Fair Flat Tax Act of 2005

Mr. President, millions of Americans are now going through a paperwork nightmare, trying to complete their taxes. They are trying to find their 1099s and their W-2s and their schedule this and schedule that. They shout across the room: Honey, can you find the copy of the receipt for that copier we bought back in March?

What I am going to do between now and April 15 is highlight some of the ways this Tax Code gratuitously complicates the lives of all our citizens--middle-income folks, low-income folks, and the affluent. I am going to be pointing out specific provisions in the Tax Code and try to describe how it does not have to be this way. We do not have to have a ``deadwood'' tax bureaucracy, where we now have had more than 14,000 changes. That comes to something akin to three for every working day in the last 20 years.

Our citizens are going to spend more this year complying with the Tax Code than this country spends on higher education. We are going to spend $140 billion complying with the needless kind of bureaucracy that I am going to describe this morning. It is my intent between now and April 15 to discuss this. I am going to start today with the alternative minimum tax, which is true water torture for middle-class folks who basically have to figure out two taxes, their taxes and the alternative minimum tax. There is a whole set of complicated procedures here. After I complete this week's presentation on the alternative minimum tax, it is my intention to go next to the earned income tax, which is also mindlessly complicated.

Then I intend to focus on a number of the provisions for those who are very affluent that strike me, again, as defying common sense in how they are written.

Today, I want to begin by focusing on the alternative minimum tax. It is, of course, a crushing tax for millions of middle-income people, folks who definitely do not consider themselves fat cats. Across this country, 3.6 million taxpayers were impacted by the alternative minimum tax this year. The number is expected to rise to over 19 million by 2006 unless the Congress acts this year.

The form that you use for the alternative minimum tax is form 6251. The first line sums up what all of this has come to. The first line says:

If filing Schedule A (form 1040), line 41 (minus any amount

on form 8914, line 2) and go to line 2. Otherwise enter the

amount from form 1040, line 38 (minus any amount on form

8914, line 2) and go to line 7. (If less than zero, enter as

a negative amount.)

I think it is pretty obvious that what I have read is, for all practical purposes, incomprehensible. You would have to have a Ph.D. in economics. What it means is that in order to fill out form 6251 for your minimum tax you have to fill out not just form 1040 but also form 8914. How much time is that going to add to tax preparation? What about trying to understand form 8914, for those who may have to fill it out?

Are people in this country going to have to become CPAs to fill out this tax requirement that affects millions of middle-class people? I bring this up because it does not have to be this way.

I would like to now post the alternative that I have developed in my Fair Flat Tax Act, S. 1927. On line 1, instead of all the mumbo jumbo I read--it is real simple--all you have to state is whether you are single, married, head of a household, qualifying widower.

I filled out my one-page 1040 form that my legislation mandates in about a half hour. That alone is a bit of a revolution in the Senate Finance Committee, or the tax-writing committee in the other body, because it has been a long time since anybody who wrote tax laws could fill out their own returns. I bring this up only by way of saying let's make sure people understand how much deadwood and legal mumbo jumbo and needless complication there is in the Tax Code. That is why I have started today with the burdensome requirements of the alternative minimum tax. But I am going to go on, in the weeks ahead, to a number of other kinds of provisions.

As a result of what I read on the alternative minimum tax, lots of folks simply turn to tax preparers. This year we will spend $140 billion on tax preparation. That is more than the Government spends on higher education. It is pretty obvious why. There were 14,000 changes in the Tax Code since the last major overhaul, three significant changes for every working day in the last 20 years.

What I do in my fair flat tax legislation is simply say to the distinguished Presiding Officer of the Senate, the distinguished Senator from Oklahoma: You take your income from all your sources, you subtract your deductions, you add your credits, add it all up, send it to the IRS, and say: Have a nice day, I am done.

One page, 1040 form--somebody called me about it yesterday and we discussed how long it took me to do it. I mentioned I could do mine in half an hour. They said: Ron, it only took me 15 minutes.

That is what this is all about. I am not sure the Congress understands how this body has permitted this mindless bureaucracy, a bureaucracy that only can be described as deadwood, a bureaucracy that has lost all kind of connection with what the middle class in this country is all about. And I want to change it.

I believe we ought to start tax reform by simplifying the Code. Then let us

change the tax system so that all Americans have the opportunity to climb the ladder of success. One way you do that is to change a set of rates that now have the second richest person in America, Warren Buffett, paying a lower tax rate than his receptionist. The Tax Code discriminates against work.

I am not interested in soaking anybody. I believe in markets, and I believe in creating wealth, but as we saw today where we have very low rates in savings for the middle class, it is because they cannot keep up. Their wages aren't even keeping up with inflation. Their concerns are about those matters where the second word is ``bill''--the tax bill, the medical bill, the gas bill, the heating bill, and the education bill.

We say with my legislation that we are going to end the discrimination against work. We will protect 90 percent of all interest income earned by our citizens--their house, the capital gains they may be able to enjoy if they sell it, their savings accounts, their life insurance. I want us to build a new savings ethic. I do that in this legislation as well. But for the life of me, I can't figure out why we can't get both political parties to get moving on this issue.

