[Congressional Record (Bound Edition), Volume 158 (2012), Part 3]
[House]
[Pages 3072-3077]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           INCOME TAX REFORM

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 5, 2011, the gentleman from Texas (Mr. Burgess) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. BURGESS. Mr. Speaker, here we are 5 weeks from the time that we 
all have to file our income taxes--April 17 this year. It's 99 years 
since this House enacted the progressive income tax that we now all 
know by its familiar names that we all use for it. I thought it might 
be appropriate to spend some time this evening talking about our Tax 
Code and talking about what might be possible in fundamental reform of 
the Tax Code.
  I have long been a proponent of what is known as a flat tax. I think 
that is something that is worthy of this House taking up and debating. 
There is legislation that has been introduced, H.R. 1040 for people who 
are keeping score at home, and I think this would be a rational 
approach for people who want to be treated fairly by the Tax Code--our 
President does talk about fairness in the Tax Code--and for people who 
are wanting to get out of the tyranny of having to live with a shoe box 
full of receipts every spring, because I know this weekend when I go 
home, I'm going to be spending some time with that shoe box of 
receipts.
  The flat tax is an idea that was promulgated by my predecessor here 
in this House, the former majority leader, Dick Armey. He wrote a book 
about the flat tax in 1995. I've read it, I embraced it, and I thought 
it was some of the smartest economic policy I had ever read because I 
had just lived through what I described as the Clinton paradox.
  In 1993, President Bill Clinton, in his first year of office, earned 
almost an identical amount of money that I earned in my medical 
practice back in Texas. Now, when the taxes were filed and the reports 
were given on how much Mr. Clinton had paid that year, he returned 
about 20 percent of his income in the taxes that he paid. We had earned 
an identical amount. When I did the same calculation on myself, it was 
32 percent. Why should two people who had an identical earning level 
pay vastly different amounts on their income tax?
  The fundamental unfairness of the system as it existed--better 
accountant, just simply differences in math, why should it account for 
that type of discrepancy?
  So this is a concept that I came to Congress and wanted to push. I 
have been anxious for this Congress to enter into the debate on 
fundamental tax reform. I am somewhat encouraged during the 
Presidential debates that we've heard over the past several months that 
Presidential candidates have been talking about fundamental tax reform, 
and the President himself has mentioned creating increased fairness in 
the Tax Code.

                              {time}  1850

  I'm all for that. I think that this is one way that this House could 
entertain at least having the debate and perhaps provide a way forward 
for a more sensible structuring of the payment of income taxes in this 
country.
  I'm so very happy tonight to be joined by another Member. Allen West 
of Florida has agreed to speak with us during this hour and share with 
us his thoughts on fundamental tax reform.
  I yield to the gentleman from Florida (Mr. West).
  Mr. WEST. Well, thank you, my dear colleague, Dr. Burgess of Texas, 
for allowing me to be here and talk about the reform of our Tax Code.
  When you sit back and you look at the progressive Tax Code system 
that we have here in the United States of America, we hear a lot of 
talk today about fairness and fair share and economic equality and 
shared sacrifice. But one of the things we have to come to understand 
is, when you look at the top 1 percent of wage earners in the United 
States of America, they're paying close to 40 percent of the Federal 
income taxes. When you consider the top 5 percent of wage earners in 
the United States of America, they're paying close to 58 percent of 
those Federal income taxes. The top 25 percent of wage earners in the 
United States of America pay 86 percent of the Federal income taxes.
  But of course now we're coming to understand that you have a large 
percentage of Americans--some say it's between 47 to 49 percent--that 
are paying absolutely nothing in Federal income taxes. It kind of 
reminds me, my dear colleague, of that movie, ``Ben-Hur,'' when Judah 
Ben-Hur was sent off to be on the Roman galleys. Of course the 
commander came down and he said very simply, ``Row well and live, 41.'' 
Of course we remember that beating.
  Well, what happens on that Roman galley if only 25 percent is rowing? 
That's the situation that we have here in the United States of America. 
We will never get to ramming speed. We will never fully recover this 
economy so that we can have the capital that is necessary out there, so 
that Americans can be able to pay for these exorbitant gas prices, so 
that small business owners can expand their business.
  So I think that now is the time to do exactly what you are talking 
about: Look at fundamental Tax Code reform so that we can eliminate 
things such as the death tax; we can eliminate things such as the 
dividends tax, which a lot of the seniors that I represent down in 
south Florida and pre-seniors, they depend upon those dividends. Why 
are we having these exorbitant taxes upon tax?
  So I think that this is a great opportunity to have this 
conversation. I am so honored that you allowed me to stand here and 
spend some time with you this evening.
  Mr. BURGESS. Well, very good. I hope the gentleman will stick around. 
I've got a few points I want to make, but at any point you feel like 
you want to expand upon something, please feel free to join back in.
  We often hear the saying that there's nothing in this world that's 
certain except death and taxes; they're both unavoidable. I will tell 
you, as a practicing physician for 25 years back in Texas, sometimes 
death seems a little less complicated than our Tax Code.
  But again, I draw your attention to H.R. 1040. This is an optional 
flat tax bill that I have introduced this year--and really for several 
Congresses now. It does have a number of cosponsors. We are yet to get 
to ramming speed, as the gentleman pointed out, but I think with the 
additional emphasis that has been placed on fundamental tax reform by 
the Simpson-Bowles Commission, by the Republican Presidential debates, 
I think this is a debate in which the American people are anxious to 
participate.
  Here's an interesting quote, and it's so interesting that I had a 
poster made of it. The tax system is so complicated that even IRS 
Commissioner Doug Shulman has said, ``I find the Tax Code complex, so I 
use a preparer.'' Wow, the very guy who's in charge of the whole 
shindig cannot do his own taxes, so he has to hire it out.
  So if this learned individual, who is the IRS Commissioner, cannot 
figure out how to do his own income taxes without a preparer, how in 
the world is the average Joe supposed to be able to figure this out? I 
ask that question because I've used this quote for a couple of years. 
Then last weekend, in The Dallas Morning News, I was struck by this 
quote, an article where just a regular small business woman was 
interviewed about how she could possibly

