Congressional Budget for the United States Government for Fiscal Year 2009 -- Continued
Floor Speech
CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2009--Continued -- (Senate - March 11, 2008)
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Mr. GRAHAM. Madam President, consistent with the unanimous consent request, I will talk for 10 minutes about the outline of this amendment. I, too, would like to recognize the chairman of the Budget Committee and the ranking member for dealing with what I think is a very fruitful and important exercise in American democracy, and that is setting the budget. We are going to try to create a budget to guide the Federal Government not just this year but in coming years.
If I had to showcase a difference between honorable men and women in the Senate about our philosophies, how you think about the economy, showcase differences between people who are very sincere and all love their country, it would probably be this amendment. Senator Baucus's amendment--I will vote for that; it extends tax cuts to families, child tax credits. The details of the amendment will be discussed on the floor. Certainly, it is needed.
My amendment is about those tax cuts that will be left behind if we pass Senator Baucus's amendment and we let current law expire. This probably illustrates the difference between the parties as much as any other event that I could offer to the American people. We live in a global economy, and the question for America is this: What kind of tax structure do we need in place to make sure capital will be formed here and not leave? Does your Tax Code matter when it comes to creating jobs? Does the amount you take from a business--a small business or a major corporation--matter in terms of a global economy? Does it affect people's decision about where to do business? What is fair?
This idea of class warfare--that it is not fair to do this for one group if you are going to do something for the other group--would be a great debate to have. What I am trying to do is offer an amendment to complement Senator Baucus's, to make sure our tax structure in America is fair to those who work hard, who hire people, who create capital and jobs, to those in retired status who are depending on their investments earlier in life to get them through.
Here is the question for the country: Under the current law that we passed several years ago, which expires in 2010, the top tax rate is 35 percent. The question for America is: Is a 35-percent top tax rate at the Federal level fair? It seems to be a gracious plenty to me--35 percent out of whatever you earn going to the Federal Government as the top rate. Should it be more? Should it be less? Well, 35 percent, to me, is more than a gracious plenty to be sending to the Federal Government because most people have to pay taxes at other levels of government.
Now, in 2011, if we do nothing, the 35-percent rate goes to 39.6; the 33-percent rate goes to 36; the 28-percent rate goes to 31; and the 25-percent rate goes to 28.
If you ask a variety of Americans--and this has been true for 10, 15, 20 years--what is a fair amount for an American to pay to the Federal Government in terms of the income they earn, the No.1 answer is consistently 25 percent--regardless of income, region, rich, poor, black or white. Most Americans view 25 percent as a fair amount that somebody should have to pay to the Federal Government in terms of their income. We are now at 35 percent, and we are trying to hang on to that.
Our Democratic friends, by opposing this amendment, would allow the top rate to go to 39.6. But most importantly, it would allow the 25-percent rate for that class of taxpayers to go to 28. Who is at the 25-percent rate? It starts with income levels of $31,850 for single and $63,700 for married couples. In 2011, they would, at that rate--if my amendment is not passed--have to pay 28 percent.
That is a lot of money from the economy going to Washington, at a time when we need money at home for families and businesses. Small business owners are in the 35-percent rate in large numbers. Do we want to take every small business that is paying 35 percent of their income to the Federal Government and, 3 years from now, make it 39.6 percent? Numbers matter. To us, we are picking numbers. At home, it is the bottom line. I grew up in a small town in South Carolina, where my dad owned a liquor store, a restaurant, and a pool room. I can remember that we got by. Neither of my parents graduated high school. The one thing I can remember about small business life is you have no option not to get up and go to work. If you are dog sick, you still have to go to work because nobody will pay the bills if you don't open the door. We had health insurance basically for the four people in our family. My mother got Hodgkin's disease, and I paid those bills up through when I was in the Air Force. To the people out there making a living, the burdens of regulations matter.
I think we should come together and say something simple: 35 percent is enough to take from anybody. If you don't like rich people, if you think there is an amount of money that is too much to make, then that is one way to run the Government, I guess. That is one way to create a society--put a ceiling on what people can do. As long as you earn your money honestly and fairly, the better you do, the happier I am for you. If I take 35 percent of what you make, I think I have probably taken enough. Should I take 39.6 percent because somebody makes too much? If you let the Government do that, I think you are letting the Government get out of line and out of control.
And it is just not the people who make a lot of money whom I am worried about; it is people who are working for every dollar they can get to grow their business and pay the families' bills that I worry about.
