Tax Simplification for Americans Act of 2004

TAX SIMPLIFICATION FOR AMERICANS ACT OF 2004 -- (House of Representatives - July 21, 2004)

Mr. PORTMAN. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4841) to amend the Internal Revenue Code of 1986 to simplify certain tax rules for individuals, as amended.

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Mr. NEAL of Massachusetts. Mr. Speaker, I think everybody in this institution knows the high personal regard in which we hold the gentleman from New York (Mr. Houghton), and we certainly regret that he is moving on to other things.

That applause there was singular.

Mr. Speaker, there is another issue that draws us to this floor today, and I have heard the gentleman from Ohio (Mr. Portman) is a good enough guy. He said a couple of times today, he said, Well, this is not a silver bullet.

Well, when I was a kid, if my father was witnessing something that he thought was particularly outrageous or he was looking at some sort of a question that he thought lacked proper definition, he would say, Well, at least Jesse James had the honor to wear a mask. And when I hear these folks on the other side come to the floor today and talk about simplification, it is outrageous.

Let me remind Members of this body that in 1994 the chairman of the Committee on Ways and Means said emphatically he was going to "pull the Tax Code up by its roots." Then, of course, the charade was perpetrated on the rest of the committee when others said, Well, not to be outdone, we are going to drive a stake through the heart of the Tax Code. And then another one said, Well, we are going to have a long funeral procession for the Tax Code.

Well, to those of you who filled out your own tax forms in the last round, that Tax Code is more complicated than ever. There has been no effort to simplify that Tax Code, but we know there is an election that is going to take place 15 weeks from yesterday, so we are going to be on the side of tax simplification.

I would submit to you today that this is the easiest thing in this body that could be done with Democrats and Republicans to simplify the Tax Code. But the rhetoric does not fit public policy, because we have got to get people psyched up and convince them in this short span that we are going to simplify the Tax Code. We will be back next year, and we will not simplify the Tax Code because once again it is inconsistent with the rhetoric, as opposed to the policy that is necessary.

Let me talk today about something we could do to really simplify the Tax Code.

While I am disappointed with the context of the bill, simply because I think it could have been expanded in an effort to achieve simplification, we examine the four provisions that are put to us today. So we are going to clarify how to classify people who were born on January 1.

Then the second section is going to replace the phrase "head of household" with a phrase that says "single head of household" throughout the Tax Code.

The third provision is going to instruct the IRS to make the EZ available to more people; but my colleagues know what, the IRS already has the authority to do that. That could be done short of what we are undertaking at this moment.

The final provision deletes some parts of the Tax Code that no longer has any legal effect. My goodness, I can feel the heartland of America today, boy, the satisfaction they must feel that we are taking up this major piece of legislation that, in the end, really does very little for them.

It is easy to talk about tax simplification, and we all know it is very difficult to accomplish; but for the last three Congresses, I have offered a tax simplification bill that would include a paid-for repeal of alternative minimum tax. If this body is serious about making it easier for Americans to file their taxes, there is no better place to start.

The alternative minimum tax was designed to prevent the very wealthiest Americans from overusing certain tax benefits to avoid most of their tax burden. Today, we all know it does not accomplish that goal any longer. Today, it ensnares millions of ordinary middle-class taxpayers, and I spoke to the American Manufacturing Association last night, and they were enraged by what has happened, and by the way, they generally support the other party.

By the end of this decade, the AMT will apply to over 30 million taxpayers, including more than three-quarters of taxpayers with incomes between $75,000 and $100,000. In fact, unless we change the tax laws, in 2005, married couples with four children will be subject to the alternative minimum tax as soon as their incomes reach $58,500. What used to be a class tax has now become a mass tax.

Now, I understand the reasons for the original imposition of AMT, but it no longer makes any sense. It no longer solves the problem that it was supposed to correct. It, in fact, creates a new problem. It doubles the amount of work that millions of Americans have to do to determine how much they owe.

Because of the AMT, these taxpayers have to fill out two tax forms. The process has become so complex that it now takes an average middle-class family 19 hours to fill out their tax forms. That is 7 ½ hours longer than it took in 1994 when they were going to pull the Tax Code up by its roots or drive a stake through the heart of the Tax Code.

The American people could be hardly more clear on the message they are sending to all of us. They need help navigating this process. It has become much too complicated. Sixty percent of the individuals hire a professional today to prepare their taxes, an increase of 50 percent from 1994 when they were going to drive a stake through the heart of the Tax Code, when they were going to have a long funeral procession for the Tax Code, when they were going to pull the Tax Code up by its roots.

If my colleagues really want to do something in this institution, we do not have to talk about tax increases or tax cuts. What we could do is talk about tax simplification. Work with me on this AMT proposal that I have had. It could be done in a bipartisan manner. I wish the gentleman from New York (Mr. Houghton) was staying because we have had success working on bills in a bipartisan manner, the two of us; and I regret his departure precisely because of that, and I believe that we could still do a tax simplification in the next session of this Congress without a great deal of difficulty.

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

I would tell my colleague from Massachusetts who had expressed concerns about the so-called birthday rule, we actually took it out of the legislation because of concerns expressed by the gentleman's side of the aisle.

With regard to AMT, I commend the gentleman for his work on that over the years. As the gentleman knows, in 2001 and 2003, we put in place increases in the threshold for the first time in many, many years which has saved millions of taxpayers from having to go into the AMT. We also have an extender bill that passed this House to extend that into the future.

Mr. NEAL of Massachusetts. Mr. Speaker, will the gentleman yield for a friendly observation?

Mr. PORTMAN. I yield to the gentleman from Massachusetts.

Mr. NEAL of Massachusetts. Mr. Speaker, I have been here for 16 years, and I have never been involved in an issue where people congratulated me more for bringing it forward and did less about it than the alternative minimum tax issue.