Unleashing America's Economic Potential

Floor Speech

Date: May 13, 2016
Location: Washington, DC
Issues: Taxes


Mr. WOODALL. Madam Speaker, I want to begin by yielding to the gentleman from Montana (Mr. Zinke), one of the great freshmen here leading our institution. Honoring the Service of Rear Admiral Brian Losey


Mr. WOODALL. Madam Speaker, folks wonder sometimes what kind of men and women serve in this Chamber. And when I am asked, What did you learn new, Rob, that you didn't expect when you got to Congress, I talk about the caliber of the men and women who serve here.

If you have not had any time to spend with the gentleman from Montana, the former commander at Navy SEAL Team 6 spent 20 years serving his country in the SEALs and said: I have more leadership to provide. I want to run for Congress because I want to be able to make a difference in that way.

And he is making that difference here every day.

Madam Speaker, there is so much time where we spend tearing each other down and talking about all the problems that exist in Washington, and certainly, they are multiple. But to confront serious problems, you have to have serious people; and we do have serious people in this Chamber. Congressman Zinke is one of those, and I am proud to serve with him, and I appreciate his leadership.

Madam Speaker, I want to talk about another topic that I think lets people--again, we can talk about all the challenges that exist in this country, but figuring out what the problem is and who to blame for it should not be our primary goal. Our primary goal should be solving those problems.

Madam Speaker, I want to talk about unleashing America's economic potential, and I want to talk about the FairTax. You know about the FairTax. The FairTax is not two words, as you know. FairTax is one word.

FairTax is the name of a bill in Congress. Not many bills in Congress command the notoriety that FairTax does, but it is H.R. 25. Anybody can pull it from congress.gov and read it. It is short, about 100 pages.

But it says, for Pete's sake, Madam Speaker, if we are going to try to make America competitive in the world, if we are going to try to create American jobs, if we are going to try to make America the country that you follow, if we are going to make America that leader in the world, what are we going to do it on?

Madam Speaker, if you want to create more jobs in America, you could depress salaries. We could pay everybody pennies, as some nations do, and try to create more jobs. That is an awful plan. That is not the right way.

If we wanted to create more jobs in America, we could stop caring about clean water and clean air and just throw our environment out with the job creation. But that is not what we want to do. That is a terrible idea.

Madam Speaker, as we sit here today, one thing that all the men and women in this Chamber control is the United States Tax Code. And the United States Tax Code, time and time again, is rated as the single worst Tax Code on the planet, the single worst Tax Code on the planet.

Once a week, you can open up a newspaper, find a story of a company leaving America to pursue incorporation outside of America's borders so that they can face a lower tax rate. And folks say: Oh, how unpatriotic; what an awful thing to do.

Madam Speaker, I would tell you that the law of the land requires them to do that. The law of the land says if you are the board of directors of a publicly traded corporation, you have a fiduciary duty to maximize return to shareholders. If you are trying to incorporate in a company that is punishing you, and you can go to a country that rewards you, you must make that. It is not optional. It is required.

So we can either try to pass laws that trap companies here, or we can try to pass laws that encourage every Nation on the planet to locate here. The FairTax does exactly that.

Madam Speaker, let me tell you a little bit about what the FairTax does. It is a fair chance for every American family to build a better life.

We talk so much about the income tax in this Chamber, but the truth is that 80 percent of American families pay more in payroll taxes than they do in income taxes.

All the time we spend complaining about the IRS, complaining about the American Tax Code, the Income Tax Code, it is the payroll tax that is the largest tax burden that 80 percent of American families face.

If you are a millionaire, a billionaire, if you are running your own giant, megacorporation, you can accept your salary any way you want to. You can do it from capital gains, stock options. You can have your privately held company pay you dividends. You have your choice about how you receive your income and, depending on what the Tax Code punishes and encourages, you can manipulate your income accordingly.

Madam Speaker, but if you are the rank-and-file American middle class family, you don't have a choice. You don't have capital gains or dividends or stock options to choose from. You get a paycheck, and out of that paycheck, the government takes the first dollar, and it is 15.3 percent that the government takes in payroll taxes alone.

Now, Madam Speaker, payroll taxes are a valuable tool in this country. They fund the Medicare program, and they fund the Social Security program. These are two very important programs to America, but they are both threatened. The revenue stream for those two programs is insufficient to fund the demands on those programs. We have to find a better way.

The FairTax says: don't take the money out of an individual's paycheck. The power to tax is the power to destroy. When you tax productivity, you destroy productivity. Rather than taxing income, let's tax consumption.

