[Congressional Record (Bound Edition), Volume 158 (2012), Part 4]
[House]
[Pages 5925-5929]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                TAXATION

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 5, 2011, the gentleman from Florida (Mr. West) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. WEST. Mr. Speaker, as we end our congressional session for the 
month of April, I think it's very important to have an honest 
conversation about taxation in America.

[[Page 5926]]

  The United States Constitution clearly states in article 1, section 
8, that:

       The Congress shall have the power to lay and collect taxes, 
     duties, imposts and excises, to pay the debts and provide for 
     the common defense and general welfare of the United States.

  Unlike in Great Britain, the Framers bestowed this power to a 
Congress directly representative of the people. Men, religious men like 
Benjamin Franklin and John Adams, were taught the ideals that all men 
and women are created equal and that there is no divine right of a 
King's rule.
  Moreover, our Framers believed in the social contract, an 
intellectual device used to explain the appropriate relationship 
between individuals and their government. The social contract our 
Framers envisioned was one in which a legitimate government was defined 
by government operated and derived from the consent of the governed. In 
other words, the government envisioned by our Framers would be 
answerable to those that elected them through regular elections.
  One of the most famous social contract thinkers, John Locke, believed 
if a government were to abuse that relationship, the governed had the 
natural right to overthrow their leaders.
  Our Framers lived under the rule of King George III, a ``man of a 
small mind,'' according to one British historian, at a time when 
``republicanism,'' defined as the protection of liberty through the 
rule of law, was sweeping across the British Empire. The British 
Empire, extending to the Americas, ruled by King George was one where 
high taxes without representation was the rule of law and where 
dissension was met with a noose.
  Following on the heels of the Molasses Act, where a tax was imposed 
on all molasses sold within the Colonies, set to expire in 1763, the 
British Parliament passed the Sugar Act in April of 1764. The following 
year, Parliament passed the Stamp Act, stating that all printed 
materials within the Colonies needed to be on taxed and stamped paper 
from London.
  In response to the Stamp Act, the American Colonials formed the Stamp 
Act Congress, held in New York. In 1765, this assembly was seen as the 
first true collective dissension shown towards the British Crown in 
colonial history.
  What followed throughout the rest of the century, Mr. Speaker, that 
was a lesson in the early beginnings of American exceptionalism.
  Learning from their lesson of taxation without representation, a 
viewing gallery was built in our first House of Representatives so that 
any citizen may bear witness to the decisions made on their behalf.
  Following the American Revolution, very few taxes were enacted and 
imposed on the American people, such as modest taxes on alcohol, sugar, 
and tobacco to pay for the simple workings and infrastructure of 
government.
  The War of 1812 brought on new taxes on luxury goods, such as gold 
and jewelry. After on-again, off-again taxes for the next half century, 
Congress passed the Revenue Act of 1862, under the tutelage of 
President Abraham Lincoln.

                              {time}  1310

  In 1913, the 16th Amendment replaced a large excise tax from alcohol 
that was repealed after Prohibition and that provided the government 
with revenue to fund the First World War, thus making a Federal income 
tax permanent. But after the war was over and Prohibition was repealed, 
was this tax still necessary? Did the creation of a permanent income 
tax contradict the previous taxes we saw in our early history?
  At the time, a very controversial amendment, the 16th Amendment, had 
been cited in multiple Supreme Court cases, most significantly in 
Brushaber v. Union Pacific Railroad and in Stanton v. Baltic Mining 
Company. The Court ruled it was never the intent of Congress to place a 
direct tax on the American people. Mr. Speaker, that's a decision we 
now see being debated again in the Supreme Court with the Patient 
Protection and Affordable Care Act.
  These direct taxes, such as a direct tax on property ownership, were 
seen to be apportioned for the States to decide. Since its induction, 
we have seen a mass exploitation of the income tax. No longer is the 
Tax Code used simply to pay for the workings of government. Today, we 
see tax dollars wasted on such egregious projects as $150,000 to the 
Institute of the Museum and Library Services funds for an American 
Museum of Magic in Marshall, Michigan; $175,000 in National Institutes 
of Health funds for the University of Kentucky to study how cocaine 
enhances the sex drive of Japanese quail; and a National Science 
Foundation grant of $198,000 to the University of California at 
Riverside for research on whether using social media makes one happy.
  But, Mr. Speaker, why are we here today?
  We are here because millions of Americans have just filed their 
Federal taxes. I wonder how many of those Americans actually understand 
their taxes. How many of those Americans have to pay someone hundreds 
of dollars who can understand the seemingly unending wail in thousands 
of pages of Tax Code? As a matter of fact, Mr. Speaker, the American 
people know that even some of our colleagues here on Capitol Hill, in 
this very body, have had some issues with the Tax Code, to include our 
own Secretary of the Treasury. Most alarming might be the fact that the 
Commissioner of the Internal Revenue Service, Mr. Shulman, has claimed 
that he uses a tax preparer.
  This is simply ridiculous. There are serious ramifications of a Tax 
Code that is over 67,000 pages. How many small and large business 
owners are not hiring because they are constantly being told they're 
not paying their fair share of taxes and cannot predict how much they 
will pay in the future? Mr. Speaker, I reject this progressive mantra 
that we need to raise taxes so that the government can waste more hard-
earned American taxpayer dollars. So now is an absolutely important 
time to go back and examine our Tax Code, move away from the 
progressive Tax Code system and simplify it for the American people. 
Milton Friedman famously quipped:

