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Pathway to Job Creation Through a Simpler, Fairer Tax Code Act of 2012

Floor Speech

Location: Washington, DC


Mr. NEAL. In quick reference to the previous speaker, I don't know how you can say how do we get out of this, and then simultaneously embrace the Romney tax plan, which is $5 trillion more of tax cuts and propose at the same time the extension of the Bush tax cuts. That's a $7 trillion tax cut proposal. Has anybody heard about those million new veterans we have, the 45,000 that have been wounded? What's going to happen to the veterans system for years to come? It's a $4 trillion cost of the war in Iraq when you factor all of that together.

We've had some really good hearings this year on both sides. We've talked fundamentally about the best path forward to tax reform, and we all agree that the current system is creaking of its own weight. But that's contrary to the idea of fast-tracking, what needs to be a deliberative procedure for understanding what the elimination of some of these expenditures really means.

Despite the talk here today, I'll bet you a year from now that we will not have eliminated the homeowner deduction, and a year from now we will not have eliminated employer-based health insurance, and we will not have eliminated the tax expenditure for charitable deductions. The question is: What's the framework that we're taking up today? The response to that is: not much.

Let me start by saying that what's striking about this proposal is that we all acknowledge that over 6 billion hours a year and $160 billion is too much in trying to comply with the current system. My favorite target is the alternative minimum tax. I've proposed eliminating that tax for a decade and actually have come up with pay-fors for addressing it, by shutting down some of the off-shoring accounts that currently companies who decide to expatriate and give up their American address take advantage of. They are not former citizens of the United States. They are current citizens of the United States. Sophisticated tax avoidance should be addressed.

The AMT, it was enacted in response to--by the way, there were only two Republicans in Congress who voted against it. It was a bipartisan assault on AMT when first addressed; 155 high-income individuals weren't paying any taxes, so Congress responded. President Reagan also embraced the idea that people ought to pay something. Today, 30 million middle class families are caught in the alternative minimum tax, and we patch it each year.

Here's where the American people really should get upset. Since 2001, this is what the patch has meant. I want you to listen to this number. We have spent $400 billion patching alternative minimum tax. The Romney proposal, coupled with the Republican proposal to extend the Bush tax cuts, will take us in 2012 and 2013, when surely we're going to patch this again, to $600 billion of patches for a $1.2 trillion problem. We've spent $50 billion of patching it. You know what that's like? That's like taking a credit card and saying you're only going to make the minimum payment every month and trying to figure out why the principal has not been reduced.


Mr. NEAL. The point here is that if we all agree that tax reform needs to take place and we need to assess what current expenditures mean in the system, but also have some enthusiasm for taking up the off-shoring issue, and taking up those that willfully hide money overseas in bank accounts and they don't want the IRS to know what they've set aside, that's part of fundamental tax reform.

There's an opportunity here to do something similar to what Ronald Reagan and Speaker O'Neill did in 1986 in a bipartisan fashion with both sides getting together in an effort to figure out what to do about building a tax system that keeps America, as the former speaker noted, ``competitive going forward.'' This is not the procedure, Mr. Speaker, to undertake that sort of initiative.

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Mr. Speaker, I rise today in support of the Democrats' middle class tax cut substitute that would extend tax cuts for 98 percent of Americans--and in opposition to the Republicans' legislation that would extend all of the Bush tax cuts.

Congress has a responsibility to protect middle class Americans from getting hit with a big tax hike next year--a tax hike of $2,200 for the typical family. Last week, the Senate passed a bill that would extend for one year the Bush tax cuts for 98 percent of Americans. And now it's up to us in the House to provide certainty to middle class Americans that their taxes will not go up next year.

But instead of doing what's right for middle class families and extending the Bush tax cuts for 98 percent of Americans, the Republicans are holding these tax cuts hostage until we extend tax cuts for the wealthiest 2 percent of Americans. If the middle class tax cuts expire, it would result in a tax hike for over 100 million American families, including 2.5 million families in Massachusetts. Let's not let that happen.

Even more troubling, the Republican tax package ends President Obama's tax cuts that make college more affordable and help working families with children. So not only are our Republican colleagues holding the middle class tax cuts hostage to extending tax cuts for the wealthiest, the Republicans would actually raise taxes on 25 million families with an average tax increase of $1,000.

I introduced legislation last week that would extend these enhancements to the child tax credit and earned income tax credit. But the Republicans' tax package fails to include many of the enhancements in my bill and, therefore, would raise taxes on millions of low and moderate-income families next year. Even though the Republicans tell us that they're against raising taxes, what they really mean is they're against raising taxes on the wealthy. I ask the American people--does this seem fair to you?

I urge my colleagues to learn from past experiences. We tried the Republicans' approach to taxes for 8 years during the Bush years and it didn't work. Let's stand up for middle class Americans and pass the Senate-passed tax extension bill. We all agree that we should extend the middle class tax cuts--so let's put aside politics and pass this important bill and provide certainly for American families.

I'd like to close by talking about one final issue that's very important to Massachusetts--the AMT. I've been a long time advocate of addressing the problems with the AMT. The first AMT was enacted in 1982 to ensure that the wealthiest Americans paid their fair share. However, because the Bush Tax Cuts decreased tax rates without making corresponding changes to the AMT, millions of Americans become subject to the AMT each year even though they do not make a lot of money. To avoid this result, for the past few years, Congress has enacted an ``AMT patch'' that prevents these higher taxes from hitting middle income families.

Unfortunately, the most recent AMT patch expired at the end of last year. And so millions of middle class families could pay thousands more in taxes when they file their returns in April 2013 if we don't enact an AMT patch for 2012.

This is a huge deal for my home State of Massachusetts. About 975,000 families in Massachusetts, including about 80,000 in my district, will be hit with the AMT if we don't enact a patch for 2012. This includes about 785,000 middle income families who make less than $200,000 a year.

To address this issue, both the Democratic and Republican tax bills include AMT patches. But we need to move beyond the patches and really address the problems with the AMT. Since 2001, we've spent about $407 billion on AMT patches--and if we pass a two year AMT patch for 2012 and 2013, we'll have spent about $600 billion on patches. Repealing the AMT would cost about 1.2 trillion--so for the amount of money Congress has spent on patches over the past few years, we could have paid for half the cost of repealing the AMT. I call on my Republican colleagues to work with me on a bipartisan basis to address the AMT problem.

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