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Pathway to Job Creation Through a Simpler, Fairer Tax Code Act of 2012

Floor Speech

By:
Date:
Location: Washington, DC

BREAK IN TRANSCRIPT

Mr. DREIER. Mr. Speaker, I yield myself such time as I may consume.

An exorbitant amount of ink has been spilled chronicling the many divisions here in the United States Congress. I was just speaking a couple of hours ago in the well about the bipartisan consensus we were able to put together on the trade issue. And I've got to say that the differences of opinions between and within the Democratic and Republican Parties are extraordinarily well documented, and too little attention is focused on the kind of bipartisanship that we've had on issues like the one that we were debating earlier today. But, having said that, even though it doesn't get much attention, there are a number of issues, Mr. Speaker, on which we can all agree.

We all agree, for example, that dramatic reform of our budget process is needed. We may diverge significantly on the kinds of reforms and the manner in which they should be implemented, but none of us looks at our skyrocketing deficit, anemic economic growth rate, or persistent unemployment and thinks that the status quo, when it comes to the Federal budget process, is acceptable.

I, personally, believe very strongly in the notion of our going to a 2-year budget cycle so that we could have both the Appropriations Committee and the other authorizing committees expend time, energy, and effort meeting their constitutional responsibility of oversight.

So again, there are a wide range of views as to how we deal with the issue of budget process reform, but there is a consensus. Democrats and Republicans alike believe that it is necessary.

We also all understand that budget challenges must be addressed within two specific areas: both taxing and spending. Again, we disagree greatly on the level and the structure of both, but we agree that it needs to be addressed. We know that meaningful budget reform must consist of both reform of the budget process, itself, as well as reform of the tax structure.

Mr. Speaker, the exponential rise in spending in

recent years infused our reform agenda with a great sense of urgency, which is why we, as Republicans, have focused so intently on reversing that trend and bringing about meaningful spending cuts. In fact, when I announced that I would be leaving here at the end of this year, one of the things that I had wanted to accomplish was that I made the choice, even though I wasn't originally planning to run again--this was 2 years ago. One of the things I said we had to do was reverse that trend we'd been on with an 82 percent increase in non-defense discretionary spending that we'd seen the years before. Well, I'm happy to say that we have been able to at least begin the process of reversing that trend.

Now we face a new level of urgency on the tax side of the equation. As we face the prospect of stark tax increases at the end of this year, while unemployment is stuck, as we've had pointed out to us by the chairman of the Ways and Means Committee, Mr. Camp, an unemployment rate in excess of 8 percent, which has gone on for more than 40 months--and we've just gotten the report at the end of last week that our GDP growth rate was revised downward from 1.9 to 1.5 percent. Tomorrow we're due to get these unemployment numbers. We all hope and pray that we will see improvement. But even if we do see some improvement, we know that the length of this challenging economic period is something that needs to be dealt with, and one of the best ways to deal with it is meaningful tax reform.

The legislation that we have before us, H.R. 6169, represents one-half of our two-pronged approach for preventing the enactment of catastrophic tax increases that would further paralyze our economy. The first step that we must take, Mr. Speaker, is to put a stop to the tax increases looming at the end of this year, which is precisely what this institution, the House of Representatives, did yesterday with the passage of H.R. 8. That bill will keep in place our current tax rates, as we all know, for 1 additional year. Now, that's an essential step.

The President of the United States has said increasing taxes during difficult economic times is bad policy. In fact, not just President Obama, but even the traditional Keynesian economists will argue that the notion of increasing taxes during slow economic growth is a prescription to exacerbate the economic downturn.

So it's very important that we do that. Again, that's one very important step. But on its own, it's just a stopgap solution, what we have done yesterday, here, for that one period of time.

Mr. Speaker, the second part of our two-pronged approach creates a pathway to a long-term solution. Now, this legislation puts in place a structure that will facilitate consideration and passage of meaningful, comprehensive tax reform.

Again, Democrats and Republicans alike regularly say they are for meaningful tax reform. We have talk from both sides of the aisle about it. What we're doing here with this compromise that we have is putting into place a structure that can lay the groundwork to have action taken rather than, simply, simply talk.

