GOP Freshman Class on Comprehensive Tax Reform
Floor Speech
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Mr. WEST. I thank the kind colleague of mine from New York (Mr. Reed).
Mr. Speaker, as a field artillery officer in the United States Army, I learned a thing or two about weaponry. Our success on the battlefields of Desert Storm and Desert Shield depended on choosing the correct artillery for each specific objective, whether it was halting the enemy's forward progress, diminishing the strength of its forces, or completely destroying its capabilities.
Although he has never served our country in uniform or risked his life to defend its freedoms and liberties on distant shores, it seems President Obama understands a thing or two about weaponry as well. But in the President's case, Mr. Speaker, the current weapon of choice is tax policy, and the enemies are small businesses, investors, entrepreneurs, and corporations, who seemingly are deemed undesirable. In short, these are the economic engines of our Nation.
The President's planned tax increases seemed designed solely to demonize the rich and use them as a propaganda tool to score political points. But the collateral damage of these policies will spread far and wide into the heartland of America. After all, the 160 percent increase in Federal cigarette taxes put in place in 2009 by President Obama and his administration, certainly affects those earning far less than $250,000, despite his promise not to raise their taxes.
The fact is, Mr. Speaker, next year, unless changes are made in the Tax Code, Americans will be bombarded with the heavy artillery of the largest tax increase in the Nation's history, causing massive economic injury and destruction.
To begin with, if the Bush-Obama tax rates are allowed to expire, the current tax brackets of 10 to 35 percent will rise to 15 to 39.6 percent. Other tax provisions scheduled to disappear that will hit ordinary Americans include the American Opportunity Tax Credit--up to $2,500 per student for qualified college costs, a tax exclusion for forgiven mortgage debt, and a tax credit for employer-provided child care.
Children of farmers, as my colleague from Georgia talked about, and small business owners who wish to continue the legacy of their parents will find it increasingly difficult to do so, as the death tax exemption will shrink from $5 million to $1 million. Further, inherited assets exceeding that amount will be taxed at a maximum rate, Mr. Speaker, of 55 percent, up from 35 percent, and a 5 percent surcharge on estates over $10 million.
Investors will be battered with a capital gains tax increase from 15 percent to a maximum of 25.8 percent. Seniors who rely on their dividend returns will also be hampered. Stock dividends, currently 15 percent, will be taxed as ordinary income with a top rate of 43.4 percent. That's 39.6 percent income tax plus a 3.8 percent tax on investment income proposed in the President's health care law.
In the last few months we've heard a lot about fairness from the President, Mr. Speaker, especially when it comes to wealthier people. In President Obama's own message about his proposed budget for fiscal year 2013, he says everyone must shoulder their fair share. But how, Mr. Speaker, does he define fair when 47 percent of wage-earning households pay zero Federal income taxes, while the top 25 percent of wage-earning households pay 87 percent?
Besides, the spending proposed in the President's fiscal year 2013 budget is far beyond what the revenue base can support. It would be mathematically impossible to increase taxes on the Nation's highest earners to close the future trillion dollar-plus deficits if spending continues as President Obama has planned.
And according to a report by the Joint Committee on Taxation, the highly touted Buffett rule would raise a paltry 30 to $40 billion over the next 10 years.
Mr. Speaker, during that same timeframe, President Obama's budget would create nearly $7 trillion in new debt, which means the Buffett tax would lower that debt by less than half a percent. This is clearly not sound fiscal policy. It's the misguided policy of economic fairness, and it is just as Frederic Bastiat stated in his essay, ``The Law'': It is legal plunder under the guise of benevolence and misconceived philanthropy.
While the President has some understanding of the destructive capability of his tax policy, he demonstrates little understanding of battlefield strategy, because those who are on the receiving end of an artillery barrage seldom stay in place.
When businesses and individuals are being bombarded with higher tax rates, they will simply change their behavior. Investors will shift money from taxable to nontaxable investments. Total economic activity slows, as there is less incentive for employees to work extra hours, while smaller, potential returns mean investors
and venture capitalists are less willing to shoulder risks. All taxpayers have a greater incentive to shield their income.
Obviously, President Obama is no student of history either, Mr. Speaker, for if he were, he would know revenues increased under Presidents Kennedy, Reagan and yes, George W. Bush, at least until the 2007 financial crisis, when tax rates were reduced.
But increasing tax revenue does not appear to be the President's strategic objective. If it were, he would be recommending policies to help increase the revenue base by optimizing the regulatory and tax environment to encourage businesses to invest, grow, and hire.
The House of Representatives, Mr. Speaker, has passed 26 bills to do just that, but they currently languish on the desk of Senate Majority Leader Harry Reid, who will not bring them up for vote in the Senate.
Instead, President Obama seems determined to punish and wipe out economic success in this country, leveling tax weapons of mass destruction on all taxpayers. This is a battle our Nation can ill afford to lose. We must reform our Tax Code, and we must restore the conditions for economic success for all our citizens because truly, they are taxed enough already.
Mr. Speaker, unleashing the individual industrialism and entrepreneurial spirit of Americans does not come from capital consolidation in Washington, D.C. The American people do not want more Solyndras and GSA boondoggles.
The American people want economic security, which comes from this body becoming responsible stewards of their tax resources, not taking more from them based upon divisive, socioeconomic rhetoric.
The American people, Mr. Speaker, want a constitutional republic, not a socialist, egalitarian, welfare nanny state. The American people want an economic future so bright that they will have to wear sunglasses.
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Mr. WEST. I just want to say you are absolutely right, and I thank you for yielding an additional minute.
It is truly the choice between two futures: it is a future of economic freedom, or a future of economic dependency. It is a future that talks about the entrepreneurial will and spirit and the individual industrialism of the American people or collective subjugation. I think that the American people will make the right choice in November 2012.
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