Highway Technical Corrections Act of 2007
Floor Speech
HIGHWAY TECHNICAL CORRECTIONS ACT OF 2007 -- (Senate - April 16, 2008)
BREAK IN TRANSCRIPT
TAX DAY
Mr. THUNE. Mr. President, I rise to speak today on an issue that is on the forefront of most Americans' minds this week, and that is the issue of tax day. Yesterday was the filing deadline, April 15, which comes around every year, and for most Americans it is greeted with a great deal of trepidation and anxiety.
April 15 represents the annual call of Uncle Sam, the tax collector, knocking on the doors of hard-working taxpayers, and it highlights the real tax burden that is placed on American families.
This year, Americans will work 74 days to pay their Federal taxes, 74 days to pay their Federal tax burden alone. In order to pay State and local taxes, Americans will work an average of 39 additional days. What that means is that the typical hard-working, taxpaying, law-abiding American in this country will have to work an average of 113 days to pay taxes in 2008.
If we look at a calendar, that pretty much takes care of the months of January, February, March, and April, up to the 23rd of this month. If you think about it, every American is still working this year to pay the tax man. They have not gotten to that point in the tax year when everything they make can then be dedicated to the expenses they have for their families, for their children's education, for retirement, for fuel costs--all the things we deal with in our daily lives. We are still at a point on the calendar where none of what we make can be applied to those necessities of life because we are still at a point on the calendar where everything we earn and make in this country is dedicated to paying the tax man. Literally 113 days of the calendar year of this year up until April 23, which will be next week, is dedicated to pay the tax man.
What does that mean? Another perspective: If you put it into an 8-hour work day, taxpayers are going to work 1 hour and 37 minutes every single day to pay Federal taxes, and an additional 51 minutes to pay State and local taxes.
Put that into perspective. All other categories of consumer spending pale in comparison to the annual tax burden. In fact, Americans only need to work 60 days to pay for annual housing costs, 50 days for health and medical care, 35 days to pay for their annual costs, and 29 days to pay for transportation.
So the expenses most people deal with in their every-day lives, whether, again, that is the cost of housing, health care, food, or transportation--all are basic necessities--pale in comparison to the number of days the American taxpayer works every single year to pay their tax burden.
That is a pretty remarkable chart, I think you would have to say, when you look at the tax burden and the number of days you have to pay relative to the things we spend the rest of our money on.
This year, the statistics are probably better, if you can imagine that, than they were a few years ago. In 2000, before the historic tax cuts took effect, taxpayers had to work an all-time high of 123 days to pay their tax burden. We have gone from 123 days down to 113 days.
In that same year 2000, a record 33.6 percent of the Nation's income was dedicated to paying taxes. After the 2001 and 2003 tax cuts, Americans were able to work an average of two fewer weeks to meet their Federal tax burden. That is why we find the average American working 113 days to meet their tax liability as opposed to 123 days a few short years ago. That is attributable to the tax relief that was enacted in 2001 and 2003.
Aside from paying taxes, filling out tax returns is a burden in and of itself. We have a Tax Code that is out of control, out of date, and is imploding under its own weight. The U.S. Tax Code spans over 54,000 pages. Some of the current provisions of the code were created 40 years ago. Each year individuals, families, and businesses spend needless hours poring over IRS forms and regulations trying to make sense of the endless exercise of filing taxes. In fact, in total, taxpayers dedicate over 6 billion hours to file their taxes and spend over $140 billion a year in compliance costs.
I read a story a couple of days ago that those who still fill out their own tax returns take an average of 34 hours to do so. That is almost a week. That is a workweek almost for most people to comply or fill out the tax return--for those who still fill out their own tax returns.
Bear in mind that a lot of Americans have gotten to the point where it is so complex, burdensome, and complicated they turn it over to a tax preparer. For those who still fill out their tax returns, 34 hours is the average they spend in complying with the Tax Code in this country.
Ironically, the complexity and uncertainty of filing taxes is only amplified by congressional action. Since 1986, we have made--I say we, the Congress--have made 15,000 changes to our Tax Code, or approximately 2 every single day. Many of these changes focus on 1- or 2-year extensions of expiring provisions.
For example, last year, Congress was unable to extend the alternative minimum tax until the IRS had published its 2007 tax return forms. Because of this delay, 13.5 million taxpayers had to wait until February 11 to file forms relative to the alternative minimum tax.