The President has an advisory commission. They asked me what I thought about it. I said: Look, I have a one-page 1040 form which will simplify this code for everybody. The President's commission report is a bit longer, but for purposes of Government work, they are pretty close together.

So why not start with simplification? Why not start with the rates I have proposed which I would like to bring to the attention of the Senate? The first bracket of rates in my legislation is 15 percent, the second bracket is 25 percent, and the third bracket is 35 percent. That is what Ronald Reagan proposed. Those are the exact brackets Ronald Reagan proposed in 1986.

Now, much has changed. I would be the first to acknowledge that. Certainly the AMT hits much harder than anything that was anticipated in the 1980s. But I am interested in being flexible with respect to the rates.

If the Senate, after bipartisan deliberation on a fair flat tax, wanted to have 13, 23, and 33, that would be fine with me. The principle is we ought to say marginal rates are important; they send a very significant message with respect to growth. But let us treat all income the same. Let us particularly get rid of some of this mindless kind of bureaucracy.

We are having a hearing today on the tax gap, the money that is not collected that ought to be paid. We all realize that is a good opportunity to generate revenue to help the middle class. If we pick up some of that money, we will drive the rates down for everybody in this country even more than I am proposing.

People ask me what I stand for. I stand for the proposition that every American ought to have the opportunity to climb the ladder of success. And let us start by changing the Tax Code, where the second wealthiest person in the United States, Warren Buffett, pays a lower tax rate than his receptionist. How is the receptionist going to be in a position to be in the middle class if we don't treat them fairly?

I also think it is worth noting that when you graduate from a college in Oklahoma or in Illinois, when you go out into the marketplace and in the first job with your new college degree, after all that hard work, you are going to pay a higher tax rate than Warren Buffett, the second wealthiest person in this country.

We need incentives for investment.

I protect 90 percent of the interest income earned by people who are saving and showing the kind of financial discipline which is necessary to get ahead.

But we can have a Tax Code that is simpler, flatter, and fairer.

I wrap up by saying to both Democrats and Republicans, I believe this is really what you are all about.

For Democrats, what could be more important than a message about giving the middle class a fair shake, the opportunity to climb the ladder of success and get out from under some of this bureaucracy?

Our friend from Illinois is here, Senator Durbin. His colleague from the House, Congressman Emanuel, has tax clinics in Chicago for families who can't fill out the earned income tax credit because it is too complicated. I have outlined how absurd the requirements are for the alternative minimum tax and why it is difficult for folks to comply. But this is something which affects everybody--poor folks with the earned income tax credit and the middle-class folks with the alternative minimum tax.

As far as I can tell, many of the affluent in this country are saying to themselves: What really counts is finding a better accountant to get me more tax dodges because that is the way you get ahead in this country, not by innovating but by finding an accountant to get you more tax dodges.

It doesn't have to be this way. The Code doesn't have to be as complicated as it is. The Code doesn't have to discriminate against people who work for a living. The late President Reagan accepted that principle in the 1986 tax reform.

We can do this. Certainly the administration, after talking about how they were interested in tax reform and forming a commission, is going to ask me and, I believe, other Members of Congress: Where are the deadlines?

This is an opportunity for the administration to have a big second- term initiative. Ronald Reagan did this in the middle of his second term because he reached out to Senators such as Bill Bradley and the chairman of the Ways and Means Committee in the other body, Congressman Rostenkowski.

It is time to cleanse this Code. It has been 20 years since real reform, 14,000 changes, spending more on preparation than the Government spends on higher education. That is a disgrace. It is not right to working people. It is not right to all taxpayers, regardless of their income.

It is my intention to come back to this Chamber again and again--but particularly between now and April 15--as I have done today with the alternative minimum tax.

I would like to pose once more the language for folks who are middle income and trying to comply with the alternative minimum tax. If anybody who is not a CPA can figure out the first line of the AMT, I urge them to call me. My guess is they can't. They will have to call their accountant to sort it out.

I also wish to point out for people trying to get help this morning that the IRS has an 800-number. We will post it on our Web site: 1-800- 829-1040.

As I wrap up this presentation, let me contrast this, which is the dead wood in the tax bureaucracy today, with the legislation I have filed, the Fair Flat Tax Act, which replaces the legal mumbo-jumbo I have shown you with our section 1--just a handful of lines--describing whether you are single, married, head of household, or a widower.

I know colleagues are waiting to speak.

Certainly.

Mr. President, I thank the distinguished Senator from Illinois, who as usual is being a bit too logical. The fact is, if Members of the Congress had to go through this--because we

will have a lot who are paying the AMT, many who have investments of a variety of sorts--I believe that alone could trigger a bit of a revolution around here. I think the challenge is for people to see just the kind of tax hole we have dug ourselves into over the last 20 years--14,000 changes, needless complications.