Now, Mr. Speaker, we all know that our Tax Code is not working for the American people. I think that it's another point on which we can all agree. I would say to my friend from Worcester, he knows very well that the Tax Code that we have today is not working. We believe on our side that the Tax Code we have today is not working. It's unfair, and it is Byzantine in its complexity. And we all know, too, that the Tax Code that we have, Mr. Speaker, is clearly a drain on our economy.

I'd like to make a couple of points on this.

Since 2001, that's basically a decade plus a year, a little over a decade, there have been nearly 4,500 changes made to the U.S. Tax Code, so within that decade, 4,500 changes made to the Tax Code. Now, Mr. Speaker, that works out to one change a day, one change a day over that 10-year period of time. Now, the resulting complexity leads nearly 9 out of 10 families to seek assistance in filing their Federal income taxes. And at the same time, Mr. Speaker, the majority of small business owners, small business men and women in this country, 71 percent, 71 percent of all unincorporated businesses are forced to pay someone else to prepare their taxes.

Now, dealing with the Tax Code under these circumstances forces individuals, families, and employers in this country to spend--are you ready for this, Mr. Speaker?--over 6 billion--6 billion--hours, costing over $160 billion every single year in an effort to faithfully comply with the burdensome and complicated Federal tax system.

Now, Mr. Speaker, I've talked to tax attorneys and accountants--tax attorneys and accountants--and they acknowledge that these wasted resources are a drain on economic growth and on our shared bipartisan quest for job creation.

Furthermore, the current system is injecting a great deal of uncertainty in our economy. Many of us like to point to the fact that uncertainty is the enemy of prosperity.

Now, Mr. Speaker, let's look at the uncertainty that has existed over the past several years. Tax rates have been scheduled to increase sharply in 3 of the last 5 years, requiring the enactment of repeated temporary extensions. What does that create for job creators and for investors out there? It creates that uncertainty. And that uncertainty, again, is the enemy of prosperity.

Now, Mr. Speaker, as you know, dozens of other major tax provisions expired in 2011 or are currently scheduled to expire by the end of this year. Working families and small business owners are not able to plan for the future or make rational business decisions, including hiring decisions, in this extraordinary environment of uncertainty.

Now, Mr. Speaker, all of these challenges argue forcefully for comprehensive reform. Unfortunately--unfortunately--real results in this quest have proved, so far, to be elusive. We are all aware of the challenges of moving comprehensive legislation through the Senate. Here in the House, we have, as we all know, a majoritarian body where a simple majority is able to work its will.

The nature of the Senate is fundamentally different, far slower, far slower, by design. Frustrating though its inactions may often be, I do believe that the Framers of our Constitution were actually right to structure these two bodies differently.

However, at times throughout our Nation's history, we've recognized the need to come together, the two institutions to come together to facilitate decisive action on critical matters. And, Mr. Speaker, that's exactly what we are doing here today, recognizing that the imperative for tax reform, something that has been discussed for literally decades, is going to be able to have something other than just talk, but action. And we're going to facilitate that with this effort here.

This legislation, Mr. Speaker, lays out a roadmap for reform and helps to ensure its timely consideration in both the House and the Senate. It provides for consideration of a bill that is introduced by the chairman of the Ways and Means Committee by April 30 of next year, and then incorporates five key pillars of comprehensive reform.

First, the reform package should provide individual filers with much needed clarity and simplicity by consolidating the current individual income tax rates into no more than two brackets, 10 and 25 percent.

Second, it should spur job creation and growth by limiting the corporate tax rate to no more than 25 percent. And again, focusing on the bipartisan nature of this, I've regularly said that I appreciate the fact that President Obama has come forward and called for a reduction in the top rate on corporations in this country.

Third, it should protect middle class families by repealing the alternative minimum tax. We all know how onerous that has been, and we all know that more and more Americans have, unfortunately, been drawn into this alternative minimum tax, which was designed to focus on very, very few people.

And fourth, Mr. Speaker, it should broaden the tax base to maintain revenue between 18 and 19 percent of our gross domestic product. And so, as we look at our economy, the goal of 18 and 19 percent.

And finally, one of the things, again, I was talking about earlier is our global leadership role. We need to make sure that we shift from a worldwide to a territorial system of taxation to have greater equity, to allow for those who want to invest and participate to be able to do so on a global basis.

These are broad outlines of the tax reform agenda, Mr. Speaker, and they're an outline that I think will lay the groundwork, again, for the details to be put into place. The legislation provides for expedited procedures in the House and the Senate, so that comprehensive reform can receive its due consideration.

