BREAK IN TRANSCRIPT
Mr. LANKFORD. Mr. Speaker, this is a conversation about something that's very pertinent to all Americans right now, and that is their taxes. Obviously, this is tax week, which was punctuated by an incredibly difficult day in Boston.
But this is also tax freedom day that's happening April 18. It's a recognition that if Americans worked their entire year they could get to this point. For many areas of the country, this would be the day they're finally paying into their own family, rather than paying into the Federal Government or the State and local Treasury.
Now, that differs from area to area, but this shows, again, the significance of what it really means to get to a point like this where we have to look again at our Tax Code.
Today is the day just to be able to pause and say: Where are we with our Tax Code, and where are we with our budget?
Let me just highlight a couple of things. Then I have several colleagues that I want to get a chance to yield the floor to to get a chance to continue this conversation.
There's a lot of conversation about our budget, rightfully so. We're over $1 trillion overspending this year, the same as we did the year before, the year before, and the year before. Now, for the fifth year in a row something has happened that's never happened ever in American history. We've overspent the budget by $1 trillion.
Let me set aside something else, though, for people to be able to look at, and that is, this year, in the Federal Treasury, we will receive the highest amount of tax revenue ever in the history of the United States Treasury. Make sure no one misses that. We'll receive more revenue this year than we ever have in the history of the United States Government. Yet, we're still overspending $1 trillion.
We have serious budget issues, but they're not tax revenue as far as how much is coming in issues; it's overspending. But our issue with taxes is not the issue of the tax rate not necessarily having enough. It's the issue of how we do it.
It's such a convoluted mess to be able to go through our thousands and thousands of pages of Tax Code. We need to stop and be able to evaluate this: Is this really the right way to do it?
The purpose of tax action is to tax the smallest amount possible to run an efficient government. Is that really what we're doing in our Tax Code right now?
Is it a simple system that people can actually do? If so, why do people spend billions of dollars across America, and millions of hours, trying to fill out tax forms, and to be able to get it in on time in a way that's so complicated that when you turn it in, no one thinks that they actually turned it in correctly. No one.
So the challenge of this is, how can we get to real tax reform to be able to solve many of the tax issues, to be able to benefit our Nation and what happens in the days ahead, and especially for our businesses that need so much help and would like to have the relief of the burden that they have to go through all this convoluted tax policy.
Let me introduce one of my dear friends. This is Tom Reed from New York. He's a member of the Ways and Means Committee. They live and breathe and function with the Tax Code, and he is one of the leaders of trying to walk through the process of reforming this code.
BREAK IN TRANSCRIPT
Mr. LANKFORD. Thank you for those words of encouragement, because that is what we're all about.
As simple as this is, everyone would look at this Tax Code, the few notes that I brought with me to be able to reference where we really are on tax policy now, and see how large this has really become.
When we look at our tax policy, we say, How did it become this? It became this because we've added one new rule after another after another as it's gone through. Just since 2001, there have been 3,250 changes to the Tax Code. That's more than one per day. And they continue to rack up. And every business and every American has to try to rush to keep up with all this Tax Code, which leads to the problem of, How do I know that I actually filled it out correctly and completed all this? For many people, there is that sense that I didn't get a chance to write anything off as deductions but there are other people that know how to get out of this.
In this constant fight to say how do we fix this, first, we have to get to some basic definitions. One is, What does it mean to reform the Tax Code? Reforming the Tax Code seems to be a simple thing. That means we're going to fix it to make it simpler; we're going to make it more fair; we're going to make it more straightforward.
There are some that try to define reforming the Tax Code as a new way to be able to raise taxes on other people, to be able to take away this deduction or that loophole and find ways to keep this same convoluted, crony system of Tax Code, but we're going to find some way through it to be able to raise taxes on different groups of people. And so we accomplish more revenue by raising taxes rather than by fixing the system.
Again, I go back to we have the highest amount of revenue ever in the history of the Nation. This is not a tax revenue problem of how much is coming in. We have a serious spending problem. But we do have a Tax Code problem, as well, that forces businesses to overspend for tax preparation when they should be taking care of customers and clients and their employees.
We can do better than all of this. We can do better, and we should. Again, there's this sense that within the Tax Code that, if we just create a couple more things, that we can fix the Tax Code, or maybe if we just raise rates on people, that will get in more revenue.
