[Congressional Record (Bound Edition), Volume 158 (2012), Part 4]
[House]
[Pages 5586-5594]
[From the U.S. Government Publishing Office, www.gpo.gov]




             GOP FRESHMAN CLASS ON COMPREHENSIVE TAX REFORM

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 5, 2011, the gentleman from New York (Mr. Reed) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. REED. Mr. Speaker, I rise tonight to join here this evening with 
six or more of my colleagues from the freshman class to talk about a 
very important issue that we face in this Nation, and that is the need 
for our country to engage in an open and honest debate about 
comprehensive tax reform as we come to the end of the year with the 
expiration of our individual tax rates, our corporate tax rates, and 
the potential exposure of the estate tax being reinitiated at levels 
that would decimate family farmers and families across all of America.

[[Page 5587]]

  I am pleased to be joined by so many of my colleagues who understand 
the importance and the critical nature of this issue to put us on a 
path to make America competitive when it comes to the world economy, 
and also to come up with a Tax Code that is simpler and easier for 
people to understand and that we don't have to spend thousands of 
dollars, hundreds of dollars, paying advisers to fill out forms just to 
meet the obligation of a tax burden that is out of control because of 
spending that is completely causing this Nation to create a national 
debt of $15.6 trillion. As we go forward in this conversation, let us 
be open, honest and fair about the issues before us.
  With that, I would like to yield, Mr. Speaker, to a good friend of 
mine from Georgia.
  Mr. AUSTIN SCOTT of Georgia. Thank you. I will tell you the key to 
this is open and honest debate.
  We hear a lot from the President and from Democrats today about 
America's millionaires not paying their fair share. And they, quite 
honestly, quote Warren Buffett and talk about the Buffett rule. And 
certainly I'm happy that Mr. Buffett lives in a country like I do where 
he's able to achieve what he has. But Warren Buffett is a billionaire, 
not a millionaire.
  Now, let's talk about who America's millionaires are. In my part of 
the country, farmland sells for about $3,500 an acre. So if you own 285 
acres of land that you farm, you're a millionaire. In other parts of 
the country, it may sell for as much as $15,000 an acre. And if you're 
a farm family with 66 acres, that's one of America's millionaires.
  These are hardworking, middle-income Americans who have saved all 
their lives to pay for the farm. We need to work to protect these 
family farms so the next generation can carry on their legacy. We hear 
a lot about that--protecting the American farmer--from the other side 
of the aisle. Yet they propose tax policies that do the exact opposite 
and very much would destroy our agricultural industry and the safety 
net that it provides this country.

                              {time}  1740

  In fact, if you follow their tax policy, America's farmers will 
simply be another statistic. What statistic? As it stands today, 
approximately 30 percent of family businesses will be passed on to the 
family's second generation--only in America--12 percent will make it to 
the third generation, and only 3 percent of all family businesses make 
it to the fourth generation or beyond. For a family farmer, for a small 
business owner, that's very disheartening. However, if the President 
has his way, those percentages will be even lower.
  On January 1, 2013, the death tax will rise from the dead again, re-
ordained by President Obama, and return with a rate of as much as 55 
percent. Again, in my part of the country, a middle-income family 
farmer in my part of the country who owns more than 285 acres of land 
could be assessed a death tax of as much as 55 percent of what they try 
to leave to the next generation. That's what the President defines as 
the family farmer's ``fair share.''
  Mr. Speaker, family farms are a significant and reliable food source 
for our country and the world, and they play a vital role in our 
Nation's national security. However, under the President's death tax 
proposal, family farmers will be forced to downsize their operations 
chunk by chunk, selling their assets to pay for what amounts to nothing 
other than the seizure of the family farm. Many may shut down and have 
to sell everything just to cover the cost.
  I think of the song by Crosby, Stills & Nash that said: ``Tax the 
rich, feed the poor, 'til there are no rich no more.'' This is 
certainly the attitude of the current administration.
  The truth is you simply can't feed the hungry without the family 
farmer. They play a vital role in everything we are and do as 
Americans.
  Mr. Speaker, you want more hungry people in America? You want a 
decline in family businesses and higher unemployment? Follow the 
President's proposal on the death tax, because that's exactly where it 
leads. It's the seizure of assets of the family farmers and the family 
businesses in America. I promise you, if that happens, there will be 
more hungry people in America.
  Mr. REED. I so appreciate my colleague from Georgia, the president of 
the freshman class, for his comments on the family farm and standing up 
for family farmers all across America.
  One thing that we're going to face at the end of the year with the 
expiration of these tax rates and a need for us to commit firmly to 
comprehensive tax reform, I hope we all adopt a policy, a policy that I 
have heard from folks throughout my district, across my great State of 
New York, and across this entire Nation, and that is a firm commitment 
that they're looking for from Washington, D.C., to adopt tax policy 
that is going to be certain, that we adopt tax policy that is going to 
be permanent. Because as we ask our local manufacturers, our job 
creators of the United States of America, they need to know that when 
they make these decisions on millions, if not billions, of dollars in 
local plants to put people back to work that the rules of the road are 
going to be clear and they are going to be certain and they are going 
to be permanent so that they can rely on that certainty, so that they 
can make the investment necessary to get this economy going forward 
again, and making sure that they can rely on those rules and that they 
won't change midstream as we see with tax policy that extends on 10-
year windows--or tax extenders, the 101 tax extender policies that 
either expired last year at the end of 2011 or will expire at the end 
of 2012, things as basic as the research and development tax credit for 
our manufacturers across America. Those types of policies need to be 
done on a permanent nature so that when these investment decisions are 
made, the people that are making those choices know that there will be 
a forum and a platform on the American market that is secure, certain, 
and will allow them to make sure that there is a good thought process 
put in place as they make those investment decisions.
  At this point in time, I would love to yield to my good friend from 
the State of Pennsylvania, one of our leaders in the freshman class, 
Mike Kelly.
  Mr. KELLY. I would like to thank my friend from New York (Mr. Reed).
  Mr. Speaker, I rise today to talk about the things that are certain 
in life. People always say there's two things you can be certain of. 
One is death and the other is taxes. There's another one that we're 
going to be certain of after January 1, and that is you're going to 
continue to pay taxes after death.
  In a government that borrows 42 cents of every dollar it spends, it 
comes as no surprise that we can't even let the dead relax. They're 
still going to be taxed beyond what they ever could have possibly 
imagined in real life.
  So we look at a country that now has the highest corporate tax in the 
industrial world; we're going to have the highest or the second highest 
death tax in the world. And why? Because of a town that's never learned 
to do what it tells all of its citizens to do: live within your means, 
play fair, pay your fair share.
  Well, I would just suggest to you that, in addition to that, what 
we're telling people is, look, you don't have the certainty anymore 
that you have planned your estate the right way, because after January 
1 this government is going to come up with heavier taxes on its 
citizens--not the ones that are on the ground and living, but the ones 
that have already died, that have paid their fair share, that have 
played within the rules, that have done everything they're supposed to 
do as good citizens of this great country. They're going to be told at 
the end of their life that you cannot go to your final resting place in 
peace. No. Everything that you have accumulated in your life and 
already paid taxes on is going to be taxed again.
  And who is it that's going to face that burden? All those people that 
we tried to work so hard for, that we tried to put things aside for. 
Our children and our grandchildren are facing a hockey stick of 
spending that goes up and off the charts. Again, a country that cannot 
live within its own means,