I really do not see how a middle-class person can get ahead with a Tax Code that discriminates against work. The Senator from Illinois has been a champ for the middle-class kind of family.

Here is the way it works. If a cop in Chicago gets a $500 pay raise, that cop pays 25 percent of his or her pay raise to the Federal Government in income taxes, and then they pay Social Security payroll taxes on top of that. If somebody in downtown Chicago makes all their money from capital gains and investment, they pay 15 percent on their capital gains and no Social Security payroll tax.

Again, I have tried to emphasize that I am not for soaking anybody. I believe in markets, and I believe in creating wealth, as I believe Senators of both political parties do. But as the Senator from Illinois has pointed out, if Senators were really forced to deal with these kinds of situations themselves, starting with the Tax Code complications, when they fill it out on their own, that could start a revolution around here.

I believe this is a bipartisan opportunity that comes along rarely.

I will wrap up with one last point.

I believe the Social Security reform showed a lot about what our citizens think about a vital American program. A lot of Americans love Social Security dearly, and there are a lot of rallies outside the offices of Members of Congress, with folks carrying signs saying, ``I love Social Security.'' I tell colleagues that there will be no rally outside your office with people carrying signs saying, ``We Love the IRS Code.'' This is something which could be reformed, could be changed on a bipartisan basis.

The Senator asks a good question. First, a quick word on my proposal, which is available from the Congressional Research Service and Jane Gravell, the top economist who is there to discuss it with Senators. It would actually reduce the deficit by about $100 billion over 5 years, making downpayments in terms of deficit reduction.

But here is what the distribution profile looks like in terms of our legislation. We believe that upwards of 70 percent of the people in this country would get a solid tax cut. These are middle-class folks making $60,000, $70,000, $80,000, and $90,000. Essentially, what the Congressional Research Service has shown is that millions of middle- class people would get relief. It is upwards of 70 percent. We have calculated that about 15 percent of the people in this country would be treated about the same.

For example--and it is matter of public record, and I can discuss it--I have a Senate wage of about $160,000, and I have a bit of investment income. I come out about the same under my proposal as under the status quo. We have to make 6 or 7 percent of the people in this country who make virtually all their income from capital gains and dividends--not from wages--pay a bit more.

So that is what the distributional effect of one actual proposal looked like. That was again very similar to what happened in 1986 when Ronald Reagan, after having started his Presidency with a set of tax changes--and my colleague will remember they were largely for investment--did an about-face and passed a reform proposal that gave real relief to middle-class people.

I want to close by thanking the Senator from Illinois, who I know has a great interest in this subject and has been a strong champion of the middle class.

Mr. President, America can do better than making a policeman walking the beat pay a higher Federal tax rate than someone who makes their money on capital gains and dividends. Unfortunately, the Advisory Panel on Federal Tax Reform today

sent to the President a recommendation that will widen the gap between our middle class workers and the fortunate few.

I am a Democrat who believes in markets, I believe in wealth creation, I believe in entrepreneurship, but I also believe in what Henry Ford said. He, of course, was the great industrialist. He made it clear that he wanted to make money and he wanted to do well but he said: For me to make money, my workers have to have enough money to be able to buy my cars.

What concerns me tonight is that the middle class, the folks who are hurting, have gotten short shrift once again from the special advisory panel on tax reform.

These are the folks, the middle class folks, who are walking an economic tightrope, balancing their medical bills against their energy bills, trying to set aside money to save for retirement and health. They are the ones who deserve a break.

I heard mention tonight that Democrats, Senators on my side of the aisle, were not interested in cutting taxes. Well, I proposed last week to cut taxes for millions of middle class people and folks with incomes up to $150,000 by eliminating scores of exemptions, deductions and special interest breaks that exist on both the individual side of the code and the corporate side of the code.

What we saw today is the special advisory panel on tax reform wanted none of that. They did not want to make those kinds of tough choices that step on the toes of special interests, powerful interests with big lobbies. Instead, what they did is take it once again out of the hide of middle income people who would be asked to give up tax breaks and support for concerns such as child care.

When we already have a big gap between those who work for wages and those who make their income on capital gains and dividends, how can it be that it is now proposed to widen that gap?

I think we would be well advised to look back to 1986, when the late President Reagan worked in a bipartisan way with Democrats, both with the Senate and the other body, to come up with a proposal that I think--certainly its foundation would be very appealing now. It makes sure that all income is treated equally. That is what this country has always been about. I do not want to soak anybody. I do not want to discriminate against anybody. But I do not think it is right for workers to have to pay a higher effective tax rate than those who make their money on capital gains and dividends.

Income ought to be treated the same. That is what the country is all about. It seems to me that the advisory panel on tax reform missed a big opportunity today when they widened the gap between those who work for wages and those who make their income from wealth.

