Mr. Speaker, we have come to the floor tonight again, my colleagues and I, to talk about something that is of great concern to us, great concern to the American people. And that is that, in just 1,398 days, there will be one of the largest…
Mr. Speaker, we have come to the floor tonight again, my colleagues and I, to talk about something that is of great concern to us, great concern to the American people. And that is that, in just 1,398 days, there will be one of the largest tax increases in American history, over $200 billion, and that is going to occur if the majority party does not extend the tax cuts that the Republicans put in place in 2001, 2003 and extended some of them in the last Congress.
But that is going to happen. This huge tax increase is going to occur in America. And the Democrats don't have to do anything but run out the clock. If they sit on their hands, sit on the ball, we will see, in 1,398 days, as I said, one of the largest tax increases that the American people will have ever experienced.
Some of my colleagues on the other side have talked about the change that took place in this body, and there was a change. But I don't know anybody in America, nobody that I talk to in the
Ninth Congressional District of Pennsylvania or across Pennsylvania, that voted to see their taxes get increased.
Over the last several months, over the last few years, several years actually, we have seen this economy move forward creating jobs. In fact, over the last 4 years, this economy has created 7.2 million jobs.
It is because of those tax cuts that we put in place. The unemployment rate in America is at 4.6 percent. It is the lowest average unemployment rate in the four decades that we have experienced over the last three or four years.
Once again, if we don't extend these tax cuts, the American people are going to see more of their hard-earned dollars being sent off to Washington. If you look at a family of four that makes $40,000 or so combined income, has two kids in their family, if we don't extend these tax cuts, if the majority party, the Democrats in Congress, don't extend these tax cuts, people in that income range are going to see an increase of about $2,000 or $2,200 a year.
Some in this body may think that is not a lot of money, but I know to the hardworking people in central Pennsylvania that earn $40,000 in income, $2,200 is a lot of money. You can take that money and that is a nice down payment on a car. You can buy a new washer and dryer machine. You can save that money for college for your children. If you take that $2,000 or $2,200 a year over the next 10 years and invest it in a mutual fund returning about 5 percent income, that would grow to $30,000 in the next 10 years. That is a significant amount of money to send your child off to one of the higher education institutions in our country.
I think that the majority party ought to take a lesson from one of their own. Back in the 1960s when President Kennedy came into office, he cut taxes. What happened was that the economy grew and revenues to the government grew. We look back at history to President Ronald Reagan in the 1980s. He did the same thing. He cut the tax rates. The economy grew, it created jobs, and, lo and behold, more revenues flowed into the Federal Government.
That is again what we did in 2001 and 2003. We cut taxes, and history has repeated itself. This economy is one of the strongest economies in U.S. history. We are getting record levels of revenue coming into the government. So what we need to do is to continue to keep those tax rates low, extend those tax cuts.
Unfortunately for the American people, and that is one of the reasons we come to the floor on a weekly basis and talk about this, to make sure we bring the attention to the American people, make sure they are aware of what is going to happen, the Democrats, they said it very clearly in their campaign rhetoric in 2006, that the leader of the Ways and Means Committee, the new chairman, has said time and time again during that campaign election that he didn't know of any of President Bush's or the Republican tax cuts that deserve to be extended.
One of the first things they did when they became the majority party is they made it easier, not harder, but made it easier to raise your taxes. When the Republicans controlled the House, we made it the rules of the House that you couldn't raise taxes unless you had a three- fifths vote in the House to raise taxes. One of the first things the Democrats did was to make it easier. They decreased it to a simple majority to raise your taxes.
They put in place PAYGO. It should actually be PAYTAXGO, because it is going to make it easier for them. They are not going to touch any existing programs, but on new spending they are going to have to offset any new spending; and the way to offset that, the easiest way, is to increase taxes. I believe, as I believe many Americans believe, that that is what is going to happen.
The American people need to know this. We hope that people are tuning in and listening to us as we talk about this. We call ourselves the Countdown Crew. We are 1,398 days away from this huge tax increase unless the American people speak up, unless the American people talk to their elected officials and say they are not going to stand for a tax increase.
We have created a Web site, and we would love for you to e-mail us and let us know, give us your story of how the tax cuts, whichever one, whether it was the child tax credit, or the accelerated depreciation, dividend tax cuts, the death tax, which one of these tax cuts has benefited you. We would like to hear your story so we can talk about it.
There are millions and millions of Americans out there, young and old, low and medium income, that have benefited by these tax cuts. Our Web site, I guess it is our e-mail, is [email protected]. Once again, there are some stories tonight. Later on in the evening we will be sharing with you that people around the country have sent us e- mails about how important these tax cuts are to them and how detrimental it will be to their small business or their family or communities across America.
