Max Sandlin

Mr. Speaker, the new minority report released today by the Committee on Ways and Means shows that the latest unfair tax scheme proposed by the majority will be one of the largest tax increases on working families in American history.

The new proposed national sales tax will result in the wealthiest 1 percent of American taxpayers receiving a $225,000 tax break per year, while working families will see an average yearly tax increase of $3,200 per year. This new national sales tax will punish the middle class and working families every single day.

Mr. Speaker, $100 of groceries will cost $130. A $20,000 pickup will be $26,000. Need a new TV? Mark it up 30 percent. And health care, a visit to the doctor for your children, or how about prescription drugs? Add 30 percent, Mr. Speaker.

The truth is, the new national sales tax proposal is just another scheme to give tax cuts to those that ship our jobs overseas, leaving the rest of us stuck with a bill and stuck with a new and unwelcome tax.

Mr. Speaker, I yield myself as much time as I may consume.

I thank my friend from Ohio for his work on this bill. Mr. Speaker, I rise today in support of tax simplification. There can be little doubt that taxpaying individuals and American businesses, particularly small businesses, spend far too much time, not just preparing their tax returns and paying their taxes, but in even figuring out just how to file or which forms to fill out, what tax preferences they qualify for, what they can deduct, and what elections they should make to best serve the interests of the business, its employees, and themselves.

On top of that is the anxiety that many small business owners experience when confronting the daunting complexity of the Tax Code and trying to make sound business and tax planning decisions with the prospect of taking a wrong turn in a numbing maze that makes tax lawyers and accountants shudder. Such complexity is both unnecessary and unhealthy, Mr. Speaker, for small business and our Nation's economy.

So, Mr. Speaker, I wholeheartedly support meaningful efforts to reform our tax system and to reduce an extreme burden on our small businesses and individuals and to ensure efficiency.

Moreover, I am pleased to rise in support of the legislation introduced by the gentleman from Illinois (Mr. Crane). I am pleased to be a cosponsor of the legislation that somewhat eases the burden borne by America's small businesses, truly the engine that drives our economy.

Mr. Speaker, at a very modest cost, H.R. 4840 provides two valuable benefits to our Nation's small businesses.

First, the bill extends enhanced section 179 expensing for small businesses for 2 years. Last year Congress passed and President Bush signed into law legislation that increased the amount of equipment that small businesses may expense from $25,000 annually to $100,000 annually. The 2003 law also increased the phase-out range from $200,000 of capital expenditures to $400,000, significantly expanding the number of small businesses that qualify for section 179 expensing. Both amounts are indexed for inflation.

The bill the House considers today extends these improvements to section 179 for 2 additional years through 2007, thereby providing much-needed relief as our economy continues to recover and to grow.

Second, H.R. 4840 eases the accounting burden on small businesses by preserving the cash accounting method for more small businesses. Generally, under current law, businesses with $5 million or more in gross receipts must switch from the cash method of accounting to the accrual method. The bill offered by the gentleman from Illinois (Mr. Crane) preserves the value of the $5 million limit by indexing it for inflation so that more small businesses will not be forced to use the more complicated accrual method.

Finally, but less directly beneficial, H.R. 4840 cleans up the Tax Code by eliminating outdated, rarely used and unnecessary provisions of the code. Repealing these deadwood provisions certainly has the effect of reducing clutter in our code, but its practical effects and benefits to small business are somewhat limited.

Mr. Speaker, H.R. 4840 is a fine bill. It is a good first step, and I am proud to support it. However, this Congress needs to do more to relieve the burden borne by America's small businessmen and -women and individuals.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

We appreciate the efforts of the gentleman from Illinois (Mr. Crane) and clearly, there is a need for tax simplification. Today, the IRS now prints more than 1,000 publications, forms, and instruction booklets, and while the Tax Code was a mere 500 pages in 1913, financial publisher CCH says its Standard Federal Tax Reporter, which is the guidance for tax preparers, has grown to more than 60,000 pages today. The cost to individuals and business in America of the complexity of our code are staggering.