If one looks at the tax panel's recommendations, in effect, they throw three strikes at the middle class and they lob softballs to the special interests. The first pitch is a slider that shifts a sizable tax burden away from those at the top to the middle income taxpayers. That is followed by a fast ball that takes away many of the deductions and credits such as those for child care and medical needs that middle income Americans have come to rely on. The third pitch is a change-up. The plan may look revenue neutral, but when it flies across the plate, it adds billions of dollars to the budget deficit and will force middle class Americans and their children to pay for tax cuts for the fortunate few.

Under this special advisory panel plan that was proposed today, the middle class simply strikes out. Certainly, those who are at the top are going to enjoy the grand slam that is offered by the panel's plan. The panel would cut their tax rates, those at the very top, once again and there is not the kind of massive housecleaning of the tax system either.

I proposed in my legislation, S. 1927, the Fair Flat Tax Act of 2005, that everybody pays their fair share, not just cutting the tax rates for the fortunate, making up for it by having the middle class subsidize those tax breaks, but mine would treat all income equally. To carry out our proposal, we include a new, simplified 1040 form, one page, 30 lines, for every individual taxpayer. There are three brackets rather than the current system.

Under my proposal the brackets are 15, 25, and 35, and we create a flat corporate rate of 35 percent. This plan is more fair because it would no longer disproportionately favor the most affluent at the expense of the middle class.

Certainly, the tax breaks that my legislation calls for step on toes. I pay for those middle class tax cuts. The proposal has been scored by the experts at the Congressional Research Service. I pay for the middle class tax cut by eliminating scores of tax breaks that are now in the Code for individuals and businesses. Certainly, some of them are going to object, already have. It seems to me that it is worth it to make a radical statement about tax laws, and that is that America can do better than a two-tiered tax system which forces a policeman to pay a higher effective tax rate than an investor who makes his income on capital gains dividends. What is fair about taxing a firefighter's hard-earned wages at a higher percentage than a corporate executive?

Under the current Federal Tax Code, all income is not created equal, and under what the panel proposed today to the President of the United States, the equality gap between the middle class and the fortunate few is going to grow.

Under the proposal that was sent to the President today, Americans who work for wages would further subsidize the cuts, credits, and deferrals of those who make their money from investments such as capital gains and dividends.

Personally, I think there were other opportunities for innovations that the panel missed. For example, I proposed in my legislation to end favoritism for itemizers. We do that by tripling the standard deduction for single filers from $5,000 to $15,000 and raise the deduction from $10,000 to $30,000 for married couples.

I eliminate the alternative minimum tax, which could snare as many as 21 million Americans in 2006. But instead of forcing middle-class people to pay for that, I go after some of those breaks and exemptions and special interest favors that have made their way into the Tax Code.

I will also say that the panel should have moved to correct a glaring inequity in the current tax system, which is regressive State and local taxes. They were advised about how regressive the State and local taxes have become, but unfortunately they took a pass on dealing with this issue as well.

Under current law, low- and middle-income taxpayers get hit with a double whammy. Compared to the fortunate few, they pay more of their income in State and local taxes. Poor families pay more than 11 percent, and middle-income families pay about 10 percent of their income in State and local taxes, while the most affluent pay much less, only about half that. Because many low- and middle-income taxpayers do not itemize, they get no credit on their Federal form for paying State and local taxes. In fact, two-thirds of the Federal deduction for State and local taxes goes to those with incomes above $100,000.

Under my legislation, the Fair Flat Tax Act, for the first time the Federal Tax Code would look at an individual's entire tax situation. My legislation would look at an individual's combined Federal, State, and local tax burden and give credit to low- and middle-income individuals to correct for regressive State and local taxes. By contrast, the advisory panel that reported to the President today proposes to eliminate the current State and local tax deduction with no credit or other mechanism to address the total tax burden that is paid by individuals in this country. So once again, the panel's approach further skews the overall tax burden toward low- and middle-income taxpayers, with the fortunate few benefiting and the middle class getting hammered again.

The proposal I have made keeps in place the deductions most important for our middle-class citizens and particularly the investments they make--the investments they make in their home, in their retirement, in education--those concerns that are so important to maintaining a middle class in our country.

In contrast to the proposal made by the advisory panel today, my legislation means that the vast majority of

American taxpayers will see a cut, particularly the middle class in our country. The Congressional Research Service has indicated that all Americans, particularly the middle class and those with incomes up to $150,000, will see tax relief. The President's panel, the advisory panel that reported today, itself said that most taxpayers under its plan will not see much difference in their taxes.

We are going to have a battle of ideas. We hear often that there ought to be a debate about specific proposals. Now we have one. The advisory panel that reported to the President of the United States said, by their own analysis, that most taxpayers under their proposal will not see much difference in their taxes.

Under the proposal I have made for a fair, flat tax rate, what is going to happen in this country, according to the independent analysts at the Congressional Research Service, is that millions of middle-class people will get a tax cut, and all Americans with incomes up to $150,000 will see tax relief. Where the panel throws strikes at the middle class, I say it is time to give the middle class a break. I certainly question the fairness of the President further cutting tax rates for those who are the most affluent in this country while the gap widens between those who depend on their wages to support their families.

