Mr. ENGEL. I thank my New York colleague and friend.
Madam Speaker, I rise today in strong opposition to H.R. 8, which should be more appropriately named the Job Prevention and Recession Protection Act.
We always hear talk about tax reform, but the only solution my colleagues on the other side of the aisle have to offer is an extension of the failed policies that skyrocketed the debt and contributed to the current state of the economy. My Republican colleagues say their plan will create jobs. If that's true, why didn't it work during the Bush administration when we lost millions of jobs? The Republican philosophy always seems to be to help the wealthy and give the back hand to the middle class.
So let's put this in perspective: at the same time the majority demands we give the wealthiest a break, they cut Medicaid and Medicare, early education programs, title X family planning, and food stamps. The list goes on and on. Madam Speaker, I would laugh if this weren't so tragic.
Our government should be about giving everyone a fair chance and making sure that we help the middle class and working people. Unfortunately, the current Republican philosophy seems to make it easier for those who are already ahead and more difficult for everyone else. The Republican proposal would give our military soldiers a tax increase while giving millionaires and billionaires a huge tax break.
That's why I strongly support the Democratic substitute introduced by Congressman Levin. Our substitute is in stark contrast to the billion-dollar boondoggle proposed by the majority. Our proposal continues the tax cuts for the middle class and requires the wealthiest to pay their fair share, as well they should. Until we can have a meaningful debate about actual tax reform, the Democratic proposal is the only one worth supporting.
Madam Speaker, I urge my colleagues to oppose H.R. 8 and to support the Democratic substitute.
Mr. COHEN. Madam Speaker, this week there was some disturbing news about Members of the House. One of our finest, longest-serving Members, Mr. LaTourette of Ohio, a Republican, announced he wasn't going to run for reelection. He said he couldn't run for reelection because of the gridlock and the difficulty getting things done.
He was for income, revenue--not for Grover Norquist's pledge that most of the Republicans have signed. And because he was for revenue, which is what the Democrat plan is, in taxing the wealthiest and most financially blessed in this country, he gave up because he said, you couldn't get things done. That's a shame.
People ask, why is there partisan gridlock? This is a perfect example. The two sides agree that people making $200,000 a year or married couples making $250,000 a year should get continued tax breaks. We should pass that, as the Senate did. We know that can become law and guarantee those tax breaks. The difference that we have is whether people making over $200,000 single and $250,000 married get tax breaks. They will get tax breaks on that amount of income but not on the income over that.
I have been blessed in my life, and I have had sufficient monies to do the things I want. But I have never made $250,000 a year. I consider that a lot of money.
On the Democratic side, we call that middle class tax cuts. The reality is, in my perspective, it's upper-middle class tax cuts and middle class tax cuts. The only people at the top who are having to pay a little more are the very wealthy and predominantly millionaires.
When I grew up, a millionaire was somebody who had a net worth of $1 million. Today it's somebody who makes $1 million--rock stars, business tycoons, bankers. They can afford to pay it. They're not spending that money. We need Americans who spend their money to stimulate our economy. We need purchasers.
So that's why I am against the Republican plan and for the Democratic plan. It will activate our economy.
I thank the gentlewoman from New York for yielding the time.
Ms. JENKINS. Madam Speaker, stopping the tax hike is not just about taxes; it's about jobs. Small businesses have been responsible for about two-thirds of the new jobs created. Raising taxes on the so-called ``rich'' will hit nearly 1 million of these businesses and in this weak economy will risk destroying 700,000 jobs.
Is it worth it? Raising taxes simply allows Washington to spend more. If we want to have a serious discussion about reining in our out-of-control spending, I welcome that debate. But first we should do no harm to our fragile economy.
Extending current rates gives us time to pass our plan for comprehensive tax reform without risking thousands of jobs and another recession. CBO estimates that action will produce 2 million jobs next year alone.
The choice is clear. Let's stop the tax hikes and create jobs.
Ms. JACKSON LEE of Texas. Madam Speaker, although I have great affection for the gentleman from South Carolina, I am so enthusiastic that [Page: H5545]
Ranking Member Slaughter is managing this bill.