I am pleased to be joined tonight by one of my colleagues from Kentucky, Mr. Davis. I yield to Mr. Davis to talk about some of these issues tonight.
How many people does George employ?
That is small business personified, that 25 people. Those are the kinds of stories that I think we need to bring out.
Absolutely. I didn't mean to interrupt you, but I just wanted to know what size business that was and make sure the American people know that we are talking about people in their neighborhoods, in their communities, that employ 25, 30, 50, 100 people and that start from small and turn these enterprises into successful businesses. In most cases, my experience has been those small business owners, they are the backbone of the community. They are the ones that give to the local little league team. They are the ones that contribute to the hospital and the hospital boards. They are the ones making sure their communities are wonderful places to live, or are helping to make sure they are wonderful places to live.
As soon as next week, the Democratic majority will be introducing their budget. It is my guess that they are going to spell out exactly how they are going to increase taxes on the American people to pay for that budget. They are going to have a choice. The choice is going to be either to continue the tax policies which have resulted in record job growth, 7.2 million jobs over the last 4 years, 40 quarters of an expanding economy; or they are going to choose to put the brakes on the growth of this economy by raising taxes.
I am going to predict tonight that if they decide to choose to raise taxes, which all indications lead me to believe they will, the brakes will go on this economy in very short order.
One of the important reforms that we as Republicans made when we were in the majority was to reduce the taxes on dividends and capital gains. In past history, dividends and capital gains were sort of viewed as only the fat cats in society, only the wealthy get to benefit by a reduction in taxes on dividends and capital gains. But that is not the case today.
Over 60 percent of the American population is invested into mutual funds and the stock market, into various other financial vehicles. It is widespread in the economy who invests and who can benefit from a decrease in the tax on dividends and a cut in the tax on capital gains.
Prior to 2003, tax cut dividends were subject to individual income taxes up to 38.6 percent on top of corporate taxes of 35 percent. It was double taxation. The corporations in America that you invested in, if you invested in General Motors or you invested in Wal-Mart and they made a profit, they got hit with a 35 percent tax increase, and then they paid out their dividends to the millions of people from all walks of life who invested in those corporations, and the dividend, it was hit at a tax rate of 38.6 percent or below. Among developing countries, only Japan has had higher tax rates on investment income than us.
In 2003, the top individual tax rate on dividends was cut by more than half down to 15 percent. Starting next year, there will be no dividend tax at all for lower income Americans which is absolutely essential to continue growth in this economy.
In addition, capital gains tax increased, with the top rates on long- term capital gains dropping from 20 and 10 percent down to 15 and 5 percent. The 5 percent rate will drop to
zero next year for those in the bottom two tax brackets. Again, for families in the middle and lower income that have investments, they are not going to be taxed on those types of investments, or it is going to be significantly decreased.
Those lower tax rates have promoted a strong and growing economy, and has created 7.2 million new jobs. Our job creation in the last 4 years is greater than the European Union and the Japanese economy combined. This has been an economy that has grown strong and created millions and millions of jobs.
Again, if the Democrats fail to extend the tax relief, in 2010, those rates will return to where they were before we lowered them, and the American people are going to experience significant tax increases.
Because seniors rely on income from investments, they have benefited greatly from those lower taxes. That is why it is important. They are one of the key groups in our economy that have benefited by it.
The Treasury Department has estimated that 8.5 million seniors saved an average of $1,144 on their 2005 taxes as a result of lower rates on dividends and long-term capital gains. And $1,100 goes a long way towards buying something new for your home, whether it is a washer and dryer, or whether it is a senior giving it to their grandchildren to help them out as they make their way in the world and go to college and try to get an education.
According to the Tax Foundation in an analysis of IRS data, more than half of all taxpayers over the age of 65 received dividend income in 2004. Over half of the folks over 65 years of age are receiving dividend income. That is double the national average for all taxpayers.
Seniors also rely upon capital gains income. That same Tax Foundation report found that while nationally less than 13 percent of taxpayers claim capital gains income in 2004, that figure cost 30 percent, a third for taxpayers between the age of 65 and 74, and more than 27 percent for those over the age of 75. Seniors benefit greatly by the dividend and capital gains tax cuts.
On May 10, 2006, Flora Gramma Green, a national spokeswoman for the Seniors Coalition, described the importance of lower dividend tax rates for seniors living on a fixed income. She said, ``When I planned for my retirement, I needed the dividend income just to have a secure retirement. I am not wealthy. I worry every day if I will have the money to buy the gas I need to get to the doctor, I worry if I will have the money I need for proper nursing care as I get older, and I worry that the monthly income I plan for will stretch far enough each month to let me pay my bills. The millions of fellow seniors who benefit from this tax reduction are in the same boat I am in. We need this tax break just to continue the safe and secure retirement that we planned for.''
