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Mr. HOEVEN. Madam President, I rise to speak on the need for progrowth tax reform rather than a tax increase.
President Obama has proposed raising taxes. He says that we should raise income taxes on individuals and small businesses, that we should raise capital gains taxes on investments, and that we should raise the estate tax, meaning raise the death tax on American families.
For example, take the estate tax. You have a farmer. Right now, if he wants to pass his farm on to the next generation, for any value over $5 million, he has to pay the estate tax. Generally, families may be able to do that. They may be able to borrow the dollars required and pass the family farm on to the next generation. But under this proposal, that changes. Instead of paying the estate tax on anything over $5 million, now that farm family would have to pay the estate tax on anything over $1 million. So think about a farmer in my home State of North Dakota or maybe in Minnesota or anywhere else throughout the Midwest. How do they pass on that family farm when they are going to have to pay taxes on any value over $1 million? So now they are looking at a situation where they are going to have to sell that farm rather than have their children continue farming an operation that may have been in that family for generations. That is a real problem for our farmers, for small businesses, and for families across this great country, and it certainly is not going to help our economy. In fact, it will hurt our economy.
The President himself has said that we cannot raise taxes in a recession. He has said repeatedly that doing so would hurt the economy and would, in fact, hurt job creation.
So let's review our situation right now. Our situation right now is that we have 8.2 percent unemployment. We have more than 41 months in which unemployment has been above 8 percent. We have 13 million people out of work, and we have another 10 million people who are underemployed. So you are talking about 23 million people in this country who are either unemployed or underemployed.
Middle-class income, since this administration has taken office, has declined on average from approximately $55,000 to $50,000.
Food stamps use. Food stamp recipients have increased from 32 million recipients, when this administration started in office, to 46 million food stamp recipients today.
Home values have dropped on average from $169,000 to $148,000.
Economic growth. Economic growth in this recovery is the weakest of any recovery since World War II. For the last quarter, our growth was 1.9 percent versus the prior quarter--1.9 percent.
Job creation last month: 80,000 jobs. But it takes 150,000 jobs gained every month just to hold even with our population growth, just to start reducing that 8.2-percent unemployment rate.
Those are the facts. They speak for themselves. You can draw your own conclusion.
The President's approach to our economy is making it worse. His failure to join with us in extending the current tax rates and engage in progrowth tax reform rather than raising taxes is sitting on our economy like a big wet blanket. But we can change that, and we can change that right now. We do it by extending the current tax rates, the tax rates that have been in effect for 10 years--not raising them but extending the current tax rates for a year--by engaging in comprehensive, progrowth tax reform, and also, of course, by getting control of our spending. Business investment and economic activity would respond immediately.
Look at the latest information from the Congressional Budget Office. The CBO projects that the economy will contract--will contract--by a 1.3-percent annual rate for the first 6 months of next year if the fiscal cliff is not addressed, meaning the current tax rates, which go up at the end of the year unless we address this, an increase in taxes and the sequestration.
Now, if those things are addressed with the approach we have put forward, instead of an overall one-half percent of growth next year, you are looking at 4.4-percent growth for our economy. Those are the CBO's statistics. Think of the difference--think of the difference--that would make for those 13 million people who are looking for a job. It just stands to reason because business needs certainty to invest, to grow, and to hire people, not higher taxes. With legal, tax, and regulatory certainty, businesses in this country would invest and grow.
Right now, there is more private capital on the sidelines than at any other time in the history of our country. Private investment capital that businesses would otherwise invest and get this economy growing and get people back to work is sidelined because of the regulatory burden, because of the government spending and the deficit and because of plans like this to raise taxes. It is that situation which is sidelining private investment and private capital. That means slow economic growth. That means higher unemployment. That means more people without jobs. That means less revenue to reduce our deficit and our debt.
So clearly raising taxes is not the way to go. But President Obama says: Now, wait a minute, everybody needs to pay their fair share. Right? You hear him say that all the time: Everyone needs to pay their fair share. Well, of course everyone needs to pay their fair share, but the way to do it is with progrowth tax reform and closing loopholes. That is exactly what we have proposed, not raising taxes on more than 1 million small businesses in this country--the very job creators in this country--as the President has proposed.
Let's take a look at tax rates for just a minute. We talk about this all the time. Let's take look at these tax rates. According to the National Taxpayers Union, for the tax year 2009, the top 5 percent of taxpayers paid almost 60 percent of the taxes. One more time. The top 5 percent of taxpayers paid almost 60 percent of all the income taxes paid. The top 10 percent paid 70 percent of all income taxes, and the top 50 percent paid 98 percent. The top 50 percent of taxpayers paid 98 percent of all income taxes.
So what we are proposing is progrowth tax reform, closing loopholes. Let's extend the current tax rates for 1 year and set up a process to pass comprehensive, progrowth tax reform that lowers rates, that closes loopholes, that is fair, that is simpler, and that will generate revenue from economic growth rather than higher taxes. The reality is that, along with controlling government spending, is the only way we are going to balance our budget, that is the only way we are going to get on top of our deficit and debt, and that is the only way we are going to get these 13 million people back to work. Because that is how this American economy works--when we stimulate that private investment, that entrepreneurial activity of small businesses across this county that has made our economy the envy of the world.
