Concurrent Resolution on the Budget for Fiscal Year 2014
Floor Speech
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Mr. WHITEHOUSE. Mr. President, I have similar stories to those that have been described on the Senate floor today. Indeed, a former Member of this body, who is now the Governor of our State, Governor Chafee, wrote to me about a bookstore owner in Middletown, RI. The bookstore owner talked about patrons who would browse for books in his store, only to leave without actually making a purchase. He said they would make a list of the books they wanted to buy and then went to get them more cheaply on the Internet.
I have been approached by a Rhode Islander who works in a shoe store. He said he has seen people come in and have his employees bring them boxes of shoes to try on so they can find the exact size and model shoe they want only to then walk out the door without a purchase. They have seen it happen enough that they think what happens is the potential customer is instead going to an Internet site so they can buy the shoe more cheaply.
Now, there are true efficiencies and true benefits to shopping over the Internet. It is very valuable, and it is very sensible. Those are real factors. That is part of progress, and we have no quarrel with that. However, we should not be using discrepancies in taxes to favor shoe companies, one over the other, because one sells over the Internet and the other sells out of a brick-and-mortar store where people can actually come in and try on the shoes.
As a result of this loophole, big businesses who do business over the Internet have $23 billion to fiddle around with that doesn't go to support the kind of civic structure of our society--as Senator Franken talked about.
The complexities are not that great. There is an existing Streamlined Sales and Use Tax Agreement that simplifies this immensely. The tax payments will very shortly be built into the basic business software. The concern about small businesses is misplaced because we completely exempt any business with less than $1 million in annual sales. They have no obligation to comply with this whatsoever.
The National Governors' Association, the National Conference of State Legislatures, the National Association of Counties, the U.S. Conference of Mayors, the National League of Cities, the Retail Industry Leaders Association, the National Retail Federation, the International Council of Shopping Centers, and amazon.com, to their credit, as well as AFSCME, support this.
I hope we can use the vote on this amendment to show that this is a piece of legislation that we are willing to move forward on. Then, of course, we will have to go through the legislative process of authorization in order to actually pass it into law. The budget amendment will not pass it into law, but I think it will send an important signal that will bring everybody to the table and finally get us to closure on this important piece of legislation.
I will close by thanking Senator Enzi, whom I see on the floor, for his work and his leadership and dedication in trying to get this right over 14 years. Before it was as easy as it is now to comply with this, he was working on this. Every year it gets easier. Every year the software is able to catch up more. Every year more States join the Streamlined Sales and Use Tax Agreement. He and Senator Durbin have done a service to this country with their leadership on this issue.
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Mr. WHITEHOUSE. Mr. President, I thank Senator Levin for his leadership on this issue. I am proud to be part of his Levin-Whitehouse group in putting this together. If we boil down the discussions that we are having back and forth about the budget, they come to a very simple question; that is, can we use the money that is in tax avoidance, in tax loopholes toward solving our sequester problem, our deficit problem, and our debt problem?
The way this has been described so far is that there are spending cuts. That is one part of the equation. The other part of the equation is tax increases. That has been the way this has been framed. That overlooks the third big piece of the problem, which is money that goes out the backdoor of the Tax Code without ever coming into the U.S. Government in revenues. I want to let people who are watching know--because they probably won't believe it--what a colossal number that is.
We get $1.09 trillion in revenue out of the individual Tax Code. We get $181 billion in revenue out of the corporate Tax Code. We give away $1.02 trillion out the backdoor of the Tax Code for individual deductions and loopholes. We give away $157 billion out the backdoor of the Tax Code in corporate deductions and loopholes. The IRS estimates that there is $385 billion which never even gets into the formula because of what Chairman Levin was talking about: companies and individuals who hide their revenue and income offshore so it never even gets into the tax package. If we add it up, there is actually more money lost through tax avoidance than there is collected in tax revenue in this country.
When people talk about only the tax revenue and only spending cuts, they are trying to hide a very big ball. That is the basic difference between the Democratic proposal and the Republican proposal. We want to take $975 billion, which is only 7 percent of all the money that goes out the backdoor of the Tax Code, and use it toward ending the sequester and balancing the budget. That is our proposal. The Ryan Republican proposal is to take 41 percent of that money that goes out the backdoor of the Tax Code and use every nickel of it to lower the high-end rates for corporations and for wealthy Americans who pay the highest end rates. They don't put a dime from this toward either the sequester or deficit reduction. We cannot have that be the rule.
If we take this number, which is an annual number--the minimum is right here, $1.02 trillion plus $157 billion. We do our budget over a 10-year span. These are annual numbers. That means in a 10-budget horizon, we have at least $11.5 trillion going out the backdoor of the Tax Code.
If we allow for moderate growth in the economy, it is not $11.5 trillion, it is $14 trillion. If we throw in the nearly $400 billion in offshoring, we are up to nearly $18 trillion--$18 trillion that goes out the back door of the Tax Code.
By the way, although there are important middle-class deductions in the middle of this, such as the home mortgage deduction, there is an awful lot of nonsense and mischief in the tax expenditures that go out the back door of the Tax Code. If we want to know why hedge fund billionaires pay a lower tax rate than their chauffeurs and the hospital orderly rolling his cart down Rhode Island hospital hallways in the middle of the night, we can look at the mischief in the Tax Code for the carried interest exception. If we want to know why corporate jets, private jets get favored treatment, look at the accelerated depreciation schedules in the corporate Tax Code. There is a lot of mischief and monkeyshines that have been built into the Tax Code by lobbyists for the wealthy and lobbyists for powerful corporations over the years.
All we want to do--and what this fight is all about--is take $975 billion out of those trillions and trillions of dollars that go out the back of the Tax Code and use it to get rid of the sequester and to balance the budget. That is what we want to do. And what the Republicans want to do is take 41 percent of that and use every dollar--every dollar--to lower tax rates for the richest people. They don't spend a nickel in all of that toward reducing the deficit or toward ending the sequester.
This Tax Code spending--all the earmarks the lobbyists built into the Tax Code over decades--is the Republican treasure trove. That is their Ali Baba's cave. That is where all the goodies are, and they don't want to spend a nickel of it either getting rid of the sequester or helping with deficit reduction. They want all of the treasure in Ali Baba's cave of special tax deals to stay with the big corporations and with the wealthy in the form of lower tax rates. That is the entire debate between our sides right now.
I think Chairman Levin, by putting forward this plan to take this offshore hidden revenue and bring it into the discussion and use it to help solve our sequester, use it to help support our economy, use it to help reduce our deficit, is a very strong idea, so I am very pleased to support him. I appreciate his leadership. I am delighted Senator John McCain has joined us on this to make this a bipartisan initiative. They show great leadership together, and I am delighted to join them.
With that, with my great appreciation to Chairman Levin, I yield the floor.
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