Those are the words of a senior who is certainly involved in the fight to continue to keep these tax rates low, to see that the tax rates are extended so that in just 1,398 days, which will be January 1, 2011, which is a short period of time away, we will see this $200 billion tax increase, and it is going to cut across all income spectrums, from low income to high income.
These folks are going to have to send more of their money to the Federal Government and not be able to put it back in the economy, creating jobs in the most efficient way that an economy can create jobs.
Mr. Speaker, I don't want to mention his full name, but I had a conversation with a gentleman today who is a local businessman and employs about 120 people in one of my counties back in Pennsylvania. I am just going to call him Harold. I had a conversation with Harold on the phone today, and it was about the negative impact of these tax increases if we don't act on them.
As I was talking to Harold, he has been in business. Actually, his father started the business. Harold has been in it for 40 or 50 years. They started out with a couple of dump trucks and a bull dozer. Today they have a tremendous amount of equipment. They are an excavating business. They employ 120 people. But Harold's wife, Delores, just had a health scare, and so Harold has been looking at the business and what would happen if he were to pass away.
He said, you in Congress need to pass the death tax because if you don't, if I pass away, it is going to cost his children millions, up to several millions of dollars in taxes that they are going to have to pay in Federal and State tax, mainly Federal tax, to keep the business. He said, my children won't have access to that kind of cash, so they will have to liquidate the business if I were to die.
There are thousands of stories like that across America, that we need to make sure that we are extending the death tax and making sure that small-business owners like Harold and Delores, if they pass away, that their children will not have to liquidate a business because you have 120 families that they employ making a good living, living in rural Pennsylvania, that are potentially not going to have jobs if that were to happen.
Also, something that I think is important, as you mentioned, you were a small business owner, and I was a small business owner before I got here. Harold is the kind of guy in Pennsylvania, he is one of the pillars of the community. He is the guy that is always contributing to the community, giving back, whether he is on the hospital board or the economic development board. He is the guy making sure that he is contributing to the local Boy Scouts, to the Little League, making sure that the firemen have money, that he is supporting their efforts to raise money as they struggle to keep their ambulance and fire service going.
Those are the kinds of people, small-business owners, that have been in business for many, many years, that give back to their community, give back to their community and give back to their community.
Those are the kinds of people and those are the kinds of communities that are penalized with a tax like the death tax that would cause a business, one of the pillars of the community, to have to liquidate to raise the money to send it down here to Washington, to come into the Federal Treasury, and it would go out again probably 50 percent or 60 percent less of what came in. It would be less efficient than Harold being able, or Harold's family being able, to give back to the community and get the most impact out of a dollar.
Again, those are the kinds of people. I had a lunch with a gentleman in a similar business as Harold, gentleman by the name of Dave I will call him, who is the same type of person, started a business, told me about growing up on the farm in rural Pennsylvania, saying he did not have any money; he did not know any better. But he started out a with a flatbed truck hauling coal from the coal region of northeastern Pennsylvania back down to central Pennsylvania. That is how he got started, and today he has 200 employees, three different businesses, and is another gentleman who gives back to the community again and again and again.
That is what we are talking about. That is what makes America great, coming from a poor farmer to a prosperous business owner and a pillar of the community. Again, that is what makes America great. These are the kinds of people all across this country we have to make sure that we are not penalizing for being successful.
I yield back to the gentleman.
Absolutely. You talked earlier about the stories that we want to have sent to us, talking about real-life stories out there in America, how these tax cuts have helped them or what they are feeling in the economy or what they are feeling about their government. You can e-mail us at [email protected]. That is [email protected].
I received an e-mail, and I wanted to read some of it to you. It is from Kent Berry, who is a small business owner from Gravel Ridge, Arkansas. I have never been to Gravel Ridge, Arkansas. It is about 15 miles north of Little Rock; and over the past months, Kent has been watching us.
Kent says he is swamped by Federal tax regulations which are driving him down. He goes on further to say: ``More and more I feel that the deck is stacked against me. I witness so much nonproduction being rewarded with money which I had to struggle to remit. I'm beginning to feel that the American Dream is an optical illusion. I'm starting to envision the American Dream a lot like the carrot and stick. I keep pressing but it ain't gettin' no closer.''
Kent continues: ``I'm no constant agitator or perpetual malcontent, but I do enjoy C-SPAN and I did hear your e-mail address several times, and I'm writing to say that I'm struggling here.
``Government, like a lot of things, is a good thing. But like all good things, moderation.''
And as Kent points out there, he is struggling out there because he has got a small business. He works hard to earn the money that he earns, and then he has to turn around and pay a tax bill that is bigger than he can probably handle. If we do not extend some of these tax cuts, the tax bill is going to be even greater for Kent.
