Freedom Flat Tax Act

I thank the Speaker for the recognition. I thank the leadership on my side for allowing me to talk this hour.

Mr. Speaker, it is April 15. It is the day that we file our taxes, or in some cases we submit a request for an extension. In the interest of full disclosure, I did submit a request for an extension, not because-- well, I will tell you, when I was practicing medicine when I was a physician, my taxes were a great deal more complicated than they are today. But even today it is difficult to keep up with all of those various pieces of paper that you must collect after a year's worth of living and deliver to your accountant in order that they may accurately and correctly assess your taxes. That is one of the things that has always bothered me. It is one thing to pay taxes. The previous gentleman said it's one of our obligations for living in a free society; I don't dispute that--I may dispute the level at which he wants to see us taxed--but at the same time, I don't see why it always has to be so hard. I would like to give people another option, and that's what I want to talk about this evening, Mr. Speaker.

But, actually, first, I do need to talk a little bit about what we just heard over the past hour because it was a wonderful story; but, Mr. Speaker, maybe if we're going to tell stories we ought to start out with, ``Once upon a time'' and end up with, ``And they lived happily ever after.''

The gentleman was quite correct in quoting a poll that said only 12 percent of Americans believe that President Obama has cut taxes. But what do you think is the reason for that? Maybe it's because in the last 15 months taxes in this country have increased by $670 billion and counting, according to the Committee on Ways and Means. Many of these tax hikes include taxes on people whom the President said during his campaign for the Presidency that people would not see a tax increase. And what are some of those? Well, the previous gentleman alluded to the fact that we just passed and the President just signed a massive health care bill. But, really, if we were honest in our discussion about that bill, we would call it a massive tax increase bill because honestly that's what it was. It didn't really have that much to do with health care, but it sure had a lot to do with taxes.

There is going to be a new tax on individuals who don't purchase government-approved insurance. And guess what? That tax will fall on Americans, some Americans who earn less than $200,000 a year, violating the pledge made by President Obama when he was campaigning for the highest office in the land. Now, for most people that's not a great surprise because there were so many promises made that were not kept during that campaign.

Oh, remember things like, I'm going to take public financing for my Presidential campaign. Remember the great transparency hoax that was played upon the American people: oh, sure, we'll create a health care bill and I'll have everybody in around a big table and we'll invite C- SPAN in so you can see who's standing with the special interests and who's standing with the American people. Well, guess what? You didn't get to do that, did you, because that was another promise that wasn't kept.

Well, promises to not raise taxes on Americans earning less than $200,000 a year unfortunately were one of the first casualties of this administration, and the sad thing is it continues to be a casualty of this administration.

What about the new tax on employers who fail to fully comply with the government health insurance mandates? That might fall on some people who earn less than $200,000 a year. It's

not going to happen for a couple of years because they did stretch some of these things out in the health care bill; but what about the 40 percent excise tax on some health plans that cost over a certain amount of money? That's the health care plan that costs over a certain amount of money, but it may belong to someone who earns under $200,000 a year or a married couple that earns under $250,000 a year.

What about the ban on the purchase of some over-the-counter drugs for people who happen to have a health savings account or a health reimbursement account? What about the increase in Medicare tax on wages and self-employment income and the imposition of a 3.8 surtax on certain investment income for individuals who earn over certain amounts of money? These are significant changes that occurred in our Tax Code, but they were passed in a health care bill. That's why you didn't know about them; they were hidden in this bill that we passed last month.

Now, for some people, not for all, but for some people with high medical expenses, there is a threshold that has to be met. Your medical expenses have to be more than 7.5 percent of your adjusted gross income before those expenses are tax deductible. Now, to be sure, if someone's medical expenses are over 7.5 percent of their adjusted gross income, that's an individual who spent a good deal of money on medical care that year. You would think that we wouldn't want to punish that person further, but in fact that's just what we did in this health care bill. We raised that threshold to 10 percent. So that means people who have a lot of medical expenses will now have to spend 10 percent of their adjusted gross income before they can begin to deduct those expenses from their income tax.

We've imposed a new $2,500 cap on people who contribute to their own flexible spending accounts. There is going to be a new annual tax on some health insurance policies. There's going to be a new tax on some pharmaceuticals; some of those taxes will fall on people who earn under $200,000 a year.

How about this? A new excise tax on medical devices, a 2.3 percent tax on medical devices. These are class 2 and class 3 devices as defined by the Food and Drug Administration. So, okay, tongue depressors and Band-Aids will not be taxed, but syringes will be. Well, who's going to pay that tax on the syringes? Well, in all likelihood in that instance it is going to be the doctor in the doctor's office because doctors have very little way of passing charges onto the patient because most of their arrangements are contractual with insurance companies or with Medicare and Medicaid, and they're not going to pay the tax. It will be difficult to pass the charge onto the patient because those charges are capped. So, actually, that will be the physician's office that gets to pay those taxes. In fact, Mr. Speaker, everything from lasers to leaches are taxed under this new excise tax that's coming on certain medical devices.

What if you earn under $200,000 a year and happen to go to a tanning salon? Well, guess what? A 10 percent tax on that activity for you even though you earn under $200,000 a year. And there will be a new tax on some self-insured health plans; and, yes, some of those may fall on people who earn under $200,000 a year.

There will be new penalties for nonqualified health savings account distributions. Now, people shouldn't take money out of their health savings accounts unless it's for a health expenditure; but rather than just having that money then convert to taxable income, there is actually going to be a double penalty on those types of purchases. And the list goes on.

The other gentleman did this, so I'll do the same thing. As you can see, there is a significant amount of writing on this page of paper. No, you can't read it from your distance, but I did read many of the things that are contained on this page. And get this, get this: all of these additional taxes, and what did we hear the other day?

Someone floated the notion of a value-added tax, a VAT tax, as a way to deal with the deficit and some of the increase in Federal spending that's going to occur as a consequence of this health care bill that we passed. We heard it a couple of times last spring when we first started talking about this health care bill. Some people came on the Sunday shows and talked about--some people from the administration came on the Sunday shows and talked about a value-added tax, and then all of that talk was tamped down pretty quickly when that trial balloon was met with so much disfavor. But now that the bill has passed, maybe we will need that VAT tax in order to pay for it. That will be a tax increase on some individuals who earn under $200,000 a year.

There is no question that unless this Congress takes some action before the end of the year--and quite honestly, I don't know where the time and energy will come for this Congress to do this, but the tax policies that were enacted in 2001 and 2003 expire at the end of this year. Many of those tax policies will affect people who earn under $200,000 a year. The expiration of a tax policy means we revert to tax levels that were present in 2001. Guess what? That's going to be a tax increase on some people who earn under $200,000 a year.

And what are we going to do about the inheritance tax, the appropriately named ``death tax''? We haven't even talked about that. That is one of those other things that will have to be tackled before the end of the year. Time is running out. It's an election year. People aren't willing to do difficult things during an election year, so it becomes problematic as to whether or not those things will be fixed.

Mr. Speaker, it's often said that there is nothing certain in this life except death and taxes. And I will tell you from the standpoint of a physician that sometimes death is less complicated than our tax system. Let me just give you an example here.

Most of us are familiar with the name Sam Rayburn because, after all, that's who the Rayburn Building is named for. Sam Rayburn was, in fact, my Congressman when I was a small child in the north and northeast Texas area. He served for a long time. When he first came to Congress back in 1913, he was part of a Congress that enacted the Federal income tax. Back in 1913, it was a bill by standards in those days, it was 400 pages. But look what's happened over time. By the end of the Second World War, it was 8,200 pages; by the time a man landed on the Moon it was 16,500 pages. In 1979, when Ronald Reagan won his second term, it was 26,300 pages. When the Republicans took control of Congress, it was over 40,000 pages. In 2004, 60,000 pages. And here we are today, 2010, and it is 71,684 pages long. That's a lot of Tax Code for people to keep up with. And as the complexity has increased, the cost for individuals to comply with their obligations under the Tax Code has increased as well.

And why has this happened? Whose fingerprints are all over all of these pages of the Tax Code? Well, it's the fingerprints of people here in the House of Representatives because under the Constitution all revenue bills have to originate with the House of Representatives.