       If you put the Federal Government in charge of the Sahara 
     Desert, in 5 years there would be a shortage of sand.

  President Obama has increasingly upped his rhetoric of class envy by 
suggesting that higher-income taxpayers are avoiding their 
responsibility in not paying their fair share. Instead of resorting to 
manipulative rhetoric, pitting one working American against another, 
the President and Congress should work together to enact pro-growth 
economic policies to help put Americans back to work.
  One of the biggest reasons our economy continues to struggle is that 
employers, both large and small, are filled with uncertainty. They look 
to Washington only to see more government spending, the desire for more 
taxes, and more government regulations on the horizon. Washington 
spending has been out of control for years, Mr. Speaker--and 
Republicans and Democrats certainly could have done more in the past to 
stop it--but the spending binge that has occurred under President Obama 
is truly unprecedented. President Obama's proposed tax hikes that are 
buried in the Patient Protection and Affordable Care Act, increasing 
regulation, government intervention into the private sector, and 
skyrocketing debt have created economic uncertainty, thus freezing 
investment and hiring.
  The solution for reviving our economy is straightforward: cut 
wasteful government spending and remove the unnecessary tax and 
regulatory barriers that cause the uncertainty that prevents employers 
from hiring Americans. Understand that you cannot help the job seeker 
by punishing the job creator with higher taxes. Job creators know that 
historic debt levels will lead to historic job-destroying tax 
increases. If we raise taxes on the very people that we need to grow 
and invest in our economy and hire new workers, our economy will 
continue to spiral. If we do not have economic growth, we will never 
balance the budget.
  Nearly 75 percent of America's small businesses, the economic engine 
of

[[Page 5927]]

