Senate Floor Speech
Senator Kay Bailey Hutchison
March 7, 2001 -- Page: S1923

MRS. HUTCHISON. Mr. President, I thank my colleague from Wyoming for talking about taxes because I don't think we can talk about tax relief enough. There is no question but that we have the chance of a lifetime to bring tax relief to every working American and also give increased benefits to earned-income tax credit recipients. It is in everyone's best interest that we do this.

I thank my colleague from Wyoming for starting this debate and starting the process of educating everyone about the importance of this tax relief.

Let me say that when we talk about the tax relief package, we really are talking about good stewardship of our tax dollars. We have a projected $5.6 trillion surplus. We have a bright red line between the Social Security surplus and income tax withholding surplus. We are taking half of the $5.6 trillion--roughly $3 trillion--that is in Social Security surplus, and we are going to leave it intact in a lockbox so that Social Security will be totally within itself, solid and firm.

The other half of the $5.6 trillion--the $2.6 trillion or so--is the income tax withholding surplus. That is very different from people who are paying into Social Security and expect that money to go to Social Security. But people who are sending $2.6 trillion in income taxes above and beyond what government reasonably needs to operate should have some relief. That is money coming right out of the pocket of every American and going to Washington which we know it does not need for legitimate government expenditures.

It is our responsibility to be careful how we spend taxpayer dollars. With that $2.6 trillion surplus in income tax withholding, we have a proposal that takes $1.6 trillion and gives it back to the people so they don't even have to send it to Washington. We have $1 trillion remaining. That $1 trillion is going to be for the added expenditures that we know we need in priority areas to do the right thing.

So what are the priority areas?

We are going to spend more for public education because we know public education is the foundation of our freedom and our democracy. If we allow public education to fail, or not produce, then we are taking away the strength that has been the foundation of our Nation.

We are going to spend more on public education.

No. 2. We are going to spend more on national defense.

Our national security forces have been deteriorating. We do not have a solid plan to upgrade the quality of life for those serving in our military. These are people who are pledging their lives to protect our freedom. We owe them a quality of life that allows them to do their job. We are going to increase their housing quality and health care quality. We are going to increase salaries. We are going to increase education for military children, spouses, and military personnel. All of these will add to the quality of life.

We are going to invest in the technological advances that will keep us ahead of any adversary we might have and also make sure that our allies are strong.

We are going to increase spending in national defense.

No. 3. We must address the prescription drug issue in this country.

Ten years ago, you would have to go in the hospital and have surgery for an ailment that today can be treated with prescription drugs. Hospital stays are much shorter. Sometimes it is just an office visit because prescription drugs are so much more effective. They are also more expensive. We need to treat prescription drugs as one of the mainstays of quality health care, just as hospital stays and surgery used to be the avenue for treatment of a major problem.

We have to deal with this big expense and this big part of health care that has changed our quality of life in America, but which many people cannot afford or they have to make such tough choices that it just isn't right. People on fixed incomes cannot afford a $400-a-month prescription drug bill. Some people are making other kinds of choices. We are going to have to have more benefits and more options for prescription drug help for people who need it.

These are the areas where we want the ability to have added income, to make sure we can do the job we are expected to do. I certainly think $1 trillion should be plenty if we are running the Government efficiently and making sure taxpayer dollars are not being wasted or misused.

I think the tax relief plan is much more than tax relief. It is good stewardship of your taxpayer dollars and my taxpayer dollars. It is a balanced approach that pays down the debt, protects Social Security, and adds spending in the priority areas where we must add spending. And it lets people keep more of the money they earn in their own pocketbooks because we believe they can make better decisions for their families than someone in Washington, DC, can do.

What is in the marriage penalty relief? What is in the tax bracket lowering? What is in the inheritance tax relief?

The biggest part of the tax cut is an across-the-board lowering of each tax bracket, so if you pay in the 15-percent bracket today, you will either pay no taxes at all or you will go to a 10-percent level. The most benefit of this tax relief is at that level. And then you go to a 15-percent bracket, a 25-percent bracket, and a 33-percent bracket. So everyone gets a lowering of their bracket.

We believe no one should pay more than 33 percent of their income in Federal taxes. That is a fair tax. It could be lower, but at least that is a fair cap on taxes for any individual. That is the biggest part of the tax cut plan.

It will also increase the earned-income tax credit for people who are not paying taxes at all but get a refund because we want them to have the incentive to work rather than be on welfare. This is a good incentive, and it works.