I rise in great opposition to H.R. 8, but in enthusiastic support for H.R. 15. This is a gift to America's women, working women, mothers.
And let me give you the role: every taxpayer will get tax relief on $250,000. That, by the evidence of this letter from small businesses, will be 97, 98 percent of small businesses. And they are women--most of them, many of them--women who are in their homes having a one-person small business, women who have hired people in a five-person small business, women who are thinking of getting ready to start their small businesses.
Then, of course, the child tax credit. What a boon for working mothers and others who need that desperate relief. And then, of course, the marriage tax relief. EITC, if you come from the gulf region, we were saved by the earned income tax credit for Hurricane Katrina victims. They were able to get some minimal relief to carry them through. The higher education tax credit. The adoption tax credit. And as I indicated, the child care tax credit. A tax credit, as well, for expensing in small businesses.
What are my colleagues and my friends on the other side talking about? A job-killing, economy-killing, deficit-busting H.R. 8 is not the way to go.
So I am enthusiastically here to tell the women of America that this is a vote for you today. Those women who get up every day, who design a way to make a living when there is no job--these women, along with men, who have come into understanding what small business can do for America.
I'm excited because I consider the 18th Congressional District to be a host of small businesses. Everywhere I go, individuals are talking about their small businesses.
Ms. JACKSON LEE of Texas. I will submit into the Record, Madam Speaker, a letter from small businesses of the Main Street Alliance opposing H.R. 8 and supporting this legislation the Democrats are offering.
This is a celebration for women. This vote today will enhance opportunities for women, small businesses, and families across America.
Madam Speaker. I rise in strong opposition to H.R. 8 and H.R. 6169, and ask my colleagues on both sides of the aisle to come together in support of regular order for any proposed tax legislation, whether it comes to the House Floor today, tomorrow, or next year. The Rule before us is structured and I note that is titled H. Res. 747, but unlike the jetliners that we Americans use every day, this bill and the Rule are not yet ready for take-off.
House Republicans released a proposal, H.R. 6169, that would relax some of Congress's normal procedural rules in order to enact an overhaul of the tax code--so long as the tax overhaul meets the objectives laid out in the House budget plan authored by House Budget Committee Chairman PAUL RYAN.
Their proposal states:
``The United States tax code is far too complex and bloated. It forces American citizens and small business owners to focus on filling out tax forms instead of tending to their families and businesses. It is clear to lawmakers on both sides of the aisle that real, fundamental reforms to our tax code are long overdue. In fact, our revenue laws have not been substantially reformed in 50 years,'' Chairman DREIER said.
I couldn't agree more with Chairman DREIER but by putting a stranglehold on the tax reform process before we even begin is tantamount to forcing debate on any tax reform bill while potentially limiting input.
H.R. 6169 lays out several components that the tax overhaul legislation must have in order to be passed through the easier legislative procedure.
All of these components seem identical to those laid out in the Ryan Plan that we witnessed in the Spring--it's like a bad B movie rerun.
The required components of the tax overhaul include:
replacing the personal income tax rates with just two rates, 10 percent and 25 percent (or less)
repeal of the Alternative Minimum Tax, AMT
reducing the statutory corporate income tax rate to 25 percent (or less)
adoption of a ``territorial'' tax system (exempting offshore profits of corporations from U.S. taxes)
collecting revenue equal to between 18 and 19 percent of GDP
The ``findings'' section of the bill states that revenue will ``rise to 21.2 percent of GDP under current law,'' meaning its
proposed revenue target of between 18 and 19 percent of GDP is an explicit cut in revenue.
Like the Republican Plan, the bill introduced by my colleagues Ways and Means Chairman CAMP and Rules Committee Chair DREIER, does not say which tax loopholes and tax subsidies should be closed to ensure that the tax system still collects revenue equaling between 18 and 19 percent of GDP even after the plan's steep rate reductions and the repeal of the AMT are in effect.
My sense is that even if those with incomes exceeding $1 million were forced to give up all the tax expenditures RYAN could possibly want to take away from them--all their itemized deductions, tax credits, the exclusion for employer-provided health insurance and the deduction for health insurance for the self-employed--even then the net result for these taxpayers would be an average income tax cut of $187,000 in 2014.
