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Mr. BISHOP of Utah. I thank the gentleman from Missouri for allowing me to have some time here, and I appreciate the comments of the gentleman from Ohio illustrating what happens in the States. I think oftentimes we should be looking to the States as an example of what does and what does not work, and we can emulate those concepts here in Washington.
You are right, as you initially said, we have a severe budget problem. There are really only two ways of trying to reconcile that budget problem: We can either raise taxes or we can cut spending.
I think it is interesting to look at some other States. Cal Thomas had a wonderful article this morning--maybe it was last night--that talked about comparing what other States have done. So we see the State of Illinois, another midwestern State whose solution to their problem was to raise the personal income tax 67 percent and their corporate tax rate by over 46 percent.
Mr. AKIN. May I interrupt. You said raise the personal income tax in Illinois. Was it by 6 percent?
Mr. BISHOP of Utah. Sixty-seven is what I heard, and 46 percent on corporate taxes. And let's face it, corporate taxes are paid by consumers anyway. So you get hit with it coming or going.
You can compare that with what other States have done, like the neighboring State of Indiana or Wisconsin, Virginia, New Jersey, my home State of Utah, which decided to solve their problem simply by reducing their spending. I am told that Indiana, since 2004, reduced spending by 40 percent.
Mr. AKIN. Whoa, 40 percent. That is a number.
Mr. BISHOP of Utah. And it will be interesting to see if the Illinois experience will replicate what happened in Indiana and those other States I listed, and my gut guess is it probably will not.
But when we instituted income tax for the first time in this country, the statute that did that would cap the maximum rate of income tax at 2 percent, even though we only applied a 0.5 percent income tax. I think if people would look at their paychecks today, they would see it slightly different from that original time.
Mr. AKIN. As I recall, gentleman, at that time, weren't there people who said that income tax could possibly get
as high as 5 percent and they were laughed off the floor of the Congress, that income taxes could get as high as 5 percent? Am I right on that?
Mr. BISHOP of Utah. It is alarming, but that is actually accurate. As we found out in that experience, the best tax is, obviously, something paid by somebody else. It was estimated when that original income tax was in place that 80 percent of it would actually come from only four States. Apparently, four States were fighting it, and the rest of the States kind of liked it.
Unfortunately, there was--and I'm not impugning anybody here--a Representative from Missouri at the time who actually did say that a new dawn has broken with this new income tax and that, actually, the government would be more careful with people's money now that we are taking it directly from them than in the past when we simply ran government by taxes coming from tariffs or land sales.
Mr. AKIN. We're not proud of everybody from Missouri, gentleman.
Mr. BISHOP of Utah. That certainly does not represent your thinking anyway.
Mr. AKIN. No.
Mr. BISHOP of Utah. What happened is, within a short period of time, using World War I as the excuse, that top rate was not at 2 percent or at 5. It was at 75 percent. Now, what we found out is the actual amount of money coming into the country was in a decline, not in an incline.
So, when President Coolidge came into power and initiated the first tax cuts by reducing the rates across the board, the amount of revenue coming into the country actually increased. The same thing happened when President Kennedy tried it, President Reagan, and President Bush, because what we found out was that people with money are not stupid. They had money for a reason and that it was not that they were avoiding their taxes. They had just found an alternative way of investing--in the case of World War I, it was a lot of municipal funds that were going in there that were not taxed--or they simply did not invest their money. They sat on it until such time as they actually had control of their money again.
So the bottom line here is, if we look at the tax pot, or proposal, as a way of solving our problem, all we do when we allow taxes to increase is allow Congress to actually spend more.
It's like going on a diet, which I desperately need. I may change my diet to my only eating good food; but if I eat a whole lot more of good food, it's not going to really solve the problem. There is another problem, too, that goes onto the spending side, which is I can actually be full and malnourished at the same time. If I only eat potatoes as a diet, I may be full; but I'm not helping my body.
When we look at the spending side, which is really the only option that we have, and when we don't look at it in a way of looking at how we are spending, all we're doing is malnourishing us. All the CRs we passed last year, without actually doing a real budget or a real appropriations act, may have flat-lined our spending, but it didn't help us out. It was like eating potatoes all the time, which in moderation are good; but if that's the only consumption you have, we are making serious problems.
Mr. AKIN. I think what I'm hearing you say, gentleman, is that America has been getting high on junk food. At least you have an economic analogy.
Is that where you're going?
Mr. BISHOP of Utah. Well, so am I, and I have to admit I love potato chips; but, yes, that's where we're going.
What we need to do is, I think, what this Congress is looking at, which is to try and readjust what we are doing and look at our spending levels, which is why 2008 spending will be a starting point to adjust and look at what we are doing. We have to look at our spending in prioritization so we're not just spending everything. We have to look at what our responsibility as a government is, and we have to look at the spending side seriously.
As the gentleman from Ohio stated and you stated with your charts, if we do not take the spending side seriously as the solution to our problem, we will never find a solution to our problem; and the end result will be disastrous for this country.
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