[[Page 3073]]

file her income taxes, which she didn't understand. She told The Dallas 
Morning News reporter:

       I don't care what the IRS says, it's complicated. It's much 
     more confusing than I understand. We don't know what we're 
     going to do.

  Now, I don't know what this says to you, but it certainly says to me: 
Time for a change.
  I yield to the gentleman.
  Mr. WEST. You bring up a great point, Representative Burgess. When 
you look at the fact that we have a Tax Code that is some 67,000 
pages--as a matter of fact, the American people know that even some of 
our colleagues up here on Capitol Hill in this very body, the House of 
Representatives, have had some issues with the Tax Code, also to 
include our own Secretary of the Treasury has seemingly had some issues 
with the Tax Code and the confusing nature of which it exists. So, 
you're right, I think it's an absolutely important time that we go back 
and we examine this Tax Code, maybe move away from this progressive Tax 
Code system and simplify it for the American people.
  As you know, if we can bring those rates down, if we can lower the 
deductions, if we can get rid of a lot of the loopholes on the personal 
income tax side and also the corporate tax side, think about what we 
can do for generating economic growth here in America.
  Mr. BURGESS. I think the result would be absolutely outstanding. One 
of my wishes is that I live long enough to see that glorious day when 
the chains are taken off the American economy, the chains imposed by 
the Tax Code.
  I actually wasn't going to bring up some of our esteemed heads of 
Federal agencies, even the esteemed heads of congressional committees 
last year charged with writing the laws that govern what other 
Americans are having to pay in their taxes. These individuals simply 
could not comply because it was too complicated. The very individual 
who was in charge of the committee with writing the tax laws found 
himself afoul of those same laws. The very head of the U.S. Department 
of the Treasury found himself afoul of some of the Tax Code because, 
again, he alleged the complexity in the system.
  So the Tax Code has grown by so much since it was introduced some 99 
years ago. When it was first created that infamous year, the Tax Code 
comprised a total of 400 pages. As the gentleman from Florida just 
mentioned, it has grown to almost 70,000 pages.
  Remember, one of the fundamental tenets of the American legal system, 
including the tax system, is that ``ignorance of the law is no 
excuse.'' Therefore, theoretically, every single American who is merely 
trying to comply with the law and get their taxes filed by April 17 
this year is required to be familiar with 70,000 pages of tax rules.
  Now, I don't do my own taxes. I don't trust myself to do my own 
taxes. I know I'm not smart enough. With four college degrees, I 
couldn't possibly handle this. But I doubt that even the tax attorney 
that I employ at great expense is familiar with all 70,000 pages, let 
alone the single mom back in Dallas, Texas, that I referenced.
  The complexity of the Tax Code is a consequence of countless 
deductions and exemptions aimed at steering a social agenda. That might 
surprise some people. The Tax Code is used to steer a social agenda. 
But it's supposed to be a Tax Code.
  So what does that mean?
  It means that the special interests are running rampant in the Code. 
Any time Congress wants to punish or reward--we call it incent 
behavior--we add either a credit or a tax to the IRS code. An example 
of this would be the, say, 23 new taxes that were included in the 
Affordable Care Act.
  Let me pause for just a minute. I get a lot of criticism from people 
who say: You're a doctor. You should have been for health care reform. 
But the bill that was signed by the President 2 years ago this March 
was not a health care bill; it was a tax bill.
  Now, how do I know that?
  I know that because, of course, the House passed its own bill on 
health reform, but when the Senate passed a bill on health reform, it 
wasn't the bill the House had worked on. It was not H.R. 3200. H.R. 
3200 passed in this house November 9, 2009, and it immediately went to 
the dustbin of history. The bill that ultimately became the Affordable 
Care Act was called H.R. 3590, and it passed the Senate famously on 
Christmas Eve.
  Oh, wait a minute. It was the Senate. Why was it a House bill number? 
Interestingly, H.R. 3590 started life as a housing bill, a bill to deal 
with veterans housing. It passed this House in July of 2009. I think I 
voted against it. I honestly don't remember. But H.R. 3590 had not one 
word about health care; it had not one word about taxes.