We all wondered on April 15, Madam Speaker, what our neighbors paid in income taxes. Don't you wonder? Money magazine did a study one time. Fifteen different accountants worked on the same tax return, and they came up with 15 different answers. It was impossible to figure out which one was right, and none of those was the answer that Money magazine came up with for themselves. But you wonder what you are neighbor is paying, and you wonder if they are paying their fair share.

What the FairTax says is we are going to charge you not based on what you produce but what you consume.

So if you have a brand-new Mercedes sitting in your driveway, we think you ought to be able to help fund the American way of life. If you have a used Ford Festiva sitting in your driveway, maybe we ought to cut you some slack.

If you have just built yourself a new, 9-bedroom, 12-bathroom house, we think you ought to be able to afford to pay to help grow America. If you are a family of six living in a two-bedroom apartment, we think we ought to cut you some slack.

If you are working hard trying to improve your life, don't punish productivity, as today's Tax Code does; tax folks based on consumption. That is not a crazy idea, Madam Speaker. In fact, America is one of the only OECD countries, one of the only industrialized countries that doesn't have a consumption tax.

But America was founded on a consumption tax. That is exactly the way America began, saying that if you have enough money to import silver from Europe you ought to be able to pay the tax on that. It was excise taxes at that time. I am talking about a simple retail sales tax.

But people spend at different rates, Madam Speaker. People spend at different rates. What I have here--you can't see it; the print is going to be too small--but it is the relative tax rates of a two-adult, two- child household.

What the FairTax says is, listen, we all have basic expenses in our lives. If you are struggling and you are trying to make a better life for you and your family, you are going to have to buy your food, you are going to have to have an apartment, you are going to have some form of transportation, whether it is a car or riding public transportation, and you are going to have to have clothing. These are the basic necessities of life.

So we have created a system so that no American family pays retail sales taxes on those basic necessities. That is what we will call poverty-level spending. When you go above and beyond that, you begin to pay the taxes.

What that means, Madam Speaker, is that if you are earning $32,000 a year in that family of four, you are not paying a penny in taxes. Again, payroll tax is today the largest tax that American families pay. We are not asking you to pay a penny.

But if you are earning $50,000 a year, then you start to pay an effective rate of about 7\1/2\ percent. If you are earning $64,000, then it is about 11 percent, and on and on and on until you get all the way up to a 23-percent tax.

There are no exceptions, no deductions, and no exemptions. Everybody pays on everything after that poverty-level spending.

Again, Madam Speaker, if you can afford to have a boat and a new jet ski sitting in your driveway, then I think you can afford to help struggling families in America succeed. If you are one of those struggling families and you are saving every penny that you have because you want to send your child to college one day, then we ought to cut you some slack.

Madam Speaker, the FairTax was created by a group of economists, a group of public citizen activists, who said: If we started from scratch today, then what Tax Code would we write?

There is not a man or a woman in Congress, Madam Speaker, who believes that if we wrote a Tax Code today that we would write the one we have. The one we have is atrocious. It is atrocious.

What that does is it targets every individual working at the IRS. The IRS is the most vilified institution in this town. By moving the burden of taxation from income to consumption, the FairTax would close the IRS forever.

Madam Speaker, the problem with the IRS could be the occasional rogue man or woman that works there, but most of the men and women that work there are conscientious and hardworking civil servants charged with implementing the atrocious Tax Code that this Congress has passed.

Milton Friedman, the Nobel Prize-winning economist, said: The best way to escape this trap that we are in is to throw the whole thing out and start over from scratch. He is exactly right.

Madam Speaker, #PassTheFairTax is the way we are driving this particular debate. Imagine if working American families never, ever, ever had to deal with the IRS again. If you are a sophisticated business, you are going to collect that tax in sales taxes. You are going to have to deal with a State tax collector, and you are going to have to deal with an occasional Federal audit. But if you are a rank- and-file American family, you will never be threatened by the IRS again.

Madam Speaker, you know, as I do, we handle casework all the time from constituents being pushed around by the IRS, getting threatening letters from the IRS and having their home threatened by the IRS. Why? Because, despite their very best efforts, they messed up their tax return.

Money magazine hired 15 professional accounting groups to fill out a tax return. They all got different answers. But when an American family makes that same mistake, they are punished.

I want to close the IRS for good, Madam Speaker. I want to get folks out of the business of being threatened by their government. I don't think folks mind paying their fair share, but they would like a thank- you for paying their fair share, not a threatening letter from the IRS at the end of the day.

What are we talking about in terms of productivity, Madam Speaker? The Tax Code grows longer and longer and longer every year. The National Taxpayers Union this year, by this April 15, said that in this 1 year alone we spent 6.1 billion--billion--hours filling out tax returns, that we spent collectively $330 billion to comply--$330 billion to comply.

Madam Speaker, what would have happened to the economy if we had dedicated that $330 billion to economically productive activities? We could have dedicated that $330 billion to paying down the debt.

