Veterans Jobs Corps Act of 2012--Motion to Proceed--Continued
Floor Speech
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PROGROWTH TAX REFORM
Mr. HOEVEN. Mr. President, I rise to speak on the need for progrowth tax reform. It is a subject I have been here on the Senate floor speaking about repeatedly over the course of the year and certainly over the course of the recent weeks.
Last week the Senate voted on several tax measures. One of the measures was a measure we offered which would continue the current tax rates for a year, giving us an opportunity to engage in progrowth tax reform. That bill was defeated in the Senate.
The other bill, a bill which I voted against, was a bill that would raise taxes on approximately 1 million small businesses in this country. In fact, that bill was passed. But the fact is that under the Constitution any tax measure has to start in the House of Representatives. In fact, that is what is going on today. They are voting on a measure that would extend the current tax rates for a year, giving us the opportunity to engage in progrowth tax reform which I believe would truly help galvanize our economy and raise revenue for our country, not through higher taxes but in fact through growth and through more revenue from economic growth.
I believe that is exactly what we have to support in the Senate as well. The measure the administration favored, and that was earlier passed, as I say, will be blue-slipped so it will not take effect, but the problem with that measure is it would raise taxes on individuals and small businesses. Almost a million small businesses across this country would pay higher taxes and they are the generators of jobs for our economy. It also raises taxes on capital gains and it raises estate tax as well.
Let me talk about the estate tax or the death tax provision for a minute. Right now the estate tax provides an exemption on the first $5 million and then amounts in an estate over that $5 million threshold are taxed at 35 percent. However, reverting to the pre-2001-2003 tax rates, which happens at the end of the year unless action is taken--unless action is taken by both the House and the Senate to extend the current rates--then we revert to the tax rates before the 2001-2003 tax reductions. That means instead of a $5 million exemption and a 35-percent tax rate on estate tax or the death tax, we go to a $1 million exemption with a 55-percent tax rate after that.
Think about what that means to our farms and our small businesses across the country: 24 times more farms will then be in an estate tax situation and something like 14 times more businesses will be in an estate tax situation. What does that mean? What it means is when a family member dies and it is time to pass on that farm or pass on that business, they are going to have to borrow money to try to pay the estate tax. That farm or that business is going to have to generate enough revenue to pay that estate tax. If you cannot pay that estate tax at 55 percent of the value of what you are passing--if that business or that farm cannot service that level of debt, then you have to sell that farm or sell that small business, which may have been in the family for many generations. Remember that those farms, those ranches, those small businesses are the backbone of the American economy and here we are, at a time when we have 8.2 percent unemployment and we are trying to get this economy going and we are putting our small businesses across this country in that situation.
That is why it is so important that we act. That is exactly what we have proposed. We have said rather than putting our economy in that situation right now, let's set up a 1-year extension of current tax rates, let's engage in progrowth tax reform where we actually lower rates but close loopholes, which will generate economic growth, and we will get revenue from economic growth rather than from higher taxes. That is vitally important.
In fact, on a bipartisan basis 2 years ago that is what we did, we extended the current tax rates. I think we had 44 Democratic votes to do that here in the Senate. Republicans voted for it. I think across the board we had 44 votes on the Democratic side. Also, it was a bipartisan measure. I argue that is exactly what we have to do again. Even the President--who came out that he supported doing exactly what I laid out because, he said, we can't raise taxes in a recession. He said raising taxes would hurt the economy and would hurt job creation.
If you look at the statistics today, we are actually in a more difficult economic situation now than we were then.
Unemployment is at 8.2 percent and has been over 8 percent for more than 41 straight months. There are 13 million people who are out of work, 10 million people are underemployed, which makes 23 million people either looking for work or looking for a better job. Middle-class income has declined from approximately $55,000 to about $50,000 since this administration took office. Food stamp usage has increased from 32 million recipients to 46 million recipients, and as we have seen, economic growth is about 1.5 percent.
As far as job creation, there were 80,000 jobs gained during the month, but we need 150,000 jobs gained during the month just to keep up with population growth and not have our unemployment rate increase. So these are the facts, and the facts speak for themselves. We need to extend the current tax rates, we need progrowth tax reform on a bipartisan basis, and we need to get control of our spending.
If we look at the latest numbers from CBO, CBO says without taking those steps we are looking at economic growth next year of maybe one-half percent for the entire year. If we take the steps to address the fiscal cliff, as I have described, and take those steps to undertake progrowth tax reform, CBO talks in terms of a 4.4-percent growth rate next year. Think what that means to 13 million unemployed people. It means the difference between getting a job and not getting a job.
The uncertainty that our economy faces right now because of the expiration of the current tax rates at the end of the year, and businesses not knowing what is going to happen, is freezing investment capital on the sidelines and freezing business expansion. There is more private capital and investment capital sidelined now more than in the history of our country. We unleash it, and we get it going not by raising taxes but by providing the legal tax and regulatory certainty--the kind of progrowth tax reform with closing loopholes, as I have described--to get this economy going.
The administration says: Well, everyone needs to pay their fair share. I think that is certainly true. We are saying exactly that. That is exactly what we do by engaging in progrowth tax reform and closing loopholes. Everyone is treated fairly, and everyone pays their fair share.
In fact, just to give a sense of that whole concept, let's look at who pays the income taxes right now according to the National Taxpayers Union. Today the top 5 percent of taxpayers pay almost 60 percent of the income tax in this country. The top 10 percent pay almost 70 percent of the income tax in this country. The top 25 percent pay almost 90 percent of the income tax in this country. The top 50 percent of taxpayers pay 98 percent of the income tax that is paid in the country.
So the point is, let's engage in progrowth tax reform that will get our economy growing rather than stagnant as it is today. It is that economic growth that puts our people back to work and truly generates the revenue, not higher tax rates which will hurt our growth. We can lower rates, close loopholes, come up with a fairer system that is simpler and will generate revenue through economic growth. That is the only way that economic growth, along with controlling and managing our spending, will get us on top of our debt and deficit and get Americans back to work. We need to do it in a bipartisan way. We can do it. We have done it before, and we absolutely need to get started, and get started now, for the good of the American people and the good of our country.
If I may, I want to close on one short message; that is, as the House works on a tax measure--as I described today--to extend the current tax rates and put us in a situation where we can truly engage in progrowth tax reform, I also urge my colleagues in the House to make sure that at the same time they are acting on farm bill legislation and not just the drought legislation.
We passed a farm bill in this Senate several weeks ago on a bipartisan basis. I hope they are able to do the same thing and pass a farm bill in the House on a bipartisan basis as well that we can go to conference with. I believe the bill we produced in the Senate and the bill they have produced in the Agriculture Committee can be brought together in a conference committee. We can pass a farm bill that will be cost effective, will save money, and help reduce the deficit.
The bill we passed would generate $23 billion in savings to help address the deficit. It would provide the right kind of safety net for our farmers and ranchers and ultimately this: Good farm policy benefits every single American because our farmers and ranchers produce the highest quality, lowest cost food supply in the world. That benefits every single one of us, not to mention creating a lot of great jobs throughout the country.
So I call on the House to act on that farm bill as well as engage in the kind of progrowth tax reform that I know will truly benefit our country.
With that, Mr. President, I note the absence of a quorum.
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