growth, pay their taxes through their owners' personal individual 
incomes. Half of those small businesses would suffer from a higher tax 
burden under the President's proposed tax increases. Those proposed tax 
increases will limit their ability to hire more workers and invest. 
Raising taxes on small businesses, where a majority of Americans go to 
work every day, will not put American families back to work. Instead, 
these tax increases will hamper the ability of these job creators to 
keep workers on their payrolls, expand their businesses, hire new 
employees, and invest. These tax increases will hurt economic recovery 
and growth because they suppress incentives to save and invest at a 
time when investments and capital are desperately needed to recover our 
economy.
  Mr. Speaker, since moving into the White House just over 3 years ago, 
President Obama has been spending millions of dollars campaigning 
around this great Nation, pushing a so-called Buffett rule. The 
President claimed that the Buffett rule would stabilize our debt and 
deficits for the next decade. Mr. Speaker, I would like to know why the 
President continues to mislead the American people. The bipartisan 
Joint Committee on Taxation stated that the Buffett rule would only 
raise $46.7 billion over the next 10 years, reducing our deficit by 
less than .4 percent. In other words, the so-called Buffett rule would 
only raise enough revenue to keep the Federal Government's lights on 
for 11 days.
  Just a couple of weeks ago, the President was in the congressional 
district that I represent, touting his political divide-and-rule 
gimmick that would collect almost $47 billion through the year 2022; 
but when you look at the comparison of the $7 trillion in Federal 
budget deficits that will come in that exact same period, we are not 
making progress. Clearly, we have a spending problem in Washington, 
D.C. and not a revenue problem.
  Mr. Speaker, the President should stop trying to score these cheap 
political points and should work towards solutions that will actually 
solve our Nation's debt crisis. His claim that the Buffett rule is 
something that will get us moving in the right direction toward 
fairness would be more convincing if he took other steps in that 
direction, too. Three years into his Presidency, President Obama has 
not introduced a plan for comprehensive tax reform, arguably the most 
important vehicle for fixing the Nation's finances and for boosting 
long-term economic growth.
  When you look at the progressive Tax Code system that we have in the 
United States of America, we hear a lot of talk today about fairness, 
fair share, economic equality, and shared sacrifice. Well, one of the 
things that we must understand is that the top 1 percent of wage 
earners in the United States of America are paying close to 40 percent 
of Federal income taxes. The top 5 percent of wage earners in the 
United States of America pay close to 58 percent of Federal income 
taxes. The top 25 percent of wage earners in the United States of 
America pay 86 percent of Federal income taxes. Mr. Speaker, to make 
matters worse, a large percentage of wage-earning households--about 47 
percent--are paying absolutely nothing in Federal income taxes.
  I would also like to speak to the other side of that equation, which 
is how we are using the Tax Code as a weapon for behavior modification.
  One of the things we have to be very concerned about is all of the 
new taxes that will kick in with the Patient Protection and Affordable 
Care Act from January of 2013 out to January of 2018.

                              {time}  1320

  One of those taxes even includes a real estate tax, as well as an 
insidious tanning tax. At a time when the housing market is still in 
free-fall, why would the President tax people for purchasing or selling 
their homes? It is not only unfair, but it is immoral to leave these 
types of policies as our legacy to our children and grandchildren.
  Also within this new government takeover of health care is the 
federalization of student loans, and we just voted about keeping those 
loan rates for our college students at 3.4 percent, not realizing that 
the Federal Government has now taken over the management of college 
loans. This completely cuts out any competition to help lower student 
loan interest rates. The federalization of these loans has done nothing 
but drive up interest rates on our young people. President Obama 
himself even said that this will do nothing to help solve the problem 
of ever-increasing college tuition costs.
  This equates to a tax on the American Dream of higher education, 
which is so crucial to success. Unfortunately, the economy and job 
market that the Obama administration is fostering is just pouring salt 
on an open wound, Mr. Speaker. Not only will recent graduates see 
themselves paying higher interest rates on their loans, they will also 
enter a job market that is seeing some of the highest unemployment 
rates for recent graduates in our history. Nearly half of all recent 
college graduates cannot find jobs after graduation.
  Mr. Speaker, at the rate we're going, our children will be the first 
generation to not live a better life than their parents. This is simply 
unacceptable. What is the President's response to this crisis? He 
introduces his fiscal year 2013 budget that would spend an incredibly 
obscene $47 trillion over the next ten years; higher taxes on 
individuals to pay for increased government spending; higher taxes on 
small businesses that will stifle new jobs; and higher taxes on 
investors to ensure our innovation lags behind the rest of the world.
  The President's planned tax increases seem designed to demonize the 
so-called ``rich'' and use them as a propaganda tool to score political 
points. But the fact is next year, unless changes are made to the Tax 
Code, Americans will be subject to the largest tax increase in our 
Nation's history. If the Obama-Bush tax cuts expire, a typical family 
of four in south Florida with a household income of $50,000 per year 
would have to pay $2,900 more in taxes each year.
  Mr. Speaker, seniors who count on dividends and investments to cover 
expenses during retirement will have to pay higher tax rates, even if 
they have a modest income. Children of farmers 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 of 55 percent, with a 5 percent 
surcharge on estates over $10 million. Investors will be battered with 
a capital gains tax increase from 15 percent to a top-level maximum of 
25.8 percent. Seniors who rely on those dividend returns will also be 
hammered. Stock dividends currently at 15 percent will be taxed as 
ordinary income at a top rate of 43.4 percent.
  Mr. Speaker, the President is also going after our military families. 
If he were to have his way, all military families would see their 
TRICARE health care fees triple above the current rates that they are 
already paying, all while leaving civilian unionized health care 
completely untouched.
  Mr. Speaker, why? Why is the President targeting some of the most 
vulnerable groups in our society like our young people, seniors, and 
those who have risked their lives to protect our freedoms? This 
certainly isn't right. This certainly is not fair. It is, Mr. Speaker, 
downright immoral.
  In the last few months, we've heard a lot about this fairness from 
the President, especially when it comes to the so-called ``rich.'' In 
President Obama's own message about his proposed budget for fiscal year 
2013, he says everyone must shoulder their fair share. But how does the 
President define fair when 47 percent of wage-earning households paid 
zero Federal income taxes while the top 25 percent paid 86 percent?
  Does President Obama think it's fair that our children and 
grandchildren will be burdened with debt because of his unprecedented 
reckless spending, because Washington currently borrows 42 cents of 
every dollar it spends? Does the President think it's fair to pile 
another $47,000 of debt onto every household in the United States of 
America