[[Page 5588]]

and yet an administration that tells its citizenry you have to pay your 
fair share, the rich are not paying their fair share.
  Listen, farms are not only going to go away because those assets are 
going to have to be liquidated to pay death taxes, small businesses are 
also going to be harmed by this new tax. They're going to have to 
liquidate in order to pay the estate taxes that are left over after 
somebody has worked their whole life, paid their fair share, done what 
they're supposed to do, lived within their means. But that's not 
enough. That's not enough for this administration. They will continue 
to rip off from your pocket after death that which you have worked so 
hard to earn over your lifetime.
  There is nothing more prickly; not even the sharpest cactus in the 
desert has more prickly pins on it than this law and this rule in the 
way it's coming.
  So I would just say to all my friends, if it's really about being 
fair, if it's really about playing by the rules, if it's really about a 
stewardship where you take what is given to you and you pass it on to 
the next generation in better shape than you got it, my goodness, how 
have we strayed so far from a basic American principle as that? How 
have we strayed so far as to tell those who have worked so hard in 
their lifetime that even in their death they cannot rest, they cannot 
be assured of that which they have worked so hard in order to pass on 
to the next generation is going to be vulnerable? Fifty-five percent 
tax on your estate.
  The liquidation of family farms, the liquidation of family 
businesses, the liquidation of the dreams of our children and 
grandchildren, all of them go up in smoke as this tsunami of tax 
increases that this administration will be forcing on the American 
people after January 1.
  I thank my friend from New York for bringing this issue up.
  Mr. REED. Well, I thank the gentleman from Pennsylvania for joining 
us here tonight.
  In listening to your comments, I wholeheartedly agree that what we're 
seeing at the end of this year, if Washington, D.C., does not get its 
act together--and we as the freshman class, I think, are doing a great 
job in holding this city accountable and really changing the culture of 
Washington, D.C. The job has just started. We have a lot more work to 
do, and we'll continue to go forward on that mission.
  But what we have to commit ourselves to is, if we do not act by the 
end of the year, the largest tax increase in the history of America 
will go into effect with the expiration of the individual tax rates, 
the reinstatement of the estate taxes at levels of 55 percent and 
beyond, and we need to act.
  Mr. KELLY. Will the gentleman yield?
  Mr. REED. I yield to the gentleman from Pennsylvania.
  Mr. KELLY. I think the other thing that is very important to 
understand is that we talk about competing in the global economy. Now, 
our friends to the north in Canada do not have a death tax. Our friends 
to the south in Mexico do not have a death tax. This, again, is an 
example of an administration that is so out of touch with the real 
world, that has never had any skin in the game, never understood that 
in order to produce a profit you must first know how to create one and 
not just how to tax it. But we are, again, taking ourselves out of the 
global economy and we are telling our people, You know what? You may be 
better off living in Canada or in Mexico, especially if you've 
accumulated anything in your lifetime, because you're not going to be 
able to pass it on to the next generation.
  Mr. REED. I so appreciate that comment.
  With that, I would like to yield to another colleague of ours, a 
great Member of the freshman class from Florida, Colonel West.