That's because the income tax rate reductions RYAN proposed are so deep that they would far outweigh the loss of all these tax loopholes and tax subsidies.
I have consistently supported and voted for middle class tax cuts, as I did two years ago when I voted for the Middle Class Tax Relief Act of 2010, and the extension of unemployment benefits.
I am deeply saddened that the fate of unemployed, low and middle income Americans has been held hostage by the insistence by Republicans that this legislation include a giveaway to the wealthiest 2 percent of Americans that is going to irresponsibly expand the already large deficit.
I have spoken to and heard from many fine, patriotic, hardworking middle income Americans from Houston, from the great state of Texas, and all across the nation. Middle class American families and small businesses are deeply concerned about our troubled economy, the skyrocketing national deficit, high unemployment rates, job creation, and sorely needed extension of the tax relief and unemployment benefits set to expire at the end of this month.
The Republican bill temporarily extends for one year, through 2013, all the reduced tax rates and other tax benefits enacted in 2001 and 2003 that are scheduled to expire on Dec. 31. The measure maintains the maximum estate tax rate of 35 percent while retaining the exemption amount of $5 million, provides a two-year ``patch'' to prevent the alternative minimum tax, AMT, from hitting over 27 million taxpayers and allows small businesses to deduct an increased amount of their capital expenditures
for another year.
I feel like we have been down this path before and I recall many of my colleagues staking a claim to fiscal responsibility.
Well, I ask in all sincerity, which bill is more fiscally responsible: H.R. 8, which blows a hole in the deficit, or H.R. 15, the Democratic alternative which keeps the Bush Tax rates in place for the people who truly need tax relief.
This is the same Republican Congress which has asked for a balanced budget amendment. It has codified the Joint Select Committee on Deficit Reduction, which is possibly unconstitutional, and has had no impact on jobs and the unemployment problem. Yet today they want us to vote on a tax increase for the top 2 percent. This illustrates what happens when Congress does not work together in a bipartisan manner, laboring for the American people. We must work together and compromise.
The Senate gave us a layup by producing a bill last week which is virtually identical to the Democratic Substitute. All we have to do is act like Olympians and pass it.
The American people are asking the President and Members of Congress to move swiftly and take decisive action to help restore our economy in a fiscally responsible manner. I am disappointed that Republicans have insisted on holding tax cuts for working and middle class families' hostage in order to benefit the wealthiest 2 percent of Americans.
I would like to thank President Obama for his determined leadership, support and commitment to protecting important tax relief issues for middle-income Americans and the nation's small businesses and farmers during these challenging economic times. I would also like to thank all the Members and their staff who worked diligently to bring this essential legislation to the House floor today in an attempt to do all that we can to protect the American people and move this nation toward fiscally responsible
I support those provisions of H.R. 8 which provide relief for middle-class families and small businesses who will see their taxes go down and get much needed certainty. But I cannot in good conscience support tax relief for millionaires and billionaires at a time when others need help just to make ends meet.
Unlike those provisions of H.R. 8 which benefit America's struggling middle class, I do not support the provisions of this legislation which condition that desperately needed relief upon [Page: H5546]
the unconscionably high cost of providing an unnecessary, expensive giveaway to the wealthiest Americans by providing a 2-year extension of Bush-era tax cuts for the wealthiest 2 percent of Americans while keeping their estate tax rate at 35 percent on estates valued
than $5 Million for individuals and more than $10 Million for couples.
These giveaways to the wealthiest Americans during these dire economic times needlessly add billions of dollars to our skyrocketing deficit yet create no value for our ailing economy since these tax cuts are not tied to job creation and preservation.
ESTATE TAX AMENDMENT
I offered an amendment that would have set the Estate Tax at reasonable levels. My amendment would have allowed estates valued at $3.5 million or less to pay 35 percent, estates valued between $3.5 million and $10 million to pay a 45 percent rate, and estates over $10 million to pay a 55 percent rate. This commonsense amendment would have restored a sense of fairness to H.R. 8.