Finally, to illustrate the contrast, the proposal made by the panel today does nothing to deal with the hemorrhage that we have in the Federal budget. My proposal, on the other hand, according to the Congressional Research Service, makes a real start at reducing the budget deficit and would actually whittle down these budget deficits approximately $100 billion over the next 5 years.

In summary, I am very troubled by the recommendations coming from the advisory panel today because they continue to twist the Tax Code away from equal treatment of all income, widening the chasm between people who get wages and people who collect dividends. I am troubled that it hits middle-class Americans especially hard, but it treats the special interests and the affluent with kid gloves. And I simply cannot find a sound rationale for adding massively to the country's deficit the way the advisory panel would do. Making the Tax Code simpler and flatter is going to help make it fairer. What is really needed is to provide actual, concrete tax relief to the middle class and to treat work and wealth equally. That was what was done in 1986.

I have been asked several times since introducing this legislation, How is anything going to happen now? The advisory panel's proposal probably goes off to the Federal agency on collecting dust, where they send these commission reports that do not get a lot of attention. But I will tell you that I think there is a chance to strike a chord out across the country with the middle class. That was what was done in 1986 when, on a bipartisan basis, President Reagan and several leading Democrats said, as I am suggesting tonight: America can do better than to tax the middle-class person's wages at a higher rate than it does the people who make their money on capital gains and dividends. If it was good enough for Ronald Reagan in 1986, I think it ought to be pretty appealing to this Congress tonight and in the days ahead.

Now that the debate has been joined, we have the advisory panel's proposal which shows again what their priorities are, which I have outlined tonight. I think they are unfortunate. The legislation I have authored would give significant tax cuts to middle-class folks by eliminating scores of exemptions and deductions and would reduce the Federal deficit at a time when these budget books are hemorrhaging.

The debate is joined. There are two clear alternatives, two clear approaches to this issue of how to approach tax reform now on the table. I look forward to the debate. It is my hope that the Congress, as was done in 1986, can decide this is time to cleanse the Tax Code. Ever since 1986, one break, one exemption, one deduction after another has been added to the Code. Unfortunately, not many of those breaks went to the middle class. They did go to the fortunate few. Now we have a budget deficit that is hemorrhaging and a middle class that is hurting.

Folks want to know what the difference is between the various parties with respect to tax reform. The difference could not be clearer tonight between what I have proposed, a Fair Flat Tax Act, and what the advisory panel proposed this afternoon. I hope the Senate can come together, as was done in 1986, and cleanse the tax system again, since that exercise has not been pursued in 20 years. It can be done on a bipartisan basis as was done in 1986.

I look forward to working with colleagues. I serve on the Finance Committee where such a debate will start. I look forward to working with colleagues on a bipartisan basis.

I yield the floor.

Mr. President, Senator Specter, Senator Brownback, and I introduce today the Second Chance Act of 2005, which takes direct aim at reducing recidivism rates for our nation's ex-offenders and improving the transition for these offenders from prison back into the community.

All too often we think about today, but not tomorrow. We look to short-

term solutions for long-term problems. We need to have a change in thinking and approach. It's time we face the dire situation of prisoners reentering our communities with insufficient monitoring, little nor no job skills, inadequate drug treatment, insufficient housing, lack of positive influences, a pap city of basic physical and mental health services, and deficient basic life skills.

The bill we introduce today is about providing a second chance for these ex-offenders, and the children and families that depend on them. It's about strengthening communities and ensuring safe neighborhoods.

Since my 1994 Crime Bill passed, we've had great success in cutting down on crime rates in this country. Under the Community Oriented Policing Services, COPS, program, we've funded over 100,000 officers all across the country. And our crime rate has plummeted.

But there's a record number of people currently serving time in our country--over 2 million in our federal and state prisons; with millions more in local jails. And 95 percent of all prisoners we lock up today will eventually get out. That equals nearly 650,000 being released from federal or state prisons to communities each year.

If we are going to continue the downward trend of crime rates, we simply have to make strong, concerted, and common-sense efforts now to help ex-prisoners successfully reenter and reintegrate to their communities.

And right now, we're not doing a good enough job. A staggering two- thirds of released State prisoners are expected to be rearrested for a felony or serious misdemeanor within 3 years of release. Two out of every three. You're talking about hundreds of thousands of reoffending, ex-offenders each year and hundreds of thousands of serious crimes being committed by people who have already served time in jail.

And, unfortunately, it's too difficult to see why such a huge portion of our released prisoners recommit serious crimes. Up to 60 percent of former inmates are not employed; 15-27 percent of prisoners expect to go to homeless shelters upon release; and 57 percent of federal and 70 percent of state inmates used drugs regularly before prison, with some estim1tes of involvement with drugs or alcohol around the time of the offense as high as 84 percent.

These huge numbers or released prisoners each year and the out-of- control recidivism rates are a recipe for diaster--leading to untold damage, hardship, and death for victims; ruined futures and lost potential for re-offenders; and a huge drain on society at large. One particularly vulnerable group is the children of these offenders. We simply cannot be resigned to allowing generation after generation entering and reentering our prisons. This pernicious cycle must come to an end.

