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Permanent Extension of 10-Percent Individual Income Tax Rate Bracket

Location: Washington, DC


Mr. RYAN of Wisconsin. Mr. Speaker, pursuant to House Resolution 637, I call up the bill (H.R. 4275) to amend the Internal Revenue Code of 1986 to permanently extend the 10-percent individual income tax rate bracket, and ask for its immediate consideration.


Mr. RYAN of Wisconsin. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, today the House can make the 10-percent bracket permanent for working Americans by passing this legislation, H.R. 4275. The 10-percent bracket was created in the Economic Growth and Tax Relief Reconciliation Act of 2001. It has provided substantial tax relief for low-income workers by taxing the first $14,000 of married couples and $7,000 for singles at a 10-percent rate instead of a 15-percent rate. This tax relief was accelerated last year in last year's Jobs and Growth Tax Relief Reconciliation Act. H.R. 4275 would make this tax relief permanent.

If Congress fails to act to pass this legislation, Americans will see their taxes increase starting next year. Without action, the size of the 10-percent bracket will automatically shrink next year, so that more income will be taxed at a higher rate. In fact, the 10-percent bracket will vanish altogether after the year 2010 unless we act today to make it permanent.

If H.R. 4275 is not enacted, 73 million tax filers will see a tax increase starting next year. The effect will be particularly acute after 2010 when 123 million tax filers will see an average annual tax increase of $500.

It is worth noting that more than 20 million of these returns are low-income taxpayers and families who have all of their income taxed at this lower 10 percent rate. The public deserves a solid, dependable Tax Code that provides incentives and lets working people keep their money for their own needs. The 10 percent bracket provides such an incentive, one we can and should make permanent by passing this legislation.

Mr. Speaker, it is important that people know what taxes they are going to face in the future. By having all of these uncertainties in the Tax Code, not knowing whether you are going to be in the 10 percent bracket next year, the 15 tax percent bracket next year, it makes it difficult to budget for the future.

We are talking about the taxpayers who can least afford to have a big tax increase going from 10 percent to 15 percent on their incomes next year, let alone not having the knowledge of knowing whether or not this is going to happen. It is very important, Mr. Speaker, that families know what lies ahead, that businesses know what lies ahead, and let us all remember that two-thirds of businesses in America file their taxes as if they were individuals, not as corporations, but as pass-through entities where they file on the individual rate. Making sure that small businesses, which produce 70 percent of the jobs we have in this country and low-income taxpayers know what lies ahead in the Tax Code is very important to make sure that we sustain the economic recovery we are now engaged in.

Mr. Speaker, largely because of the tax cuts that this bill enacted, largely because of the full implementation of the tax rate reductions that occurred just this last July, our economy has taken off. Just since last August, this economy, by the most conservative estimate, has produced 1.1 million jobs. In fact, since January 1 of this year, this economy, by this most conservative payroll estimate, has produced 881,000 jobs. This is no longer a jobless recovery; this is a recovery that is producing good jobs.

Even the manufacturing sector, which is so near and dear to my heart because it is such a big issue in Wisconsin, is producing jobs. The reason we are producing jobs in this economy is because people get to keep more of their own money to spend as they see fit. Businesses are reinvesting, rehiring people. The economy is working, and we cannot snuff out this economic recovery by yanking out the tax relief that was so instrumental in getting us onto the path of growth that we are on today. That is why I urge passage of this bill.

Mr. Speaker, I reserve the balance of my time.


Mr. RYAN of Wisconsin. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, let me just mention very briefly, the gentleman who just spoke is from California, and the taxpayers just in the State of California who are now only paying that 10 percent bracket, there are 2,605,960 taxpayers in the State of California alone who would experience a huge tax increase relative to their tax burden next year if this legislation is not passed. In fact, there are over 12 million taxpayers in California alone that would experience higher taxes next year if this does not pass.

So each of us represents people who are struggling to make ends meet who are at the bottom rung of the economic ladder who are staying just afloat and paying taxes at that 10 percent bracket who are making $16,000 or less as a couple. Those are the people that we want to help, and we want them to get on the upper trajectory of prosperity. The last thing we want to do is hit them with a big tax increase. If we fail to pass this bill, that is exactly what will happen.


Mr. RYAN of Wisconsin. Mr. Speaker, I yield myself 15 seconds.

Mr. Speaker, on May 5, 2004, the House voted 333-89 to extend the exemption amounts for the AMT, to index them for inflation; and I think the gentleman from California (Mr. Becerra) voted for the AMT relief bill. We passed the bill, making sure that we can go study the problem and figure out how to comprehensively fix it.

Mr. Speaker, I yield 4 minutes to the gentleman from Texas (Mr. Sessions), a member of the Committee on Rules.


Mr. RYAN of Wisconsin. Mr. Speaker, I yield myself 2 minutes to respond. There is a lot to respond to there, though. I do not know if I have enough time to respond to all of what my friend from Washington just said. I think that it would be good to have a little economic refresher course here for some of the Members of Congress.

I just want to point out a couple of things. Number one, the soapbox derby resolution was brought by the minority whip from the other side. But, number two, I think the Member from Washington ignored a lot of good things we just did in the last week here in Congress. Today we have the association health plans bill on the floor, helping small businesses, individuals, pool together to buy their health insurance in collective nationwide buying pools to get down the cost of health insurance. Yesterday we passed the FSA rollover to help bring down the cost of health insurance and we passed medical liability reform to help bring down the cost of health insurance.

So this Congress is obviously performing. I think he may have glossed over a lot of the accomplishments. In fact, we have 87 very important, substantive bills sitting over on the doorstep of the other body waiting for action because we have outproduced and outperformed the other body on legislation.