Only Congress can create a complex tax provision, such as the alternative minimum tax, and actually make it more complicated by extending it after the IRS publication deadline.
Unfortunately, the congressional leadership is simply either oblivious or unsympathetic to the tax burden on American families. Last month, the Senate Democrats called for the largest tax increase in American history. Under the Democratic budget, the reduced individual tax rates are set to expire in 20 months.
As millions of Americans have now finished coping with this year's April 15 deadline, I think it is important to point out that this deadline is going to be even more painful under the Democratic budget that passed the Senate earlier this year.
If the 2001 and 2003 tax cuts are not extended, on January 1, 2011, the 10-percent tax bracket will expire, the tax bracket that was put into effect that impacts low-income earners, lowers their tax liability and took literally millions of American taxpayers completely off the tax rolls. The 25-percent tax bracket that currently applies to earners in that tax rate bracket is going to go up to 28 percent. The 28-percent tax rate will increase to 31 percent. The 33-percent tax rate will increase to 36 percent. And the 35-percent tax rate will increase to 39.9 percent.
On top of the increased tax rates that will happen on January 1, 2010, unless we take steps to extend and prevent those tax cuts from expiring, the increased child tax credit will expire as well. Families with children are going to see their tax burden increase substantially when the $1,000 tax credit is reduced to $500 after the year 2010.
Additionally, the marriage penalty is reinstated. The 3l million filers who report dividend income and the 26 million filers who report capital gains income also will see their taxes on their investments go up.
Finally, the death tax will be reinstated at pre-2001 levels of $1 million. In other words, you can exempt $1 million worth of your income, the wealth you acquired over the years, from the death tax liability. If we think about how that impacts small businesses, farmers, and ranchers--and I can share that as someone who lives in a rural State where we have a lot of farm and ranch families. We have a lot of people with lots of assets, lots of land, lots of equipment, but they are very cash poor. When you take $1 million anymore, with land values being what they are in a place such as even my State of South Dakota, you are going to have an awful lot of people who are going to be hit very hard by the death tax when it becomes reinstated at a $1 million-level exemption.
Attach to that a maximum statutory rate of 55 percent--which, incidentally, is one of the highest death tax rates in the world. So literally you are going to have for people now who worked their whole lives--small businesses, farmers, ranchers--to accumulate some things to pass on to the next generation, all but $1 million of that would be taxed at a rate as high as 55 percent.
Think about the impact that is going to have on family farm and ranch operations in this country and many of our small businesses, which is where most of the jobs in the country are generated.
In total, the average family is going to see their taxes increase by roughly $2,300 per year. That is enough to buy several months of groceries or several months worth of health care.
It does not have to be this difficult. Congress can work in a bipartisan manner to fix our broken Tax Code and to ease the tax burden for families and small businesses.
Commissions have been convened, hearings have been held, studies have been published, and yet another tax day has passed without comprehensive tax reform.
Streamlining our Tax Code will strengthen our economy, it will improve the competitiveness of our businesses, and it will greatly ease the tax burden for all American families.
The problem is not that Washington taxes too little. The problem is that Washington spends too much. The American people, when they start spending virtually a third of their year to pay the tax burden that is imposed on them at the Federal level, the State level, and the local level, we are asking way too much and imposing way too much a burden on the working men and women in this country and those small businesses that are creating the jobs and those who are trying to pass on those operations to the next generation so we can keep family farms, ranches, and small businesses in the family, contributing, creating jobs, and paying taxes. With a confiscatory death tax, which will happen if we do not take steps to extend the tax cuts, we are going to see a lot of those farms, ranchers, and small businesses go by the wayside.
I hope the sentiment in this body, the Senate, and the House of Representatives will change to the point that we recognize the importance of extending the tax relief that was enacted in 2001 and 2003 so we do not see these steep increases in income rates and return of the marriage penalty and a decrease in the per-child tax credit, dividend, and capital gains income being taxed at much higher rates, and the death tax being reinstated.
If we are successful in extending those tax cuts, I think we will see an economy that, although experiencing an economic downturn right now, will improve, will start to grow again and create jobs. If we allow these tax cuts to expire, I think it is ``Katy, bar the door'' in terms of the adverse economic consequences and impact it will have on this economy and on the working men and women of this country and the entrepreneurs who make it work.
Mr. President, I yield the floor, and I suggest the absence of a quorum.
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