Extensions of Remarks

13622 EXTENSIONS OF REMARKS May 24, 1983 EXTENSIONS OF REMARKS RETAIN THIRD-YEAR TAX CUT, element of our success in the November cut and income tax indexing must be re INDEXING 1980 elections, and following those elections tained as a matter of fairness to middle- and we went about the business of implementing lower·income Americans. The third-year tax what we had promised. By and large, we put cut, in fact, provides middle- and lower HON. JACK FIELDS in place an economic program that would income Americans with their first real tax OF TEXAS achieve those goals. relief. Wealthy Americans received the bulk IN THE HOUSE OF REPRESENTATIVES Today, we find ourselves, and the program of their tax break back in 1981, when the we put into place, under attack- not only by top marginal tax rate was reduced from 70 Tuesday, May 24, 1983 the Democratic "loyal opposition," but from to 50 percent. But middle· and lower·income •Mr. FIELDS. Mr. Speaker, I want to within our own ranks! Americans' tax cuts that year and last were bring to your attention, and the atten The U.S. House, having passed the wiped out by higher Social Security taxes tion of my colleagues, an article writ "Democratic Budget," has endorsed tax in and "bracket creep." ten by my good friend, VIN WEBER, creases that can be achieved only by repeal It was the third-year tax cut that was de ing tax indexing and/or the third-year tax signed to most help middle- and lower which appears in the current edition cut. The Senate now is considering whether income taxpayers, with fully 72 percent of of Human Events. or not to repeal these major tax reforms. the benefits of that tax cut going to middle The article points out that the third There are at least three reasons to retain income taxpayers. And repeal of the third year tax cut, and income tax indexing, these tax provisions. year tax cut would mean that taxpayers must be retained if the United States First, higher tax rates will not translate earning between $10,000 and $50,000 a year is to continue the economic recovery into lower federal deficits. Second, fairness would lose over 30 percent of the tax relief currently in progress. Congressman demands that the third-year tax cut and in from the cumulative three-year tax cut pro· WEBER is to be commended for his dexing be retained. And third, supply-side gram. Upper-income taxpayers, those earn economics, given a chance to work <which it ing over $200,000 a year, would lose only 13 clear and concise arguments on behalf has not been), will work. percent of their tax breaks if the third-year of the tax reforms the Congress ap In Washington, higher revenues do not cut is repealed. proved in 1981, but which now are result in lower federal deficits, but rather in Repeal of income tax indexing would only under attack in some quarters. higher federal spending. Tax receipts grew institutionalize, and make permanent, the I would like to add that I share his from $40 billion in 1950 to a projected $659 bias in the tax code against middle- and commitment to retaining the third billion in 1984, a 16-fold increase in reve lower-income taxpayers. year tax cut and income tax indexing. nues. Government outlays over the same Why? Because the narrower tax brackets My constituents in Texas have made period skyrocketed 20-fold, from $43 billion near the bottom of the tax code push lower to almost $850 billion for 1984. Outlays in and middle-income wage earners into higher clear to me in letters, in telephone creased 20 per cent faster than government tax brackets more quickly than the wider calls, and at town meetings their revenues. As a result, government deficits brackets at the top of the tax code push desire to see the third-year tax cut, grew from .06 per cent of GNP to 3.12 per upper-income wage earners into new brack and indexing, kept in place. They be cent of GNP by 1982. ets. Most wealthy Americans, who are al lieve, as my colleague's constituents in Economist Paul Craig Roberts argued in a ready paying the maximum tax rate, would Minnesota believe, that we simply Wall Street Journal column some months benefit little from indexing. cannot tax ourselves into prosperity. ago that tax increases expand, rather than But historical experience and fairness Mr. Speaker, I commend Congress shrink, federal deficits. He looked at one aside, tax cuts-real tax cuts-are more specific tax increase, the Tax Equity and needed today than every before. The cur man WEBER'S article to the attention Fiscal Responsibility Act of 1982 <TEFRA>. rent recession wasn't caused because the of my colleagues as the House and which was designed to narrow the total federal government didn't have enough Senate work to reach an agreement 1983-1985 deficit by $100 billion, and the money. Rather, it was caused because the with regard to the fiscal 1984 budget. 