                              {time}  1750

  Mr. WEST. I thank the kind colleague of mine from New York (Mr. 
Reed).
  Mr. Speaker, as a field artillery officer in the United States Army, 
I learned a thing or two about weaponry. Our success on the 
battlefields of Desert Storm and Desert Shield depended on choosing the 
correct artillery for each specific objective, whether it was halting 
the enemy's forward progress, diminishing the strength of its forces, 
or completely destroying its capabilities.
  Although he has never served our country in uniform or risked his 
life to defend its freedoms and liberties on distant shores, it seems 
President Obama understands a thing or two about weaponry as well. But 
in the President's case, Mr. Speaker, the current weapon of choice is 
tax policy, and the enemies are small businesses, investors, 
entrepreneurs, and corporations, who seemingly are deemed undesirable. 
In short, these are the economic engines of our Nation.
  The President's planned tax increases seemed designed solely to 
demonize the rich and use them as a propaganda tool to score political 
points. But the collateral damage of these policies will spread far and 
wide into the heartland of America. After all, the 160 percent increase 
in Federal cigarette taxes put in place in 2009 by President Obama and 
his administration, certainly affects those earning far less than 
$250,000, despite his promise not to raise their taxes.
  The fact is, Mr. Speaker, next year, unless changes are made in the 
Tax Code, Americans will be bombarded with the heavy artillery of the 
largest tax increase in the Nation's history, causing massive economic 
injury and destruction.
  To begin with, if the Bush-Obama tax rates are allowed to expire, the 
current tax brackets of 10 to 35 percent will rise to 15 to 39.6 
percent. Other tax provisions scheduled to disappear that will hit 
ordinary Americans include the American Opportunity Tax Credit--up to 
$2,500 per student for qualified college costs, a tax exclusion for 
forgiven mortgage debt, and a tax credit for employer-provided child 
care.
  Children of farmers, as my colleague from Georgia talked about, and 
small business owners who wish to continue the legacy of their parents 
will find it increasingly difficult to do so, as the death tax 
exemption will shrink from $5 million to $1 million. Further, inherited 
assets exceeding that amount will be taxed at a maximum rate, Mr. 
Speaker, of 55 percent, up from 35 percent, and a 5 percent surcharge 
on estates over $10 million.
  Investors will be battered with a capital gains tax increase from 15 
percent to a maximum of 25.8 percent. Seniors who rely on their 
dividend returns will also be hampered. Stock dividends, currently 15 
percent, will be taxed as ordinary income with a top rate of 43.4 
percent. That's 39.6 percent income tax plus a 3.8 percent tax on 
investment income proposed in the President's health care law.
  In the last few months we've heard a lot about fairness from the 
President, Mr. Speaker, especially when it comes to wealthier people. 
In President Obama's own message about his proposed budget for fiscal 
year 2013, he says everyone must shoulder their fair share. But how, 
Mr. Speaker, does he define fair when 47 percent of wage-earning 
households pay zero Federal income taxes, while the top 25 percent of 
wage-earning households pay 87 percent?
  Besides, the spending proposed in the President's fiscal year 2013 
budget is far beyond what the revenue base can support. It would be 
mathematically impossible to increase taxes on the Nation's highest 
earners to close the future trillion dollar-plus deficits if spending 
continues as President Obama has planned.
  And according to a report by the Joint Committee on Taxation, the 
highly touted Buffett rule would raise a paltry 30 to $40 billion over 
the next 10 years.
  Mr. Speaker, during that same timeframe, President Obama's budget 
would create nearly $7 trillion in new debt, which means the Buffett 
tax would lower that debt by less than half a percent. This is clearly 
not sound fiscal policy. It's the misguided policy of economic 
fairness, and it is just as Frederic Bastiat stated in his essay, ``The 
Law'': It is legal plunder under the

[[Page 5589]]

 guise of benevolence and misconceived philanthropy.
  While the President has some understanding of the destructive 
capability of his tax policy, he demonstrates little understanding of 
battlefield strategy, because those who are on the receiving end of an 
artillery barrage seldom stay in place.
  When businesses and individuals are being bombarded with higher tax 
rates, they will simply change their behavior. Investors will shift 
money from taxable to nontaxable investments. Total economic activity 
slows, as there is less incentive for employees to work extra hours, 
while smaller, potential returns mean investors and venture capitalists 
are less willing to shoulder risks. All taxpayers have a greater 
incentive to shield their income.
  Obviously, President Obama is no student of history either, Mr. 
Speaker, for if he were, he would know revenues increased under 
Presidents Kennedy, Reagan and yes, George W. Bush, at least until the 
2007 financial crisis, when tax rates were reduced.
  But increasing tax revenue does not appear to be the President's 
strategic objective. If it were, he would be recommending policies to 
help increase the revenue base by optimizing the regulatory and tax 
environment to encourage businesses to invest, grow, and hire.
  The House of Representatives, Mr. Speaker, has passed 26 bills to do 
just that, but they currently languish on the desk of Senate Majority 
Leader Harry Reid, who will not bring them up for vote in the Senate.
  Instead, President Obama seems determined to punish and wipe out 
economic success in this country, leveling tax weapons of mass 
destruction on all taxpayers. This is a battle our Nation can ill 
afford to lose. We must reform our Tax Code, and we must restore the 
conditions for economic success for all our citizens because truly, 
they are taxed enough already.
  Mr. Speaker, unleashing the individual industrialism and 
entrepreneurial spirit of Americans does not come from capital 
consolidation in Washington, D.C. The American people do not want more 
Solyndras and GSA boondoggles.
  The American people want economic security, which comes from this 
body becoming responsible stewards of their tax resources, not taking 
more from them based upon divisive, socioeconomic rhetoric.
  The American people, Mr. Speaker, want a constitutional republic, not 
a socialist, egalitarian, welfare nanny state. The American people want 
an economic future so bright that they will have to wear sunglasses.
  Mr. REED. I thank my colleague for his sentiment and the words that 
you expressed. And I'm reminded that we here in Washington cannot be 
like my children when they used to sit in the TV room and watch their 
cartoons, such as Teletubbies and the other ones that are there. We 
need to grow up. We need to deal with this issue once and for all.
  And one thing that I'm repeatedly reminded of when I hear the 
President's proposal about the top 2 percent need to pay their fair 
share. I try to deal with this issue in an open and honest way. And if 
you do the math on that proposal, you raise $70 billion over 10 years. 
We have a $1.3 trillion deficit every year. The math just does not add 
up.
  And so I always have to remind people as I engage in this debate 
about the need for comprehensive tax reform that the solution to our 
national debt problem is not going to be a revenue solution unless we 
grow this economy. Raising revenue through increasing taxes is not 
going to bridge--as my colleague said, mathematically, it is impossible 
to raise taxes enough to get to that $1.3 trillion number.
  That's why I'm always reminded that this is a spending problem at its 
root cause, and that's why we need to continue to focus on that arena.
  And I would also like to echo my colleague from Florida in his words. 
Essentially, this is going to boil down, in this November 2012 
election, to two strategies of moving forward. And if I heard your 
statements and your words correctly, we essentially have one strategy 
that is going to be deployed by my colleagues on the Democratic side, 
on the other side of the aisle, who say it needs to be a revenue-based 
solution.
  But that is code word back in my living rooms in my district for, 
we're going to raise taxes to deal with this situation. And I think 
this freshman class and the people that have joined us here on this 
side of the aisle in the Republican Party have firmly committed that 
the solution is on downsizing government, cutting spending, adhering to 
what our Founding Fathers believed in and put forth in the 
Constitution, a limited Federal Government, not an all-encompassing 
Federal Government that has grown the debt to the level that we see 
today.