[[Page 5928]]

over the last 3 years? Is it fair for every American to have a $50,000 
debt obligation on them right now? Does the President think it's fair 
to use college students as props for these campaign-style rallies, 
without explaining how his bad policies will leave them in deeper debt? 
Does the President think it's fair to force hardworking American 
taxpayers to subsidize a wealthy person's purchase of a hybrid luxury 
car just because it fits his idea of American energy? Does the 
President think it's fair to hand out millions of tax dollars to 
politically correct solar energy companies that then go bankrupt? We've 
seen five so far. Does the President think it's fair to tell thousands 
of workers they won't have jobs because he blocked the Keystone XL 
pipeline to solidify the support of far-left radical environmentalists? 
How does the President feel about the fact that 3 years of his policies 
have left us with more people on food stamps, more people in poverty, 
lower home values, higher gas prices, and higher unemployment? Is this 
fair, Mr. Speaker? That's why we must simplify this Tax Code.
  Mr. Speaker, this great constitutional Republic simply needs a flat 
tax. A flat tax would dramatically reduce the ill-effects of our 
progressive Tax Code. Perhaps more important, it would reduce the 
Federal Government's power over the lives of taxpayers and get the 
government out of the business of trying to micromanage the economy.
  The major features of a flat tax include a single flat rate. All flat 
tax proposals have a single rate that is usually less than 20 percent. 
The low flat rate solves the problem of high marginal tax rates by 
reducing penalties against productive behavior such as work, risk-
taking, and entrepreneurship. It has an elimination of special 
preferences. A flat tax proposal would eliminate provisions of the Tax 
Code that give preferential treatment on certain behaviors and 
activities. Getting rid of deductions, credits, and exemptions also 
helps to solve the problem of complexity, allowing taxpayers to file 
their tax returns on a simple form.
  There should be no double taxation of saving and investment. Flat tax 
proposals would eliminate the Tax Code's bias against capital formation 
by ending the double taxation of income that is saved and invested. 
This means no death tax, low or perhaps no capital gains tax, no double 
taxation of savings, and no double taxation on dividends. By taxing 
income only one time, a flat tax is easier to enforce and more 
conducive to job creation and capital formation.
  There are two principal arguments for a flat tax: growth and 
fairness. Many economists are attracted to the idea because the current 
tax system with its higher rates and discriminatory taxation of saving 
and investment reduces growth, destroys jobs, and lowers incomes. A 
flat tax would not eliminate the damaging impact of taxes altogether, 
but by dramatically lowering rates and ending the Tax Code bias against 
saving and investment, it would boost the economy's performance, 
especially when compared to the current Tax Code.
  Under a flat-tax system, I believe in only three taxable deductions: 
a child tax credit, a mortgage interest tax deduction, and a charitable 
contribution deduction.
  Mr. Speaker, we want families to have children, and we want children 
to have homes. Most importantly, we want Americans helping Americans. 
This system would end the class warfare rhetoric perpetrated by 
President Obama and eliminate many, if not all, special interest 
loopholes that have been created over decades of Tax Code manipulation.
  Look at other countries around the world that have implemented and 
are in the process of implementing the flat tax. Economic growth 
increases, unemployment drops, and we see more compliance with the tax 
law.