1983-1987 deficit by $229 billion. business climate had worsened over the last Thank you, Mr. Speaker. But what Roberts discovered, not surpris couple of decades, particularly for job-creat [From Human Events, May 28, 19831 ingly, was that the deficit estimates had not ing small businesses. In a very real sense, shrunk, as high-tax proponents had predict it's now or never for real tax cuts. THIRD-YEAR TAX CUT AND INDEXING MUST BE ed, but had grown substantially. Rather The American economy, in many ways, FOUGHT FOR IN CONGRESS than narrowing by $229 billion as a result of can be compared to the economy of a trou <By Representative Vin Weber) higher taxes, the deficit estimates had bled small business. Faced with high execu Four years ago, as the Tax Rebellion grown by $612 billion-a swing of $841 bil tive salaries, high debt service, declining raged across the nation, Republicans made a lion in just four months! sales and poor management, that small com promise to the American people: we would How could such a swing occur? pany could do any number of things to rees reduce taxes on all Americans. That was a First, because Congress will always find tablish itself in the market. simple but very potent message. Virtually new ways to spend any amount of money Among its options are cutting salaries, re every Republican congressional, senatorial raised through higher taxes. President ducing its overhead, or improving its prod and gubernatorial candidate in 1978 em Reagan was told that TEFRA would buy uct. While an uninformed observer might braced Kemp-Roth, or some version thereof. him a spending cut of $2.80 for every $1 of contend that the simplest and most reasona Two years later, we sent the same message tax increase. But according to OMB figures, ble course of action for that business to take to the American people: vote Republican for only $59 billion of the Senate Budget Com would be to raise its prices, therefore gener a change. We promised to reduce taxes on mittee's promised $173-billion spending re ating additional revenues, that would be the working Americans in order to stimulate ductions ever materialized, reducing the most disastrous policy that business could savings and investment and put America ratio to 59 cents in spending cuts for every pursue. But that is exactly what many in back to work. dollar raised in higher taxes. And before the Congress are suggesting the federal govern Again, virtually every Republican candi Senate finishes work on the budget, the ment do to solve its economic problems: date for public office embraced that prom President may not even get his 59 cents. raise taxes to generate additional revenues ise, with many Republican congressional And second, because the size of the feder to reduce the federal deficit. candidates joining Ronald Reagan and al deficit is far less determined by attempts Unfortunately, that is the kind of arro George Bush on the steps of the U.S. Cap to fine-tune the budget, i.e., raising reve gant and naive thinking embraced by too itol on September 13 to demonstrate their nues to reduce the deficit, than it is by the many men and women in Washington commitment to tax reduction for working general level of economic activity in the who've simply forgotten how the economy men and women. nation at large. works. In the real world, an unbalanced This simple promise-tax reduction for all Beyond the inability of higher tax rates to budget is a symptom-not a cause-of the Americans-was the single most significant narrow budget deficits, the third-year tax economy's poor economic performance. e This "bullet" symbol identifies statements or insertions which are not spoken by the Member on the floor. May 24, 1983 EXTENSIONS OF REMARKS 13623 Congress completely ignores this relation tion, loss of friends and relatives, and Bob Holt is one of those fortunate ship when it tries to reduce the deficit debilitating ailments. A simple lack of people. I think Bob must have been through tax increases. Raising taxes on an transportation can isolate one so that economy that has seen its savings base dry born with newsprint on his fingers and up, its investment choked off and its pro he or she cannot continue being a pro ink in his blood; he will certainly go to ductivity stifled is like adding another leech ductive citizen leading an independent his grave that way.

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