One final point is the unemployment rate that we are experiencing in America today is lower than the average unemployment rate of the nineties, the eighties, and the seventies; 1.1 million jobs have been created, good jobs, not all good jobs but many good jobs since August. This economy is pulling out of the recession it had experienced a year ago. This economy is producing jobs. We still, yes, have a way to go; but the point of the story is when you take a look at the fact that just this year, in the last 10 months since last July, we have had lower tax rates in America. Because of that, we actually have more revenues coming into the Federal Government.

But to make the point clear, last year where we had higher tax rates on the American taxpayer, we brought in less money to the Federal Government. This year with lower tax rates, where we have more economic activity, more people keeping what they earn and a lower tax rate, we are actually bringing in more revenue to the Federal Government. We believe the way to fixing our problems is jobs and by giving people a chance to upgrade their life-styles and get jobs in the economy, we will have more tax revenue, rather than increasing taxes and increasing spending. That is not our philosophy.

Mr. Speaker, I yield 2 ½ minutes to the gentleman from Florida (Mr. Shaw).


Mr. RYAN of Wisconsin. Mr. Speaker, I yield 2 minutes to the gentleman from South Carolina (Mr. Barrett).


Mr. RYAN of Wisconsin. Mr. Speaker, I yield 2 minutes to the gentleman from Wisconsin (Mr. Green).


Mr. RYAN of Wisconsin. Mr. Speaker, I yield 2 minutes to the gentlewoman from Tennessee (Mrs. Blackburn).


Mr. RYAN of Wisconsin. Mr. Speaker, I yield 2 ¾ minutes to the esteemed gentleman from Illinois (Mr. Crane), a high-ranking member of the Committee on Ways and Means.


Mr. RYAN of Wisconsin. Mr. Speaker, I yield 2 minutes to the gentleman from South Carolina (Mr. Brown).


Mr. RYAN of Wisconsin. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, since we are going into the debate on the substitute, I will not take too long to close, although I think some of what the gentleman from California just said bears some responding to.

I think this debate has done a pretty good job of showing those who are viewing it the differences, the differences between the two parties here on the floor, the differences between the two approaches to fiscal responsibility, between two philosophies.

What you just heard the gentleman from California say is we have recklessly cut taxes by $500 billion over the next decade. It is important to put that in context.

Mr. Speaker, this Federal Government will spend about $2.7 trillion this year. Off the top of my head, we will be spending, with taxes coming in, about $29 trillion over that 10-year period. So we are proposing to allow the American taxpayer to keep about $500 billion out of that $29 trillion of their money we are about to spend.

It kind of comes down to this, Mr. Speaker, two points. Number one, we believe the best way to get ahold of our fiscal problems, to reduce our deficit, is to hold the line on spending and cut spending and grow the economy. The budget resolution we brought to the floor just a month or so ago was a resolution that froze spending and actually reduced spending in critical areas so we can get a handle on our Nation's finances. The other side did not vote for that budget agreement.

We also need to recognize the fact that when you cut taxes, economic growth occurs from that. One of the great stories being told right now, the success that we see in the data from this new economic recovery that is producing all these jobs, is the fact that this year, with the lower tax rates we are paying, we are getting more revenues coming in to the Federal Government.

What we see is that when you cut taxes on entrepreneurs, when you cut taxes on families, when you cut taxes on investors, they engage in more economic activity, they create jobs, and people go from being unemployed and collecting unemployment to going and working and paying taxes. That is what is happening today. That is a recipe for success.

We do not want to squelch this economic recovery. We do not want to raise taxes on people. We want to keep taxes low, watch our spending and reduce spending, and help people get work, so when they go to work they can provide for their families, and, yes, pay taxes, so that we can get the revenues we need to reduce and eliminate our deficit. That is the approach we are advocating.

What is the other side's approach? What is the substitute they are about to bring to the table? More tax increases. Okay, you can cut taxes to these people over here on the right hand, but we have to raise taxes to these people on the left. Net tax increases.

It is a fundamental difference in philosophy. Whereas they believe we have to keep taxes high and higher, that the emphasis should not be on spending, but we should raise more taxes, we believe the emphasis should always be on recognizing the fact that the taxes that this country collects is not our money, but the money of the American person, the man and woman in the marketplace, who is working hard to provide for their family, who is creating jobs, who is sweating and working every single day. It is their money, not ours.

So we do not believe philosophically, that is the root of what we believe in, that we should just cavalierly take more and more and more money out of a person's paycheck, out of their wallet. We believe they should keep more of what they earn.

What is so great about that philosophy is it is also good economic policy, and we are seeing that. We are actually getting more revenues because of lower taxes. How about that? And the good news is, this can be bipartisan. When John Kennedy did this, it worked. When Ronald Reagan did this, it worked. This has been done by Republicans and Democrats coming together in the past. When Reagan did it, it was because of good Democrats working with Jack Kemp and Bill Roth in the Congress to reduce tax rates on the American families. What happened? Economic growth was encouraged, tax rates went down and revenues went up.

This does work. It is working right now. What we are seeing in this debate is a difference in philosophies.

Mr. Speaker, I want to conclude by saying one thing. If a Member of Congress comes to the floor today and votes against this bill, they are voting to increase taxes on 23 million low-income workers. They are voting to increase taxes on 23 million low-income workers by one-third, to raise their taxes by one-third. They are also voting to increase taxes on 80 million taxpayers across the country.

It is a very clear vote. If you vote for this bill, you preserve these tax cuts. If you vote against this bill, you are going to raise taxes on 23 million low-income earners, the least of whom among us should be facing this kind of a tax increase.

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