                              {time}  1330

  Nations such as Estonia and Slovakia are widely viewed as role models 
since both have engaged in dramatic reform and are reaping enormous 
economic benefits. Since instituting the flat tax, Estonia has thrived 
and become a member of the European Union.
  The flat tax was implemented in 1994 at 26 percent and has since 
fallen to 21 percent of income. From 2001 to 2007, Estonia's economy 
grew by an average of 9 percent per year, which, as we just saw with 
our recent GDP growth statistics for the first quarter of 2.2 percent, 
we are severely lacking. In 2003, its unemployment rate was in excess 
of 12 percent. Just 5 years later, only 4.5 percent of its population 
was without jobs. Compare that, Mr. Speaker, to the anemic GDP growth 
of the economic recovery under President Obama.
  I think the most important thing we have to come to understand is 
that this time in history truly does belong to the American people. The 
money, the resources belong to the American people.
  The liberal, progressive approach that one should give more money to 
the government in order to better society is a flawed approach and, 
please, Mr. Speaker, tell me where a social, egalitarian, welfare, 
nanny state has ever been successful in the world. Thomas Sowell once 
said:

       Liberals seem to assume that, if you don't believe in their 
     particular political solutions, then you don't really care 
     about the people that they claim to want to help.

  I do not believe that I can spend the money of over half a million 
people I represent in south Florida any better than they can 
themselves. We should be coming up with ideas of how to keep more money 
in American pockets to invest in our economy instead of propaganda-
esque divisive rhetoric separating the American people for the spoils 
of politicians.
  Let's start treating the American people as adults and find our own 
integrity and character, Mr. Speaker. The key thing that has to 
accompany this is that we must reduce the size and scope of government 
as well because as we start to focus more on Main Street, as we start 
to focus more on the hardworking American taxpayers and what is truly 
best for them, then we can have that investment at their level; we can 
have the growth at their level.
  When President Obama talks about increasing investments in 
government, I must simply inquire: What is the rate of return?
  We grew the bureaucracy of education, and the standards of education 
in the United States of America dropped. We created the Department of 
Energy, and still we are not energy independent. We bail out private 
sector industries yet experience the slowest economic recovery in U.S. 
history.
  Mr. Speaker, one of the reasons that I came to the United States 
Congress is to begin enacting sweeping reforms that show the American 
people that we are serious about turning this economy around and that 
we're serious about creating the right type of policies that set the 
conditions of job creation. We're talking about economic freedom for 
the American people as opposed to economic dependency upon government. 
This incredible, exorbitant system that we have is complex to the point 
where it is causing more pain for the American people and causes them 
to not have the freedom that they deserve nor faith in any of us.
  Mr. Speaker, I reject the notion that fairness comes from wealth 
redistribution. True fairness rewards merit, creating the conditions 
for economic success and achieving your goals. That is the American 
way, to promote individual industrialism to honor the entrepreneurial 
will and spirit of our countrymen.
  Mr. Speaker, a simple question: Why did your ancestors come to this 
country? Did they come to get a fair system of forced income 
redistribution?
  The government cannot and never will save our country nor our 
economy. Unless we let our children earn their successes, we will hand 
them a country in decline, one where they will need to rely on 
government for their success. It is immoral to pull the ladder of 
success out from under our children's feet like this.
  And how can I explain this to my children, my two daughters, Aubrey 
and Austen? How would you explain this to your children, Mr. Speaker?

[[Page 5929]]

  We have never done less with America in our history, and I believe 
here in Washington, D.C., we need to try doing a lot more with less of 
the resources of the American people.
  In conclusion, Mr. Speaker, let us show the American people that we 
stand steadfast and loyal to this constitutional Republic and to the 
preservation of a legacy of liberty, freedom, and democracy for 
subsequent generations. To all others who would stand contrary to those 
simple beliefs, well, Mr. Speaker, in the words of the great 
philosopher, Mr. T, I say that ``I pity the fool.''
  Mr. Speaker, I yield back the balance of my time.

                          ____________________