Income Taxes
Floor Speech
Income Taxes -- (House of Representatives - January 28, 2009)
BREAK IN TRANSCRIPT
Mr. CARTER. Mr. Speaker, I appreciate being recognized.
I sure enjoyed hearing from my colleagues talking about the work of the day in, I think, a very accurate way.
I'm here tonight to talk about, I think, correcting some potential inequities.
I'm very blessed in my life. I spent 10 years practicing law in the town of Round Rock, Texas, in Williamson County, at that time a small town where a lawyer in that town pretty well did anything that walked in the door, from criminal cases all the way down to property tax cases. And I had a lot of clients back in those days that were in small businesses or who might be individuals who sometimes, I would say, unintentionally failed to pay some of the taxes they owed to the IRS. And inevitably when those things would happen, they would receive from the IRS a notice that they had failed to pay their taxes or failed to file their income tax or failed to pay payroll taxes that they should have paid. And these clients would come running to a lawyer.
At that time I was only one of two lawyers in town and never claimed to be a tax expert. But I could read the form that told us what they needed to do, and we could get them with a CPA, and they would get their taxes filed. And they would receive a notice from the IRS which would tell them that they would have to pay penalties and interest on this particular sum of money, whatever it may be. It might have been relatively small. But if the time period had been long, the penalties would be very horrendous. They would be very fierce. Sometimes over a period of time of, say, 8 or 10 years of failure to pay, you might see the penalties and interest be two, three, four times what the actual taxes were that were owed by the individual.
If it happened to be payroll taxes, I will tell you that, by my experience in those days, they would threaten to padlock businesses and put people in prison for that, for failing to pay payroll taxes, because, actually, that was other people's money that they withhold held and didn't pay and didn't pay their matching share. So the IRS would get very mad about failing to pay payroll taxes.
But they would also be a little bit upset about failing to pay income taxes and threaten similar actions, mostly padlocking businesses and seizing assets.
It was possible to go talk with the IRS, and you could sometimes negotiate those penalties and interest. But I never saw them not assess them in my period of time that I did that.
After the 10 years of practicing law, I spent 20 years as a general jurisdiction district judge in Texas, which is the highest trial court in Texas, and I tried a wide variety of cases, some of which was family law. I tried a tremendous amount of family law cases, somewhere in the neighborhood of 20,000 over that 20-year period of time.
I also tried criminal cases and so forth. In many family law cases, one of the issues when you are trying to guide assets, you would also be dividing liabilities, and one of the liabilities you would inevitably see would be failure to pay taxes or being late on taxes or failing to file taxes. So we dealt with this same issue, and I can report to this body that by my experience, the failure to pay those taxes always seemed to result in a letter from the IRS assessing penalties and interest for failure to pay.
Now, I raise this issue because I think it's important that we have fairness that everyone be treated fairly in this country. And so many will recall that it was reported by a Member of Congress on this House floor about 4 or 5 months ago, one of our Members, a very well respected, highly respected Member of this body, told us that he had failed to pay his taxes for a period of 10 years on a rental property in the Dominican Republic. And he reported that he was going through his people, he was going to discuss with the IRS the payment of these taxes, and he was going to pay his taxes.
He has since reported that he has paid his taxes to the tune of somewhere near the sum of $10,000. He also has reported that he has not paid any penalties and interest because no penalties and interest have been assessed.
Now, this struck me as very strange. By my experience and having dealt with it, I am not saying I did this full time every day, but you know, I think most Americans know, if they have been through anything, they have dealt with the IRS, the IRS is pretty proud of assessing penalties and interest. They like that a whole lot.
And so, to me, it was at first curious that this person, who is very directly related to the taxing system of the United States, has, in fact, not been even assessed any penalties and interest. I thought, you know, we serve in this body here because a bunch of people back home actually said we would like you to represent us in Washington, and we think you think like we do, and so they vote for you, and they give you this job.
But at least in my personal opinion, that makes us no different from them, other than we are kind of hired to speak for them up here as the best we can, and I think that's what we are here for. But we certainly, by the nature of our employment in the House of Representatives, should not receive any special treatment above and beyond the same special treatment that would be available to every American citizen, every American taxpayer.
So I have introduced a bill today which would basically say that because no penalties and interest were assessed against a Member of this House, that, in fact, we have equal treatment under the law, which is one of our constitutional rights. We would allow people to claim that same right not to pay penalties and interest if they hadn't paid their taxes.
