Floor Statement of Senator Mark Dayton
On the Costly Tax Bill
Mr. President, this tax bill is one of the most dangerous, destructive, and dishonorable acts of Government that I have ever seen. It is a shameful looting of the Federal Treasury by the rich and powerful in America -- compliments of their friends in Congress. It uses every trick in the budget book to line the pockets of the upper class. It cuts the top tax rates immediately, retroactively, and permanently. It lowers the top rate by almost twice as much as the next three. That gives the most rate reduction to people who are making over $370,000 a year, only half of that rate reduction to people making over $150,000 a year, and no rate reduction at all to people in the bottom two brackets -- the 10- and 15-percent rates. There is just a tweaking of the bottom 10-percent bracket, which provides $100 a year to couples and $50 a year to individuals. That is also the only change to a tax bracket which is temporary. The top rate cuts are all permanent.
So let me repeat. An individual with an annual income of less than $35,000 gets a tax cut of $50 a year. A married couple, without dependents, with an annual income of less than $50,000 gets a tax cut of $100. A person with an annual income of over $1 million receives a tax cut averaging over $93,000 in the first year alone.
Now, one of the very few good provisions in the bill is an increase in the child tax credit of $400 per child. That is the one provision of any real benefit to middle-income families. But the Conference report drops the Senate provision to improve the part of the child tax credit going to families making $10,000 to $30,000 a year. There evidently was not enough room in this $350 billion tax giveaway to help them. They get nothing so the rich get more.
The conferees also threw out the Senate's elimination of tax avoidance loopholes, as the Chairman of the Finance Committee just described, and he deserves great credit for making the best effort possible, along with his Senate conferees, to keep these good Senate provisions in the final report, but they did not make it.
So Americans working overseas continue to be allowed to pay no taxes on their first $80,000 of income -- $80,000 tax free off the top, regardless of expenses or circumstances. They kept the loopholes allowing many corporations to move offshore and pay little or no taxes on their income.
You see how perverse this tax bill is. Every part of it is carefully constructed to give as much as possible to the rich and as little as possible to everyone else.
According to the Brookings Institution Tax Policy Center, over half of all American households will get a tax cut of $100 or less. The households in the middle-income range will get tax cuts averaging $217, and households with incomes above $1 million will get tax cuts averaging $93,500 a year.
It is like the White House is having a big banquet for the gobbling up of America and everybody is invited -- except there is one menu for the rich of America and there is another one for the rest of America. The rich start with oysters on the half shells. After they are done, the rest get the shells. Then the rich are served prime rib and filet mignon. The rest get Hamburger Helper. The rich wash it down with Dom Perignon champagne, and the rest with Boone's Farm. Then the rest are asked to leave before dessert because it is too rich for them.
Dessert is a dividends and capital gains tax cut. The unearned income of the rich and super-rich is to be taxed at only 15 percent rather than between 20 and 35 percent, although, in fact, many of the rich and super-rich will pay even less than that.
Yesterday's Wall Street Journal had a headline: 'Some Investors Could Cut Tax to Zero or Close.' Ronald Pearlman, a tax law professor at Georgetown University, is quoted in the Wall Street Journal as saying of the Conference report:
I guarantee it produces very, very low tax rates, possibly even zero.
So the wealthiest Americans will pay little or no personal income taxes. This tax bill ends this country's progressive tax code, and it replaces it with a perverse tax code.
It was said earlier that lower and lower middle-income taxpayers are going to get a zero-percent rate on their dividends and capital gains -- for all three of them who can use it.
While we are at it, why don't we eliminate their taxes on private jets, ski chalets, and gifts of over $500,000?
Most lower income or middle-income taxpayers have their dividends in tax-free accounts today. There is no additional benefit to them. Very few of them have capital gains of any sizable amount to benefit from this reduction. These are reductions targeted right toward the rich and the super-rich, the wealthiest 5 percent, the wealthiest 1 percent of Americans and their unearned income, the income they did not work for every day -- get out of bed, go to work, punch a clock, work, come out, and go home to their families -- they pay at a lower rate on their unearned income than working Americans pay on their earned income.
There is something wrong here -- very wrong here. This conference report is also dishonest. It is intentionally deceptive. It was required to be limited to a cost of $350 billion. That is what the Senate said: $350 billion. That meant of reduced revenues over 10 years. Well, evidently that was not nearly enough for the House conferees to feed the greed of everyone lined up at the public trough over there. So the conferees and the White House officials decided to cheat on the rules, not just a little but a lot.
They created these fictions, transparently ridiculous pretenses, that these big tax cuts would take effect there, run for 2 or 3 years, and then stop -- end entirely.
Well, I guarantee you - because everyone here knows - Congress will act next year to make those new tax cuts permanent, just as this tax bill that we are passing today -- I expect we will -- contains an additional tax cost of $1.3 trillion over the next 10 years. That is the cost during that time of making tax cuts in the 2001 tax bill -- the one 2 years go -- permanent. If and when these new tax cuts that are in this bill today are made permanent, then their 10-year cost will be another $1 trillion.
Where will that extra $2.3 trillion come from? From raiding the surplus of the Social Security Trust Fund for the next 10 years and then so-called "borrowing" the rest of it. But "borrowing" isn't really the right term because we have no intention of paying it all back ourselves. If we did, we would not be behaving this way. No, most of our borrowing will be paid by the generation who are children today and by generations yet unborn.
Borrowing money from future generations without their knowledge or their consent -- reducing their future incomes and standards of living -- is not borrowing. There are a lot of people now in American prisons who are doing serious prison time for that kind of borrowing.
This is a tax bill that will cost about $2.3 trillion during the next 10 years that we do not have, so the rich and the super-rich can have their taxes reduced or eliminated. No wonder we can't get a copy of it. I have not seen a copy. I couldn't get a copy last night of the Conference report. They don't want anybody to see it. They shouldn't. It shouldn't be passed, either.
When I arrived in the Senate almost 2 1/2 years ago, I was so optimistic that we would make lives better throughout America by sharing our abundance. President Clinton and Congress, at that time, with an expanding economy, produced the first budget surplus in the on-budget account in 40 years, and the surpluses were projected to continue for each of the next 10 years.
The other big fund of the Federal Government, the Social Security Trust Fund, was also expected to run sizeable surpluses for the next decade. What a great opportunity. There could be prescription drug coverage for seniors, the long-promised Federal share of 40 percent funding for special education, and, more important, still be fiscally responsible. Now it has all been thrown away -- or given away -- to those who do not need it and kept away from those who do.
This year's combined Federal budget deficit will be around $400 billion, even though the Social Security Trust Fund will be running a $160 billion surplus. That means the non-Social Security account of the Federal Government, the so-called on-budget account, which is almost all the rest of the Federal Government's operations, will run a deficit of about $550 billion -- after running a surplus just 3 years ago.
In fiscal year 2000, the Federal on-budget revenues, which come almost entirely from personal and corporate income taxes, from estate taxes, capital gains taxes, and excise taxes, totaled 101 percent of expenditures. This year, they will scarcely cover two-thirds of expenditures.
The tax base of the Federal Government is being destroyed. Who will tell the American people? It is hard for anyone to discern the truth from all of the conflicting words and numbers; but the American people must learn the truth. They also must act, because the looting of America will not stop until Americans stop it.
It is not too late. It is almost, but not quite, too late.