Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, it is a real privilege to appear opposite the gentleman from Maryland. I realize he is not seeking reelection this year and is aspiring to move up to a higher level. I…
Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, it is a real privilege to appear opposite the gentleman from Maryland. I realize he is not seeking reelection this year and is aspiring to move up to a higher level. I may say at the outset it has been a privilege working with him on the Ways and Means Committee for the last 12 years. I have come to admire his talents, even when they are enlisted on behalf of something as weak as the instruction before us today. I look forward to debating the point.
Mr. Speaker, we have a motion to instruct that has been put before this body that sends exactly the wrong message. It is a message that is essentially against economic growth and against job creation, and it would put Congress on record, on the brink of our success in a tax conference in favor of things that we have in the past voted against. This instruction in some areas is amorphous, and elsewhere is perverse, and in effect it is an instruction that leads us inevitably to a tax increase.
Mr. Speaker, it is important for us to recognize that since 2003 our gross domestic product has seen its fastest growth in 20 years, averaging a robust 4.4 percent per quarter. This is extremely important, because as we have grown the economy at this clip, we have generated new revenues, new revenues that we had not anticipated in our budget, new revenues that have held down our deficits, new revenues that have created an opportunity for us to finance our social needs. And as we show restraint, as we do in the budget resolution we are voting on today, it holds forth the promise of our getting back to a balanced budget, something that the other party was never able to achieve when they were in the majority.
This growth is important to note, because it is attributable in part to the reduced rates on capital gains and tax dividends.
We have a pro-growth tax policy in place, which has allowed us to expand the tax base and generate revenues outside of the estimates in our budget. I would like to point out that ultimately the path to a balanced budget has to be through high growth rates and ultimately through the financial discipline that today's budget resolution will suggest. Yet, the motion to
instruct conferees before us in effect puts off to a date in the future the opportunity to continue to extend the current tax rates on those pro-growth parts of our existing tax policy, with potentially perverse results.
I would like to also point out, since we have heard so often and we have heard on the floor today that the tax policies we have in place only benefit the affluent, I would like to point out who in the real world has been receiving the reduced rates and therefore whose taxes will we will be raising if we fail to extend the current rate.
Mr. Speaker, it is notable that 54 percent of those families receiving dividend income had incomes of less than $75,000 and they received an average of $1,400 in dividends. That is very significant for those families. Together, families with incomes under $100,000 have more than $20 billion in dividend income.
In 2005, an estimated 10.3 million families in the 10 and 15 percent brackets will save on their taxes because of the 2003 law. So the rhetoric that this tax relief only benefits the wealthy is vacant ideological posturing.
If we let these rates expire, it would be in effect a tax increase on many Americans, including a lot of middle-class Americans. Not only would the lapse of the reduced rates impose a tax increase, it would particularly discourage equity ownership among working families, among whom we have seen a stunning 91 percent increase in stock ownership. To turn back the clock on policies that have more American workers owning a stake in their future is simply the wrong thing to do today.
Our side also strongly supports extension of the savers credit and the research credit, which is why both of these policies were extended in the House-passed bill. That is already in there. Unfortunately, almost every single member of the minority voted against extending those incentives when the House voted on the bill last December.
I should further point out that our side also strongly supports extending relief from the AMT. In fact, I am a cochairman of the Zero AMT Caucus and I have been vigorously advocating repeal of the AMT since I came to Congress, an ugly tax legacy of the previous majority. The House has spoken on this issue, and it is worth noting that we voted overwhelmingly in December to extend AMT relief as a stand-alone bill. By moving this relief outside of reconciliation, we can shield millions of families from the AMT without having to raise taxes to do so.
Mr. Speaker, this motion to instruct is asking for a tax increase on effectively the seed corn of the economy. It is asking us at a critical time to put a brake on economic growth when we need it most.
If we are serious about maintaining the forward motion in our economy, I would suggest that we need to maintain our current tax policies and not undercut our efforts to maintain them. I am calling on the House to vote against this motion. It is the right thing to do.
Mr. Speaker, I reserve the balance of my time.
Mr. Speaker, I reserve the balance of my time.
Mr. Speaker, I reserve the balance of my time.
Mr. Speaker, how much time do I have remaining?
Mr. Speaker, I yield 5 minutes to the distinguished gentleman from Michigan (Mr. McCotter).
Mr. Speaker, I yield 2 more minutes to the gentleman from Michigan (Mr. McCotter) in order to steer the discussion away from religion and back toward economic literacy.
Mr. Speaker, if I might inquire of the gentleman on the other side if he has no more speakers, I am prepared, since I believe he has the power to close, I am prepared to make a closing presentation, and I will yield myself accordingly such time as I may consume.
Mr. Speaker, there are obviously a couple of things on the record that need to be corrected.
One of the earlier speakers made a comment about it being hogwash, I think was his elegant term, that the pro-growth policies that this majority put in the Tax Code have helped the economy, have helped economic growth in this country which has achieved record rates, have allowed us to generate new revenue that in turn would bring down the deficit, and yet, in the contrary position, Chairman Greenspan just a few months ago, when he was still in office, testified before our Joint Economic Committee and made very clear that the tax policies of this majority, particularly as they apply to the more dynamic side of the Tax Code, have been successful in generating economic growth and have been successful in helping the economy. It is precisely about maintaining these tax policies and not doing a tax increase that we consider this motion to instruct.