                              {time}  1800

  I am also firmly committed to not engaging in the debate as to who 
caused it be it which President from whatever party. That is not the 
solution moving forward, engaging in the blame game. It is about 
recognizing the problem is upon us, whoever caused it, Democrat or 
Republican, and let's solve it.
  When we come to November of 2012, the American people will not be 
stupid. They are not stupid individuals. They will see that the math 
doesn't add up with a solution based on my colleagues on the other side 
of the aisle of increasing taxes to bridge this national debt problem. 
It is about truly being fiscally responsible and getting our fiscal 
house in order.
  Does my colleague have any additional comments?
  Mr. WEST. I just want to say you are absolutely right, and I thank 
you for yielding an additional minute.
  It is truly the choice between two futures: it is a future of 
economic freedom, or a future of economic dependency. It is a future 
that talks about the entrepreneurial will and spirit and the individual 
industrialism of the American people or collective subjugation. I think 
that the American people will make the right choice in November 2012.
  Mr. REED. I so appreciate it, and I wholeheartedly agree with that 
sentiment.
  At this point in time, I would like to yield to my good friend from 
Kansas (Mr. Huelskamp).
  Mr. HUELSKAMP. Thank you, Congressman Reed. It is a very timely 
topic.
  I come from western Kansas, and big skies and big dreams, and big 
visions; and I tell you, we can see an approaching storm brewing 
sometimes hundreds of miles away. You can see the dark clouds. You can 
feel the gusting winds. Though the skies are wide open, sometimes it's 
hard to predict which path the storm will take.
  We've heard tonight, and I'll say it again, there is a storm brewing 
here in Washington that may seem like miles, perhaps hundreds of miles, 
away; but it's not. Unlike our Kansas storms, it's pretty evident this 
storm is going to hit America unless this Congress and this President 
act.
  Every American will pay higher taxes next year. Let me rephrase that. 
Every tax-paying American--because you know half of Americans pay no 
Federal income taxes. So I'm talking about the half that actually pay. 
Income and the capital gains rates will go up; the death tax will go up 
as well. The child tax credit and the standard deduction will decrease. 
All of this is certain to happen unless we act.
  It's been mentioned that this would be the biggest tax increase in 
American history. I think it actually might be the biggest tax increase 
in human history. It could be. We'll look forward to those figures. Our 
economy is just starting to show signs of life again, however weak. Can 
you imagine what it will mean for the economy if taxes go up at the end 
of the year? Can you imagine where the stock market is going to go in 
the final quarter if Congress goes home before the election without 
acting to extend the lower capital gains rate?
  I know my colleague, Colonel West, noted the President might not be a 
great student of history. Actually, all he has to do is study his own 
comments

[[Page 5590]]

and go back less than 2 years ago. The President said, ``You don't 
raise taxes in a recession.'' That's President Obama, the President of 
our country, if he could study his own history. I agree with him. I 
don't agree with him on a lot of things. But he said you don't raise 
taxes in a recession.
  Sure, we might have emerged from a formal definition of a recession, 
but I don't think there is anyone out there who believes the economy is 
growing by leaps or bounds, and I don't think you can shoehorn a 
massive tax increase onto an already overburdened American economy. You 
just can't.
  America needs and deserves a Tax Code that's not premised on pitting 
American versus American in a class warfare struggle. Unfortunately, 
that seems to be the only real solution this President has. The so-
called Buffett rule is just a gimmick trying to distract the American 
people from the reality that he wants the biggest tax increase in 
American history, and he's going to get it unless we can change this 
before the end of the year.
  I have proposed a bill called the American Opportunity and Freedom 
Act, which would make permanent the Bush-Obama tax cuts. Yes, the Bush-
Obama tax cuts. Look back at history. This President extended the tax 
cuts. He signed them. They are the Bush-Obama tax cuts.
  Remember, he called those tax cuts ``a substantial victory for middle 
class families.'' This was President Obama out on the campaign trail, 
today I believe, saying we have to extend these tax cuts. I agree.
  I also support comprehensive reform, including the Fair Tax. I think 
my colleague from Georgia is going to visit about that, I hope. I've 