The Committee on Ways and Means is charged with that tough duty and, as a consequence of trying to appease one constituency or punish another, we've added pages and pages and pages of complexity to the Tax Code. I dare say in various committees today there have been proposals discussed that would either punish or reward American citizens because, in trying to drive a certain type of behavior--maybe towards green jobs or renewable energy as we did in our Committee on Energy and Commerce today--we're going to drive things in a direction where we want the social transformation to occur, and we're going to do that with the Tax Code. Any time we want to punish a special interest group or reward a stakeholder, we add a new credit or a new law to the Tax Code.

The result is a Federal law that is literally fraught with opportunities for avoiding taxes. There are loopholes within the law that people will try to exploit, and some will do it quite successfully. For everyone who exploits a loophole and avoids taxes, some other honest American is going to have to make up that difference or is going to be added to the deficit, and that honest American's children or grandchildren are going to pick up the difference. So, these are things that are not done without consequence and that are not done without penalty. Now, think of this:

The Internal Revenue Service for fiscal year 2010, the current fiscal year, was appropriated an amount of money of almost $12 billion--$11.6 billion, so almost $12 billion--to administer the activities of that Federal agency.

What is a comparable amount?

Well, I'll tell you that is more than what this country spent in defending itself with the missile defense program. Arguably, as to what may become our first line of defense against a rogue state or a nation that means us ill, we spent more on administering the Internal Revenue Service. Guess what? That is only going to increase under the health care bill that passed out of this House a mere 3 or 4 weeks ago.

In fact, within the health care bill, there are provisions for hiring--I do not remember the number exactly, but I think it was over 16,000 new agents for the Internal Revenue Service. We didn't really do much for hiring or for training new doctors or new nurses, but we did add a ton of new IRS agents to administer and to force the new Tax Code changes that were incorporated into that bill. As a consequence, you may have to go to H&R Block for your prenatal care.

The current Tax Code is a significant burden on all Americans. We spend billions of hours and billions of dollars complying, and that doesn't even count the billions of hours that we spend complaining about the Tax Code. The average taxpayer loses about 30 percent of his or her income to Federal, State, and local taxes. That is a greater share of income than is spent on food, clothing, and housing combined. According to the National Taxpayers Union, in 2009, American families and businesses spent almost 8 billion hours complying with the Tax Code. That is 8 billion hours that they weren't spending with their families or engaged in some productive activity. The cost of all of that time spent on complying with the Tax Code is estimated in excess of $110 billion.

In addition to the lost time, last year, Americans paid nearly $30 billion for help in preparing their taxes, using either software programs or tax preparation professionals. That is a little more than $200 for the average taxpayer in the course of the year. Per person, that $200 to comply with the Tax Code doesn't sound like a great deal, but we are in a recession, Mr. Speaker. Americans are struggling to make ends meet. Who wants to be in favor of making Americans waste money that they can ill afford?

The National Taxpayer Union estimates the cost for Federal tax compliance by corporations was nearly $160 billion, which was 54 percent of the corporate income tax collected in fiscal year 2008. In other words, we are spending just as much to comply with the Tax Code but are collecting half as much. The time and money should be spent by families and businesses who are growing the economy and creating jobs.

I mean, after all, what is the one thing the American people want us to do this year? They really weren't so interested in health care. They were interested in national defense, but it still falls pretty low on the scale. The one thing they want us to do is to create a climate, to create an atmosphere, where small businesses feel comfortable about creating jobs and about adding employees. That's our number one charge this year--to grow the economy and to create jobs. It's so simple. I wonder why we can't remember that.

A Gallup Poll out today, Tax Day 2010, shows that 63 percent of Americans believe their taxes will increase in the next 12 months. Again, 63 percent believe their taxes will increase in the next 12 months. That's right. They're not buying that stuff that President Obama cut their taxes, because, as we know, he did not. Only 4 percent expect a change that will reduce their taxes. The tax climate is unsteady and unpredictable for Americans. In addition to not being right, that instability is one of the things that is responsible for the very poor showing we have had with job creation in the last 15 months.

Now, this is some polling done by a group called American Solutions. It is from last year, but I think it is still apropos to the discussion at hand.

Sixty-nine percent of people think that the Federal income tax system is unfair; 70 percent favor tax incentives for companies that keep their headquarters in the U.S. That is not a surprising figure, but look at this: 82 percent of Americans think the option of a single-rate system would give taxpayers the convenience of filing their taxes with just a single sheet of paper. That's 82 percent. As Ronald Reagan used to say, those 80 percent issues are ones that he likes to get behind.

The fact is, if the system were fair and simple, you probably wouldn't have such a high number of people thinking it's unfair. The fact is, if the system were fair and simple, you wouldn't have those billions of dollars spent in tax compliance. It would be pretty straightforward. Now, I talked a little bit about it with that opening list that I went through; but again, it is important to sort of underscore some of the changes that people are going to see this year, not 4 years from now but this year, as a result of the health care bill that was passed last month.

Beginning January 1, 2012, according to the Joint Committee on Taxation, ObamaCare will limit the medical expense deduction, which will raise taxes by $15 billion over 10 years. Under current law, if out-of-pocket medical expenses, including health insurance premiums and medical procedures, are not covered by health insurance and if they exceed 7\1/2\ percent of adjusted gross income, these expenses are fully deductible, but it will increase to 10 percent under the bill that we passed. Some of the most expensive and comprehensive health insurance plans don't cover some high-cost medical procedures, such as in vitro fertilization where the cost for the procedure and for the prescription drugs can run as high as $20,000 per treatment cycle, and some families can have multiple cycles within a year. Those are the people who are going to be hit by this change from 7\1/2\ percent of adjusted gross income to 10 percent on most Americans. The Joint Committee on Taxation estimates this new limit will affect 14 million taxpayers--or 14.8 million taxpayers, 14.7 of whom will earn less than $200,000 a year at the time that it is put into effect.

There are some things I would like to point out which Steve Forbes wrote in a book a couple of years ago, in a book on the flat tax. It's called the ``Flat Tax Revolution.'' It's probably still available on Amazon. There are some interesting facts that he relates in the book of how Washington really just doesn't get it when they write tax law.

Quoting from the book, in 1989, Senator Bob Packwood requested a revenue forecast from Congress' Joint Committee on Taxation on a hypothetical tax increase, raising the top rate to 100 percent on incomes over $200,000.

So, just as a study, just as an exercise, let's just see what their projection is if we just take all income, every scrap of income, away from people who earn over $200,000. The Joint Committee on Taxation responded by forecasting increased revenues of $204 billion in 1990-- and again, these figures are somewhat old--$204 billion in 1990 and increased revenues of $299 billion in 1993.

Essentially, the Joint Committee on Taxation predicted that people would continue to work even if the government taxed them out of every penny they earned. It doesn't sound like they're living in the real world, does it? If you take every penny that people earn, why are they going to set their alarm clocks and go to work the next day? It's likely not going to happen.

A second point that they quoted in the book is that the Congressional Budget Office predicted that the 1986 corporate tax rate increase would raise government revenues from $89 billion to $101 billion. So this is over $10 billion because of the increase in the corporate tax rate. Yet what actually happened is that corporations altered business practices, and revenues decreased to $84 billion. So, instead of getting an additional $10 billion, they actually scored $5 billion less than they would have had they left the tax rate alone.

It's tough because Americans get that. They understand that. If you tell the average American, Hey, next year, your taxes are going to be 100 percent of everything you earn, they're going to say, Fine, I'm not going to work. See ya.

When we think about it, in our committees here in Congress, we say, Well, if you tax everybody at 100 percent, yeah, you're going to bring in some additional revenues. In fact, it will be significantly increased next year and the

year after that. Well, that's nonsense. That's not taking into account fundamental human behavior. If you take away everything from people, they're not going to show up for work the next day.

Now, we know what works when it comes to changing the Tax Code. We got a glimpse of it in Ronald Reagan's administration when he cut the taxes in half in 1986. As a result of that reform, the economy grew; revenues increased, and jobs were created.