As I said, the amendment I am trying to offer to the Senate will keep rates at 35, 33, 28 and 25 and not go to 39.6, 36, 31, and 28. If we don't pass this amendment, there is going to be a major tax increase coming to hard-working Americans out there, at a time when we live in a global economy; and if we take any more from Americans, a lot of our businesses are going to leave us. How many people are affected by my amendment? Twenty-eight million people will experience a tax increase by 2011 if this amendment doesn't pass.
Now, we have heard that two things are certain--death and taxes. The only thing I can tell you about taxes is that if you touch it, use it, put it in your car or eat it, in America it is taxed in some form. And then you die. Well, we have an estate tax law in America, and it goes kind of like this. The current law is you get a $2 million exemption for a couple at a 45-percent rate. If you have an estate over $2 million as a couple, the Government takes 45 percent of what is left. You have paid taxes on everything you have earned right before you died. Here comes the Government, after the $2 million exemption has been reached, and it takes 45 percent of what is left. That is current law. That is supposedly too good a deal. I don't think it is that great a deal.
In 2010, here is what happens if we do nothing: Instead of a $2 million exemption for a couple, it goes back to $1 million, and you get a 55-percent tax rate on everything else that is left. How many small businesses out there, on paper, have assets over $1 million or $2 million? How many farmers are land rich and cash poor? Is that good policy? One thing I can tell you for sure, being a former prosecutor, if we don't do something about this, there are going to be a lot of mysterious deaths on New Year's Eve 2010. Look at the consequences of dying one day versus the other. It is political malpractice for the Congress to put people in this bind, where estate tax rates go from 45 to 55 and the exemption is cut in half, based on dying one day versus the other. That is bad public policy. We need to fix it.
My amendment would say there would be a $5 million exemption for couples in this country and, after that, a top rate of 35 percent for the death tax. In other words, 35 percent of everything you worked for all your life, after a $5 million exemption, would be taken by the Government.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. GRAHAM. May I have 5 more minutes?
Mr. CONRAD. Yes.
Mr. GRAHAM. What I am trying to do is offer an amendment that will preserve current law so in 3 years, in the case of the death tax, and 2 years, we don't hit people with a tax increase, at a time when we don't need to be raising taxes, at a time that we live in a global economy.
When it comes to the death tax, one in three small business owners is never able to pass their business on to the next generation because, when they die, the assets are evaluated in such a way that people have to break up the business to pay the taxes or they have to sell the family farm.
That is not what we need to be doing in America. That is not fair. The capital gains taxes are at 15 percent under current law. In 2011, they go to 20 percent. There are over 9 million families and individuals who will claim capital gains, and if this amendment doesn't pass and we don't do something about this, there are going to be 9 million families hit by a tax increase out there, at a time when our economy needs more money in the private sector, not in Washington.
As to dividends, there are a lot of people in this country--24 million families and individuals--who receive dividend income. Under current law, it is taxed at 15 percent. In 2011, the dividends go back to regular income tax rates--a dramatic increase.
What does that mean? That means owning stock becomes less attractive. There will be less people buying stock and receiving dividends from purchasing stock. That means people who are trying to create a company or expand their business will have to borrow the money from a bank, rather than getting investors from the market, and that will create more debt on top of what is already a debt-laden country.
As to small business expensing, under current law, firms may expense up to $250,000 of qualified assets of property they place in service in 2008. In 2011, the expensing allowance is scheduled to revert to $25,000. By being able to expense, from a tax point of view, the purchase of assets, you are able to grow your business, and it makes it attractive to expand your business.
If we don't pass my amendment, in 2011, that $250,000 allowance goes down to $25,000. My amendment reflects a Tax Code that is very generous to the Federal Government but is still burdensome on families and businesses. But to let it get worse, at a time when we are competing in a global economy, and try to pit one group of Americans against another, at a time when we are trying to put our best foot forward as a nation under a stressful business climate, is ill advised.
If you think America is undertaxed, then vote no. If you think we have taken a gracious plenty from business and families, then vote yes. If we don't make these tax cuts permanent in 2013, we are going to drive people offshore and create less jobs, not more; we are going to tax people who are struggling to make it as it is; and it will all be under the idea of fairness. It is unfair to not pass my amendment.
I think it would be incredibly shortsighted not to pass my amendment and make these tax cuts permanent that would allow Americans to keep jobs and grow jobs and pay the bills they are struggling to pay right now.
I yield the floor.
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