cosponsored the Jobs Through Growth Act and numerous other proposals to 
make our Tax Code fairer, flatter, and more simple.
  The bottom line is we need to do something now. Our Tax Code should 
not outpace the Bible in number of words. It certainly doesn't outpace 
the Bible in wisdom, and families shouldn't have to read 100-page 
booklets to fill out their tax return. I'm told if you call the IRS one 
hour, you call the next hour, you call another hour later, you will get 
a different answer every time you call in, because even the folks who 
are implementing the Tax Code, they don't know what the answer is.
  Americans out there are just trying to do the right thing, trying to 
do their fair share, Mr. President. Your IRS agents can't even tell 
them the right or same answer.
  The most fundamental purpose of the Tax Code is to raise enough 
revenue in order to fund essential functions that fall within the 
purview of government.
  I just got off a Skype phone call with fourth and fifth graders in 
Peoria, Kansas. They had a lot of great questions. I thought the best 
question was from a young man who said, Why are taxes so high? Of 
course, he probably doesn't pay much taxes. He probably heard that at 
home. The answer I gave him was this: because we spend too much money, 
and on top of that, we borrow another $1.1 trillion under the Obama 
budget. So not only are taxes high; they're still borrowing money so 
they can spend it. It comes down to how much we spend.
  I think we can agree that Washington's problem isn't not enough 
revenue, it's too much spending.
  Washington has created this storm. But unlike the tornadoes that 
sweep across the plains, we have an opportunity to avoid the 
devastating consequences of the approaching storm that's coming at the 
end of this year.
  I'm excited to be here to talk about that because I must tell you, I 
am optimistic. We can solve this problem. We can take advantage of the 
approaching storm, actually do comprehensive tax reform that can change 
the future for all Americans. We can pull this economy out of the 
doldrums, go back to the days when the economy actually grew, when jobs 
were being created.
  But in today's environment, the uncertainty created by this 
administration and by a tax law that's not permanent, that is dragging 
down our economy. We can't avoid that, and we can do much better. I'm 
happy to be here tonight to talk about that.
  Mr. REED. I thank you so much, my colleague from Kansas, for coming 
down this evening to talk about this issue. You are exactly right. When 
I listened to the comments you had to offer, and as we go into this 
debate about comprehensive tax reform, I think there is somewhat of an 
agreement on both sides of the aisle that tax reform needs to be done 
because our Tax Code is way too complicated--70,000 pages of tax 
regulation and statutory language, legislation on top of legislation.
  We need to firmly attack that Tax Code in a way that focuses on the 
primary goal of what our Tax Code was originally enacted for, to raise 
revenue, not to engage in policy determination or picking winners or 
losers through the Tax Code and advancing social policy through the Tax 
Code, but focusing on a Tax Code that raises revenue to cover our 
lawful, legitimate government expense as put forth in the United States 
Constitution of a limited Federal Government.
  If we adhere to that principle and that goal, I am confident that 
both sides of this aisle will come together and achieve what could be 
one of those historical moments in this Chamber again where we set the 
country on a path to a more competitive and prosperous future moving 
forward.
  With that, does the gentleman from Kansas seek recognition?
  Mr. HUELSKAMP. If I might ask you a question, Have you read the 
entire Tax Code?
  Mr. REED. I've tried. I've read numerous parts of it especially when 
I'm up late at night and I can't sleep. It seems like a panacea for 
those sleepless nights because it immediately puts me back to bed.
  Mr. HUELSKAMP. It would probably be my guess that there isn't a 
colleague of ours that has read this Tax Code. Now, there are probably 
some special attorneys in this town that claim to have read that whole 
Tax Code. As you mentioned, how many pages?
  Mr. REED. Seventy thousand.
  Mr. HUELSKAMP. Seventy thousand pages. It's my understanding it's 
3\1/2\ times the size of the Bible perhaps, longer than all of 
Shakespeare's works, and it's all about to be centralizing power in 
Washington.
  We have a grand opportunity, I agree. With challenges come 
opportunities. We have a tremendous opportunity, and it will have to be 
a bipartisan opportunity. I agree with you. We have to have the 
President propose a solution and his only solution right now is let's 
just raise taxes.