Nina Olson, in writing in 2007 the National Taxpayer Advocate, talked about simplifying the Tax Code as one of her recommendations, and I'm quoting here: The complexity of the code increases the likelihood that honest taxpayers will make inadvertent mistakes. It creates opportunities for taxpayers to avoid paying their fair share of taxes and makes it difficult for the Internal Revenue Service to administer the tax system. Simplifying the tax law could improve the audit process and allow less of a taxpayer burden.

Well, what a phenomenal idea, simplifying the tax law. Now, who could be against that?

In 1981, there was a simple concept put forth by Robert Hall and Alvin Rabushka. This was revisited in 1995, 15 years ago, by my predecessor in this body, who was former Majority Leader Dick Armey, and most recently in the book that Steve Forbes published on the ``Flat Tax Revolution.'' All of those authors were calling for the same type of tax reform in our Tax Code--that it be flatter, fairer, and more simple.

So what would it look like if we were to do something like that, flatten the tax and broaden the base? Okay. I want everyone to close their eyes and visualize that shoe box or that suitcase full of receipts you took down to your accountant, and then visualize the sheets of paper you're going to get back from your accountant that you're going to have to file unless you file online.

What if it were a great deal more straightforward? What if it were a great deal simpler?

That blueprint would be the flat tax. In fact, there has been legislation that was introduced early last year--H.R. 1040 for the individuals who want to look it up on Thomas. H.R. 1040 allows for a person to opt into a single-rate tax system, to opt into a flat tax.

Why would you have it as an optional? Why would you have it as an opt-in?

Well, we have created this Tax Code, remember, of many, many thousands, tens of thousands of pages, and we've done that to drive behavior in a certain way. So one of the things you wouldn't want to do is change things suddenly. After all, we've encouraged people to comply or to live these very complicated tax lives in order to get the benefits of the tax system. You can't very well just say, well, we're going to change everything overnight, but we could allow people to opt in to a single-rate system. I, for one, would gladly do that. Even if it meant I paid more taxes, I would gladly do that and give up that shoe box full of receipts that I've got to sit down and go through every year with my accountant.

Now, a lot of people are concerned about the home mortgage deduction on things like a flat tax, but if it's an optional flat tax, then you make the decision. You know, the home mortgage deduction in some markets doesn't really amount to as much as it does in other markets. In some areas in Texas, the home mortgage deduction really may be as little as $1,000 a year in real dollars saved by itemizing and going through that exercise with your taxes. In other markets, where real estate prices are quite, quite high--and there are still some of those markets in this country--then it may be prudent to continue with taking that mortgage deduction.

Let's give people the option. Let's give them the choice. If someone has constructed their finances around being in the IRS code, fine. They may stay there. Yet, if someone wants the freedom to get out from beneath that code, we ought to allow them the freedom to do so. We ought to trust Americans to be able to make up their own minds on what would work best for them.

Well, how would this form work? It's really pretty simple. Yes, you are going to need a little personal information. I know the sensitivities to that with the census right now, but some personal information so that the taxes can be properly allocated to the proper individual. Income on one line: wages, tips, compensation. But this does exclude interest, dividends, and capital gains. Interest and dividends would be taxed at the point of origin, not at the point that they are received by the individual. Personal exemptions.

This form was drawn up a couple of years ago. These numbers, in fact, depending upon how incomes have grown, may change a little bit. But essentially the first $36,000 for a family of four would be exempt from income taxes. Married, filing jointly, $25,580. Single head of household, $16,330. Number of dependents multiplied by $5,510. Add those all up. Taxable income, line 1, all income; minus deductions, line 3; line 4, calculate the tax; multiply line 4 by .19; taxes already withheld, subtract that, get a refund or the taxes you owe.

What did that take? Thirty seconds? Forty-five seconds? I read fast. The print was large. How different is that from what you just went through with your accountant? How different is that from what you have been doing with the Tax Code?

If we gave the people the option of simplifying their lives or continuing the Tax Code, I think that over time you would see so many people leave the Code and opt for a simplified system as their lives became more simple, and you would no longer have the need for this great behemoth of an agency we now know as the IRS. It would just simply be a collection, a clearinghouse, for receiving these forms and tallying up the bills.

Now, I went through some of the calculations on the number of hours, the number of dollars. There is no way to calculate, no way to calculate, the hours of stress that the current IRS Code imposes on average, law-abiding Americans. It's impossible to calculate or quantify the number of migraine headaches or tension headaches that are caused by trying to keep up with the IRS forms.

One of the things that people tell me repetitively is, yes, they want to save money where they can, but one of the things they really want is they want some time back in their lives. How important would that be to give that time that is now devoted to compiling and going through check stubs at the end of the year and keeping receipts and keeping up and chasing papers all over the house and trying to run down expenses that you didn't keep up with and now you're trying to go back and recreate those trails--how about giving all that time back to Americans who would prefer to be under a flat tax?

You really do eliminate the special preferences. No double taxation of interest and dividends. This bill creates a single-rate structure. No taxes on dividends. No taxes on savings. We are told all our lives we have got to save money, and how insulting is that when passbook savings rates are extremely low but, on top of that, you have got to pay 25, 30 percent of that in income taxes? It erodes the incentive for saving.

I will give you an example. When I was in the practice of medicine, I thought at one time I need to keep 3 months of what it would cost me to run my practice. I need to keep 3 months in cash where I could get to it quickly if I needed to in order to keep the wolf from the door, if things weren't going well financially.

So I did that, and I got through the year, and everything went okay. And what I found was I was paying the business tax then on that money that I had kept in the business, and when that money was eventually distributed to the partners, the doctors, it was taxed again. So we were doubly taxed on that money.

I didn't do that very long because there's no reason to do that. Tax the money only one time when it's distributed to the partners. Otherwise, there's no reason to keep the money in the business and have to pay taxes on it twice, once when you earn it and once when it's distributed.

But the behavior behind wanting to keep 3 months of operating income, operating capital available to me, that was a good concept. It that was a sound concept. But the Tax Code punished me for doing that. The Tax Code punished

me for sound thinking. The Tax Code punished me for being reasonable.

Now, doing the tax via a flat tax would also remove the Clinton tax on Social Security earnings. And one of the things that really got me thinking about the flat tax when Congressman Armey wrote the book in 1995 and introduced the legislation, the tax year 1993, just out of pure serendipity, out of pure coincidence, Bill Clinton's first year in office as President of the United States, he and I earned about the same amount of money. I think I earned just a little bit more, but I may have had a better year.

Of course, the President's income tax filing and the amount of income taxes the President paid were public knowledge. That was printed in a story in the newspaper. So I did a very simple calculation. His salary was X. This was the amount of money he had paid in taxes. So what percentage of his salary did he end up paying in taxes? And the number was within a percentage point or two of around 20, 21 percent. I did the same for my taxes, and I paid 31 percent.

So that led me to a conclusion that there was within our Tax Code the Clinton paradox. Why should two people who earn essentially the same amount of dollars pay a substantially different tax rate?

A flat tax would make a great deal more sense. There would be no reward for perhaps a questionable deduction from your income tax; and, at the same time, we could give people back a significant amount of their time and energy during the course of the year with keeping up with receipts and that quality time that we all spend with our accountant every year. So I credit President Clinton with making me a believer in the concept of a flat tax, because it really came home at that point.

What would happen with a flat tax? You think savings would increase if we stopped punishing people for saving money? It might. Businesses also would be taxed at a flat 19 percent with deductions for goods and services, materials, wages, salaries, and pensions and the purchase of capital equipment, structures, and land. And those capital outlays would be immediately expensed. We saw the power of that in 2003 when the tax policy of 2003 was enacted.

You know, in 2003, a lot of people don't remember it now but we were having trouble with the unemployment rate being high. I think it was up to 6 or 7 percent. And it was a terrible thing that it was that high, and President Bush was to blame for this, and we really needed to hold him accountable for this high unemployment rate.

So, okay, he did something about it. He did something about it with a change in the Tax Code, and that was passed in May of 2003. It was a contentious vote when it happened. But after it passed, by July of 2003, job creation started on an upward trajectory; and really, until September of 2008, every quarter there was an increase in the number of jobs created in this country.