My 1994 Crime Bill recognized these extraordinarily high rates of recidivism as a real problem. My bill, for example, created innovative drug treatment programs for State and Federal inmates to help them kick their habit.

But this is only one piece of the puzzle. I introduced a bill in 2000 that would have built on my 1994 Crime Bill--the ``Offender Reentry and Community Safety Act of 2000'' (S. 2908). This bill would have created demonstration reentry programs for Federal, State, and local prisoners. These programs were designed to assist high-risk, high-need offenders who served their prison sentences, but who posed the greatest risk of reoffending upon release because they lacked the education, job skills, stable family or living arrangements, and the health services they needed to successfully reintegrate into society.

While we have made some progress on offender reentry efforts since 1994, much more needs to be done. In the current session of Congress, I am pleased that colleagues of mine--from both sides of Capitol Hill and from both sides of the aisle--are also focusing their attention and this vital issue.

Senators Specter and Brownback have been dedicated and tireless leaders on crime and public safety issues throughout their careers, and I am proud to join efforts with them today. Other Senators have also taken a leadership role on these issues, including Senators Leahy, Kennedy, Brownback, Hatch, Specter, Grassley, Feinstein, DeWine, Santorum, Landrieu, Bingaman, Coburn, Durbin, and Obama.

The Second Chance Act of 2005 provides a competitive grant program to promote innovative programs to this out a variety of methods aimed at reducing recidivism rates. Efforts would be focus on post-release housing, education and job training, substance abuse and mental health services, and mentoring programs, just to name a few.

Because the scope of the problem is so large--with 650,000 prisoners being released from state and federal prisons each year--our bill provides $100 million per year in competitive grant funding . This isn't being wasteful with our scarce federal resources, it's just an acknowledgement of the scope of the problem we're faced with.

A relatively modest investment in offender reentry efforts compares very well with the alternative, building more and more prisons for these ex-offenders to return to if they are unable to successfully reenter their communities and instead are rearrested and reconvicted of more cries. We must remember that the average cost of incarcerating each prisoner exceeds 20,000 per year, with expenditures on corrections alone having increased from $9 billion in 1982 to $60 billion in 2002. We simply can't be penny-wise but pound-foolish.

The Second Chance Act of 2005 also requires that federal departments with a role in offender reentry efforts coordinate and work together; to make sure there aren't duplicative efforts or funding gaps; and to coordinate reentry research. Our bill would raise the profile of this issue within the executive branch and secure the sustained and coordinated federal attention offender reentry efforts deserve.

We also need to examine existing Federal and State reentry barriers-- laws, regulations, rules, and practices that make it more difficult for former inmates to successfully reintegrate back into their communities; laws that confine ex-offenders to society's margins, making it even more likely that they will recommit serious crimes and return to prison.

Turning over a new leaf and going from a life of crime to becoming a productive member of society is tough enough. We shouldn't have Federal and State laws on the books that make this even more challenging. That's not say that we don't want to restrict former drug addicts from working in pharmacies, for example, or to bar sex offenders from working it day care centers. But many communities across the country currently exclude ex-prisoners from virtually every occupation requiring a state license, like chiropractic care, engineering, and real estate. Lifting these senselessly punitive bans would make it easier for ex-offenders to stay out of prison.

Our bill provides for a roust analysis of these federal and state barriers with recommendations on what next steps we need to take. And these reviews are mandated to take place out in the open under public scrutiny.

The Second Chance Act also spurs state-of-the-art research and study on offender reentry issues. We need to know who is most likely to recommit crimes when they are released, to better target our limited resources where they can do the most good. We need to study why some ex-offenders who seem to have the entire deck stacked against them are able to become successful and productive members of our society. We need to know what, works and how we can replicate what works for others.

Our bill also provides a whole slew of common-sense proposals in the areas of job training, employment, education, post-release housing, substance abuse, and prisoner mentoring--efforts and changes in law that we can do now.

Our Second Chance Act is a next, natural step in our campaign against crime. Making a dent in recidivism rate is an enormous undertaking; one that requires action now and continued focus in the future. I commit to vigorously pushing this legislation as well as keeping an eye on what steps we need to take in the future. We need to realize that the problems facing ex-offenders are enormous and will need sustained focus. The safety of our neighbors, our children, and our communities depends on it.

I am proud today to join with Senator Specter and Senator Brownback in introducing the Second Chance Act and ask our colleagues to join with us in this vital effort.

Mr. President, today I am proposing a Fair Flat Tax Act that will finally provide real tax relief to America's hurting middle class. It will do so by making the tax system simpler, flatter and fairer. And at the same time, it will begin to reduce the deficit that is destabilizing our economy, our security and our future.

This tax reform proposal is simpler because it's easier to understand and use. My legislation will include a new, simplified 1040 form that is one page, 30 lines, for every individual taxpayer.