                              {time}  1810

  If he does nothing, if he refuses to help us make America more 
competitive, if he refuses to help us, we'll have, as you mentioned, 
the single largest tax increase in American history. We can't stop it 
if he's not willing to help out, but I think the American people are 
demanding comprehensive tax reform. They're demanding us to get this 
right because we cannot afford the massive tax increases in the current 
law. I am very fearful about that, but I am optimistic that we can and 
will do the right thing.
  I've got a friend of mine in Junction City, Kansas. I met him at a 
town hall. His name is Tom, and he's a small business owner. He said, 
You know, I'm going to start a small business--or I would--but because 
of those tax increases at the end of the year, I'm not going to do 
that. He said, I would have hired seven people. Those seven people not 
hired in Junction City, Kansas, don't show up on any list, but they 
show up in Junction City as seven more people--seven families--that 
don't have the income they need, and they probably end up having to 
have some government assistance or having to get help from their 
churches and their neighbors. Those are the things that get lost.
  We can't forget in this town that it's not about us, that it's not 
about special interests. It's about the American people and about 
getting this economy going again. I appreciate the opportunity to talk 
about that. The common goal of those of us sitting in the Chamber 
tonight is to get this economy

[[Page 5591]]

moving again and to actually be competitive internationally. I 
appreciate your leadership on that, Congressman Reed. You are doing a 
fantastic job here tonight.
  Mr. REED. I appreciate the gentleman's comments, and I appreciate 
those kind words.
  As we move forward, I'd like to bring a good friend of ours from 
Wisconsin into this conversation. He has been a stalwart down here on 
the House floor, and has joined us numerous times in these 
opportunities when we have a chance to debate the issues of the day.
  With that, Mr. Duffy, it is an honor to yield you time.
  Mr. DUFFY. I appreciate the gentleman from New York for yielding.
  As we talk about these issues--and I've been listening today as my 
colleagues have been discussing the tax policy--if you take a step 
back, if you look at all of the different rules and regulations and 
bills that have taken place over the course of the last 3\1/2\ years, 
it's a torrential rain. We have to take it almost raindrop by raindrop, 
looking at each policy, each rule, each law that has gone into effect. 
I want to take a moment to step back from the tax debate and first 
start with the conversation in regard to the budget because I think 
most Americans that I talk to, they are very nervous about what's 
happening with this ever-expanding government and ever-expanding debt. 
Many Americans know we owe now $15.6 trillion. They know we've borrowed 
$1 trillion every year for the last 3 years.
  So they will step back and go, Well, what's the plan? How do we 
address this really difficult problem?
  I know a lot of the moms in my district are concerned about who's 
lending us that money. Ask the Chinese. They're concerned about their 
kids that they're raising so well, are educating so well. What kind of 
an America are they going to grow up in?
  So they say, Listen, what kind of budget are you going to have? How 
are you going to fix it?
  If they were to look to the Senate, they would look and see that for 
the past 3 years the Senate wasn't willing to pass a budget, that they 
weren't willing to put out a plan on how they would deal with this 
daunting issue that this country faces. If they were to look over to 
the President and ask the President, How do you deal with this cancer 
that is growing in America, which is our debt? How do you deal with it? 
I think they'd say, Well, Mr. President, you've given us a budget, but 
it's a budget that never balances. It's a budget that includes all the 
tax increases you've ever discussed, but it doesn't balance. It's a 
budget that we've brought to this House floor, and it was such a 
political document that doesn't accomplish the goals that the moms and 
dads of America want accomplished that not one Republican or one 
Democrat voted for that budget.
  We need real ideas to be put on the table, and we need bold 
leadership to address the large issues that we face in this country. 
For the last 2 years, the House Republicans have given that bold 
leadership. We've been willing to put ideas on the table on how we fix 
the great problems of our generation. I'm proud of our freshman class, 
and I'm proud of our House Republicans for willing to step out and 
lead. Part of that leadership has been the reform of our tax system, of 
our Tax Code, making it more competitive and more fair, and I want to 
talk about that a little bit, which is the conversation tonight.
  I think many Americans may not know this, but as of April 1, April 
Fool's Day, we had the highest corporate tax rate in the industrialized 
world, and that's because the Japanese on April 1 were the last ones to 
lower their taxes, making us the highest tax country. That's a problem. 
We find ourselves in a situation in America where one party is asking 
for a more competitive Tax Code that will encourage investment and 
growth in America. We have the other side, which is the President's 
side, that encourages, under the auspices of fairness, that we increase 
taxes.
  As I talk to people back at home, these conversations oftentimes come 
up, and I'll ask my friends at home. I'll say, Listen, if you look at 
businesses in America, can you name a few of them that don't pay taxes? 
Are there a few businesses here that you can identify that don't pay 
taxes?
  Virtually everyone in the town hall will shake their heads and go, 
Yeah, yeah. I can name that business that doesn't pay taxes.
  So I'll ask them, Well, if you want that business to pay taxes, if 
you were just willing to raise the tax rate from 35 percent up to 40 
percent, which is what the President wants to do, will that business 
that's in your head that doesn't pay taxes now pay taxes if you just 
increase the rate by 5 percentage points?
  No. The Tax Code is broken--for generations, long before I got here. 
I was riding my trike when people were carving out special interests in 
the Tax Code. There are 70,000 pages in the Tax Code that are for 
special interests, special loopholes. The people of my district don't 
take advantage of those 70,000 pages. It's for the special interests 
that come to this town day after day and ask to carve themselves out. 
What have we done? We in this House have said that's not fair; that's 
not right.
  Let's carve them all back in. Let's reduce the complexity of the Tax 
Code, bring all these people back in and make them, yes, pay their fair 
share. What we've said that we can do is take the top rate from 35 
percent and bring it down to 25 percent, and then the other rates down 
to 10 percent. If you do that by eliminating all the loopholes in the 
code, you'll bring in more revenue, and it will be fair. Doesn't that 
make sense? Raise and raise doesn't accomplish it. Reforming the Tax 
Code is where we have to go. Let's get a bipartisan group together, 
carve out those special interests, reduce the rates, and make us more 
competitive.
  We hear a lot about the Buffett tax, right? It's a tax on investment 
income. Listen, there are two different kinds of income. You have the 
income that you get from your salary. Your salaried income, that's 
taxed at a certain rate. You're guaranteed to get that every week or 
every 2 weeks because you put your 40 or 80 hours in, and that paycheck 
comes to you and you're guaranteed to get it. But there is also 
investment income. In America and around the world, investment income 
is taxed at a little bit of a lower rate.
  You say, Well, why? Why would that be taxed at a lower rate? The 
reason is--let's say you invest $100,000. You're not guaranteed to make 
anything on that $100,000. Actually, you might lose the whole 
investment--you might lose that $100,000--but if you're lucky enough or 
smart enough or savvy enough to make some money on that $100,000 
investment, we've said you should have a tax rate that's a little bit 
less than that which is guaranteed in the salary. So we have a little 
less of a tax rate on investment income.
  But there is something else. We want to encourage investment in 
America because we know, if you're investing in our infrastructure, in 
our manufacturing facilities, in our businesses, if we have investment, 
what happens? We create jobs. There is job growth in America when you 
have investment in America, and we want to make sure this is a great 
home for investment. If you raise the taxes on investment, you will get 
less of it. Let's make sure we have a great investment tax rate so 
money around the world wants to pour into this country and wants to 
take advantage of one of the best workforces in the world, which is 
right here in America.
  One other point I want to make before I yield back to the gentleman 
is that there are a lot of people who talk about raising taxes to bring 
in more revenue. I think it's important that we're very clear: that 
when people are talking about raising taxes to bring in more revenue in 
order to pay down the debt, that's not what's happening. People are 
asking to raise taxes to spend more money. There is no effort to reduce 
spending in this town. Those who want to increase taxes want to spend 
more--they don't want to spend less--but if you want to actually bring 
in more money to the Federal coffers, you should look at the tax 
history, because every time we're raising tax rates,

[[Page 5592]]

there is not a correlation in bringing more money into the Federal 
coffers.