We have got to create between 120,000 and 150,000 jobs every month in this country just to keep up with people that are entering the workforce. So that was an extremely important change in the Tax Code, and one of the things it did was it allowed for immediate expensing of capital outlays rather than a long depreciation schedule in businesses, that the cap on capital outlays was increased significantly, from $10,000 to $30,000. The result was businesses did go out and make that capital investment, did improve their businesses; and, as a consequence, the tax receipts really increased. Jobs increased. And it appeared to me that that was a sound way to go about dealing with a downturn in the economy.

And, Mr. Speaker, I frankly do not understand, do not understand why we will not undertake similar policies today with our unemployment hovering around 10 percent. And one of the most pernicious aspects of that is young people just completing their education are ending up in the ranks of the unemployed and they are losing those early productive years, which may have a deleterious effect on the remainder of their productive lifetime.

It seems like almost any group with whom you speak, regardless of the age demographic, the beginning of the working years in the late teens and early 20s, the pre-retirement age, or those in between, everyone is having difficulty. Every one of those demographic groups is having trouble finding work. And, as a consequence, we are creating what may well turn out to be a longitudinal problem that, should we take the time to solve it now, would really be to our great benefit.

The long-term unemployment numbers are startlingly high. The unemployment numbers for minorities are startlingly high. The unemployment numbers for people who are in their late teens and early 20s are startlingly high. Why wouldn't we consider something that worked as recently as 8 or 9 short years ago? In fact, those policies are going to expire, and we may well make things worse rather than better.

One of the things that I do want to address, and we heard this in the last hour, on Tax Day 2010, are you better off this Tax Day? The little cartoon here says, ``I'm sorry, sir, but you can't claim Citibank, Goldman Sachs, AIG, Bank of America, Wells Fargo, Fannie Mae, Freddie Mac, GM, and Chrysler as dependents.'' So are you better off this Tax Day? You answer the question.

There is an option that we could take to fundamentally transform the tax system in this country, and it would be liberating for individuals and businesses alike. Fundamental tax reform in this country is something the American people are crying for. Eighty percent, according to the American Solutions Study from a year or two ago, want us to do something about that. Through both Democratic and Republican majorities, we have talked about it, but we haven't taken that work on. President Bush convened a tax panel during his second term. The result of that was disappointing. The recommendations were all over the place, and no one really proposed legislation as a consequence of that tax reform panel.

It is incumbent upon this Congress, the next Congress. Regardless of which party is in the majority, it is incumbent upon them to come to some realistic conclusions about simplifying the Tax Code. For too long we have put this burden on our citizens in order to get them to comply with what the previous speaker said was our obligation for living in a free society, and that is the payment of income taxes. For too long we have made that too difficult. We have made that too onerous. And, as a consequence, we have had a deleterious effect on our economy. Right now, our economy is suffering. We would do people a great service by simplifying the Tax Code, unleashing the power of the American economy.

Look, this economy is too vibrant to keep down for too long. Even the United States Congress is not capable of keeping this economy suppressed. The economy will recover. But the recovery will be more robust and more prolonged if we will create a sensible tax policy to go along with that recovery.

Madam Speaker, I thank you for recognizing me this evening.

I was real pleased to see our 30-Something Group over there has expanded their folks, a lot of new faces, and new faces are good for Congress. It is good to see them, and even though my in my opinion they are a little misdirected, they certainly are entitled to their opinion. I am not here to debate them tonight. Maybe some other night I might be here for that purpose.

Tonight I am here because I have been raising and talking about an issue here in the last couple of weeks, probably now going on a month, about a change in the tax law that I proposed in the form of a bill that I introduced here to instigate the ``Rangel Rule,'' which would allow ordinary citizens to be treated as nicely as Charlie Rangel, the chairman of the Ways and Means Committee, who by his own admission on the floor of this House failed to pay taxes for a period of quite a long time, something like 10 years or better. But he did catch up on those taxes when he finally realized kind of, whoops, I messed up for about 10 years, and maybe I ought to pay these taxes. It may have been a longer period of time than that. I don't know. It is not really relevant to the issue. The issue is that he was not assessed any penalties or interest by the IRS.

I really have a hard time figuring that out, because I have talked to a lot of people back home in Texas who have like not filed their taxes on April 15th, but have gotten an extension, and they ended up filing like on August 15th or October 15th, which is not a real long delay, nothing to compare with like 10 years or 20 years or whatever the period was. But they all got assessed penalties and interest by the IRS, and we really don't like to think that just because somebody happens to be the chairman of the Ways and Means Committee that they should be treated any differently than, say, those folks back there that I talked to in Texas or the folks that have contacted me from all over the country on this issue.

So I have been raising that issue, and in all fairness tonight I want to be fair to Chairman Rangel, because he is a man that, of course, this House highly respects. There are other issues that have to do with Mr. Rangel. We may go into some of those tonight. But in all fairness to the chairman, maybe I should have expanded this rule a little bit, because there are others who have issues that need to be dealt with, at least talked about.

You know, the current Secretary of the Treasury, Tim Geithner, I guess he had some issues that he had with taxes too. His were very confusing to me, because the other day, I couldn't find the board tonight, but we had a picture of a letter that a company sent, a fairly sizable check around $30,000-plus that was sent to Mr. Geithner, telling him here was his money he was supposed to pay his taxes with, and he was signing, by the obligation of this form, he was obligating himself to pay his Social Security and Medicare taxes.

And that he, by the signing of this document said, ``I sure will. I promise you. I give you my word, that I will pay these taxes.'' And then, whoops, he just kind of let it slip his mind for about 4 years. And, in fact, it had completely slipped his mind until he became the subject of discussion in the United States Senate about whether or not he had a clear conscience to serve as the Treasury Secretary of the United States. At that point in time, he realized that, ``Uh-oh, I believe I forgot something. I believe I forgot to pay my taxes for 2001 and 2002 and 2003 and 2004 and maybe some more.'' And so he rushed in and he paid those taxes.

Now, he didn't pay them all because he was slick enough or smart enough or maybe good lawyer, if he's lawyer, enough to know that the statute of limitations had run on 2 years of these taxes he was supposed to pay. And so I think he relied upon that statute to prevent him from having to pay that amount of money. But he, like Chairman Rangel, he did some hustling and some catching up, and he caught up and he paid his taxes.

Now, you know, it's real upsetting to the IRS when people don't pay their income taxes. They get real upset about it. But my experience of being a lawyer and a judge for, well, going on 30-something years is that they get particularly irritated when you don't pay the Social Security and Medicare taxes you're required to pay, because they kind of feel like that's a whole lot bigger crime than slipping up and miscalculating on your income tax.

And they get downright serious about that. I've seen them padlock people's businesses over failing to pay those taxes. I have a good friend that used to run a place called Big G's in Round Rock, and he got padlocked all the time back in the '70s when I represented him. And he always got slapped with heavy penalties and heavy interest.

But Mr. Geithner, Secretary Geithner, he finally paid some of those taxes, and he paid some taxes, some interest. But once again, just like Chairman Rangel, he wasn't assessed any penalties for intentionally not paying his taxes. And I say ``intentionally'' only by the state of the evidence that has been presented and the fact that he signed a document addressed to the IRS in which he pledged to them that he knew that the check they had sent him was for taxes and he knew he was obligated to pay those things.

So, with that sworn statement, I think it's pretty fair to say he intentionally didn't pay his taxes. Now, you know, he may have had just a temporary lapse of memory, but let's hope not, because we really don't want to think that the man that's in charge of the monetary system of the United States has that kind of temporary lapses of memory. I mean, we, as American citizens, certainly don't look for that quality in a Treasurer. And so I think we ought to be concerned about that.

So I guess what I'm starting off to say here is that I don't want Mr. Rangel to think that I'm just mistreating him by himself, because I really don't intend to do that. I really think it's time for us to look at all these issues that are ethical issues that seem to have come up in the majority since the Democrats have been in charge of this Congress.

