Tax Increase Prevention and Reconciliation Act of 2005 - Conference Report -
TAX INCREASE PREVENTION AND RECONCILIATION ACT OF 2005--CONFERENCE REPORT -- (Senate - May 11, 2006)
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Mr. SCHUMER. Mr. President, everyone here knows we are going to vote on a $70 billion reconciliation bill later today, and it is far different from the bipartisan bill that originally passed the Senate. I would like all of America to please pay attention to this bill because if anything ever showed the differences between the two parties, this is it. We want to help the middle class; they want to help the richest people in America who are doing very well already. That is the fundamental difference between the bill that left the Senate with bipartisan support and the new bill that is coming back.
My good friend from Texas said: Help the people who earn it. Far too much of this bill goes to the people who make over $1 million a year; far too much. If there were no harm to the middle class, that would be great. But too many provisions that affect the middle class are hurt, and the one that I am going to focus on is one of the best provisions we have passed under this new President, and that is making tuition tax deductible for people whose incomes go up to about $150,000. That is gone. That is not extended for 1 new year or 2 new years; it is gone. And in its place are tax benefits for the wealthy and, worst of all, the removal of $5.1 billion of tax increases on the oil companies which are making record profits. No one likes to tax anybody, but I ask America: Oil companies or middle-class students? Whom do you pick? The leadership, the Republicans, and the President chose the oil companies. Democrats choose middle-class students struggling for college.
It is not just this issue. That is a metaphor for why Americans are looking for change. That is a metaphor for what they finally understand--that the trickle-down economics, which gives the overwhelming benefit of the tax cuts to the wealthy with a few crumbs for the middle class, doesn't work anymore.
Politics is a tough and tricky business, but sometimes you get handed an issue that is so crystal-clear, you want to make sure everybody knows about it. And this tax bill so perfectly shows the Republican majority's misplaced priorities that I think the American people are going to see it the way most of my colleagues and I see it. This bill shows the true colors of the Republican Party, which is far more interested in helping the very wealthy--God bless them--than hard-working middle-class Americans.
Make no mistake about it. There is a choice. There is a choice. You can't do both. And when people on the other side of the aisle, whether they are up for reelection this year or not, vote against our proposals and vote for this tax bill, they will be taking away from the middle class one of the best benefits we have given the middle class in recent years.
Let me talk a little bit about this issue. Several months ago, the Senate passed its version of the tax bill with 66 votes, 17 Democrats, myself among them. Our bill contained AMT relief, which this bill does, but it also contained college tuition.
The extender package, including a 4-year extension of college tuition deductibility, which I was proud to author, was in the Senate bill, but because, again, the White House, the House leadership, and Senate leadership said: No, no, no, big oil comes above middle class students, it is gone. To refresh everyone's memory, since our Republican conferees seem to have forgotten, the 2001 tax cut contained a provision that made college tuition deductible for the first time. The deduction, modeled on a bill I championed with Senators Snowe, Biden, Smith, Bayh, and Durbin--bipartisan--allowed middle-class families to deduct $3,000 from their tax return and that deduction was raised to $4,000 a year in 2004.
Last year, single filers who made up to $65,000 and joint filers with income up to $130,000 qualified for the full deduction, and there was also a smaller $2,000 deduction for those with higher incomes.
For the first time, the middle class would get some relief. You know, we help the poor go to college. We help the working poor go to college with Federal grants. That is a great thing. But in every one of our States, middle-class people came to us and said: What about us? I may make $70,000 or $80,000 or $90,000 a year, but I can't afford tuition. We finally came to their aid. It is gone. It is gone because the other side wanted to extend tax cuts that are already there in the outyears for capital gains and dividends.
I am all for reducing the tax on capital gains and dividends, but it is there already. And the cavalier attitude--do something for 2009 and 2010 and take away something from the middle class this year--again, bespeaks volumes as to why the American people are turning away from the majority and the President and turning to us. I have consistently worked with my colleagues to try to expand the deduction. But as I said, this deduction is not in the report.
The conference report is also interesting for what it includes that was not in the Senate version, as I mentioned: the 2003 tax cuts on dividends and capital gains for those earning $1 million a year. We did not include those in the Senate version because the Senate believed that those tax cuts that have already expired, such as the tuition deduction, should take priority over tax cuts that are not scheduled to expire for 3 more years.
I offered a resolution with Senator Menendez, a sense of the Senate, and got 73 votes. There will probably be 20 people who voted for that resolution saying support college tuition, not extend dividend and interest income deductions which go to the very wealthy, that are already on the books, and they are going to flip-flop when they vote for this bill.
Some of my other colleagues are going to speak of the distributional inequities, but I want to speak of the real choices we have with tuition, even assuming that it was a good idea to extend the capital gains and dividends tax cut. As I said, I believe that those taxes should be reduced. I do believe they create growth. But there was another alternative, because in the Senate bill was $5.1 billion which changed the accounting and created revenues from big oil. Again, that was taken out. If it had been kept in, we could have had the dividend cut, we could have had the capital gains cut, we could have had the AMT cut, and we could have saved the tuition deductibility for middle-class students.
So the choice was clear: Big oil or middle-class students. The other party couldn't help itself. They had to side with big oil. That they are going to live with, certainly, through the 2006 elections.
Do you think half of America would choose big oil over college student tax deductions? Do you think a quarter of America would choose that? Do you think 5 percent of America would choose that? Absolutely not. But as in the past, my colleagues on the other side of the aisle think they are insulated from the argument. They think by saying ``tax cuts,'' no one can show which tax cuts they have chosen over others. It is not true anymore. The tuition deductibility is a tax cut just like the other tax cuts in this bill, and it is not there anymore.
The oil provisions should have stayed in. The first related to an accounting method that the oil companies use. Along with Senator Snowe, I added a provision that disallowed the oil companies from using LIFO, which means when the costs of your inputs are rising--in other words, the price of oil--using LIFO allows the oil companies to make their income appear lower than it is so they pay less tax; and oil costs are rising. So this would have simply restored some equity and made sure they paid a fair amount of tax. But the President and the Republican leadership hated this one because they have to protect big oil above the interests of middle-class students.
The Senate passed our provisions with 66 votes, and I suppose the conferees thought that in the dark of night they could put them back.
There was a third provision added by my colleague from Oregon, Senator Wyden, in addition to the two that I offered--one with LIFO and one with profits they make overseas. They didn't put that one back either. President Bush actually spoke out against it a few weeks ago.
So the bottom line is simple, and there is an amazing coincidence. What was the cost of the oil tax breaks? It was $5.1 billion. What would be the cost of extending tuition deductibility for 3 years to middle-class people? It would be $5.1 billion.
America, whom do you choose? If you choose big oil, continue to vote for the other side. If you choose students, vote for us. This bill could have had the exact same provisions in it with all of the arguments made by others about needing the capital gains and dividends tax cuts, if simply the other side had the guts to tell big oil you are still going to make record profits, but we are not going to allow you this extra $5.1 billion. Instead, they are telling hard-working, middle-class families who are struggling to pay tuition: Tough luck. The oil companies come first.
This is a sad day for the middle class. It is a sad day for those of us who know that a college education is crucial for the future for America to stay No. 1. It is a sad day when this Senate turns its back on the interests of others. The Republican majority will try to spin this bill as a boon to the middle class. The facts show it is not true, and we are not going to let them get away with it anymore. Democrats are not afraid to face these issues because we know there are choices. When we convey the choices to the American people, we are confident they will decide we need new leadership in Congress and the White House. We need change. Because a party that once heralded itself as friends of the middle class has turned its back on that middle class for the special interests.
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