                              {time}  1820

  Raising tax rates doesn't mean more money. What does mean more money 
into the Federal coffers is a growing economy. If you can grow your 
economy, if you can put your people back to work, more people pay 
taxes.
  If more people pay taxes, more money comes into the Federal coffers, 
and we have more dollars to pay down our debt. Not only that, there's 
less people on food stamps and energy assistance because they have a 
job.
  This is some commonsense reform that this group in the House is 
talking about. If we could just implement it, take the weight of a 
burdensome Tax Code off the shoulders of our entrepreneurs, our job 
creators, and our investors, we can see expansive growth, explosive 
growth.
  I look forward to being part of a team who is willing to engage in a 
great debate to make sure we are again the most competitive and best 
placed in the country to invest.
  Mr. REED. I thank the gentleman from Wisconsin for joining us and the 
sentiment and the words that you have expressed. As we go into the 
election and as we go into November 2012, I think what we are 
articulating on the House floor tonight as we are having this 
conversation about tax reform is that there are some differences that 
the American people are going to be able to choose between.
  One of the fundamental differences, when it comes to tax policy, is I 
see a base philosophy differential between my colleagues on the other 
side of the aisle from the Democratic Party and those of us on this 
side of the aisle in the Republican Party, and that base differential 
and philosophy is what I hear from my Democratic colleagues on the 
other side of the aisle when they propose such things as let's increase 
taxes on the top 2 percent or this group or that group. It's a 
fundamental belief, I would submit, that they believe that that money 
is better given to them here in Washington, D.C., to then dole out as 
they in Washington, D.C., feel is appropriate.
  The philosophy on this side of the aisle that I am firmly committed 
to, and I am sure many of my colleagues here tonight are firmly 
committed to, is that that money is the individuals' money, it is the 
American citizens' money. They are the ones who earned it. They are the 
ones who punched the clock around the hour--24/7 or 8 o'clock in the 
morning until 4 o'clock in the afternoon or midnight till 8 a.m. They 
are the ones earning that money, and that is their money. The more that 
we can keep that money that they earned as citizens and individuals in 
their pocket, they will do the right thing. We believe in the 
individual.
  From the arguments that I have heard from my colleagues on the other 
side of the aisle, I would say that they differ in that opinion. They 
truly do believe that Washington should be the judge of where those 
resources go, because for some odd reason they sit here in Washington 
and try to come up with one-size-fits-all answers to the problems of 
the day. It fundamentally is a philosophy that that money is 
Washington, D.C.'s money and not the individual's.
  My colleague from Georgia (Mr. Woodall) is a strong advocate of the 
Fair Tax proposal that's been out there and that's being debated. That 
is one of the things that I have to say about this freshman class is 
that we have changed the culture of Washington, D.C., and that we are 
going to allow all alternatives to be on the table and have an open and 
honest conversation with all of America about reforms that are going 
forward and then going forward in a way that solves our Nation's 
problems, and everyone will be given a fair shake to express those 
ideas.
  I'm sure my colleague from Georgia is rising today to offer his 
insight and his proposal as to an alternative to the income tax 
structure that we presently exist under, and that would be the Fair 
Tax. If I'm wrong on that, I apologize to the gentleman from Georgia; 
but knowing his reputation and his words around this town, I'm sure we 
are going to hear a little bit about that.
  With that, I yield to the gentleman from Georgia.
  Mr. WOODALL. I appreciate my friend from New York for yielding.
  You are absolutely right. I have some Fair Tax passion. I believe 
that there is a better way to create a United States Tax Code, and I 
believe the Fair Tax is that. H.R. 25, for folks who haven't read it. 
But the truth is I came down here tonight because I knew that we were 
going to have that debate of ideas that you're talking about. I mean, 
whether it's your leadership on this Special Order, whether it's the 
enthusiasm my friend from Wisconsin brings to the floor, we're talking 
about the challenges that we face using a different language than we've 
used in this body before. This is a floor that has been taken over by 
freshmen here tonight. This is an institution that's been taken over by 
new ideas. I don't mean just new freshman ideas; I mean new ideas from 
all aspects of this institution.
  I hear my friend from Wisconsin talking, and he comes from a 
competitive district. There is all this talk about these rabid 
freshmen, crazy Republicans. The people of Wisconsin, they can choose 
anybody they want. They don't have to choose Republican. They can 
choose a Democrat. They can choose an independent. They can choose 
anybody they want, and they choose him.
  His message is not: Look what I am going to go to Washington and get 
for you. His message is: We don't need a subsidy here because we've got 
the hardest-working workforce in the world. His message is not: How can 
I give you an unfair advantage over your neighbors? His message is: How 
can we make the American economy the most competitive economy in the 
world, because if we do that, the American worker will succeed because 
we work harder, better, and longer than anybody else on the planet. 
That is a different take on what happens in Washington, D.C., and it's 
a different take on what happens in the Tax Code.
  I know my friend from New York sits on the powerful Ways and Means 
Committee, as does my friend from Tennessee, and you have to have a 
Ways and Means Committee. For folks who don't sit on that committee, 
they're the ones who write all the Tax Code. The Tax Code is a 
complicated thing to do.
  What this Ways and Means Committee is doing--and it's important to be 
said because this is an election year, and a lot of crazy things happen 
in an election year. There are crazy things like people supporting a 
Buffett rule to solve deficit problems, a rule that if it had been in 
place this year and collected that same amount of revenue for the next 
250 years, it still would not have balanced the budget from last year. 
That's right.
  This great savior of all that's good that ails us in this country, 
President Obama's Buffett rule, had it been in place this year, and not 
just this year but the next 250 years, it had raised that revenue, it 
still would not have balanced the budget from last year, just the 
budget gap from last year. We have all this nonsense in a political 
year.
  But what we're getting out of the Ways and Means Committee--and I 
know my two friends from the Ways and Means Committee wouldn't brag on 
themselves, so I'm going to brag on you for you. We have had more 
serious hearings about fundamental tax reform in this Ways and Means 
Committee over the last 16 months than we've had in the last decade. 
This is a committee that, by virtue of simplifying the American Tax 
Code, is going to undo the work of the Ways and Means Committee for 
decades and decades and decades in the past. They're doing it not to 
exploit the power of their position; they're doing it to help grow the 
American economy.
  As an alternative to the Buffett rule, I have brought down a chart to 
demonstrate what happens in today's Tax Code. My friends on the Ways 
and Means Committee know it all too well. But in today's Tax Code, the 
folks who have the money benefit from all the loopholes and exceptions 
and exemptions and carve-out. Of course they do.

[[Page 5593]]

It makes sense. I will tell you, the folks who have the money are the 
ones who are paying the taxes, so it certainly makes sense that they 
are the ones benefiting from the carve-outs.
  We have a choice of two futures here. We can either implement the 
President's Buffett rule, which again, by simple mathematics, will have 
absolutely no effect either on growing the economy or paying down the 
deficit, or we can simplify today's Tax Code to make it flatter and 
fairer.
  That's what my friends on the Ways and Means Committee have been 
working on, Chairman Dave Camp and the rest of the committee, in ways 
that I have never seen before, with a sincerity that I have never seen 
before. You're absolutely right, and I appreciate my friend from New 
York for saying it.
  They've said, Bring all comers. Bring all comers. We're not the 
smartest people in the room. If the idea comes from Lawrenceville, 
Georgia, bring it. If it comes from Seneca, New York, bring it. If it 
comes from Chattanooga, Tennessee, bring it. We want all the ideas, and 
we'll just let the chips fall where they may. That's what's different 
in this town.
  I say to my colleague, what is different in this town with this 
Republican class is we don't have to rig the game to get to the 
outcome. We just bring the debates to the floor. Bring the facts to the 
floor. Let the facts speak for themselves. And then guess what. Have a 
vote. If it's a good idea, it wins, and if it's a bad idea, it loses. 
We see both of those happen on this floor every day, and the Ways and 
Means Committee is leading in this tax process.
  This would have been a great year for the Ways and Means Committee--
putting my political hat on for a moment--a great year for you all to 
play some sort of game with the Tax Code. I have seen it happen in 
Congresses past.