And, you know, it's kind of funny. I think it's really amazing. There are polls that show that the American people really think that the Democrats have only been in charge of this Congress since President Obama got in office. But, I mean, that's a mistake. This is actually the third year that the Democrats have been in charge of this Congress. So those things that everybody talked about last year that they thought the Congress did very poorly, and many seem to point the fingers at the Republicans, at that time the Republicans were not in charge of this Congress. This was the Democrats' Congress. They are in charge of it. They decide what comes to the floor and what doesn't come to the floor. They set the policies of this Congress at this time, and they have for the last almost 3 years.

So back when the Republicans were in charge, they talked about a culture of corruption. I'm not talking about a culture of corruption yet, but I am talking about certainly some lapses in ethical behavior on behalf of our colleagues.

And as our President, who, by the way, made a very nice speech last night, and many of us were very taken back by his speech--and we all recognize his very good talent at speaking to the American public. President Obama is a very skilled speaker. And I sat right there in that chair right there, and I listened to the whole thing, and I was impressed.

But he's had a little problem with some of his people that he's gotten to go to work for him. Besides the ones that we just talked about--and Secretary Geithner got away with what he had to do. I guess if we're going to have the ``Rangel Rule,'' we might have the ``Geithner Getaway,'' because he certainly got away with not paying his taxes for a period of time.

But, you know, Secretary of State, who was a candidate for the President of the United States, Hillary Clinton, she also had some issues that people got concerned about and probably should be. Her husband's foundation, President Clinton's foundation, received over $500,000 in donations from foreign governments and foreign nationals, and we've asked President Clinton's wife, Secretary Hillary Clinton, to be our representative to those foreign nations. There are strict guidelines about accepting donations like this, but it seems that those restrictions didn't seem to apply to her.

Of course, she's been confirmed and she does represent us with all foreign countries and all the foreign representation in the world. She is our agent. She speaks for us. The question we have is, is it ethical to take donations from foreigners and then serve this Nation as our representative with foreign nations? Is that the right kind of behavior? Is that the ethics that this House ought to be standing up for and the Senate ought to be standing up for? Could there be a conflict of interest here that we really should have discussed? Because she's negotiating with nations, many of whom have contributed to a foundation which furthers issues that are important to Bill and Hillary Clinton.

So, you know, she's there, and I'm sure that she's going to do a good job. I certainly hope so. But I think we at least ought to ask these ethical questions about Secretary Clinton.

Governor Richardson from New Mexico was another one that the President of the United States thought would be an outstanding Cabinet member. He was man enough to actually pull his name down because there were being issues raised in New Mexico about payments of pay-for-play schemes with companies that were involved with the State of New Mexico. And rather than bring this ethical lapse to the forefront, he thought it was better if he just stayed in New Mexico and dealt with his issues there, rather than having to bring them up here to Washington. That's good. It's a good thing. It looks like, after two or three tries, we're finally going to hopefully get a Commerce Secretary here.

So the whole point of being here tonight is to point out that you're not hearing a lot about it but there are an awful lot of ethical lapses of judgment that are going on in the Congress these days. And they seem to be all coming from the ruling majority.

I see that I have a friend here that has joined me. He's always a good friend, and he always comes to my aid when I'm standing alone, and that's my good friend and classmate, Dr. Burgess from Texas.

Dr. Burgess, I'd like you to join me and give us your ideas on some of the subjects we're talking about and any other subjects you want to talk about. I'll yield you such time as you may choose to consume.

Reclaiming my time for questions to my colleague.

First off, I'm very aware that my colleague has been a strong proponent of the flat tax as we've been here in Congress, and I appreciate his coming up again and giving us his special message about what he sees as a solution to this problem. If I could ask you a question, Dr. Burgess:

On the issue of Senator Daschle, who took about $180,000 worth of car rides or something, would this form solve that problem? Would that still be income to Mr. Daschle under the flat tax?

That's the answer. I was wondering about that because it sure would have helped Senator Daschle in his quest to serve at the cabinet level of this administration if he hadn't had to claim those things, but of course, I guess we know under the present Tax Code--and most everybody knows--that if somebody spends money on your behalf, you gain benefit from spending money on your behalf.

I mean most all of us around here have to catch a cab every now and then. Shoot, it doesn't take any time at all before you run up a $15 or $20 cab fare. So I guess, in having a car drive you all over town for several years, you ought to kind of in the back of your mind figure that somebody's paying for this, and it's certainly not you, and they're doing it on your behalf, and you're getting the use of it, so maybe you ought to at least think about the fact that it ought to be income to you in some form or fashion.

It certainly was a benefit. I think that maybe Senator Daschle ought to be jumping up and down to be promoting the flat tax over with our colleagues on the other side of the aisle so he can, maybe, stay out of this kind of trouble the next time he comes along and somebody wants to make him one of the Secretaries of our administration.

I guess Mr. Richardson could have some benefit from the flat tax, and Mr. Geithner might even have some benefit from the flat tax. In fact, you've come up with a solution, and I want to thank you for coming up with solutions. Now, I have some friends who would argue that the fair tax also would be a solution, but we won't go into that today.

Reclaiming my time, Dr. Burgess, in a sense of fairness to our colleagues, I've come up with the Rangel Rule.

Do you think that I should seek to amend the legislation to expand the definition or the title of this rule where it's not just all on poor Chairman Rangel's back? Maybe we could call it the Rangel/ Geithner/Daschle/Who is Next Rule on paying taxes.

Truly, it's not a good night to go into the complexities because I think everybody knows it's pretty simple, that if you have to pay penalties and interest when you fail or if you just make a mistake on your income tax--and my colleagues who sit around this House would be in that same boat, I assume, because they're not the chairman of the Ways and Means Committee--then maybe the chairman of the Ways and Means Committee ought to pay those penalties and interest, too. If he doesn't, then maybe none of us should.

That's the whole idea behind the Rangel Rule. It's a simple rule. Just write at the bottom of your tax form ``wish to exercise the Rangel Rule,'' and all penalties and interest would be excused. What a joy that would be for so many taxpayers in the United States. It would be a bipartisan effort because it wouldn't just be for Republicans or Democrats or even Independents. It would be for everybody.

Well, I appreciate your coming back up here and telling us about the flat tax. I think the flat tax is a concept that all Americans, no matter what party they're a part of, should at least have the patience to take a look at. The flat tax is for the simplification of the public's life because, really and truly, we spend overtime around this place complicating Americans' lives. I believe they would be blessed to no end if we would just spend a little time de- complicating their lives.

This last week, in fact, I got off the phone tonight. A fellow asked me about that stimulus package. He said he watched John Boehner drop that thing on the floor here and scare everybody in the room. He wanted to know was that really the stimulus package or was that just something he dropped to get people's attention. I said, ``No, that was it,'' and that was very complicated.

I think, honestly, everybody would say that, in the 12 hours that that stimulus package was available to Republicans and to many Democrats, nobody, even the best speed reader wasn't able to read that almost 1,100 pages and decipher what it meant. Unfortunately, I happen to be a fellow who has had to deal with deciphering what the law means for a long time.

And some of the Federal laws are written in such a way that, you know what? It takes an act of Congress to figure them out, as we say back down in Texas, because they are very complicated, and we complicate people's lives. So the flat tax may be an idea whose time has come that we won't complicate people's lives.

The purpose of talking about all of these issues that concern the ethical behavior of this House is because it has been the subject of the 30-Something Group which preceded me here for at least 4 years that I know of. I have sat in the chair where the Speaker is sitting right now and heard the 30-Something Group accuse people in this House of corruption. I haven't accused anyone of corruption because I think, actually, that's beyond the pale of what Members of Congress should do.

I just said that there is ethical lapses that have to be discussed, and if they turn out to be more than that, that's for someone other than me to discuss. That's for someone like the Ethics Committee or the Justice Department to deal with, but not for me to deal with.

I'm certainly not accusing anyone of corruption here tonight. But I am very concerned that we put sunlight on the types of behaviors where Members of Congress have failed to do the responsibilities that we tell the American citizens is their responsibility as a citizen--that is, pay their taxes and pay them on time. And yet they don't suffer the penalties that the average taxpayer suffers for failing to do that. That's the purpose of me being here today.

I'm really pleased to see my friend from California (Mr. Dreier) here. I hope he will talk to you and share some of his wisdom on the issues of ethics.

I know you served in this House for many, many years, and you've dealt

with these issues over and over. And I'd like to yield you what time you'd like to use here.