                              {time}  1900

  It goes over to the Senate, sits in the hopper, gets picked up by the 
Senate majority leader when he needed a vehicle to put a health care 
bill through the House. But he knew that it was fundamentally a tax 
bill and not a health care bill, so it had to originate in the House of 
Representatives.
  So here's a convenient bill number, H.R. 3590. Amend it, strip all 
the housing language out of it, and then you start putting the health 
care language in it. That's how we get a health care bill that is 
really a tax bill passed initially by the Senate and then subsequently 
ratified by the House in March of 2010.
  It was a dreadful process; and for anyone who remembers those days, 
it was certainly some pretty dark dealing from the bottom of the deck, 
and that's why the health care bill has been so unpopular. It was 
unpopular when it passed, and it stays unpopular to this day. And I 
hope that we are going to be able to get something done about it, if 
not this year, then next.
  But back to the Tax Code. Twenty-three new taxes in the Affordable 
Care Act because, again, Congress wants to punish their enemies or 
reward their friends.
  Well, how do you figure special interests like ethanol and the 
special treatment they get in the Tax Code?
  The results of these actions is a compilation of laws fraught with 
opportunities for, yes, avoiding taxes, but also perhaps just simply 
making a mistake or not understanding all of the loopholes. And all of 
this, then, comes down to the expense of fellow Americans.
  Now, everyone's familiar with the problems of the Tax Code. We all 
criticize it. It's almost like an American pastime to do that. But here 
are some interesting facts that further demonstrate why we need 
fundamental tax reform.
  Mr. WEST. And if I can, my colleague.
  Mr. BURGESS. I yield to the gentleman from Florida.
  Mr. WEST. I'd like to talk about one of the things you just 
mentioned, how we are using the Tax Code as a weapon for behavior 
modification. You just brought up exactly one of the things we have to 
be very concerned about is all of the new taxes that will kick in in 
the Patient Protection and Affordable Care Act from January 2013 out to 
January of 2018. One of those taxes even includes a real estate 
transaction tax.
  Now, why would we tax people for going out and selling homes and 
purchasing homes?
  Those are the types of hidden things that you find in that bill, and 
that's why we need to come back and simplify this Tax Code so that we 
don't have politicians using it for a certain ideological agenda.
  But there's another unintended consequence that I see occurring down 
in our district because of this very complicated Tax Code. Now, you 
have many different shady typed of operators out there that are talking 
about how they will help prepare that Tax Code.
  You know, when you drive by and you see the person spinning the 
arrow, or dressed up like the Liberty Bell, or something of that 
nature. And now we're finding that many of these places are rampant 
with tax fraud, that people are not getting their tax returns back.