                              {time}  1830

  Oh, this is going to be good for reelection. We're going to go do X, 
Y, or Z. It's not going to happen. It's not going to be real. But we're 
going to play the game. The folks on this committee this year, the 
freshmen in the body this year, would rather lose in November, having 
tried each and every day to do the right thing, than win in November, 
having played the game the way it's been played for so many years.
  So serious is the effort in the Ways and Means Committee that it was 
included in the House-passed budget this year--flatter, fairer rates, 
eliminating exemptions, loopholes, carve-outs--all of those things that 
the American people look at and lose faith in this body. You've stood 
up to them all. You've stood up to them all in the Ways and Means 
Committee. We've stood up to them in the Budget Committee to say, No 
more. There's a better way. And we're going to share with the American 
people.
  I appreciate my colleague for taking on the time tonight. And I ask 
him to commit this chart to memory. I say to all my other colleagues 
who might be watching back in their offices that on budget.house.gov, 
you'll find myriad charts to talk about all the things that my friend 
from Wisconsin discussed and my friend from Kansas discussed and my 
friend from Florida discussed. It will lay them out in easy-to-see and 
visualized ways.
  But if we want to get a handle on what's happening in America with 
the discrepancies--call it fairness, call it economic growth, you name 
your ill--a flatter and fairer tax code is the beginning of that 
solution, it's not the end. But the Tax Code was not designed to 
implement social policy. It was designed to collect revenue so that we 
can run the national defense of this country. And if we get back there, 
the American economy and the American taxpayer is going to be the 
beneficiary.
  I thank my friend for his leadership tonight.
  Mr. REED. I so appreciate the gentleman from Georgia and the 
expression and sentiments you bring to the floor and the passion that 
you bring to the floor on this issue and all the issues that you bring 
to our attention. And you are so right. We are committed to having an 
open and honest debate with all of America, because the American 
hardworking taxpayer deserves no less.
  We are here to do what needs to be done. We are here to lead. And 
that's why I appreciate my colleague from Georgia on the Budget 
Committee, because I know there was some political heat put on that 
Budget Committee to back away from coming up with a budget that we 
could stand for in this Chamber. But we took the stand and you took the 
stand as part of that Budget Committee to say, You know what, we're not 
going to engage in the politics of old. We're not going to be afraid to 
lead. Because the problems that face us in America today are 
generational. They are the same level threats that generations before 
us faced.
  And that most recent example, possibly, that jumps to the top of my 
mind is World War II, when the real fate of the American Government, 
the American symbol of freedom and democracy, was at risk with a threat 
from Europe with fascism and the expressions coming out of that area of 
the world. And what did America do? That's the history lesson that I 
bring to this Chamber tonight.
  American leadership, our President, our leaders did not look to 
divide America on that issue. That leadership led by uniting America to 
come together to face the generational threat and survive so that the 
America that they had could be passed on to our generation and this 
generation and grandchildren's generations to come so they have the 
opportunity to succeed and take care and live that American Dream. It 
is time for our Nation to come together, not be divided. And I am very 
confident because I have faith in the American individual that come 
November, 2012, the American people will make the right call. And 
between the choices that will be clearly articulated between both sides 
of this aisle we will see what needs to be done, and the right 
decisions will be made, and we will overcome this generational crisis 
that faces us in our national debt and this economy that has bogged 
down in stagnation, debt, doubt, and despair. And we will overcome it, 
because failure is not an alternative.
  With that, I'd love to yield to a great lady on the Ways and Means 
Committee, a fellow freshman and a good friend, Mrs. Black from 
Tennessee.
  Mrs. BLACK. Thank you for yielding to me. I want to thank you as a 
fellow member of Ways and Means and a freshman for bringing us together 
tonight for this Special Order. This is such an important issue, and 
the American people really need to hear that there is a choice. There's 
a choice between a system or a plan that is going to take more money 
out of the pockets of our hardworking taxpayers or one that's going to 
put more money in those pockets and make a system that is fairer, 
flatter, and simpler.
  As I traveled throughout my district over the last 16 months now, 
I've continued to hear from my businesses in particular that there's so 
much uncertainty out there. And I ask them, What is the uncertainty? 
What is it that's keeping you awake at night that keeps you from 
growing your business, and as a result of that creating more jobs? 
Obviously, when people have jobs, they have money in their pocket. And 
what do they do when they have money in their pocket? They spend that 
money. And they spend that money to buy other products and services, 
which means that the economy grows.
  And what they tell me is there are really three things. One, they 
feel like they don't know when a new mandate is going to come down, 
such as the health care. And that's going to cost them money. They also 
don't know when we're going to put another regulation on them. And many 
of the businesses are very burdened by regulations that, frankly, those 
are not the same regulations that you see when they do take their 
businesses offshore, which means we are just driving them offshore.
  And the third is the one we're here tonight to talk about, and that 
is tax. We have heard in a number of our hearings in Ways and Means 
that all the way from the corporate tax down to

[[Page 5594]]

the individual tax and the pass-through tax that many of our small 
businesses use that they are willing to give up those deductions and 
loopholes that are currently in the Tax Code to get something that is 
fairer, flatter, and simpler.
  This Tax Code has not been reformed in 25 years. What it has had is a 
lot of things that have been added to it. And with everything that's 
added to it, it only complicates it more. But it does something else. 
It picks winners and losers. And by having a tax reform that would make 
things fairer, flatter, and simpler, we wouldn't be picking winners and 
losers. It is far too complicated.
  Most of the American people don't realize that the United States has 
the highest corporate tax in the world as of April 1, when Japan 
lowered their corporate tax. I don't know that we want to be very proud 
of this, but we became the country that has the highest corporate 
income tax. Talk about driving people offshore.
  So in our tax reform we bring the corporate income tax down to a 
level that is an average for all of the countries that we do trade with 
and that we are in competition with, and we bring it down to 25 
percent. We do something that makes sense. It's a commonsense reform. 
Likewise, when we take a look at our other businesses that are not the 
large businesses that are corporations, but the small businesses--and 
about 60 percent of the small businesses are pass-through. That means 
they're in the individual tax system.
  Am I hearing that we're out of time?
  Mr. REED. We are coming to our end of time.
  Mrs. BLACK. If I may then just conclude with a couple of words.
  Mr. REED. I would be honored to yield to my colleague from Tennessee 
for her closing.
  The SPEAKER pro tempore (Mr. Young of Indiana). The time of the 
gentleman from New York has expired.

                          ____________________