And I thank you for your comments, my friend from California. Mr. Dreier, as we have well seen, is very knowledgeable in the concepts of this House and how it operates, and the history of this House and what the history tells us.

I want to thank both my colleagues for coming out here today. And, quite frankly, we have been asked by and challenged by the administration to put forth ideas. I would hope that the White House is monitoring what was said by both of my colleagues here tonight as some ideas that ought to be looked at and considered. We really do want to work with the administration and share ideas. And we would really like to have a world where nothing is off base, because obviously the two parties disagree on a lot of policy, but a free flow of information and ideas is what the American people expect us to do. And I think we heard two gentlemen tonight who put forth different, but similar, ideas as to how to simplify our lives and how to turn things around.

To me, bipartisan is not, ``here's our bill, if you vote for it, we're bipartisan.'' Bipartisan is, we sit down and we discuss the issues, sometimes one at a time. And when we conclude, we hear both sides, and then people are willing to give and take to make it work.

You know, if the President of the United States told us when he was elected that he was vehemently opposed to earmarks, that he was going to do everything he could to get rid of earmarks, and if he finds spending in a bill that everyone would acknowledge is an earmark and he chooses to veto that bill because it goes against what he told the American people his principles were and the Republicans help support that veto because they agree with the principles that he put forward, that is certainly bipartisanship--and that opportunity may actually arise over the Omnibus bill that we passed today with the 9,000 some odd earmarks that are contained therein. So that's bipartisanship. Listening to what Mr. Dreier and Mr. Burgess have to say and not dismissing it out of hand, that's bipartisanship.

And so, that's kind of an aside from what I'm here to talk about tonight. But I'm really grateful for my colleagues to come in here and put these ideas out on the table because I think they're good ideas. And I don't necessarily agree completely with every one of them, but I'm certainly willing to listen. And I think our President has told us he is willing to listen. And I take him at his word. I think he is, and I hope he will. And I feel good about it; I think he will.

Now, I've talked about ethical issues tonight, I'm going to talk about them some more because there's a lot more that we can talk about. And they are issues that are important. And I'm trying to be friendly about it, but make no mistake, I have spent 26 years of my life making sure that the laws of my State are abided by. And people who violate those laws, after all of their rights are protected under the Constitution, if they are convicted of doing something wrong, I honestly believe they should be punished. And I've been involved in that also.

So, although I try to be friendly about this discussion--and I will continue to try to be friendly because the American people are tired of mean

spiritedness--I want everyone to understand that, from my personal belief, everyone is entitled to their day in court, everyone is entitled to be presumed innocent. I'm not making accusations that you should consider convictions. But should there be a conviction, I believe that this body is not above the law, and we should keep it that way. And I will pledge myself to do so. And I think every Member of this body would feel the same way. And that's why these little ethical slips give the impression that somebody might be above the law.

We are a nation of laws, we are not a nation of men. And being a nation of laws, we expect everyone, no matter what their status, to abide by those laws. This body is a body of rules, and we expect Members of this body to abide by those rules; and the failure to abide has consequences.

So even though I'm trying to be as friendly as I can on these issues, I want everybody to understand that those are principles that this country stands on and that this body stands on, and I intend to make sure that those principles stand firm. I think my colleagues across the board, both sides of the aisle, in their heart of hearts will agree with me. And I think it was a right policy when a Member, even though a close, personal friend of mine, was accused of something, that under our rules he had to step down until his issues were resolved. And I think it's unfortunate that the Democrats, under their rules, don't take the same position; that if a serious accusation of misbehavior or breaking the law is raised against a Member in the form of an indictment, that that person has to step down from positions of leadership. Both sides should have the same rules. Unfortunately, we don't have it that way.

Still, I defend every person's right to be presumed innocent until proven guilty beyond a reasonable doubt. And I will stand for any Member of this House, no matter what his party affiliation, to preserve that right on his behalf because I have preserved that right on behalf of thousands of people who were convicted by a jury of their peers of heinous crimes, and yet that was a right guaranteed by our Constitution. It's a right guaranteed to our Members. So make no mistake, I make no accusations of guilt because that's not appropriate under our system, but I do raise questions of ethical lapses, and I will continue to do so.

I thank the Speaker for allowing me to speak here tonight. I'm going to yield back my time now. And I want to thank my colleagues who joined me here tonight. And we will be doing some more of this, and I hope other colleagues will join us and give us their ideas.

Mr. Speaker, I thank my very good friend and colleague.

I've heard two Texans up here talking about not only the issue of ethics but also tax reform. And I'd like to take a few minutes to talk about a proposal that I put forward that I believe will go a long way towards dealing with a lack of compliance, which is an issue that we are regularly addressing, and something that there has been very little talk about, and that is the issue of economic growth.

We've talked about saving our economy. We've talked about working towards recovery. But it seems to me, Mr. Speaker, one of the important things that we need to focus on is economic growth itself. And, frankly, if we had a tax code that is like the one that my friend, Mr. Burgess, was just talking about a little earlier, I think that many of the problems that we have with people who have not complied with the Tax Code would, in fact, be diminished.

As my friend said, he's not accusing anyone of ethical violations as he's standing here, but we do know this: with a tax code that is as voluminous as it is, it encourages a lot of the behavior that we have. And I think what we need to do is simplify it.

On the opening day of this Congress, I was privileged to introduce, as I did in the last Congress, what I call the Fair and Simple Tax Plan, F-A-S-T, which is FAST. And I think there is so much common sense to this. And I know that, having two very distinguished gentlemen from Texas, common sense is in great abundance in Texas. And I will admit it is, on occasion, lacking in my State of California. But remember, we've got common sense in California, but we have, on occasion, not enough common sense. But it seems to be very abundant in Texas, and even in North Carolina. I see my colleague from North Carolina here, and I think it's abundant there.

But I do believe, Mr. Speaker, that as we look at a commonsense approach to deal with the issue of economic growth--which, again, should be a very important driving factor for us here because we're not simply talking about stemming the downturn, we're not talking about, you know, our attempt to recover. We need to have policies that create bold, robust economic growth, and we can do that.

So let me take a moment, if I might, Mr. Speaker, and talk about the Fair and Simple Tax Plan.

What it consists of is taking the six rates that we have today and it cuts that in half down to three rates. The first rate, which is the income on the first $40,000, would be a flat 10-percent rate. Then, for income between $40,000 and $150,000, the rate would be 15 percent. And the flat rate for income above $150,000 would be a 30-percent rate.

Now, I know a lot of people say, ``Why don't we just do a clean, simple flat tax and have that be it?'' Well, there are a number of things and challenges around here, a number of areas that are really sacrosanct.

People always talk about the need to deduct the interest on their home mortgage, right? When we talk about a flat tax, the red flag seems to go up and they say, ``What about the deductability of interest on home mortgages?'' Well, under the Fair and Simple Tax Plan--which, again, was introduced on the opening day--we maintained the opportunity for people on a single-page form to deduct the interest on their home mortgages.

And what else is very important and sacrosanct to people, and that is to be able to make charitable contributions. So we maintained the deductability of charitable contributions.

And one of the things that President Obama spoke here in this Chamber about last night was the issue of health care and the challenge that exists there. We all know that we need to take action. So the Fair and Simple Tax Plan includes a $15,000 exclusion so that people can purchase either direct health care or they can purchase insurance. And, again, it incentivizes them to do that.

Then it deals with issues that have been heavily debated here. One of the things that people are concerned about regularly are jobs leaving the United States and going overseas. Our constituents talk about that with regularity.

A lot of people make what I believe is a misplaced claim that somehow embarking on trade agreements, which simply open up new markets, that causes the flow of jobs out of the United States into other countries. Well, the fact is it's not trade agreements, Mr. Speaker, that do that. What it is is it's the fact that the United States of America has a tax, a tax on businesses, the job creators in this country, that is second only to Japan. And under the Fair and Simple Tax Plan, we slash that tax from 35 percent to 25 percent. Again, as you talk to those job creators out there, that would go a long way towards encouraging economic growth.