Now, Mr. Speaker, in the House, under this structure, any committee that receives a referral on the tax reform bill must report the legislation to the House within 20 calendar days. Failure to do so within that time period will result in an automatic discharge of that legislation. Our Rules Committee will then have 15 legislative days to provide a special order for consideration of the bill before the majority leader is automatically empowered to offer a motion to proceed with floor action.

Now, Mr. Speaker, to underscore how important the right of every member of this institution is, after 2 days, any Member of the House will be able to do so if action has not been taken by the majority leadership. These procedures will help to ensure that no committee or Member has the power to prevent or indefinitely delay consideration of comprehensive tax reform.

Now, Mr. Speaker, in the Senate, which is where this is really needed because, of course, we have a Rules Committee here in the House and so it's not absolutely essential that we do this. But in the Senate, where this is really needed, the bill, tax reform bill must be referred to the Committee on Finance, understandably, which will then have 15 calendar days to consider and report the bill before the legislation is automatically discharged.

Mr. Speaker, in the Senate, the Majority Leader can then offer a motion to proceed to the bill. After two more days, any Senator will be empowered to do so, again, ensuring that people will not be able to stand in the way of moving ahead with tax reform. Now, that motion will not be debatable, and cloture is not required before a vote on a motion to proceed; basically meaning, Mr. Speaker, that a super majority will not be necessary to allow to move ahead on the debate on tax reform in the Senate.

Now, each amendment will be limited to 2 hours of debate in the Senate, and cloture will also not be required before votes on individual amendments. However, cloture, a very important power that does exist in the Senate, cloture on the underlying bill may still be required prior to the vote on passage of the bill.

So what this does, Mr. Speaker, these procedures ensure timely consideration in the Senate, while maintaining that last hurdle of a potential cloture vote on to final passage.

I believe very strongly, Mr. Speaker, that this agreement strikes the right balance between facilitating action while preserving the very core nature of the Senate process. The magnitude and the urgency of our current economic challenges demand that we create this clear pathway to comprehensive tax reform.

Our proposal provides a real solution to the uncertainty, the complexity, and the burdensome nature of our Tax Code. And, Mr. Speaker, it unleashes a powerful source of new revenues.

Now, you know this very well, Mr. Speaker. There is a common misperception out there, and you hear it reported from people in the media, and I don't believe that it's normally meant as a pejorative, but what they say is, Republicans don't want to increase revenues. Republicans don't want new revenues to the Federal Treasury. We hear this drumbeat over and over again.

I'm here to say, Mr. Speaker, nothing could be further from the truth. Republicans want new revenues to the Federal Treasury. We absolutely must find a way to bring greater revenue. We've got to find a way to bring revenue into the Federal Treasury. We all decry the $15-plus trillion national debt that we have and the massive deficit spending. We've got to have greater revenue to the Federal Treasury.

Where we diverge, between the two political parties, my colleagues on the other side of the aisle, is the manner in which we see these new revenues actually achieved.

Rather than raising tax rates on any one set of individuals or businesses, we want to raise revenues through greater gross domestic product growth. We want to expand the overall size of our economy, creating opportunity for all Americans. We've done this as a Nation many times in the past.

I always like to point to President John F. Kennedy, who pioneered this approach by cutting marginal tax rates and growing revenues as a result. Now, I acknowledge the marginal tax rates when President Kennedy did this were significantly higher than they are today, when he was able to reduce marginal rates for individuals and reduce capital gains. But we still can put into place pro-growth tax policy.

Mr. Speaker, President Reagan did the same thing 20 years after John F. Kennedy did it, and we all know what happened. We all know what happened, Mr. Speaker, when President Reagan, with the support of many Democrats, through what was known as the Conable-Hance tax package, it was a Democrat and a Republican, a then-Democrat and Republican. Mr. Hance has since seen the light and become a Republican, but he was a Democrat at the time. He offered this measure that brought about major marginal rate reduction. And what did that do?

During the decade of the 1980s, contrary to so many reports, we saw a nearly doubling, a nearly doubling of the flow of revenues to the Federal Treasury, bringing even greater results than we saw following President Kennedy's cuts. So, Mr. Speaker, we want to follow the Kennedy-Reagan tradition of expanding the Federal Treasury by implementing pro-growth tax reform.

