President George Bush, and President Obama's own 
commission directed by Paul Volcker.
  We have a chance now to make fundamental changes--fundamental 
changes--that will change the direction of our economy and the 
psychology of the American marketplace. In this debate, we can talk, 
for example, about the issues that are front and center with American 
workers. I am certain that in those coffee shops in West Virginia, one 
of the things that is said again and again is: Senator, make sure you 
keep the jobs here. Keep them at home. We are tired of all those jobs 
going offshore.
  Senator Coats and I have a proposal that takes away the tax breaks 
for shipping jobs overseas and uses those dollars to create jobs here 
at home--red, white, and blue jobs, jobs that pay good wages here in 
the United States because we change tax policy and make it more 
attractive to do business in the United States.
  We can talk about the various ways to do it. There is discussion 
about a territorial system, there is discussion about a worldwide 
taxation system for the multinational corporations. The bottom line--
again, reflected in all of the reform proposals--is that competitive 
rates, which means lowering rates for small business and businesses of 
all sizes doing business in the United States, will help us create more 
jobs, and they will be red, white, and blue jobs. They will be jobs 
here in the United States.
  So I assume this weekend--whether it is in coffee shops or on talk 
shows or wherever--people are going to be talking about this discussion 
about taxes, and they will say: Oh, I don't know if those folks in 
Washington are going to get anything done. And if they do anything, it 
will probably be a temporary thing, and they will all talk about why, 
if you had real tax reform, it might not do anything soon. And, well, 
it will take a lot more study, and that sort of thing.
  I have been convincing this morning about why I believe permanent tax 
reform--permanent tax reform--will start changing the behavior of 
consumers in the marketplace, get them back into the marketplace, 
buying those products that fuel a consumer-driven economy. They will 
start doing it quickly if they see permanent tax reform enacted. I hope 
I have been able to clearly outline why a great deal of groundwork has 
been done already to allow us to move forward--not do the entire tax 
reform effort in the 6 or 8 weeks that the supercommittee has, but to 
get a foundation, a baseline in place, a baseline that is built around 
these areas of consensus, changes that are advocated, essentially, by 
all the reform proposals, and then allow the Senate Finance Committee, 
under the leadership of Chairman Baucus, and the House Ways and Means 
Committee, under the leadership of Chairman Dave Camp, to use the first 
few months of next year with their committees--the committees of 
jurisdiction; the Finance Committee here in the Senate, and the Ways 
and Means Committee in the other body--that they take the first 90 or 
120 days to enact permanent tax reforms.
  I think that will be a huge boost for the American economy. I think 
it will change the behavior of American consumers and American business 
because that is what markets do. They react when positive and permanent 
changes are put in place.
  This can be thoroughly bipartisan. It was in 1986 when a whole host 
of quite progressive Democrats got together with Ronald Reagan. I have 
had the pleasure, over the last few years, to work with two outstanding 
Members on the other side of the aisle, former Senator Gregg and 
Senator Coats, and Senator Begich of Alaska, a former small 
businessperson.
  This is not like health care; we have done it before. The reform 
proposals are very much built around the same sort of principles which 
were the fundamentals of tax reform in 1986. While I know there is 
going to be considerable debate this weekend about whether tax reform 
can be done, whether it is going to change anybody's behavior or change 
anybody's behavior soon, I wanted to weigh in and outline why looking 
at the principles of the market, I believe, is going to change consumer 
behavior, change consumer and business behavior for the better, and 
that there has been a lot of groundwork laid that we can build on.
  There is an opportunity, an opportunity for Democrats and Republicans 
in this Chamber to come together and take steps, steps that will end 
this anti-growth mess of a tax system, and give our consumers and 
businesses the certainty and predictability they need to grow, to come 
back into the American economy.
  We will talk some more about this on the floor of this great body in 
the days ahead. I just want the American people to know this is an 
opportunity where, if there is a will to do permanent tax reform, there 
is a way to get it done.
  Mr. President, with that, I yield the floor and suggest the absence 
of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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