And then the capital gains rate. Well, people say, ``What capital gains do we have today with this market downturn?'' We need to look long-term. We need to look at what we want. And we want greater economic growth and to reduce that top rate on capital gains from 20 percent to 15 percent rather than increasing it, as I believe action that would go a long way towards encouraging economic growth and it would help us deal with the flow of revenues that we will need for much of the spending that is taking place.

And we all acknowledge, well, the stimulus package went way, way, way overboard with $800 billion and a thousand pages. We were passing that thing around as we were debating it the other day, those of us who could catch it and could throw it with 1,100 pages.

The fact is we all recognize that infrastructure spending is essential, very, very important for the goods' movement and other things here. But we could do that for significantly less than the $800 billion that is in this so-called stimulus bill.

So we need revenue to be generated, and I believe that slashing the top rate on capital gains, taking that rate on job creators, on businesses, from 35 to 25 percent, would go a long way towards creating economic growth, which, therefore, would create the flow of revenues that we need to meet a lot of these essential items that are out there.

Mr. Speaker, the other thing that it does is that it completely eliminates the inheritance tax, the death tax, throws it out the window. We all know that for people who have to go to a funeral home and then deal with the Internal Revenue Service within a matter of days is a challenge. I have had to go through this. It's very painful. That tax is very, very punitive. It's forced people to have to sell businesses and others just to meet that tax obligation that is there.

Right now that tax rate has been 45 percent, and it had been 55 percent. And I believe that if we could completely eliminate that, that would, again, create a tremendous opportunity for growth to take place. A lot of small businesses would be saved.

And all of this is done within the context of a single-page form, throwing the complex code that we have out, and the taxpayers would have the option of going to this Fair and Simple Tax Plan.

I think that that's the kind of creative proposal that we need to take on to deal with the challenge of economic growth, which I think should be priority number one as we seek to deal with the economic downturn that we have.

I also want to say that on the overall issue of ethics, I'm very proud--there are a lot of people who have said on this issue that when we Republicans were in charge, we did next to nothing on it. Well, as my friend knows very well, when Republicans were last in charge, we put into place very, very strong--a very strong ethics reform package.

We dealt with a lot of these issues, and it hasn't gotten the kind of attention that I believe we need to get. Why? Because people have constantly engaged in attacking Republicans. And, obviously, there has been corruption on both sides of the aisle. A very, very bipartisan thing, tragically, has been that corruption has existed on both sides of the aisle.

But I do want to make sure that the record is clear that we, when we were in the majority, spent an awful lot of time addressing that issue, and we put into place with some bipartisan support, I think, very good ethics reform.

But especially at this time--and my friend is absolutely right. We need to make sure that a good example is set for the American people because we are going through a tough time. The President made it so clear. His opening remarks last night were so on target, about the fact that people have sleepless nights, the fact that people are anguishing over this. This notion of a high school student opening that envelope and having to put that acceptance letter back into the envelope, as the President said so well here last night, is the kind of story we hear with great regularity.

And I, the other day here on the floor, shared an even greater tragedy. A very good friend of mine told me that his 14-year-old son's best friend's father had just committed suicide because of the serious economic downturn that we have faced. And I've talked to a number of people, and the suicide rate has continued to climb as it relates to the economic challenges that we have.

That's why I continue to believe that even though we've passed this so-called economic stimulus package--which, from my perspective, I hope and pray, we all hope and pray, that it brings us out of the downturn that we're going through right now. But, frankly, if one looks at history, it is proved to have failed.

Now, in special orders, a number of us have been regularly quoting Secretary Morgenthau. Henry Morgenthau was the Treasury Secretary under Franklin Delano Roosevelt. And in 1939, Secretary Morgenthau was testifying before the House Ways and Means Committee. And in his testimony before the House Ways and Means Committee, he said the following--now, remember, this is Franklin Delano Roosevelt's Treasury Secretary. I've read the card so many times, I've got it now committed to memory.

He said, ``We have tried spending money.'' Again, this is testimony before the Ways and Means Committee. ``We have tried spending money. We have spent more money than we have ever spent before. Now, after 8 years of this,'' the Roosevelt administration, ``we have an unemployment rate that is just as high today as it was when we started, and we have an enormous debt to boot.'' That's what the Secretary of the Treasury of Franklin Delano Roosevelt said in testimony in 1939 before the House Ways and Means Committee.

I got to thinking about this the other day, and I believe that we should look to another Democratic President as our model for economic growth, that being John F. Kennedy. So, over the weekend, I started reading up about Douglas Dillon, who was the Treasury Secretary under John F. Kennedy. He put into place bold, robust, dynamic economic growth policies through tax cuts that took the top rate from 90 to 70 percent and had a capital gains reduction. And it unleashed tremendous growth, a surge in the flow of revenues in the Federal Treasury.

Similarly, I was very honored to be elected to this Congress, as my friend said correctly, a long, long time ago. 1980 is when I was privileged to be elected, the same day that Ronald Reagan was elected to be President. And Ronald Reagan inherited a tremendous--a very, very difficult economic time. The unemployment rate was very, very high. Interest rates were approaching 20 percent. We had inflation very high. It was a very, very, very challenging time economically for our country.

And what was it that was put into place, I should say not just a few weeks after he became President, as has been the case here, but after 6 months of going through a very deliberative process? We put into place in May of 1981 what was known as the Gramm-Latta budget package that reduced the rate of spending by the Federal Government by 17 percent. And in August of 1981, we put into place the Conable-Hance tax package, which reduced marginal rates and doubled the flow of revenues to the Federal Treasury through the decade of the 1980s.

Yes, there was a great deal of spending--a lot of spending on defense, a lot of other spending that took place from this Congress-- but we still saw that surge in the flow of revenues to the Federal Treasury.

So we have the ideological bags of the past. Secretary Morgenthau referred to the fact that they spent more money than they ever spent before, and yet they had an unemployment rate that was as high as when they started. And we had John F. Kennedy and Ronald Reagan, who has these bold, dynamic, robust marginal rate reduction packages that created a surge and flow of revenues to the Treasury by reducing marginal tax rates. That's what we should be doing today. And I think that using things like our fair and simple tax plan as a model for that would help us deal with the challenges that we have.

I thank my friend for the hard work that he has put in on a wide range of projects. I'm pleased to sit with him in the leadership of this great institution. We meet regularly and sit next to each other in those meetings, and he always has a very, very insightful and thoughtful proposal on a regular basis. And I believe that it really stems from what I began talking about, and that is that Texas common sense. So I thank my friend for yielding.

I thank the gentleman for yielding. And as always, it's a pleasure to join him on the floor of the House. He has such good ideas.

And, certainly, the concepts talked about tonight are something that have perplexed me, perhaps not the individuals involved, but the concepts involved have perplexed me for years, because our Tax Code is complicated. It turns out it's so complicated the chairman of the Ways and Means Committee, the committee that's charged with writing our tax laws in this country, they've written laws that are so complicated they can't understand them and they cannot follow their own law.

Now, the judge very kindly has introduced legislation that if we're going to grant dispensation to the chairman of the Committee on Ways and Means, perhaps we ought to grant that same dispensation to others who are at a less high station in life and perhaps find themselves just as unfortunate when trying to deal with our very complicated Tax Code.

The fact is, Madam Speaker, the Tax Code does not need to be so complicated. There are great ideas out there for simplifying the Tax Code. The good news is that 80 percent of the people in this country think that Congress ought to do something. They don't identify whether they think the Republicans ought to do something or the Democrats ought to do something, but Congress ought to do something about the complicated Tax Code that people have to follow.

We've got the chairman of the Ways and Means charged with writing the tax law, cannot follow the tax law because it is too complicated. We've got perhaps the smartest financial mind in the world, the man that was chosen as the President's Secretary of the Treasury, who has been charged with dealing with this very harsh financial environment in which we find ourselves, who, in spite of that high station in life and in spite of that keen, incisive intellect that is going to allow him to chart that course through these very turbulent economic waters, can't fill out his income tax, even when aided by TurboTax.

But I'm all about solutions, and I'm here to offer the solution that is going to uncomplicate the lives of these two very powerful and important public figures, public figures that we know we need to get us through these turbulent economic times.