I know his story and his feelings are like millions of Americans out there that want to make certain that if they are going to invest their capital, if they are going to invest their blood, sweat and tears into a small enterprise, that they have the ability to get a return, that they have a ability to save some money, that they have an ability to make sure that their family lives a little better life than they have.
This is the American Dream, as we have talked about a couple of these folks from your district and some from mine, that they start from meager beginnings and with hard work, with ingenuity, they grow a business and become significant parts of their communities, giving back to their communities. Those are the types of people that we want to make sure that they are not penalized, that they are not driven out of business because they have to have some big tax bill when they pass away, you know, whether it is taking that money and investing it into a mutual fund so they can get a nice dividend back and they are not overburdened with taxes, whether they take their company or their business or their property and sell it and do not have an oppressive capital gains tax.
As you mentioned, most Americans do not take the money and bury it in the backyard. They put it back into the economy. They invest it in a mutual fund. They invest it into another business or a property that builds something, but that money goes back into the economy to create jobs and to hopefully when they invest that money create a return for them so they can continue to live a good life.
Again, through my district, there are a number of people. I have mentioned the name before, a B.C. Stone, another one of those operations started out in a garage. I visited with those folks about a week or so ago. They started out in a garage and today with a couple of employees, and today they employ 70 people. Their business is prosperous. It is growing over the last 4 years, and Travis Collins, one of the owners, says it is directly because of the various tax cuts that we put in place. The economy is moving, booming, and so his business right along with it.
As I mentioned before, he has taken on an old hotel in my hometown of Everett, Pennsylvania, an over 110-year-old hotel, and he is restoring it and turning it into a 12-bedroom hotel with a first-rate restaurant in it. By doing this, he hopes he is going to make some money, but he really wants to give back to the community and this beautiful, small town that he grew up in and this hotel, quite frankly, was dilapidated. He is putting a fresh face on it, and he is going to try to attract people to come into the community, to spend money through tourism.
Again, these are the kinds of things that happen when you allow people to keep more of their own money. They invest it, they grow their business, they try to create jobs and make their communities better places to live and to work.
Just in our closing minutes here, I want to reiterate, first of all, say we have been getting up here for the last several weeks talking about the coming tax increase, unless Congress and the Democratic majority acts, which will occur in 1,398 days, which will be January 1, 2011, and that occurs in 2008, some of the taxes, if they are not extended, will expire, 2009, 2010. Again, we want to hear from citizens around the country that have benefitted by these tax increases, tell us your story about your small business, how it has grown or how you started it.
You can get those stories to us at the [email protected]. We want to hear those stories. Again, I want to close with just talking about what's going to happen with the dividend and the capital gains tax cuts if we don't act.
January of 2010, those rates will go back up. As I mentioned earlier, when folks think about those dividends, whether you have a mutual fund, you have an IRA, you have a 401(k), you have some pension fund out there. By and large, if not all of them, almost every one of them, is dependent on investments to put income in and pay out to the beneficiaries.
Prior to a 2003 tax cut, dividends were subject to an individual tax rate up to 38.6 percent and on top of a corporate tax rate of 35 percent. Those types of rates are coming back unless this Congress and unless this Democratic majority acts. In 2003, the top individual tax rate on dividends was cut by more than half, down to 15 percent; and starting next year, that dividend, no dividend tax on income, on lower- income Americans. That is substantial.
In addition to capital gains tax decreased with the top rates on long-term capital gains dropping from 20 and 10 percent down to 15 and 5 percent, and, again, the 5 percent rate will drop to zero next year for those in the bottom two tax brackets.
If the Democrats fail to extend this tax relief, again, in 2010, they are going to come back, and anybody out there in America that is retired, anybody out there, as I said, that has a 401(k), a mutual fund, they are going to be taxed at a higher rate on those dividends. So it is important that we act. That is, again, why we come to the floor once a week and remind the American people that this tax increase is coming.
You need to talk to your Member of Congress. I do not believe that anybody in the November elections voted to increase their taxes, and your Member of Congress needs to hear about it. We have to stop it because we want to see this economy continue to grow and to prosper.
Does the gentleman from Kentucky wish to close? The gentleman from Texas arrived, too.
We certainly appreciate you coming here over the past several weeks. It is always good to have a CPA on the floor to be able to correct us when we spout off a number that is not quite accurate. You have been able to do that a number of times with us. We appreciate it.
I just want to point out again to people that may be watching tonight, such as a CPA, a small business owner. I was a small business owner. We all have children. Your children, I know, are grown now.
But it is important in America that small business owners and families are not burdened with these heavy taxes. We have to keep them low.
I think the gentleman from Kentucky might have a final passing word.