[[Page 3074]]

  Now think about, just as you have recommended, a simplified Tax Code. 
Think about what is happening with tax fraud that is targeting our 
seniors so that now you have people that are going trying to file their 
tax form and they are finding out that someone has already done it 
under their presumed identity. If we could simplify this, a lot of 
those unintended consequences would not be happening.
  Mr. BURGESS. That's absolutely correct.
  Here's a few fun facts that I've compiled over the years on the 
income tax code. Each year, America spends 6.1 billion hours preparing 
their tax form. It turns out that's 254 million days. Who knew?
  The cost of compliance for Federal taxpayers filling out their 
returns and related chores was $163 billion in 2008. That's 11 percent 
of all income tax receipts. Think about that just for a moment. We 
could have an 11 percent increase in revenue to the Federal Treasury if 
these costs were not incurred.
  The Tax Code has grown so long that it's become challenging even to 
figure out how long it is. A search of the Tax Code in 2010 turned up 
3.8 million words. A 2001 study published by the Joint Commission on 
Taxation put the number at 1.3 million words. A 2005 report put the 
number of words had almost tripled since 1975. Such is the pace, the 
rate, at which new regulations are being added.
  A study done in 1998, when the forms were even less complicated, was 
surveyed by 46 tax experts. They kind of ran some hypothetical numbers 
on a hypothetical earning, and each expert came up with 46 different 
answers from 46 tax experts when determining tax liability. The 
calculations ranged from a low of $34,000 to a high of $68,000. The one 
who directed the test even stated that his computation is not the only 
possible correct answer. And yet we are asking our fellow Americans, 
our fellow citizens, to make this same type of leap of faith every year 
when they fill out these forms.
  They don't want to be non-tax compliant. They don't want to be 
perhaps afoul of the law. But the problem is it is so complicated that 
they literally have no choice.
  Mr. WEST. One of the pieces of legislation that we are currently 
considering is how do we spur on capital for our small businesses. Now, 
think about what you are recommending, Dr. Burgess, where you look at 
the personal income tax rate. And right now we have this progressive 
Tax Code system. What if we were to flat tax that out? One single rate?
  Think what that would do for small businesses who operate from that 
personal income tax rate, subchapter S and LLCs. Think about the fact 
of how they go from being at the top end, maybe 35, 38 percent of that 
bracket. Now we bring it down a little bit lower, like you suggest in 
1040.
  What happens with that capital now we've put back in their pockets? 
What can they do with those small businesses? What can they do with 
providing the right types of benefits for their employees? What can 
they do to expand that business?
  That's why what you're bringing up is one of the critical things we 
have to look at if we are truly going to turn around the economic 
situation here in America.
  Mr. BURGESS. Well, they might spend it on goods and services produced 
by other Americans, which would help their businesses; or they might 
reinvest it in their own business and perhaps hire a new person, even 
with the threat of the health care act hanging over their heads.
  The Tax Foundation estimated in 2007 that the average person spends 
79 days working to pay their Federal taxes, another 41 days for their 
State and local taxes. To pay the Federal taxes is more than people pay 
in health care, housing, and transportation.
  You can kind of see the return on investment for those other areas, 
but I'm not quite sure that people see the return on investment as 
they're forced to pay their Federal income taxes. We all complain about 
paying taxes; but the fact is, if the system was fair and simple, it 
would be easier to take.
  Now, Americans don't mind paying for roads. They don't mind paying 
for a strong defense or for health care. But if the family who lives 
next door is paying a smaller share of the tax burden than you, living 
right next door, are forced to pay at a higher rate just because they 
have a better accountant, that simply doesn't make sense to people.
  The Declaration of Independence states that all men are created 
equal, and I believe that should apply to our Tax Code.
  Time is precious. All of us don't have enough time to do all of the 
things that are in our daily living. We've got to earn a living, raise 
our family, discipline our kids, spend time with friends.
  And then the dollars-and-cents side of the equation, where time is 
money, valuable resources are squandered navigating the tax laws 
instead of growing the economy and instead of creating jobs.
  Taken together, this is a strong prescription for real change in our 
Tax Code. And the good news is we know it works. We've seen it before. 
We caught a glimpse of it in 1986 when Ronald Reagan cut the Code in 
half. As a result of that reform, the economy grew, revenues increased, 
jobs were created.
  I can't think of a better prescription for our economy than 
replicating the reform of the Tax Code on an even greater scale.
  So what to do? To me, the prescription is very simple. Flatten the 
tax, broaden the base, shift the burden away from families and small 
businesses. Simplify the Tax Code and make it easier for businesses and 
families to use.
  Now, even the National Taxpayer Advocate, Nina Olson, repeatedly 
states simplification of the Tax Code as one of her recommendations to 
her annual report to Congress. In 2009 she was quoted as saying, the 
complexity of the Code leads to perverse results. On one hand, 
taxpayers who honestly seek to comply with the law can make inadvertent 
errors, causing them to either overpay their tax, or to become the 
subject of an IRS enforcement action for mistaken payments of tax. On 
the other hand, sophisticated taxpayers often find loopholes that 
enable them to reduce or eliminate their tax liability.
  Now, look, this is the National Taxpayer Advocate, and she thinks 
it's best for our constituents if we simplify the system. So it makes 
sense for Members of Congress to take up that sentiment and work toward 
that goal.
  Mr. West, I can assure you your constituents and my constituents 
already know that.
  Mr. WEST. You're absolutely right. Our constituents back in south 
Florida--and of course we get a lot of email from all across the 
country, and, hopefully, we'll get some of that email tomorrow after 
this Special Order--but they understand a single flat rate.
  All flat tax proposals have a single rate, and usually that single 
rate is less than 20 percent. That low flat rate solves the problem of 
a high marginal tax rate by reducing those penalties against productive 
behavior such as work and risk-taking and entrepreneurship.