Madam Speaker, I spent my life in health care. And we were deprived of one of the bright lights in health care, a former Senator, Tom Daschle, who had to withdraw his name from consideration because of difficulties with reporting taxes. And, quite honestly, it is difficult to know you have a car and driver that someone gives you, is that something you have to report as income?

We could simplify this process and eliminate these problems that would allow us many more great public servants to be able to come to the fore and help us with these vexing problems, economic turbulence and the difficulty with our health care system.

Now, I was a doctor back in Texas for over 25 years. You know, the old saying

goes, ``There's nothing as certain as death and taxes.'' But I will tell you that sometimes the taxes seem a lot more complicated than death. The Tax Code was created in this very body some 96 years ago, back in 1913. And it has grown from--you know, we talk about the length of bills today. In fact, we had one on the floor that stretched up halfway to the ceiling. But the initial Tax Code was 400 pages. Now the Tax Code stands at well over 67,000 pages, and the complexities are well-known. But they don't need to be there.

Part of the problem is, over the 96 years since the Tax Code was introduced, men and women on both sides of the aisle who were well- meaning have attempted just a little bit of social engineering into the Tax Code, and the result is this very complicated, complicated 67,000- page structure that we have in front of us today.

And it's creating problems for those of us who want to be in compliance with the law. We're desperate to be in compliance with the law. And every single American simply trying to comply with the law and fill out their taxes by April 15th is supposed to be familiar with all of those 67,000 pages of the tax rules.

Again, you consider a man as brilliant as the Secretary of the Treasury, Timothy Geithner. He couldn't understand and had difficulty filing his taxes. Well, you've got to wonder does your own tax attorney understand everything that's in those 67,000 pages, because when it comes to the Tax Code, ignorance of the law is no excuse. So we must fix the Tax Code.

Americans don't always see eye to eye on every issue. In fact, you saw evidence of that here last night, but again, 80 percent of the American people, according to American Solutions, think that the system of the way we go about filing and collecting our taxes needs major change. Everyone knows the problems. Every year, Americans waste billions of hours and billions of dollars complying with the complex Tax Code. In 2005, the average taxpayer paid almost $2,000 in household compliance costs. That means, you know, you've got to work several days a week just to pay the cost of paying someone to fill out your taxes because you don't want to make a mistake because things could go very badly for you. You might lose an opportunity to serve your government at the very highest level if you don't do this correctly.

I brought a little poster to share with the Congress. Again, I'm doing this in the spirit of generosity in offering a possible solution. I realize there are other solutions out there, and by no means do I intend to disparage other solutions that people are willing to talk about, but this is just one idea that's out there.

It was developed by my predecessor, Congressman Armey, when he was in the House of Representatives here for many, many years. He wrote a book called the Flat Tax, and I remember buying the book in 1995. I believed in the book. I thought, certainly, by 1996 or 1997 that Majority Leader Armey would have had that enacted into law. We sit here now over a decade later. It's time. It's time for just this type of change. Let's go through it. It's so simple, Madam Speaker.

It's just a little bit of personal information: Name and Social Security number; a spouse, if you have one, and the Social Security number; you write down your income, your personal exemptions; you add a couple of lines; you calculate the tax; you multiply it by the taxable income calculation--17 percent in this legislation that I introduced last week that, interestingly enough, is called H.R. 1040. It makes it easy to remember.

So, if you're following along at home and are wondering what is this panacea for our tax problems, H.R. 1040: calculate your taxes; calculate the refund; send it in. What did it take? All of 30 minutes-- 30 seconds. I beg your pardon. We have trouble with zeros here in this Congress. It takes all of 30 seconds, and you're done.

You don't have to keep that shoe box full of receipts. You don't need to go online and download a program that you don't understand. You don't need to have the concern that you filed a tax return that is in error and that you're going to be held accountable for that. No more expensive tax attorney bills. The hours of stressful research into preparing your taxes, think of what Americans could do with those hours if they were no longer bound to their desks in their houses, really, literally between now and April 15. There's no telling how many nice spring weekends are going to be spent sifting through that shoe box full of receipts. No more of Congress' picking one special interest group over another to reward in the Tax Code, and no more potential leaders of the free world who'll be having to pull their names out of contention because they can't comply with a very complicated Tax Code.

So, again, I come here tonight in the spirit of goodwill, in the spirit of offering solutions. We should be about solutions.

One of the things on the bill that I introduced, H.R. 1040, is a flat tax, but I'll have to say that Congress doesn't always know best, and I trust the American people to know best in their situations. If a family has constructed its finances around the IRS code, it would be wrong for Congress to simply come in and change all the rules of the game all at once. So this tax would be optional. People would have a period of time when they could opt into a flat tax. If they'd constructed their family's finances around the complicated Tax Code and they wanted to continue to file under the Tax Code, they could do so, but boy, if they're ready to kick that shoe box of receipts over into next week and take that weekend off that they were going to spend doing their taxes, that would be their choice. We should give Americans the power to choose, the power to make that choice as to whether or not they would like to opt into a fair or flatter tax.

A flat tax would be much less costly. Taxpayers could save $100 billion a year just on the cost of compliance. The result in increased personal savings would be a stimulus package that could have an immediate effect on the American economy.

Well, Madam Speaker, we live in a very political time, and this concept that I'm offering tonight is done in the spirit of offering solutions, in the spirit of cooperation to Members on both sides. I encourage people to look at H.R. 1040. Give me your ideas. Certainly, the bill has been introduced. Cosponsors are on the bill even as we speak, so there is an opportunity for other Members of Congress to cosponsor this legislation.

Again, you think of the difficulties the judge has already pointed out. He has had to introduce a bill called the Rangel Rule so the poor, little guy in his district who gets caught in the tax trap can at least have the same consideration in the tax courts that we gave to the chairman of the Ways and Means Committee.

We've got the Geithner getaway. We've had the Daschle dodge. All of these issues could have been avoided if we would have simplified the Tax Code. It is within our power to do it. The American people are looking to us for solutions. They're not looking for partisan rhetoric. They're not looking for one side to gain an advantage over the other. They want us to work together on big issues like this. Eighty percent of the American people feel that the simplification of the Tax Code is something that is well-nigh due for the American landscape--filling out your taxes on a postcard, making it simple, giving that time back to your families. Yes, people need money nowadays, and the economy is rough, but boy, if you can give people back time, that is extremely, extremely significant. So we're going to give back money and time with a simplified tax form.

Madam Speaker, I am so grateful to my friend from Texas for yielding me time to talk on this very timely and important subject. We're just a few weeks away from the tax filing deadline, and many of us are going to lie awake at night and are going to wonder: By golly, am I going to have to file for the Rangel Rule because I made a mistake on my taxes, and now someone may be coming after me?

Fortunately, they've got Judge Carter looking after them, and the gentleman from Texas has introduced his very forthright legislation, so we're trying to protect you on both sides. Maybe this is a preventative medicine flax tax where you won't even have the problem, but the judge has the remedy

if you've gotten into difficulty with the Rangel Rule and with the Geithner getaway.

I appreciate the judge's holding this hour tonight.

You know, Judge, you've asked a very good question. My understanding is it would not. We would simplify his life by his not having to keep up and keep tally. Everything that was offered as part of his compensation package would be considered under the 17 percent flat tax.

If the gentleman would yield, that is a fair observation. Again, by coming here tonight and talking about something that has been important to me for well over a decade, by no means do I mean to say that this is the only concept that's out there. There are other people who have good concepts. We ought to have the debate as a body and take good ideas from all within the body and come up with the answers to the tough questions. This is what the American people sent us here to do. If we can find a better way, if we can deliver time and money to the American people, then we should do so.

Well, if the gentleman would yield, he has posed a question that is technically very complex, and as just a simple country doctor, I'm probably not qualified to render an opinion on the title of his legislation.

If the gentleman would yield, I love the spirit of forgiveness that he has embodied within this legislation.

Again, my purpose in being here tonight was to offer a possible solution. I think Members of Congress should be about solutions. The American people want to see us be about solutions. This is one that is widely embraced and polls very well, but I would yield the floor back to the judge, and would certainly, again, thank him for his forthrightness and for his leadership in holding this special hour tonight.