In essence, the earned-income tax credit is a rebate of the payroll tax. For people who do not pay income taxes but they do pay payroll taxes, they are going to get a bigger rebate. So that is the big part.

The next part of this tax relief plan is relief from the marriage penalty tax. Why on Earth should two single people, earning the incomes they earn, who get married, be thrown into a higher bracket and pay more in taxes just because they got married--not because they got a pay raise but because they got married? That is wrong. It is a wrong incentive in this country, and it was never meant to be that way. This was a quirk in the Tax Code, and we must fix it.

You should not have to pay a marriage penalty. Today--and this is in my legislation I have introduced--if you take the standard deduction, you do not get the standard deduction if you get married. You do not get it doubled. In fact, the standard deduction is $4,550 for a single person. For a married couple, it is $7,600. Under my bill, the standard deduction for married couples will increase by $1,500 to $9,100, which is double the single standard deduction. So if you do not itemize and you take the standard deduction, we want you to have double the single rate when you get married.

Secondly, we want to widen every bracket so you will not have to pay more in income taxes because you go into a higher bracket just because you combined incomes. We want to widen the brackets so your combined income will be taxed at the same rate as if you were single making two incomes that added up to that. So we are going to try to widen the brackets.

And third, on the earned-income tax credit, we will increase the adjustment on the income levels and make the earned-income tax credit also come in at the same level as if they were two single people rather than penalizing people who get the earned-income tax credit when they get married.

It is very important that we relieve the pressure on 21 million American couples who pay the marriage penalty tax. This is not right, and we are going to change it. That is another major part of the tax relief bill that will be before us in the coming weeks.

The third area is doing away with the death tax. There is no reason for someone to have to sell a family farm, a ranch, or a small business in order to pay taxes to the Federal Government. We must take the lid off the death tax.

The people of America understand the death tax as being unfair. Even if they are not going to have to pay the death tax or their heirs will not have to pay the death tax, they still have a fundamental sense of fairness that it is wrong to tax money that has already been taxed when it was earned and when it was invested. There is a sense of fairness in the American people.

There is also a sense of hope. Every parent hopes that his or her child is going to do better than they have done. So they want their children to have that opportunity to be able to keep the family business and to do better. And they most certainly do not want a family business to be sold off to pay taxes because they know that not only affects their own families but the jobs of the people who work for a family-owned business.

Fifty percent of the family-owned businesses in this country do not make it to the second generation, largely because of the inheritance tax. Eighty percent do not make it into the third generation.

Do we want to be a country that does not have family-owned businesses? Do we want everything to be a big international conglomerate? I do not think so. I think we want the family farm to succeed in this country because we know that family farmers are contributing citizens to the community; they are contributing to the agricultural greatness of this country; and they are a stability for our country to make sure that we control our own resources.

I do not want a big international conglomerate to take the place of the family farm in this country. And that is what death taxes produce. It is in our interest that we have small family-owned hardware stores. It is in our interest that we have small family-owned service companies that contribute to a community.

I hope we will eliminate the death tax, or at least modify it greatly so that any reasonable description of a family-owned business would be covered, so that there will not have to be a sale of assets that would break up that business, that farm, or that ranch.

The fourth major area of our tax relief plan is to double the child tax credit. Whether you have child care or not, we believe you should have more than the $500-per-child tax credit because we know how much it costs to raise a family. So we would double that to $1,000 per child.

A $1,000-per-child tax credit isn't nearly enough to offset the costs of raising children. We know that. But we do not have children to get tax credits; we have children because we love them and we want them to be strong, to continue the great heritage that we have in this country. But we should give tax relief that is focused on helping families raise their children in as conducive an environment as we can possibly give them.

That is our tax relief plan. It is our stewardship of tax dollars to give more money back to the people who earn it, and to pay down the debt at the most rapid rate that we possibly can. Over 10 years we will have paid down the debt to the absolute minimum. And to help people with prescription drug benefits, to rebuild our national defenses, and to make bigger investments in public education, we are saving $1 trillion back from the surplus. And last, and most important, we are keeping Social Security totally intact. That is good stewardship of our tax dollars.

I am proud to support a tax relief plan that saves Social Security, and keeps it secure, that adds spending where we need it, and makes absolutely sure that we give back to the people who earn it more of the tax dollars they deserve to keep in their pocketbooks, rather than sending it to Washington for decisions to be made that they will probably never realize.