                              {time}  1910

  Also, you eliminate a lot of those special preferences because flat 
tax proposals would eliminate provisions of the Tax Code that bestow 
preferential tax treatment on certain behaviors and activities. Guess 
what? It reduces that influence of lobbyists up here that you already 
talked about.
  When you get rid of deductions or lower those deductions, credits, 
exemptions, and other loopholes, that also helps to solve the problems 
of complexity, allowing taxpayers to file their tax returns on that one 
simple form. That's why H.R. 1040 is a great step forward.
  Mr. BURGESS. Just a few years ago, a group called American Solutions 
conducted a nationwide poll on different topics relating to the Tax 
Code and on taxes and jobs. They crossed gender, ethnicity, economic, 
and party lines and discovered the following interesting facts about 
America:
  The majority of people in America, 69 percent to 27, think the 
American tax system is unfair;

[[Page 3075]]

  A majority believe that the death tax should be abolished, 65 
percent;
  A majority favor tax incentives for companies who keep their 
headquarters in the United States of America, 70 to 26;
  Taxpayers should be given the option of a single income tax rate of 
17 percent;
  Taxpayers would still have the option of filing their taxes in the 
current system if they chose to do so. That was a 61 percent favorable;
  The option of a single-rate system should give taxpayers the 
convenience of filing their taxes on a single sheet of paper. Guess 
what. That one was 82 percent of our constituents believe, our fellow 
Americans, believe they should be able to file their Federal income 
taxes on a single sheet of paper.
  America has spoken. The evidence is clear, and we need real change in 
our tax system. The encouraging news is that we do have a practical and 
effective blueprint for making this change across the board. The 
blueprint, of course, is the flat tax.
  In 1981, Robert Hall proposed a new and radically simple structure 
that would transform the Internal Revenue Service and our economy by 
creating a single rate of taxation for all Americans. Today, several 
States with their State income taxes have implemented single-rate tax 
structures for their State income taxes. From Utah to Massachusetts, 
citizens are seeing the benefit. In Colorado, a single tax rate 
generated so much income that the revenue--that lawmakers were actually 
able to reduce rates. In Indiana, the economy boomed after a single 
rate went into effect in 2003, and the following 3 years the corporate 
tax receipts rose by 250 percent.
  Here in Congress, there is no shortage of champions who've worked on 
the problem. I've been involved in this for a number of years, but 
prior to my coming here, Congressman David Dreier of California, the 
chairman of the Rules Committee, has spent a number of years working on 
this concept. Paul Ryan, our budget chairman, Paul Ryan of Wisconsin, 
chairman of the Budget Committee, has worked on this problem for a long 
time. Mike Pence of Indiana, who was our conference chair last term, of 
course my friend Allen West of Florida, all working to establish a 
simple tax rate structure for our country.
  Other Members are working on this in the Senate as well. And let's be 
honest: This is a time where Congress is not held in high regard, and 
this would be a tremendous deliverable for the House and the Senate to 
work together on simplifying the Tax Code and actually returning not 
just dollars to the American people, but giving them back their time 
that we rob from them every year when we enforce compliance with the 
Tax Code.
  Not everyone may agree on precisely where the flat tax rate should 
be. Seventeen percent, no deductions, is something that's been talked 
about for some time. I think that is certainly a system that is worthy 
of study. But if someone else wants to talk about a system with two or 
three rates or if they want to maintain deductions, we should be able 
to have that debate. We should have it civilly. It shouldn't be 
something that we clobber each other over the head about.
  But every American should bear this burden equally at the lowest rate 
possible, and everyone should be able to do their taxes without the 
help of a professional. People should be confident that when you earn 
the same income as the person across the street, you pay the same 
income taxes at the end of that year.
  Just by way of comparison, according to the Internal Revenue Service, 