This bill has got a name, and we call it the Rangel rule.
I would hope that people would take it in the light that it is set. It is not criticism in any way of any Member of this House. In fact, if it's criticism of anything, it's criticism of the IRS of the United States for failure to treat people equally under the law. And so I raise this issue because, in fact, that's what I seek here by this legislation, equal treatment under the law.
That club owner that I was well aware of back in the 1970s who constantly was having trouble with the IRS--and he is dead now, so I am not going to use his name; but I represented him before the IRS a half a dozen times, and we battled tooth and nail and borrowed money to pay that principal, interest and penalty that he had to pay.
He, if there is someone that's given special consideration, then that man should have been given special consideration. And that's why I have introduced this bill which basically says that if you have failed to pay your taxes and you are willing to pay the taxes, and you don't want penalties and interest assessed against you, then you can claim the Rangel rule, and you won't have penalties and interest assessed against you, according to the law.
That's what we are doing here today. We are not doing it out of any malice, we are only doing it because we think it's fair for the American people.
I am joined by some of my colleagues here. I will first yield, I think, to my friend from Iowa (Mr. King) since he is down on the floor and let him give us some comments.
BREAK IN TRANSCRIPT
Mr. CARTER. Actually, I point that out in the spirit of bipartisanship and working together, yes, very much, although I understand that the now-Secretary of the Treasury, designee of the new administration, has, infact, paid the interest on this amount, but no penalties have been assessed. Yes, he could claim this very rule to have the penalties waived should this be enacted into law.
Of course, I would urge the committees of jurisdiction to move forward on this very quickly, so we can treat every American citizen fairly under the rule. In fact, even Mrs. Kennedy's issues on her nanny, that seemed to prevent her to being a possible candidate for the United States Senate, that also might fall under the Rangel rule and those issues could also be addressed.
So, yes, certainly we, some of our colleagues on the other side of the aisle could benefit from this.
BREAK IN TRANSCRIPT
Mr. CARTER. I thank you for your comments. Your ``ruh rohs,'' this was very interesting. One of the things I was thinking about too, we had a very unusual procedure take place. When the gentleman I was describing was speaking on the floor, he announced that he was going to turn himself in to the Ethics Committee.
Well, so that we understand exactly what the Ethics Committee is, they are very noble people who serve a very tough job in this House because they have to look into issues concerning their colleagues. I have a high respect for people who are willing to serve on the Ethics Committee.
But the reality of the Ethics Committee in this House is that it has an equal number of Republicans and Democrats on that committee. So if everybody just sticks with their party, then things seem to have a deadlock time quite often in the ethics committee. In fact, for most of the time since I have been in Congress, the Ethics Committee has been deadlocked. I am going into my fourth term in Congress.
So I would say that turning yourself in to the Ethics Committee would be sort of like someone turning themselves in to the grand jury when the grand jury is not going to function. And so that shouldn't be a defense. We shouldn't have that kind of defense for actions that take place in this House, that, Oh, I will step up in front of everybody and say this is what happened. I am turning I myself in to the Ethics Committee. And then it's going to be business as usual for their act.
The American people don't have that kind of dark hole to dump things in. That shouldn't be an issue. This should be an issue of ethics and morals that touch the hearts of these people who serve in this Congress.
The judiciary in Texas has a rule that not even the appearance of impropriety against the person who serves on the bench. It's very tough, strict, because you have to think, What does this look like when I do this? And if you think somebody thinks that there's something improprietous about what you just did or said, you better not do it, because you can be severely sanctioned by those who police up our judiciary in Texas for giving the appearance of impropriety.
That is not the standard of this House. I would argue it maybe should be because it makes you police your conscience, to some extent. But it's not. So I do not want anybody to get the misconception that I'm saying that is the standard that we meet here. But we certainly should realize and be humbled by issues that go before the Ethics Committee. I am not saying that the Ethics Committee is the ``do-all, see-all,'' or that they do anything wrong. I think they actually are courageous people who have a tough job.
We need a functioning Ethics Committee, and I think we will get one because Nancy Pelosi has told us we will get one. And so I take my Speaker at her word that we will get one. And I'm hoping that we can do that.
BREAK IN TRANSCRIPT
Source