Congressional Budget for the United States Government for Fiscal Year 2005-Continued

CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2005-CONTINUED

Mr. GRASSLEY. Madam President, what we have to think about when people suggest raising taxes is, I have hardly ever had anybody ever tell me they want to raise taxes. How high do taxes have to be to be high enough to satisfy the people asking to raise the taxes?

Since we hear that more from the other side of the aisle than we do from this side of the aisle, I cannot help but ask anybody on that side of the aisle who is going to be suggesting during this debate on the budget to raise taxes, how high do they have to be to satisfy you?

We have had marginal tax rates of 93 percent in the last 50 years. Was that high enough? We had 70 percent in the last 20 years. Is that high enough? We have had them as low as 28 percent. People felt an awful lot of economic good happened, particularly promoting entrepreneurship, when they were lower.

I think the most important thing for my colleagues to think about during this debate is on the issue of process. Quite frankly, we are being given some direction through this amendment to raise taxes. We are being told the intent is to raise them on the very wealthy, but that is not how the budget resolution works. The budget resolution just says to the Budget Committee, raise X number of dollars based upon what that budget says. We decide where that is going to be raised.

Anybody who believes that by voting for this amendment, they are putting the burden on just the wealthy, for instance, are sadly mistaken. What it takes to get a bill out of the Senate Finance Committee is a bipartisan compromise, and just taxing one class of people is kind of a nonstarter for our committee, if you believe in bipartisanship.

In addition, if the issue of raising taxes just on millionaires is an issue, you need to remember you cannot just tax the wealthy. You confiscate all the income of people over $1 million, and you are going to run the Government for a few days. If you see that as a solution to our budget problems, you don't study the statistics, you don't study the impact taxation can have on the economy.

Also, if it is the millionaires, just think in terms of the top 1 percent, earning about 27 percent of the income, paying 33 percent of all of the income tax coming into the Federal treasury. Once again, how much is enough for the top 1 percent to pay? They make 27 percent of all the income. They pay 33 percent of the taxes. Should they pay 50 percent? Pretty soon it gets to the point where maybe they ought to pay 100 percent of it all. But that is a nonstarter. There is not enough income there to take care of our problems.

What does this high tax philosophy lead us to? It eventually leads us to taxing the common ordinary American to a greater extent than is good for the country, good for economic freedom, and obviously a discouragement to entrepreneurship.

I believe I saw on the chart, the one the Senator from Arkansas had, does taxing higher tax rates or lowering marginal tax rates really help small business? That is probably based on the argument that every small business does not pay the highest marginal tax rate. We are not dealing just with what is the highest marginal tax rate; we are dealing with fairness between self-employed, sole proprietors, and their highest rate of taxation and the highest rate of taxation of corporations. So anybody who is suggesting we ought to raise the marginal tax rate above where it is now at 35 percent is being unfair to sole proprietors, self-employed people, compared to corporations.

We should not have a penalty against small business in America. Regardless of the income of that small business, there should not be a penalty. When you have a 38.6-percent marginal tax rate, that is a 13-percent penalty on small business.
It is unfair to sole proprietors. There is no reason individuals paying taxes in America ought to have to pay more than corporations.

I am not arguing raising the corporation tax because we know what that does to our international competitiveness. That hurts our international competitiveness because we have high cost of capital. But I am arguing for fairness between corporations and sole proprietors, self-employed people, people who scrounge to get money to invest. They don't have stockholders. They can't go to the bond market like corporations can. They have to raise their capital. They live relatively moderately and maybe even low income throughout their livelihood to reinvest their earned income, to expand their business, to create jobs. Why do we want to penalize them? That is basically what this business of taxing the wealthy is all about.

There isn't enough wealthy in this country to do everything they want to do on the other side. Eventually it filters down to hurting the middle class.

We have to protect the middle class. What we are doing is talking about lower rates of taxation, protecting working men and women from having their resources confiscated by government.

I urge we defeat the amendment.