there are 1.2 million tax professionals preparing taxes during the tax 
season, which is roughly equal to the population of the State of 
Hawaii.
  There are 950,000 doctors in the United States. Now, as a physician, 
I think this number is off; it's askew. Healers should not be 
outnumbered by tax preparers. It makes no sense. More people should go 
into medicine and less into tax preparation, and it will provide them 
the simplicity in the Tax Code. Perhaps that can happen.
  But let's also be honest. The accountants who do your taxes would 
much rather be talking to you about your long-term life planning, your 
planning for your retirement, your planning for covering expenses if 
you become disabled; they would much rather talk to you about life 
planning than they would talk to you about how they disrupt your life 
with the Tax Code.
  I yield to the gentleman from Florida.
  Mr. WEST. Thank you once again, dear colleague. You bring up a great 
point when you talk about your after years, your retirement years.
  But I think another thing we need to be considering is: How do we 
spur on investment in the United States of America? How can we spur on 
innovation and ingenuity? When you look at the flat tax, then you can 
get rid of double taxation of savings and investment, because flat tax 
proposals would eliminate the Tax Code bias against capital formation 
by ending the double taxation of income that is saved and invested.
  This means that we get rid of the death tax. We can get rid of 
capital gains tax. Definitely, we can reduce it. Most importantly, we 
get rid of the double tax on dividends.
  By taxing income only one time, a flat tax is far easier to enforce 
and more conducive to the one thing that we need in the United States 
of America right now: job creation and capital formation. It's all 
about having the right type of tax policies that emanate out of this 
body, the House of Representatives, and that's why we have to get 
behind your proposal.
  Mr. BURGESS. According to H&R Block, which is one of the major 
preparers of income taxes in this country, now 60 percent of Americans 
use some type of preparer for their income tax return, and quite likely 
that number is going to increase. In 1960, less than a fifth of 
taxpayers used tax preparers. In 2011, H&R Block garnered $3 billion in 
tax preparation revenue, up from $1.5 billion, so they doubled in the 
previous 10 years.
  I've got nothing against this company. I think they do a good job. 
I've got nothing against my own accountant. But it's an indictment of 
our system when a tax preparer has seen their revenues increase so 
much, and it really is a shame.
  The United States Congress has it within their power to change this, 
to transform this, and they simply will not do it, and instead they 
continue to create a system that is so complicated that more than half 
of the public feel the need to pay someone else just what they owe at 
the end of the year to Uncle Sam.
  I will tell you, it just simply does not have to be this complicated. 
Let me show you what is possible if we were to transform the system 
into a simple, single-rate tax.
  Here is the form. This is not the long form. It's not the short form. 
It is simply the tax form. Maybe someone at home should time me, But 
here you go:
  Write in your name, a little bit of identification data, your income, 
a line for personal exemptions, calculate your deductions from your 
personal exemptions, your taxable income, and calculate your tax by 
multiplying by a flat rate, subtract the taxes already withheld, and 
you're done.
  So what did that take? Thirty seconds, a minute if you write slow?
  This is not a complicated formula. This is not a complicated scheme, 
and most people would be able to do this themselves without a lot of 
outside work or outside preparation. So no more tax preparation bills, 
no more tax attorney bills. Gone are the hours of stressful research 
trying to figure out things like how your marital status will affect 
your return or how many children affect your return. No more headaches 
in trying to determine where the estimated tax payments go. No more 
Congress picking one group over another just because they've got a 
clever lobbyist to advocate on their behalf. Instead, we just deliver a 
simple system to the American people.
  Now, as you have said, a single-rate structure would eliminate the 
taxes on capital gains, taxes on dividends, taxes on savings. Those 
things should only be taxed one time. Personal savings would increase.