To be successful, this effort has to be bipartisan. We have to join together in a bipartisan way to make it happen. So let's get started. Let's give small businesses in this country the legal, tax, and regulatory certainty, the business climate, the environment they need to encourage private investment and innovation and job creation. That is the American way. That is the real American success story. We can do it, we need to get started, and we need to make it happen now.
With that, I yield the floor.
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Mr. HOEVEN. That is exactly right. I am pleased to be here with my esteemed colleague from South Dakota as well as my esteemed colleague from Kansas. I wish to commend Senator Coats from Indiana for the strong and important points he made here as part of this discussion on the Senate floor. This vote we will have on the Tax Code and its impact on farming and small businesses across this country is certainly important.
But Senator Coats also made a very important point a few minutes ago; that is, we already have farmers and ranchers--our producers--in a situation where they face difficult times because of the drought. So I join him in calling on our House colleagues to act on the farm bill. I think it is very important we pass a farm bill, as we have in the Senate.
I had an opportunity to work on that farm bill with Senator Thune of South Dakota and others. We passed a good package in the Senate. The House Ag Committee has passed a good farm package as well. We need that to pass the House, get it into conference, and get a farm bill done for our producers. I think that is incredibly important always because good farm policy benefits every American. We have the highest quality, lowest cost food supply in the world thanks to our farmers and ranchers. Particularly now, with our farmers throughout the country looking at this drought, it is very important they know we have a sound farm program in place for now and for the future.
As regards this vote in the Senate today, whether it is
the good Senator from Indiana, from Kansas, from South Dakota or others, this is incredibly important. We are looking at a bill that is essentially a plan put forward by President Obama that will raise income taxes, that will raise taxes on capital gains, and that will raise the estate tax.
I was on the floor this morning, as others have been, talking about the impact that those tax increases will have on small business when we have 8.2 percent unemployment. We have had 8 percent unemployment for more than 40 straight months. To a large degree, people are focused on the increase in the income tax and its impact on small business, but the impact from the estate tax--from the death tax--is a big deal, and people need to understand what the ramifications are if that estate tax is increased.
We understand it very well in our States because of the case we are making right here. Look at how this affects our farmers and ranchers. We are talking about going from a situation where when a farmer or rancher, looking to pass on that farm or ranch right now, is taxed, from an estate tax standpoint, on the amount above $5 million and then it is set at a 35-percent rate. But the plan being put forward today--and being put forward essentially by the President and by the other side of the aisle--would change that to go back to anything over $1 million would be subject to the estate tax and then would be taxed at a 55-percent rate. So just do the math; right?
That is the point the good Senators from South Dakota and Kansas and others have been making. It doesn't work. It just doesn't work. In other words, that family can't borrow enough money to pay off the estate tax and keep the farm because they can't afford to pay back that level of debt. The farming operation will not sustain it. The ranching operation will not sustain it. You can't borrow that much money to try to keep the farm in the family because you can't afford to pay the debt. As a business enterprise, it can't service the debt. So what happens? The only alternative is to sell the farm.
So we have farmers who have been farming for generations--their father, their grandfather, grandmother, mother, relatives all the way back--and now their kids are farming with them. Their children are involved in that farming enterprise, and they want to continue farming, but that is not going to happen because they are not going to be able to afford the estate tax. So this is exactly what we are talking about when we talk about how raising taxes will have a detrimental impact on our economy.
We have talked about this in terms of small business and we have talked about it in terms of the income tax and the ramifications on capital gains tax, but I think this demonstrates how clearly it truly has an impact across this country on all small businesses because I think all of us, from our States and from many other States, know these farm families. We know this is not just a job or a vocation, it is a way of life, and it is a way of life these families have been counting on.
I wish to make one further point before I turn the floor over to my esteemed colleague; that is, these farm families or any other small business, when we look at the estate tax, we have to keep in mind they are passing assets, but throughout their entire life they have been paying taxes. They have been paying income tax, sales tax, property tax. They have been paying taxes all the way along. So it is not as if they are just handing this stuff on to the next generation without paying taxes because they are not paying a death tax. They have been paying taxes on it all their lives and not just one or two taxes but multiple taxes. So this property has been taxed their entire life. They have worked their entire lives to pay those taxes and would now face a death tax that would force them to sell their business. That is not right.
You know what. It is not right if it is a farm or a ranch or, frankly, any other kind of small business in this country because this country is about small business. That is the backbone of our economy. It is the economy of this country, and that is exactly what we are dealing with.
That is why we put forward an option--and we encourage our colleagues to support this option--that will continue the current tax rates, that will not raise tax rates, and then we will work on extending those current tax rates for 1 year while we engage in progrowth tax reform. We close loopholes and we get more revenue from economic growth, from a growing, more vibrant economy that puts people back to work rather than raising taxes.
With that, I yield the floor for my esteemed colleague from South Dakota.
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