According to the Center on Budget and Policy Priorities, the 2009 estate tax rules already are extremely generous, tilting in favor of the wealthy. The Tax Policy Center estimates that if policymakers reinstated the 2009 rules:
The estates of 99.7 percent of Americans who die would owe no estate tax at all in 2013. Only the estates of the wealthiest 0.29 percent of Americans who die--about 7,450 people nationwide in 2013--would owe any tax.
Moreover, under the 2009 rules, the small number of estates that were taxable would face an average effective tax rate of 19.1 percent, far below the statutory estate-tax rate of 45 percent. In other words, 81 percent of the value of these estates would remain after the tax, on average. An estate tax that exempts the estates of 997 of every 1,000 people who die and leaves in place an average of 81 percent of the very wealthiest estates is hardly a confiscatory or oppressive tax.
Moreover, only 60 small farm and business estates in the entire country would owe any estate tax in 2013, under a reinstatement of the 2009 rules, and these estates would face an average effective tax rate of just 11.6 percent. Failing to tie tax cuts to job creation is irresponsible since it exacerbates our growing deficit without bolstering job creation.
My amendment does not address the step-up in basis. The exemption level and rate are consistent with parts of the estate tax proposal included in the President's FY2010 and FY2011 Budgets and H.R 16, the intelligent estate tax proposal being put forth by my colleague Mr. LEVIN of the Ways and Means Committee.
CLASSROOM EXPENSE DEDUCTION AMENDMENT
My second amendment would have provided tax relief to school teachers by providing them a deduction for qualified out-of-pocket classroom expenses of $250 dollars, whether or not they itemize their deductions. You may recall Mr. Speaker that the
President included this proposal in his Budget for Fiscal Year 2013.
I understand the tremendous personal costs incurred by educators with little or no classroom budget. According to a 2006 National School Supply and Equipment Association Retail Awareness Study, teachers spend an average of $493 out of pocket on school supplies for their own classrooms.
Seven percent of teachers surveyed said they plan to spend more than $1,000 of their personal finances on supplies. As education budgets face major shortfalls in the recession, that amount is expected to increase significantly.
Beginning in 2002 the IRS allowed for an above-the-line deduction for classroom expenses of up to $250. The educator expense deduction allows teachers to write off some expenses that they incur to provide books, supplies, and other equipment and materials for their classrooms. I introduced this amendment and would like to acknowledge the work of my colleagues who have put forth legislation advocating this deduction. America's teachers from Texas to Maine to Florida to Washington deserve our renewed
appreciation for their commitment to educating future generations.
Our children should not have to suffer because our teachers are given a Hobson's Choice, forced to choose between using their own finances to effectively teach a class or forced to cut corners due to budgetary restrictions. We promote an increased quality of education by lessening the financial burden on them when they are trying to go above and beyond their responsibilities is certainly warranted.
While I am opposed to the portions of H.R. 8 that amount to an expensive giveaway to the wealthiest 2 percent of Americans, I want to emphasize that I fully support job-creation and job creators. I also support President Obama's vision for change. I share his commitment to fighting for low- and middle-income Americans who are the backbone of this country and our economy.
However, this legislation, H.R. 8, especially as it pertains to tax cuts for the top 2 percent of Americans and estate tax provisions that are regressive and inflate the deficit, does not comport with this vision. I have serious misgivings about extending tax cuts for the wealthiest Americans at the expense of our deficit, especially if these tax cuts are not targeted towards job creation.
DEFICIT AND TAXATION
You may recall that in the Budget, the Administration calls for individual tax reform that: cuts the deficit by $1.5 trillion, including the expiration of the high-income 2001 and 2003 tax cuts. As a matter of sound fiscal policy, I am supportive of this effort. I recognize the putative economic benefits that many attribute to the Bush Tax Cuts, but we must ask ourselves are they
affordable? There is no amount of dynamic scoring that will help penetrate the deficit.
The President's budget also eliminated inefficient and unfair tax breaks for millionaires while making all tax breaks at least as good for the middle class as for the wealthy; and observes the Buffett Rule that no household making more than $1 million a year pays less than 30 percent of their income in taxes.