This plan is flatter because it collapses the current system of six individual tax brackets down to three--15, 25 and 35 percent--and creates a flat corporate rate of 35 percent.

Ultimately, this plan is fairer because it changes the laws that disproportionately favor the most affluent Americans and corporations at the expense of the middle class. Instead, it provides a major middle-class tax cut--paid for by the elimination of scores of tax breaks in the individual and corporate income tax breaks, and by repealing the Bush tax cuts that favored the most fortunate few at the expense of the many.

This plan is fairer for American taxpayers because it treats work and wealth equally.

This is a radical statement about tax law: America can do better than a two-tier system which forces a policeman to pay a higher effective tax rate than an investor who makes his income on capital gains and dividends.

Under the current Federal Tax Code, all income is not created equal in this country. Americans who work for wages, in effect, subsidize the tax cuts and credits and deferrals of those who make money through unearned income--the dividends from investments. It's time to treat all taxpayers the same.

Let me be clear: I am not interested in soaking investors. I am a Democrat who believes in markets, and creating wealth. But what our country is all about is equality, and our Tax Code should treat everyone's income more equally too.

My legislation, The Fair Flat Tax Act of 2005, adapts the flat tax idea to help reduce the deficit instead, through fewer exclusions, exemptions, deductions, deferrals, credits and special rates for certain businesses and activities, and through the setting of a single, flat corporate rate of 35 percent. On the individual side, it ends favoritism for itemizers while improving deductions across the board: The standard deduction would be tripled for single filers from $5,000 to $15,000 and raised from $10,000 to $30,000 for married couples. Six individual rates are collapsed into three progressive rates of 15 percent, 25 percent and 35 percent, and income from all sources is taxed the same.

Several deductions used most frequently by individuals, those for home mortgage interest and charitable contributions, and the credits for children, education and earned income are retained. No one would have to calculate their taxes twice: this proposal eliminates the individual Alternative Minimum Tax (AMT), which could snare as many as 21 million American taxpayers in 2006.

This proposal would eliminate an estimated $20 billion each year in special breaks for corporations, and direct the Treasury Secretary to identify and report to Congress an additional $10 billion in savings from tax expenditures that subsidize inefficiencies in the health care system. Eliminating these breaks would sustain current benefits for our men and women in uniform, our veterans and the elderly and disabled--as well as breaks that promote savings and help families pay for health care and education.

What makes the Fair Flat Tax Act truly unique is that it corrects one of the most glaring inequities in the current tax system: regressive State and local taxes. Under current law, low and middle income taxpayers get hit with a double whammy: compared to wealthy Americans, they pay more of their income in State and local taxes. Poor families pay more than 11 percent and middle income families pay about 10 percent of their income in State and local taxes, while wealthier taxpayers only pay five percent. And because many low and middle income taxpayers don't itemize, they get no credit on their Federal form for paying State and local taxes. In fact, two-thirds of the Federal deduction for State and local taxes goes to those with incomes above $100,000. Under the Fair Flat Tax Act for the first time the Federal code would look at the entire picture, at an individual's combined Federal, State and local tax burden, and give credit to low and middle income individuals to correct for regressive State and local taxes.

Repealing some individual tax credits, deductions and exclusions from income--along with some serious changes to the corporate Tax Code-- enables larger standard deductions and broader middle-class tax relief.

The deductions most important to most Americans remain in place: the home mortgage deduction stays, as do child credits and charitable contributions, higher education and health savings.

What all this means for American taxpayers is--the vast majority of taxpayers will see a cut, particularly the middle class. Congressional Research Service experts tell us that middle class families and families with wage and salary incomes up to $150,000 will see tax relief.

On the corporate side--this plan does something that may not be popular, but it's right.

Each of us, including America's corporations, need to pay our fair share. Corporations that have used tax loopholes to avoid paying their fair share of taxes are going to see those loopholes close and they're going to contribute.

This legislation makes concrete progress toward deficit reduction. There's a long way to go to stop the hemorrhaging in the Federal budget, but this legislation makes a real start by whittling the deficit down approximately $100 billion over five years.

Some may wonder if what I am proposing today is a response to the President's Tax Reform Advisory Panel. To date, the Panel hasn't officially released its recommendations. I can't respond to something that hasn't been introduced yet. But I am troubled by the fact that the recommendations trickling out from the Panel would continue to twist the Tax Code away from equal treatment of all income, widening the chasm between people who get wages and people who collect dividends.

I am introducing The Fair Flat Tax Act of 2005 today to provide Americans a plan based on common-sense principles that can make the Tax Code work better.

Making the Tax Code simpler and flatter is going to make it fairer. My legislation is going to provide real relief to the middle class. It will treat work and wealth equally. It will make a start at reducing the deficit. I am ready to get to work with my colleagues and move it forward.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, today I am proposing a Fair Flat Tax Act that will finally provide real tax relief to America's hurting middle class. It will do so by making the tax system simpler, flatter and fairer. And at the same time, it will begin to reduce the deficit that is destabilizing our economy, our security and our future.