I think this motion to instruct would be perverse. It has been challenged here whether this motion to instruct, in fact, represents a tax increase. It is curious that some in Washington still argue that when you have put rates into place and the market has adjusted for them, that if you allow those rates to lapse, somehow that is not a tax increase. Only in Washington is that kind of fantasy engaged in.
What is fairly clear is the tax policies that are our majority and our majority's budget resolution attempt to preserve are tax policies that have been beneficial to the economy, and the alternative is clearly a tax increase.
Let us consider the AMT for a moment, and I think this is very important.
To listen to the other side talk about the need to deal with AMT relief through this budget reconciliation overlooks the fact that the House passed an AMT bill by a margin of 414-4 a few months ago. At that point, clearly an overwhelming majority, over 400 Members of this body, felt that passing a bill specifically to deal with the AMT was the right way to go.
So when we had another Member on the other side suggest that it was essential for someone to vote for this instruction if they are serious about dealing with the AMT is absurd. The House has already dealt with the AMT and in a manner that I think is appropriate.
It is appropriate for our tax conference to be in a position to deal with other issues, including extending existing tax policies.
Now, the gentleman from Maryland pointed out at the beginning of his remarks that the current tax rates are going to be in place until the year 2008 on capital gains and on dividend income, and that is, quote, unquote, plenty of time. I would suggest to the gentleman that the markets may disagree with him. The markets are assuming that we are going to extend current rates, and certainly in the past we have never scheduled a tax increase in these areas in advance and telegraphed the punch. I would suggest that markets might respond to this in a very strange way; and by adopting this motion to instruct conferees, in fact, I would suggest it would send exactly the wrong message at a time like this to the markets.
Some might argue that going back to the old higher rates, raising taxes in that manner, might generate revenue; and yet we have heard testimony before the Ways and Means in recent years that suggests that the revenue-maximizing rate in capital gains, according to one expert, might be between 20 percent and 15 percent, but in the next order of probability might be between 15 percent and 10 percent.
I would suggest, since the gentleman from New Jersey raised the question of
morality, there is not really a coherent morality in setting tax rates in a particular area that are above the level at which they will generate the most revenue. I think that the current rates on capital gains clearly have been beneficial, and it is not clear that we are going to generate additional revenue if, as the gentleman on the other side would like to do, we increase those rates.
We have generated revenue that was not captured in our calculations by lowering these rates. Our experience with raising capital gains rates over the years is that the revenue that was supposed to occur rarely does, and that suggests to us that perhaps the 15 percent rate might be an ideal place to generate the most revenue, not that there is ever really a compelling argument for setting a rate at the revenue- maximizing rate.
I think there are also some things that we ought to consider about some of the figures that were thrown out here. I, in my initial remarks, pointed out some of the clear benefits to the middle class that have accrued from the current tax policies, and the gentleman on the other side of the aisle challenged that and trotted out some figures.
I should simply point out for the record that the joint committee has given us different figures, and the other gentleman's argument I found to be a saturnalia of static analysis. So I think that those who are following this debate can listen and make up their own minds. I think that clearly the current tax policies are justified on the facts, and the other side has not really offered a coherent position for adopting a new tax policy.
My feeling is that workers who have taxable assets, who have seen the value of those taxable assets which they are holding toward retirement increase because of the growth, increase because the market has gone up, may I suggest that they have seen a real benefit from our tax policies, one that is not captured in the static analysis used on the other side, but one which is important and is a real measure of wealth and is a real measure of their satisfaction.
I was intrigued by some of the rhetoric on the other side in which, on one hand, a speaker called for us to use civility and then accused us of siding with millionaires. That is an unusual approach to civility, but I would suggest to the speaker that by supporting the current tax policies and supporting the growth that so clearly is their result, we are siding with entrepreneurs. We are siding with workers who depend on small businesses and the people who run them to create the jobs that they need. We are siding with the capitalist economy that has created more wealth and more opportunity in this country than anywhere else in the world. We are siding with the dynamic side of our economy and that part of our economy that we think offers the promise of new opportunities throughout America.
I believe that we have a great opportunity in this tax conference to move forward and to continue this House's policy of supporting pro- growth tax policies. I certainly hope that the House tonight makes very clear that we continue to support those policies; and on the eve of this tax conference, I hope that we come together to send a clear message by rejecting this instruction.
I think there is a clear philosophical difference here. We believe in growth. We believe in expanding opportunity. We believe that the capitalist economy can create those opportunities. We believe that American workers and American companies, where given the opportunity and where the Tax Code and the taxman does not get in their way, can compete anywhere in the world.
Mr. Speaker, with that I call on my colleagues to reject this instruction, perhaps well-meaning, but poorly conceived and clearly a tax increase at the wrong time and at the wrong place.
Mr. Speaker, I yield back the balance of my time.