Now, we all know that our friends on the other side of the aisle do take a different point of view. I wish that they would follow President Kennedy's great example on this. But, unfortunately, the leadership on the other side of the aisle does take a different point of view, which brings me to the final point on which we all agree.

The Democratic approach to the considerable economic challenge we face is to raise taxes. I mean, we all agree that that's what our friends on the other side of the aisle are arguing. I've been watching television ads with President Obama on there talking about increasing taxes on working Americans. Yes, they're in the upper income, but these are people who are creating jobs and investing, and he wants to increase the tax burden on those people.

They readily admit that their solution is to allow a large portion of the tax increases to proceed. They want the tax increases that are scheduled to go into place in January to succeed.

So I come back to my points on the fact that uncertainty is the enemy of prosperity, and the statements of President Barack Obama, who as we all know has in the past agreed to an extension of these tax cuts to keep the economy growing. We also know that Keynesian economists have again made it clear that increasing taxes during a slow economy is a prescription for disaster.

So this is where the disagreement lies.

Democrats and Republicans alike recognize that Democrats want to increase marginal tax rates and that we as Republicans want to grow the economy to enhance the flow of revenues to the Federal Treasury. We as Republicans argue that making the Tax Code more burdensome for some and more complicated for all is not the solution. Raising taxes when our economy and our job market are flagging is not the solution. The only way for us to create opportunity for all Americans is to reignite our engines of economic growth, but we cannot spark new growth without addressing both the immediate crisis of impending tax increases and the long-term need for comprehensive tax reform.

So, Mr. Speaker, I urge my colleagues to support this very, very critical legislation.

With that, I reserve the balance of my time.

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Mr. DREIER. Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, I want to congratulate my distinguished Rules Committee colleague for his very thoughtful, warm, and loving mischaracterization of where we stand on this issue.

This is not about Donald Trump. This is not about Donald Trump at all. We continue to hear the two words ``Donald Trump'' invoked in the tax debate.

What this is about, Mr. Speaker, is the 253,484 women-owned small businesses in this country who are seeking to ensure that they can continue to have the ability to hire people and grow their businesses. This is about the potential of losing 710,000 jobs, based on the Ernst & Young report that has come forward. This is about ensuring that we turn the corner on our economy.

Now, Mr. Speaker, when I came here in 1981, one of the first bills that I introduced was a bill calling for a flat rate tax. People talked about that all the time. I mean, there was a standard joke out there. It was, well, the simple tax form asks, How much did you earn last year? The second line was, Send it to Washington. I mean, those are the kinds of things that people have said might be in the direction of tax reform. But what we need to do is we need to recognize that everyone has talked about the problem of taxes. Famously, the former chairman of the Senate Finance Committee, Senator Long, would say, Don't tax you. Don't tax me. Tax the guy behind the tree.

We all know, Democrats and Republicans alike, that there is a desire to make this happen. There is always talk from Democrats and Republicans. Again, President Obama has said we need to bring about tax reform. President Obama has said we need to reduce the top corporate rate from that 35 percent level. I congratulate him for acknowledging that we have the highest corporate tax rate of any nation on the face of the Earth, now that Japan has lowered theirs, Mr. Speaker.

Everybody talks about it, but the question is: How do we actually get it done? Now, my friend said that if we really wanted to do it, we could have done it. Well, there are specifics in this measure. There are specifics. We have five of them. Included among them: ensuring that we repeal the alternative minimum tax, and everyone acknowledges how terrible that is; ensuring that we have two rates of not more than 10 and 25 percent; and, yes, doing what President Obama has said we need to do, and that is reducing the top corporate rate, this calls for 35 to not more than 25 percent; and then also dealing with the global aspect.

This has specifics in it. And what it has, Mr. Speaker, at the end of the day is: Let's get the job done. Action, action, action. We can continue to hear all kinds of talk--press releases and all this sort of stuff, talk about what this is. This is about actually doing what Democrats and Republicans say needs to be done.

I think that by working with our colleagues in the Senate--we ensured, by the way, under this structure that no Democrat is denied the opportunity to offer amendments. My friend said that we don't have this great bipartisanship. Well, we're pursuing a bipartisan goal of comprehensive tax reform and the structure to make that happen. But as this process begins, we will have, clearly, amendments in both the House and the Senate offered by any Member who wants to participate in this process at the committee level as it goes through.