More than $100 billion a year in accounting fees and the value of taxpayers' time to complete their returns, according to Joel Slemrod of the University of Michigan, are used up each year. This is roughly equivalent to what our Nation spends to operate the Departments of Education, Homeland Security, and the Department of State each year. According to the IRS, small business owners are required to devote 60 hours, almost 8 full work days each year, to prepare their taxes.

While the bill we debate today is a good piece of legislation, it will not do enough to reduce this burden, and we must do more, working together.

Mr. Speaker, I yield 5 minutes to the gentleman from Washington (Mr. McDermott.)

(Mr. McDERMOTT asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield such time as he may consume to the gentleman from Washington (Mr. McDermott).

Mr. Speaker, I yield 4 minutes to the gentleman from Illinois (Mr. Emanuel).

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Illinois (Mr. Emanuel).

Mr. Speaker, I yield myself as much time as I consume.

In 1996, then-Speaker Newt Gingrich stated the Tax Code over the years has become increasingly politicized and is seen less as a simple tool for raising revenues than as an instrument for social and economic engineering, exponentially increasing the complexity of the code.

The current system is indefensible. Clearly, the small business community in America has been subject to more tax law complexity year after year. For example, the Small Business Job Protection Act of 1996 makes 657 Tax Code changes which expanded the Tax Code by more than 50 pages. The Jobs and Growth Tax Relief Act of 2003 made 51 Tax Code changes and expanded the Tax Code by 12 pages. The IRS estimates that the average taxpayer with self-employed status has the greatest compliance burden in terms of preparation, 59 hours. And this is about 10 hours longer than in 1994.

Even the House-passed version of the FSC/ETI bill from this year has 109 tax changes. This will encompass at least 200 additional Tax Code lines and at least 50 new pages of statutory language and footnotes.

Mr. Speaker, America's small businesses are the engine powering the largest, most robust and most innovative economy in the world. They deserve a more meaningful effort by this Congress to ensure that valuable time and resources are better invested in the success of their business and not wasted in preparation of returns and to make sure that our business people, entrepreneurs, are not raked over the coals by a Tax Code that requires a lawyer, a CPA and a computer programmer to understand it. We can and must do better by our small business men and women and individuals in this country.

Mr. Speaker, again, I am proud to support and cosponsor this fabulous piece of legislation. I urge my colleagues to join with me in casting a vote for small business owners and their employees across this Nation. At the same time, however, I am hopeful that this legislation is the beginning of meaningful reform and not the end of the line.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, again I want to restate my commitment to reform our Tax Code in ways that meaningfully benefit America's working families. While I support this bill, I am afraid that we missed an opportunity. H.R. 4841 offers little meaningful benefit. It is, as we say in Texas, all sizzle and no steak.

In effect, the bill before the House does three things, only one of which provides any real benefit to the American taxpayer; and even that particular change does not require any legislative action by this body. The IRS could accomplish that same result by regulation.

First, under the current law there is special filing status for heads of households. The bill before us does not change the criteria for qualifying for that filing status, but simply inserts the term ``single'' before ``head of household.''

This decision or provision does not change or simplify anything. Indeed, it may create some confusion because some individuals who are legally married under State law, but otherwise considered unmarried qualify for head-of-household status. For example, a spouse living apart with children can qualify for head-of-household status even though that spouse is married.

Second, the bill would make the form 1040EZ and form 1040A short forms available for individuals with incomes up to $100,000; currently, the limit is $50,000. Also, the bill allows the filer to have more than $1,500 in interest income. There is no question but that this change is useful, particularly as individual incomes rise in concert with inflation. Nevertheless, this change does not require an act of Congress. The IRS is fully empowered to make tax form revisions without additional legislation.

Finally, the bill purports to repeal some deadwood language on the Tax Code on the grounds that the language has no legal effect. However, the majority apparently is uncertain that all of the provisions no longer have effect. Therefore, the bill includes a savings clause. The savings clause in effect reenacts the repeal provisions if it turns out that anyone would benefit from the provisions in the future. Once again, it is all sizzle and no steak.