The individual income tax is a hodgepodge of deductions, exemptions, and credits that provide special benefits to selected groups of taxpayers and favored forms of consumption and investment. These tax preferences make the income tax unfair because they can impose radically different burdens on two different taxpayers with the same income. In essence, Congress has been picking winners and losers.
There is absolutely no justification for huge tax cuts. The wealthiest tax brackets should not profit at the expense of programs keeping struggling families from poverty.
Bear in mind, the Republican's 2012 budget cut $2 trillion dollars more than President Obama's Debt Commission advised, and those cuts come from vital social services and safety nets for low-income families, children and seniors.
Tax expenditures also reduce the economy's productivity because decisions on earning, spending, and investment are driven by tax considerations rather than the price signals that a well-balanced, and fair free market economy produces. These expenditures, whether for individuals or corporations, are really no different than the much ballyhooed entitlement programs, but they have cute names and fancy lobbyists.
Moreover, tax expenditures make the tax system excessively complex for honest taxpayers who are trying to comply with the law while seeking the benefits to which they are legally entitled.
The system is so complex that most taxpayers--even those with low incomes--now use either a professional tax preparer or tax software. A one-page form shouldn't require a tax preparer who earns a percentage of the return, or a fee.
It is not justifiable, especially when some commentators like to point out that a number of taxpayers pay no tax--well they somehow conveniently forget to mention that these tax scofflaws making $30,000 dollars a year more than make up for it with a long list of regressive taxes at the state and local level.
The alternative minimum tax, or AMT, was initially designed to ensure that all high-income taxpayers paid some income tax, has become the poster child for the tax system's failure, requiring
Congress to enact increasingly expensive temporary patches to prevent the AMT from encroaching on millions of middle class households particularly those with children, in a web of pointless high tax rates, complexity, and unfairness.
On the deficit reduction front it is important to remember the economic crisis that the President inherited. I remember back in 2008 and 2009, when we experienced the worst recession since the Great Depression. The economy actually contracted, it shrunk, at a rate of almost 9 percent in the fourth quarter of 2008.
We lost 800,000 private-sector jobs in January of 2009 alone, and unemployment was surging. Those are the conditions the President inherited--the car was swerving into the ditch. He was not the driver, but he was asked to come in on literally his first day of office, roll-up his sleeves and figure out how to prevent the car from rolling farther down the hill. If you'll recall we also faced a housing market that was in crisis, and we faced a financial market crisis as well that threatened to set
off a global financial collapse. We have come a long way since then yet there is more work to be done.
The cloud looming over this Congress is an unintended ``triple-witching hour'' of tax increases that will take effect at the beginning of 2013.
The expiration of the Bush Tax Cuts, the end of the recently extended Payroll Tax Cut, and increases in capital gains and dividends taxation will shock the conscience and wallets of the American people. That is why Congress needs to enact bi-partisan legislation that [Page: H5547]
helps lower the deficit but does not wreck havoc on the financial soul of the middle class.
But again, tax reform that lowers the rate, reduces the deficit, and does not pick winners and losers is not easy, but let's not forget, if President Reagan and then-Speaker Tip O'Neill could do it in 1986, anything is possible.
The so-called ``99ers have been sincerely looking for work for a very long time and have run out of resources to provide for their families and pay their mortgages, pay their bills and buy food. They simply want and need a job to pay for these obligations. H.R. 8 proposes to give tax cuts to the wealthiest Americans, yet fails to provide for the so-called ``99ers.''
H.R. 8 unfortunately is not ready for prime-time.
Mr. KING of Iowa. I thank the gentleman from South Carolina for yielding and for leading this reform debate for real tax reform.
In the time I came to this Congress, I have made the pledge that I would push for tax reform. I believed at the time that the debate that had been taking place in this Congress over the preceding years would flow into the following years.
I remember the inspiration that came when Billy Tauzin and Dick Armey went around the country and debated tax reform between the flat tax and the Fair Tax. I don't ever remember anyone debating in favor of the Fair Tax having lost that debate. But we had a real tax reform debate.
And in this time--and I have pushed in my time in this Congress--I can think of only one time that we have had a serious debate on tax reform, and that was at a time when we had some debate, and I testified before the Ways and Means Committee in favor of a national sales tax.