Let me tell you a quick story. My daughters at their school several years ago had a project between the fifth graders and the first graders. As they studied through American history, the fifth graders and the first graders both got to the American Revolution at the same time; obviously, at different levels of interest and different depth on the topic. But as they studied through the American Revolution, the fifth graders, at some point, would take the role of the British and the first graders would be the patriots, the Americans, the revolutionaries.
Actually, the week before, I got a note, as a parent, saying, You need to send 100 pennies with your first graders for next week's class. And all it was was just a note saying every first grader needs 100 pennies to come. And so I sent my first grader off to school that next week with 100 pennies in her little sack. She didn't know why.
They began studying the American Revolution, and
midway through the day, the fifth grade class barges into class and says, There is now a tax on sharpening your pencil, and they would impose a one penny tax on sharpening your pencil. If you go to lunch, you also have to pay another penny to leave the classroom if you go to lunch. There's a one penny tax to get a piece of Kleenex as well. They just declared it, and they would come in. Several times throughout the course of the day, they would just pop in and start collecting their tax from people. Well, on Tuesday, they came in and they doubled their tax. It's now 2 cents to sharpen your pencil, it's 2 cents to get a Kleenex, and its 2 cents to head to lunch. And so on Wednesday, it comes again and they add new things again to it.
So by Wednesday night, do you know what my first grader did? My first grader, Wednesday night, came home and said, Dad, I need to take 10 sharpened pencils with me tomorrow to school. I said, Why do you need 10 sharpened pencils? She said, Because the tax is so high on sharpening pencils, I'm going to take sharpened pencils with me to school so I won't have to pay the tax to sharpen my pencil at school. I laughed and I said, My first grader knows how to avoid taxes. My first grader knows how to do this.
Some perception that, if we just raise rates on people, a lot more tax money is going to come in is foolish, based on a basic value of, when we know it's unfair, we'll find a way to get out from under it. If we had a simple, fair, clean, straightforward tax system, we would not fight with this, and we would actually receive in the revenue that we should receive in as a Nation.
A nation does not need tax revenue. We need to be efficient, we need to be fair, and we need to be straightforward. We can do this, and we should do this.
I'd like to take just a brief moment to be able to recognize another one of my colleagues from North Carolina. This colleague has a different topic than tax reform, but it's really important this week because a mutual person that we have great respect for that he knows personally, as well, is due of honor in this week of all weeks.
So with that, I'd like to recognize my colleague from North Carolina (Mr. McHenry).
BREAK IN TRANSCRIPT
Mr. LANKFORD. I thank the gentleman. He is a man worthy of honor and worthy of spending the moment to be able to stop and discuss.
Back on tax policy--which seems a mundane topic now compared to George Beverly Shea and all that he has done for our Nation and the world--did you know that under our current system if you own a guard dog to protect your business or if you hold a business convention in Bermuda or pay for your child's clarinet lessons so that it will help with their overbite, you can deduct those expenses from our income tax?
There is something morally and culturally wrong with a government that enables its citizens to deduct their gambling losses but punishes the same person by taxing the interest that they have on savings in the bank. Why would we as a Nation deduct gambling losses and tax interest savings from the bank? Shouldn't we encourage saving and maybe discourage, or at least be neutral, for gambling losses? That's the nature of this code.
There's a section even in this code that specifically outlines that if you're a drug trafficker or drug dealer, you can't deduct your expenses from drug trafficking. That's what our code has become. We've got to find a way to be able to simplify the code and to make it a fair, straightforward code that deals with the issues and takes away the absurdity that's in our code.
Let me give you another example. We have a tax system dealing with internal taxes. In our internal tax system, we actually tell people that if you're a business that's an American-owned business and you do business with other parts of the world, you will pay that tax rate to that country, which is fair, but that when you bring your money back to the United States, you'll also have to pay the difference in our tax rate. We're the only country that does that.
So we literally tell our businesses, do business all over the world, function all over the world, make money all over the world, but when you make money over there, we'd encourage you to leave that money over there and not bring it back home. Because if they bring it back home, they're actually punished for returning money back to the United States.
Now, what does that mean to American competition and how we actually function in our business world? What that means is if you're a German company doing business in the U.K., let's say, you pay your taxes in the U.K. and then you return your money back to headquarters. But if you're an American business doing business in the U.K., you pay the business tax in the U.K., and then you don't return your money back to America, you just reinvest in your U.K. branch. Because why would you lose all that money coming back to the United States with it? This simple fix would bring back $1 trillion in private American capital from around the world back into the United States.