Mr. Speaker, we need real reform. We need real simplification. The bill may be entitled and named ``The Tax Simplification for Americans Act of 2004,'' but adding one modifier to the head of household's filing status provision has no effect and may, in fact, be contrary to the stated purpose and introduce confusion rather than clarity. Moreover, changing legislatively what can be accomplished through agency action does not serve meaningfully to simplify an onerously complex Tax Code.

Mr. Speaker, the legislation before the House today is simplification in name only. We can and must do better in this House.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 7 minutes to the gentleman from Massachusetts (Mr. Neal).

(Mr. NEAL of Massachusetts asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 3 minutes to the gentleman from Maryland (Mr. Cardin).

Mr. Speaker, I yield 3\1/2\ minutes to the gentleman from Washington (Mr. McDermott).

(Mr. McDERMOTT asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, our honorable chairman mentioned maybe we should rename the act because we had been criticizing it, and maybe call it the ``Taxpayer Rationalization Act.'' Well, I had already proposed calling it the ``All Sizzle and No Steak Taxpayer Act,'' and certainly we would accept that moniker.

The honorable chairman indicated that we are unfairly criticizing the bill, but I might mention, we are only criticizing it because it is wrong. Adding ``single'' to the ``head of household'' is just simply incorrect. If it was so simple, we would not have to be debating and talking about it so much.

In fact, the Tax Code contains 1.4 million words, 10,000 of which have been added since the gentleman from California (Chairman Thomas) got into the majority, and now we can make that 10,001 words, as we add the word ``single,'' although it certainly is incorrect.

I feel that in looking at this we have to clarify what the bill does and does not do by asking ourselves certain questions and asking the author certain questions about the intent of the bill.

The questions would be: Does the bill deny the tax benefits of head of household status to a married woman whose husband has abandoned her and the kids? And the answer to that would be ``no.''

Does the bill deny tax benefits of head of household status to a married man who is legally separated under the laws of a State of this Nation, who has custody of the children? And again the answer would be ``no.''

So if the provision does not apply only to single taxpayers, what does the provision do other than add confusion by using the word ``single,'' which is inapplicable.

Finally, I am curious about the other provision of the bill, which would require the IRS to change the short forms to allow taxpayers with higher incomes, up to $100,000, to use the forms. My questions are: Does the code need to be amended, added to, to change how tax forms are printed and formatted? And the answer would be ``no,'' they have authority to do that under the current law.

And do the experts at the IRS and the Treasury think that these forms that we currently have should be changed? And I think obviously not or that would have been done.

Now, possibly some of these issues could have been addressed if we had gone through the regular order and process of the House, as was mentioned by the gentleman from Maryland (Mr. Cardin). The rules are there for a purpose. Possibly if we had gone through the Committee on Ways and Means to consider this bill, these issues could have been addressed. We could have renamed the bill the ``All Sizzle and No Steak Act.'' We could have made sure that the word ``single'' was inserted if it was accurate, and not inserted if it was not.

But again, the rules are there for a purpose. We did not follow the rules, and we find ourselves here today in this confusion. So again this legislation may be marginally helpful, but why miss an opportunity for real tax simplification?

Since 1994, the majority has enacted 42 new public laws with 3,533 changes to the Tax Code contained in those more than 10,000 additional pages of complex public laws. That averages 360 changes a year with no serious efforts made to provide simplification. The Tax Code currently contains about 1.4 million words. The Tax Code has more than 4,700 pages. The Tax Code content has grown by at least 15 percent since the majority took over in 1994. It has grown 15 percent. The Master Federal Standard Tax Reporter used by accountants and lawyers is more than 60,000 pages. Since 1994, that manual has increased by 2,000 pages.

Today it takes average, middle American families 7.5 hours longer to fill out their tax return than it did in 1994, an increase from 11.5 hours in 1994 to 19 hours today. That is a full day's work for most Americans. And what do we do to simplify? We add the word ``single.''