I see we have the ranking Democratic member of the Ways and Means Committee, my very dear friend, the gentleman from Michigan (Mr. Levin), here on the floor. I'm sure that as we proceed with tax reform under this structure that Mr. Levin will be offering many thoughtful amendments to this measure. His right is guaranteed under these expedited procedures.

So what we're arguing, Mr. Speaker, is that we need to make sure that, rather than simply talking, we get things done. And I think we've got a chance to do that now.

Mr. Speaker, I urge my colleagues to support this measure. We're going to go into a debate now with our friends on the Ways and Means Committee; and from there, we will have a vote on the substitute, which I'm happy to say that we made in order, that will be offered by the distinguished ranking minority member of the Committee on Rules; and then we will proceed with a vote on this measure.

So I urge my colleagues to support action, action, action over talk, talk, talk when it comes to the imperative of growing our economy and reforming taxes.

With that, I yield back the balance of my time.

BREAK IN TRANSCRIPT

Mr. DREIER. Mr. Speaker, I would like to begin by extending my congratulations and to associate myself with the very thoughtful remarks of my dear friend from Rochester, the distinguished ranking minority member of the Committee on Rules. As she at the beginning said, Democrats and Republicans alike agree on the need for comprehensive tax reform.

She is right on target when she says that, Mr. Speaker, and that's exactly what we're doing. The problem that we have is that the amendment that she is proposing undermines the ability for us to get that done.

Now, as I think about this issue that is before us, we have virtually everyone talking about the need to get this done. We have Democrats talking about it, and we have Republicans talking about it. We have the President of the United States talking about it. In fact, it's very interesting. As I heard my friend characterize the ``misguided principles'' set forth by the Republicans, I am struck by the fact that at least one of those principles has been called for by President Barack Obama. President Obama has said that we need to reduce the top corporate rate from 35 percent. He acknowledges the fact that we have the highest corporate tax rate of any nation on the face of the Earth now that Japan has very wisely reduced its top corporate rate. So what my friend from Rochester describes as ``misguided'' is actually one of the proposals submitted by President Obama.

So, again, talk is great. I've talked about tax reform myself for the three decades that I've been privileged to serve here. My friend has just talked about the need for tax reform, but there is a time, Mr. Speaker, when we need to step up to the plate and take action.

The Framers put into place a very, very good structure, a differentiation between the rules and operations of the House and the Senate. We know that the House of Representatives is the coffee cup into which the coffee simmers. As President Washington said so eloquently to Thomas Jefferson as they were sitting down at the Willard Hotel and were describing the Senate--Jefferson was the really smart guy, but it was Washington who was describing to Jefferson what that ``saucer'' is. It's where the simmering of the coffee takes place, and he said that that's what the Senate is. That was a great vision put forth by our Framers, Mr. Speaker, but there comes a time on some important issues when we need to streamline operations, expedite procedures, and that's what we're doing.

What my friend from Rochester said is absolutely right. We need to put into place comprehensive tax reform. I totally agree with that. Now let's get it done. Yes, we put forth some guidelines. We say two rates, no more than 10 or 25 percent. I mean, let's deal with the globalization issue by shifting from a worldwide to a territorial tax system. Let's do what we can to obliterate the alternative minimum tax, which we all know has impacted so many of our fellow working Americans who are struggling to make ends meet. It was never designed to do that. And as President Obama has said, let's reduce that top corporate rate.

Mr. Speaker, as we look at this issue, we can talk about tax reform until we are blue in the face, but this structure is one that's going to actually get it done. I say very sadly that this measure that is being proposed by my friend is a measure which simply extends the talking, and it undermines the ability for us to actually take action.

Let's move ahead. Obviously, we need to make sure that we maintain the tax structure for everyone, the tax cuts for all. We did that yesterday. There is this notion of saying let's just proceed with what we all agree on, which is that we all agree on keeping taxes low for those in the middle class. Well, if we do what it is that they're saying, what we would end up doing is actually imposing a massive tax increase on job creators. So we can't come to an agreement on that because, as President Obama again has said, increasing taxes during difficult economic times is bad public policy.

So, Mr. Speaker, I urge my colleagues to vote against this measure.

With that, I reserve the balance of my time.

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