This rule that's before us expedites this debate. It expedites the consideration of a bill providing for comprehensive tax reform. And I look at the conditions that are in here. There are five conditions that are written in, and the Fair Tax meets all of those conditions, I think, by design.
I am looking forward to an open debate that will take place at least within the Ways and Means Committee and hopefully come here to the floor. It says to me, as I look at this rule, that the legitimate proposals that would come for real tax reform will be in order before the Ways and Means Committee.
So I encourage those committee members, as this expedited debate takes place, to bring your reforms to the Ways and Means Committee. Bring them in the form of amendment. Let's have a real debate. Let's put the Fair Tax up against everything else.
And I have done that now since about 1980. And even though I have lost a couple of debates with my wife and some with my family, and even one or two with my staff, I've never lost a debate on the fair tax because the American people understand this--right now, the Federal Government has a first lien on all productivity in America. If you punch a time clock on Monday morning, just imagine, Uncle Sam is standing there by that time clock. When it goes thunk, his hand goes out and he gets into his
hand what he wants until he gets his share, and then he puts it in his pocket and you get to keep what's left.
Let's change the tax from production to consumption. Let America grow, let America breathe, to quote the Congressman from Pennsylvania.
Mr. FARENTHOLD. Madam Speaker, I thank my freshman colleague from South Carolina.
I rise today in support of this rule. America has waited long enough for the uncertainty over taxes to go away. This rule gives us the opportunity to avoid a huge tax increase and gives us the opportunity to have that debate about a fairer, flatter, simpler tax that the American people want and need and this economy wants and needs.
You know, we shouldn't be having a big argument over these extensions. They passed on a bipartisan basis under Speaker Pelosi. They should pass on a bipartisan basis this time. We do not need the politics of envy and divisiveness. We need tax reform, and this puts us on the path to do it.
I urge my colleagues to support this rule and the underlying bill.
Ms. SLAUGHTER. Madam Speaker, I yield myself the balance of my time to close.
Madam Speaker, we understand the majority intends to have a last-minute change in the rule. The amendment would create a number of obstacles to middle class tax cuts. And under the last-minute change, the middle class taxes could not be cut until the Senate has approved the entire Republican tax reform agenda, and we certainly don't need that kind of obstacle and we don't need that kind of bill. We need quick action on tax cuts, so I hope we can get that today. But let me remind you that you
need to vote against this rule, unless you want the Republican bill to pass automatically.
The Senate-passed tax cuts are a simple and fair extension of tax cuts that will directly benefit the middle class. It was quite wonderful to see the Senate of the United States do the sensible thing and say that everyone making $250,000 and under would receive a tax cut. Unfortunately, our colleagues on the other side of the aisle are the only ones standing in the way of the tax cut becoming law.
Their flawed alternative proposal demands that any middle class tax cut be accompanied by an additional tax cut for the richest 2 percent. Such a proposal would be and has been a fiscal disaster. It would explode the Nation's deficit, fail to create jobs, and perpetuate the record of inequality facing our Nation.
The oft-repeated premise that we need to protect job creators--who haven't created new jobs--with lower corporate taxes and lower taxes for the wealthy should be put to bed. It has been thoroughly and convincingly disproven.
Instead of protecting tax loopholes for corporations that ship jobs overseas and serving the wealthy at the expense of the middle class, we should be making the Tax Code more simple and fair and asking everyone just to pay their fair share. Our proposed middle class tax cut would be a great first step towards doing just that.
In addition, Madam Speaker, if we defeat the previous question, I will offer an amendment to the rule to give the House a vote on H. Res. 746, which would prohibit us from going home until the President signs middle class tax cuts into law. Otherwise, we will be going home perhaps tomorrow with that undone.
There is no excuse for Congress to go on summer vacation at the end of this week. No other American leaves work with a job half done, and neither should we. It is our duty to deliver results for the American people, and we should not leave this town until every middle class family has a tax cut in their hands.
In closing, I urge my colleagues to support the middle class tax cuts, to vote ``no'' on the rule and on ordering the previous question.
Madam Speaker, I ask unanimous consent to put the amendment and other extraneous material in the Record immediately prior to the vote.