[[Page 3076]]



                              {time}  1920

  I will never forget the time during the prior recession in this 
country--the savings and loan debacle, the meltdown. I was in solo 
practice in Texas, and I got worried at one point that I was not going 
to be able to meet my obligations. As we emerged from that and as cash 
flow picked up a little bit, I thought, you know, I am going to keep 
money in certificates of deposit, enough to cover 3 months of operating 
expenses so that I'll never again have to worry about the dire wolf 
being at the door. So I did that, and I kept that money there for a 
couple of years.
  What I found out by doing that maneuver is that when that money 
eventually returned to the partnership and was distributed to the 
partners, we had paid corporate taxes on it at 38 percent, and then we 
had paid personal income taxes at 39.6 percent because we were all 
doing pretty well by that time. Needless to say, my partners were not 
amused by the fact that I had conjured up a scheme that I had thought 
would save us from ruin but that, in fact, exposed us to double 
taxation under the IRS code.
  Mr. WEST. You're absolutely right.
  When you think about last year, our GDP growth over the four quarters 
of about .4 percent, 1.0 percent, 1.3 percent, and the revised number 
in the last quarter of 3 percent, that's why, once again, economists 
will tell you that the two principal arguments for a flat tax are 
growth and fairness, which you just brought out.
  They are attracted to this idea because the current tax system, with 
exorbitantly high rates and discriminatory taxation on savings and 
investment, reduces growth; it destroys jobs and it lowers incomes. A 
flat tax would not eliminate the damaging impact of taxes altogether; 
but by dramatically lowering rates and by ending the Tax Code's bias 
against savings and investment, it would boost our economy's 
performance, especially when we compare it to the present Tax Code.
  I think, Dr. Burgess, my dear colleague, if you look at where flat 
taxes have been instituted, you've seen GDP growth in those countries. 
So what holds us back from doing something that is just common sense?
  Mr. BURGESS. The country of Estonia was a case in point a few years 
ago when they reported on their experience with the flat tax.
  I think this is a good system, but do you know what? I am willing to 
admit to you that I do not know the best for every family in America. 
Some people would criticize this system by saying, Well, wait a minute. 
I need that income tax deduction for my home mortgage. I need that 
income tax deduction for charitable donations. That may be right; but I 
do know this, that you should have the option of saying, I accept a 
single flat-rate tax, and I am going to give up those other deductions.
  It should be your option. It should not be the United States Congress 
that is dictating to each and every American what they shall and shall 
not do. If you have constructed your life by living around the IRS 
code, then you should be able to continue doing that. If that is the 
reason by which you've made economic decisions in your life, you should 
be able to live by those decisions. Congress should not be disruptive 
in this process.
  I, personally, would give up all of the itemized deductions that I 
keep in order to get rid of having to keep up with those itemized 
deductions. Would I still give money to charity? Absolutely. Would I 
still turn stuff over to the Salvation Army and to Goodwill? 
Absolutely. It's no fun keeping up with those things and then having to 
report them to my accountant, and I always worry that I've left 
something off and that I'm not getting all that's owed to me off of my 
income tax return.
  I would so much rather have a system that was simple and with which, 
within a few hours every spring, I could be done. The United States 
gets its money. I get the satisfaction of knowing I've done it 
correctly, that I'm not going to jail for some perceived 
misconstruction on the Tax Code, and that no others have gotten a 
better deal than I have because they were more clever about how they 
declared those charitable deductions, for example.
  Let me give you an example of the mortgage tax deduction, because I 
do have a lot of friends who are in the real estate business, and 
they're concerned about losing that home mortgage deduction. It's one 
of the bedrocks on which the economy has been built over the years:
  If you have invested in a starter castle in California and if your 
house payments are largely of interest and not much of principal, you 
probably don't want to do this because that number is likely very high; 
but if you live in Fort Worth or San Antonio, Texas, where the average 
home mortgage is much, much smaller, if you do the numbers, if you run 
the numbers, you'll find that the amount of money you actually get to 
keep from that mortgage income tax deduction is actually fairly modest.
  I would give that up in a heartbeat to be out from under the tyranny 
of the shoebox full of receipts, but I fully understand how some 
families have made the decision. A home is a pretty important 
investment. After all, I get to write off the cost of the mortgage home 
deduction, so I will make this investment in this size of a home. It 
would be wrong for the United States Congress to say, as of next year, 
you don't get to do that anymore. The real estate market has already 
suffered, and it would suffer worse if Congress were to make a sudden 
decision like that.
  So make it optional. You can either stay in the Code and keep doing 
what you've been doing, or you can evolve and come into the promised 
land of a flat tax and give up that shoebox full of receipts. The 
important thing here is it's your choice; it's your option.
  Now, I will say that once you opt into the flat tax, you can't go 
back and forth into the Code and out of the Code depending upon what 
kind of year you have and what kind of investments you make. Once you 
make the decision to go into the flat tax, there you'll stay. I fully 
believe that, even though some people might not do as well under a flat 
tax system, because it is so much simpler and because it returns time 
to their lives, they will opt for this; and as a consequence, we will 
see the number of people participating in the IRS Code dwindle down to 
an ever-smaller number until, one day, it just vanishes under its own 
weight and the country is completely freed from the tyranny of the IRS 
Code.
  Mr. WEST. You're absolutely right.
  I think the most important thing we have to come to understand is 
that this time belongs to the American people. The money, the 
resources, belongs to the American people. Let's give them the option 
to do what is best for them in their lives--the option of going to a 
flat tax or staying in the current progressive Tax Code system with the 
options of the mortgage interest tax deduction, the child tax credit, 
charitable contributions, as we reduce those deductions.
  But let's start treating the American people as adults. The key thing 
that has to accompany this is we have to reduce the size and scope of 
government as well because, as we start to focus more so on Main 
Street, as we start to focus more so on the hardworking American 
taxpayers and what's best for them, then we can have that investment at 
their level. We can have the growth at their level.
  One of the things that really does trouble me is that when you drive 
around Washington, DC, you see a lot of construction cranes. Business 
is good up here, which means that there are fewer pockets of the 
hardworking American workers, that there are fewer pockets of the small 
business owners; and this is the means by which we unlock that 
entrepreneurial spirit that will grow this economy.
  So that's why I hope that, in this Congress, which is one of the 
reasons I came here, we do those big reforms that show the American 
people that we're serious about turning this economy around and that 
we're serious about creating the right type of policies that set the 
conditions for job creation.
  Mr. BURGESS. Our time here has almost concluded.
  The gentleman is exactly right. All of the improvements in the Tax 
Code

