[Congressional Record (Bound Edition), Volume 157 (2011), Part 12]
[Senate]
[Pages 17358-17359]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              THE TAX CODE

  Mr. COBURN. Madam President, our country is at a crossroads. Anybody 
who is watching Europe will find that they have been very slow to 
address the real underlying problems of debt and deficits there. They 
have a much more difficult time than what we should because they have a 
monetary union without a political union. We have a monetary and 
political union.
  The fact is that over the next 10 years we are going to have a debt--
including borrowing money for student loans, borrowing money to pay 
back Social Security, what has been stolen--we are going to have a true 
debt of about $27 trillion to $28 trillion. It is absolutely 
unsustainable. It won't happen--according to Ben Bernanke--because his 
statement is, the world will not loan us the money.
  What is going on in Europe today? What is going on in Europe today is 
the markets are punishing the countries that have excessive debt-to-GDP 
ratios. We sit at 100 percent debt to GDP. We see what has happened 
just in the last 2 weeks to bond rates for Italy. The differential 
between an Italian bond rate and a German bond rate is now about 430 
basis points, a 4.3 differential for the same length maturity bond for 
Italy versus Germany. What is the difference? Germany is living within 
the confines of its economic capability. Italy didn't. How does that 
apply to us? It applies to us in that we are not and what will happen 
to us if we don't make the difficult changes that are necessary.
  There has been a lot of rhetoric on both sides of the aisle and there 
has been rhetoric from the President in terms of us looking at who pays 
what in terms of taxes in this country. But nobody is looking at what 
we are doing with our Tax Code that enables those who are the wealthy 
in this country to pay less taxes. So I had my staff put together a 
list of the subsidies for the wealthy in this country, because the 
answer isn't just to raise taxes; part of the answer is to quit 
subsidizing these behaviors.
  We came up with a piece that we put out called ``Subsidies for the 
Rich and Famous.'' It is a report that looked at every government 
program. We looked at everything we do. What we found is every year, 
for people having adjusted gross incomes above $1 million, we give $28 
billion worth of benefits in the Tax Code or through our programs. I 
will tell my colleagues that if we wanted--I am one of those who thinks 
we ought to reform our Tax Code, we ought to lower the rates, we ought 
to make it where it actually increases productivity in this country, 
creates capital investment. But one of the first steps in doing that is 
to make sure our Tax Code and our safety net programs are for those who 
truly need it and not for those who don't.
  We went through the total tax breaks of $113.7 billion over the last 
4 years. Mortgage interest: $27.7 billion in tax breaks to people who 
are making more than $1 million a year. That is a lot of dough.
  Rental expenses. The writeoff of rental expenses for those making 
more--we are not talking businesses. None of these are business 
deductions. These are personal deductions for the very wealthy in this 
country who are making more than $1 million adjusted gross income a 
year. We allow them to write off $64.3 billion in rental expenses.
  Gambling losses. We allowed the rich and famous to reduce their taxes 
by $21 billion because we allow them to gamble, and if they lose money, 
they get to write it off. So we are subsidizing the loss. We are 
subsidizing their gambling losses.
  Canceled debt, debt writeoffs, debt forgiveness. We have allowed $128 
billion in terms of writeoffs for those people making more than $1 
million adjusted gross income.
  Business entertainment--and this is not through business, though, not 
run through a business; this is personal deductions for business 
entertainment--$607 billion.
  Electric vehicle. What are we seeing? Who are the people taking 
advantage of our messing in the economy and creating an incentive for 
somebody to buy an electric vehicle? The vast majority are the people 
who don't need the writeoff in the first place. What we have is $12.5 
million last year alone in tax credits for the very wealthy to take a 
$7,500 or $8,500 tax credit for buying an electric car.
  Childcare, nanny care for the very wealthy last year: $18 million.
  Renewable energy tax credits for the very wealthy: $75.6 million.
  The whole point of putting this report out is we are schizophrenic 
with our Tax Code. We have it upside down. When people talk about how 
they want millionaires to pay more--they are paying plenty. The top 1 
percent pays 38 percent, the top 20 percent pays 80 percent of all of 
the taxes in this country. But if we want to start getting at this, the 
way we do it is start taking away the things that reduce their tax 
burden that don't make sense, that aren't smart, and that don't help 
those who need the true safety net in our country. These people aren't 
dependent on these. They will do fine without them. The whole purpose 
for most of these programs was to create and sustain a safety net for 
those who are less fortunate.
  When we allow $113.7 billion in tax breaks for the wealthy over 4 
years, what could we do with that money? Well, we could run a NASA that 
is twice as big. We could not borrow $113 billion because the interest 
rates on that are significant; another $4 billion or $5 billion a year 
in interest that we wouldn't have to borrow. We wouldn't have to make 
some defense cuts that are going to have to come. We could maybe put 
more money into Medicare prevention and disease prevention rather than 
what we have done. There are all sorts of things we could do.
  The point behind the report is that most Americans don't realize how 
we are subsidizing through tax credits the very wealthy in this 
country. I don't have any real problem with them taking the tax 
credits. We put it out there. The real question we ought to be asking 
is why are we doing all of this in the first place. Does the economy 
itself in a free market not allocate resources better than we can do? 
How many Chevy Volts have been sold this year? The answer is 5,000. So 
5,000 times $7,500 is what we paid in tax credits to have the Chevy 
Volt sold because everybody who bought it got a $7,500 tax credit. If 
it is a viable product, then let people buy it. If it is not, they 
won't. Yet who are the people who bought most of the Chevy Volts? 
People making significantly more than the average American.