Now, in 2009, this Congress passed an almost trillion-dollar stimulus bill where they took money from each other as Americans and tried to redistribute it to say it would fix the economy. Actually, what it did was
it skyrocketed our debt, and we will be paying for it for generations. And it did not resolve our fiscal situation.
What would it mean, instead of just taking money from Americans and redistributing it around and pretending we did something, what would it mean instead to allow private capital to move from all over the world from American-owned businesses to be able to come back home? It would be significant to us. It's one of those commonsense things that when I talk to people, they all nod their head and say, why don't we do that? I say, because of this, because it's so difficult to get through our Tax Code and to fix the things that are obvious.
I've even had some people say to me, well, if those American companies bring their stuff back home, they'll just buy stocks or reinvest in their building, they'll just spend it however they want to. We should tell them how to spend it. I just smile and say, it's their money; let them spend it how they choose to spend it but allow them to be able to bring it home. In fact, we should encourage American-based companies to bring American money back home when they make it rather than reinvesting all over the world. It's a commonsense thing.
It's a commonsense thing to say when you do business: no matter what type of business that you're in, don't discriminate. If they have normal business expenses, allow those normal business expenses to be written off and tax on the profit. It's a commonsense thing. But instead, our code makes it so convoluted. One business gets taxed different than another business and another business. No one can define what just basic simple business expensing is because the code is all so cluttered.
Then you see in some proposals--like the President's proposal when he put out his budget, when he said that normal business expensing should be taken away from any company that does oil or gas or coal, and instead we should give special preferences to those that do wind and solar and hydro and other things. In fact, they had the audacity to make the statement in the Treasury Green Book, they made the statement that the President wants a neutral Tax Code on energy. I had to laugh. I said, one group of companies that actually has just normal business expensing--if they have a cost for a well, they're able to deduct it like every other business does for their basic operation--gets punished in this code, and other companies get triple benefits from it. That's not neutral; that's preferences. That's back to crony capitalism.
Now, I've got to tell you, I'm all for all types of energy; I really am. I'm all for it. In my great State of Oklahoma we have geothermal; we have oil; we have gas; we use coal; we have wind. We've got all kinds of energy, and we use it all extremely well. It's a great solution for us. But the issue is not what do we do on what type of energy, it's where do we put preferences.
The code doesn't need to become even more convoluted by saying, well, the administration has certain preferences on energy, and so it's going to make it more expensive for some types, and then we're going to give special crony benefits to others. That's not the way that we need to function.
We need a code that is straightforward and clean and intentional, that we have a certain amount of money that needs to be raised to have basic operation of the Federal Government, and not raise more than that--and definitely not create a system that is even more complicated than what we have, when we have all of this giant code. Instead, we should make it more simple.
So what do we need to do? Let's set some basic guidelines. Can we create a code that is fair and straightforward? Yes. So let's get started on that. And let's start with the basics. Let's not take this code and edit. Let's take a blank sheet of paper and say, how much does the Federal Government have to raise to efficiently operate? What is the best Tax Code to start that process and begin our reform not by tweaking this, but by fixing it?
I know for certain if I went to any American and said, what is the best way to do Tax Code, no one would point to this. No one would point to our current Tax Code and say that's the best way to do it. We all get that. So let's start from there and say let's start by fixing it.
The second thing is let's make our Tax Code as neutral as we possibly can. What can we do to make it simple, neutral, straightforward, so that whether you're an American that makes $20,000 a year or whether you're an American that makes $2 million a year, you feel like it's fair to you, there's not some sense of somebody else gets more benefits than I do out of this Code. It's a simple, straightforward Code.
So, we're going to make it neutral, we're going to make it simple, and we're going to try to make it as efficient as we possibly can. And I know the words ``efficient'' and ``Federal Government'' don't go together very often, but when we start a Code, we should start it as simple as we possibly can.
The last time there was a major reform of the Tax Code was in the 1980s, and it was to simplify the Code. Since that time, it has grown more and more and more complex again. I have every belief that if we go through the long process of simplifying our Code, which dramatically needs reform, if we will simplify our Code again, in the days ahead, future Congresses will make it more complicated again. That's the nature of government. I understand that. I'm just saying it's past time to do the simplification again.
We need to have significant reform, and not reform that's defined as: How do we stick it to a certain group to make sure they pay more? Reform that's actually reform, that fixes our broken system and walks Americans through a process where they can pay taxes, as we all love to do, but can at least pay taxes in a way that they believe is fair and neutral and consistent from year to year.
With that, I yield back the balance of my time.