This tax reform proposal is simpler because it's easier to understand and use. My legislation will include a new, simplified 1040 form that is one page, 30 lines, for every individual taxpayer.

This plan is flatter because it collapses the current system of six individual tax brackets down to three--15, 25 and 35 percent--and creates a flat corporate rate of 35 percent.

Ultimately, this plan is fairer because it changes the laws that disproportionately favor the most affluent Americans and corporations at the expense of the middle class. Instead, it provides a major middle-class tax cut--paid for by the elimination of scores of tax breaks in the individual and corporate income tax breaks, and by repealing the Bush tax cuts that favored the most fortunate few at the expense of the many.

This plan is fairer for American taxpayers because it treats work and wealth equally.

This is a radical statement about tax law: America can do better than a two-tier system which forces a policeman to pay a higher effective tax rate than an investor who makes his income on capital gains and dividends.

Under the current Federal Tax Code, all income is not created equal in this country. Americans who work for wages, in effect, subsidize the tax cuts and credits and deferrals of those who make money through unearned income--the dividends from investments. It's time to treat all taxpayers the same.

Let me be clear: I am not interested in soaking investors. I am a Democrat who believes in markets, and creating wealth. But what our country is all about is equality, and our Tax Code should treat everyone's income more equally too.

My legislation, The Fair Flat Tax Act of 2005, adapts the flat tax idea to help reduce the deficit instead, through fewer exclusions, exemptions, deductions, deferrals, credits and special rates for certain businesses and activities, and through the setting of a single, flat corporate rate of 35 percent. On the individual side, it ends favoritism for itemizers while improving deductions across the board: The standard deduction would be tripled for single filers from $5,000 to $15,000 and raised from $10,000 to $30,000 for married couples. Six individual rates are collapsed into three progressive rates of 15 percent, 25 percent and 35 percent, and income from all sources is taxed the same.

Several deductions used most frequently by individuals, those for home mortgage interest and charitable contributions, and the credits for children, education and earned income are retained. No one would have to calculate their taxes twice: this proposal eliminates the individual Alternative Minimum Tax (AMT), which could snare as many as 21 million American taxpayers in 2006.

This proposal would eliminate an estimated $20 billion each year in special breaks for corporations, and direct the Treasury Secretary to identify and report to Congress an additional $10 billion in savings from tax expenditures that subsidize inefficiencies in the health care system. Eliminating these breaks would sustain current benefits for our men and women in uniform, our veterans and the elderly and disabled--as well as breaks that promote savings and help families pay for health care and education.

What makes the Fair Flat Tax Act truly unique is that it corrects one of the most glaring inequities in the current tax system: regressive State and local taxes. Under current law, low and middle income taxpayers get hit with a double whammy: compared to wealthy Americans, they pay more of their income in State and local taxes. Poor families pay more than 11 percent and middle income families pay about 10 percent of their income in State and local taxes, while wealthier taxpayers only pay five percent. And because many low and middle income taxpayers don't itemize, they get no credit on their Federal form for paying State and local taxes. In fact, two-thirds of the Federal deduction for State and local taxes goes to those with incomes above $100,000. Under the Fair Flat Tax Act for the first time the Federal code would look at the entire picture, at an individual's combined Federal, State and local tax burden, and give credit to low and middle income individuals to correct for regressive State and local taxes.

Repealing some individual tax credits, deductions and exclusions from income--along with some serious changes to the corporate Tax Code-- enables larger standard deductions and broader middle-class tax relief.

The deductions most important to most Americans remain in place: the home mortgage deduction stays, as do child credits and charitable contributions, higher education and health savings.

What all this means for American taxpayers is--the vast majority of taxpayers will see a cut, particularly the middle class. Congressional Research Service experts tell us that middle class families and families with wage and salary incomes up to $150,000 will see tax relief.

On the corporate side--this plan does something that may not be popular, but it's right.

Each of us, including America's corporations, need to pay our fair share. Corporations that have used tax loopholes to avoid paying their fair share of taxes are going to see those loopholes close and they're going to contribute.

This legislation makes concrete progress toward deficit reduction. There's a long way to go to stop the hemorrhaging in the Federal budget, but this legislation makes a real start by whittling the deficit down approximately $100 billion over five years.

Some may wonder if what I am proposing today is a response to the President's Tax Reform Advisory Panel. To date, the Panel hasn't officially released its recommendations. I can't respond to something that hasn't been introduced yet. But I am troubled by the fact that the recommendations trickling out from the Panel would continue to twist the Tax Code away from equal treatment of all income, widening the chasm between people who get wages and people who collect dividends.

I am introducing The Fair Flat Tax Act of 2005 today to provide Americans a plan based on common-sense principles that can make the Tax Code work better.

Making the Tax Code simpler and flatter is going to make it fairer. My legislation is going to provide real relief to the middle class. It will treat work and wealth equally. It will make a start at reducing the deficit. I am ready to get to work with my colleagues and move it forward.

I ask unanimous consent that the text of the bill be printed in the Record.