[[Page 17359]]

  If we are going to play in the Tax Code, what we ought to do is play 
on a very level playing field. If we want to create incentives, then we 
ought to create incentives that actually will do something for the 
economy rather than benefit those who make the most money in the 
economy.
  I would say what this spells is a case for us to totally reform our 
Tax Code. Most people don't realize this is one of the side effects. 
That is not to say there are not some good side effects. But the fact 
is when we are running $1.3 trillion deficits, do we want to be 
subsidizing the rich and famous in this country with our programs? I 
would say no.
  When Medicare Part B started, 50 percent of the cost of Medicare Part 
B was to be borne by the Medicare recipient. We are at 25 percent now. 
There was never any thought--and, remember, nobody ever paid anything 
for that. In other words, that is all borrowed money to do that. Nobody 
ever contributed into a Part B fund. They contributed into a Part A 
fund which, by the way, will be bankrupt in 4\1/2\ years. What about 
those on Part D? Nobody ever paid a penny, and we have $13 trillion in 
unfunded liability in Part D. Why should the very wealthy get 
subsidized drugs in this country? Why should they get subsidized Part 
D? In other words, we ought to ask ourselves a question.
  Think about Social Security. Why is Canada's Social Security system 
not in trouble? Because Canada looks at how much income a person is 
making every year, and at certain levels a person gets half of their 
Social Security because they obviously don't need it because their 
income is up there, and at a certain other level they get none of it. 
Why? Because it is based on a means-testing mechanism that says this 
program is designed to be an underpinning for those who need it. We 
have gone completely the other way.
  My point is we have all this discussion about what we should do. We 
are wringing our hands. The first thing to do is to fix the Tax Code 
and the best way to fix it is to say 3 months from now it is going 
away, and have Finance and Ways and Means Committee in the House come 
together with a new Tax Code that fixes all of this. Everybody in 
Washington says that can't be done. Nobody outside of Washington says 
it can't be done, but we say it can't be done. It can be done. It needs 
to be done.
  If we want a healthy future, we need to reform our Tax Code to 
generate greater investment, greater job opportunity. We need to lower 
the rates, and we need to eliminate things such as these that don't 
truly help the economy, but help those who were smart enough to figure 
out how to play the game, who are the wealthiest in this country. I am 
proud of them. I want them to be more successful. But in these 
difficult times, we need to ask them to contribute more. We need to not 
have these kinds of programs in our Tax Code that actually subsidize 
those who need no subsidy.
  With that, I yield the floor and note the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BEGICH. Madam 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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