[[Page 3077]]

really become meaningless if we don't reduce the size and scope and the 
footprint of the Federal Government. You're right about the cranes that 
are all over town. But after those buildings are built, let's be honest 
in that the money invested in the Federal Government doesn't really 
produce all that much, does it? We don't make things here during the 
day other than laws and regulations that interfere with other people's 
lives. We need to have this government smaller and more manageable.
  We talk a lot about transparency, and I think transparency is good. 
The problem is you have something that is so complex, like the IRS 
Code, that even though you may have the ability to look inside it, you 
won't know what you're finding when you get there. If you have a system 
that's as simple as this, people are able to know what their government 
is costing them and what they are getting from that bond with the 
government.
  If they didn't like that equation, they could change. They could 
change their Members of Congress; they could change their Senators; 
they could change their President. That's the beauty of living in the 
representational Republic that we all know and love here in the United 
States of America, and it is the thing that, arguably, has made us 
great--government with the consent of the governed. Wouldn't it be 
great if that governed knew just exactly what it was costing them, and 
then perhaps they could find out where those dollars were going.
  I mentioned earlier that Budget Committee Chairman Paul Ryan has 
called for broadening the base and lowering the rates. Obviously, I 
want to work together with him. Ways and Means Chairman David Camp has 
promoted the simplification of the Tax Code. The President, himself, 
through the Bowles-Simpson Commission, talked about it. Whatever the 
tax proposals are that we look to in the future, we need to remember 
that a flat-tax system could be less costly, saving the taxpayer over 
$160 billion a year, reducing tax compliance costs by over 90 percent, 
with a resulting increase in personal savings.
  Here you go. How about a debt-free stimulus package, a gift to the 
American people, that could have an immediate effect on the American 
economy. American Solutions looked into this question in 2009: 80 
percent of Americans favor an optional one-page tax form with a single 
rate. Who could complain about making something easier? And we've got 
70,000 pages of the Tax Code and more on the way this December when we 
get through with the so-called ``lame duck session.'' I don't know 
about you, Mr. West, but it scares me half to death to think about 
what's coming at the end of this year. The current process comes at a 
cost that's way too high for the American people and that costs way too 
much time.

                              {time}  1930

  Mr. WEST. Thank you so much to my colleague from Texas, Dr. Burgess, 
and I think the seminal argument is this: We're talking about economic 
freedom for the American people, as opposed to economic dependency upon 
government. This incredible, exorbitant system that we have, it is 
complex to the point where it is causing more pain for the American 
people and causing them to have the freedom that they deserve.
  Mr. BURGESS. Mr. Speaker, of course, I know I must direct my comments 
to you. April 17 is coming up. It's rapidly approaching. I know people 
are focusing and will begin to focus more and more on this issue for 
what remains of the month of March and the first couple of weeks of 
April, because they'll be having to arrange their own taxes, deal with 
their own shoe boxes full of receipts.
  This is the time to make the point that it is time to return time and 
money to the American people. Let's get behind the flat tax.
  I yield back the balance of my time.

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