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The Adoption Tax Relief Guarantee Act

Location: Washington, DC

THE ADOPTION TAX RELIEF GUARANTEE ACT -- (House of Representatives - September 22, 2004)

Mr. CAMP. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 1057) to repeal the sunset of the Economic Growth and Tax Relief Reconciliation Act of 2001 with respect to the expansion of the adoption credit and adoption assistance programs.


Mr. LINDER. Mr. Speaker, I thank the gentleman from Michigan for yielding me this time.

I was watching some of the coverage on TV of the debate and saw some of the worst demagoguery I have ever seen in my life. And we will hear it again and again.

It is true that the gentleman from South Carolina is a cosponsor of a bill for a sales tax. So are 54 of his friends in this House. And it is true that the sales tax would be at 23 percent of what we spend. But the fact of the matter is we are currently giving up 22 percent of what we spend to the current system.

A study that we have from the head of economics at Harvard argues that 22 percent of what we are currently spending at retail represents the embedded cost of the current system. One is paying every tax bill and compliance cost of every company that touched that house or that appliance or even that loaf of bread.

If we are to get rid of the income tax and the payroll tax and all tax on income, competition would drive that out of the system. And if we replace it with a 23 percent tax, we would have a 1 percent higher standard of living, but they would keep their whole check and the average income earner would have a 56 percent increase in take-home pay.

We have heard before the study out of the Joint Committee on Taxation that said it had to be at 50 percent or 60 percent. That is true, because they made some assumptions that the bill would not pass as written; and when they made those assumptions and took taxes off certain things, it raised the cost.

But just think about this for a moment. We have a negative savings rate in this country, which is to say we spend more than we earn. And if the tax needed to be 56 percent on what we spend, then surely we would have to argue that it has to be more than that on what we earn. And I do not hear anybody saying that we have an average income tax at 56 percent.

We are going to be forced to make some tough decisions in the very near future, and we are going to come to a system that gets the tax component out of the price system so that we are more competitive in the world economy. And the only bill that does that is the one that gets rid of all tax on income and the payroll tax. We spend 6 to 7 billion man-hours just filling out IRS paperwork. We spend at least that much time calculating the tax implications of a business decision. We lose 18 percent of our economy to making decisions based on the tax consequences instead of the economics. It is costing us somewhere between 300 and $500 billion a year just to comply with this complicated code.

What it is doing is it is forcing jobs overseas. If we became the only Nation in the world that sold goods and services into a global economy with no tax component in the price system, we would not only be voraciously competitive, but every foreign corporation would build its next plant in this country so that they could sell into a global economy with no tax component in the price system.

We have a coming crisis in Social Security and Medicare. Larry Kotlakof, an economist from Boston University, says that the shortfall, the 75-year unfunded liability in Social Security and Medicare, is $51 trillion.

The total household debt in America is less than $44 trillion. That system cannot survive by having employees pay for retirees. If we move it to a portion of the 23 cents of the sales tax, we would double the revenues to those categories in 15 years by doubling the size of the economy in 15 years.

Lastly, we have somewhere between $5 trillion and $6 trillion sitting in offshore accounts to protect them from the IRS because it is too expensive to repatriate money. A company would rather borrow at 6 percent than repatriate at 33 percent that. That money would all be in our shores if we were to become the world's largest tax haven, and we would be creating jobs with it.

To demagogue an idea without reading the 132 pages is what this House does an awful lot of. But if someone would take the time to read it and understand that we are already paying this tax, that we totally untax the poor by getting rid of the 22 percent embedded cost and by giving every household a check to totally untax them up to the poverty line, if they would begin to understand that this is actually a tax on accumulated wealth, relieving the tax for low-income people, maybe we could have an honest debate about this and maybe we could speak some truth on the floor of the House. It is way too much to expect, but let us give it a shot.


Mr. LINDER. Mr. Speaker, I thank the gentleman for yielding me time.

Mr. Speaker, I guess it is too much for people to read the 132-page bill. We get rid of the payroll tax, we do not leave it in place, and there is simply no tax on farmers. It is only on personal consumption, and the Farm Bureau is very close to endorsing the entire idea.


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