It is not just the $330 billion that we lose because we are spending it on taxes. Our Tax Code is so convoluted. The New York Times reported last month that $458 billion, almost one-half-trillion, go uncollected every year, sometimes through fraud, sometimes through deceit, and oftentimes just through an inability to understand the Tax Code and folks not reporting it properly. Collectively, we are talking about $1 trillion in lost productivity here in this country.

There are 11 million words of laws and regulations in the Tax Code. Madam Speaker, you know that you haven't read it. I haven't read it either. We are paying people to help us with our taxes; they haven't read it either. You call the IRS Help Line for help; they haven't read it either. Eleven million words, nobody has read it, and nobody understands it. We make a criminal out of every family in this Nation when we ask them to comply with it.

Madam Speaker, sadly, particularly over the last 2 years, we have been reading about abuses at the IRS, whether it is targeting groups based on what their conservative beliefs are, whether it is inappropriately leaking confidential information, selectively leaking that information to support one effort or another.

Madam Speaker, the IRS knows more about each and every one of us than many of us are willing to tell our children, and it is wrong. You cannot give that kind of power to an agency without having agency abuses.

We can close the IRS. We can get every American family out of the business of dealing with the IRS on April 15 by simply paying a retail sales tax when they shop at their local stores.

Madam Speaker, we are talking about igniting America's economy. We are talking about doing those things that encourage productivity, doing those things that encourage risk-taking, and doing those things on which America's economy was founded but many of which we have lost sight of in the past several years.

We can't avoid paying taxes. Death and taxes are certain. What we can do is make it easier, what we can do is make it more effective, and what we can do is make it less punishing.

We are having a debate right now, Madam Speaker, about what kind of new Tax Code to provide for America. I believe we are going to get there. I don't think we are going to get there this year. I think it is going to require some Presidential leadership. I think all the Presidential candidates remaining are talking about what they would do to change the Tax Code.

We all realize we are getting shellacked by the rest of the globe. All of our major trading partners are bringing their corporate rates down and down and down, creating the kind of corporate flight that we are talking about.

I don't want to talk about changing America's Tax Code so it fits in kind of the middle of the pack, so that we are kind of average with all of our peers around the globe. I would tell you, America has no peers around the globe. America is a leader around the globe. America stands alone around the globe, and America should lead the world with the single best Tax Code around the globe.

I don't want to lower wages, I don't want to impact environmental regulations, and I don't want to change those things that deliver value. I want to change those things that don't. And a complicated Tax Code benefits no one except lobbyists in Washington, D.C.

Madam Speaker, Americans for Fair Taxation, again, hired some of the best economists we have in the land, who predicted that we could create 13 million more jobs--13 million more jobs--with a Tax Code that encouraged investment, that encouraged savings, and that got us out of the business of punishing productivity and into the business of rewarding.

Michael Boskin, the former chairman of the Council of Economic Advisers, Madam Speaker, said that the long-term gain to GDP from a consumption-based tax reform would be roughly 10 percent--a 10-percent change to GDP simply because we take away a punitive Tax Code and put in one that makes sense.

Madam Speaker, I don't know about families in your district; families in my district can't wait. Families in my district don't think the economy is going so great that it is okay if we shave off 10 percent at the top. We can do better and we must.

``Long-run GDP per capita would be 9.7-percent higher under a national sales tax,'' says Alan Auerbach at the University of California, Berkeley.

Time and time again, economists from the left and economists from the right come to the same conclusion: the power to tax is the power to destroy. Taxing income punishes and destroys productivity.

``Near-term 9- to 13-percent increase in the GDP,'' says Dale Jorgenson, the former chairman of the economics department at Harvard University.

There is a reason all of these different economists come together around the same figure, Madam Speaker, again, from the left and from the right. We have an opportunity to do better, if only we will agree.

Madam Speaker, it is #PassTheFairTax. The FairTax has more cosponsors--again, it is H.R. 25--more cosponsors than any other fundamental tax reform in this institution. On the Senate side, it has more cosponsors than any other fundamental tax reform bill on the Senate side.

Madam Speaker, the FairTax has supporters in every State across the Nation. It is not coming out of Washington, D.C.

Passing the FairTax would take away so much of the power that this town can exercise over people. We will give you a tax credit for buying an electric car, we will give you a tax credit for buying a windmill, we will give you a tax credit for having more children, and we will give you a tax credit for this, that, and the other. With the FairTax, all of those exceptions and exemptions go away. Hear that.

I started telling you about the amazing men and women who serve in this Chamber, folks who come to work every day to try to build a better America in cooperation with their bosses, their constituents back home.

We talk so often about how the Washington culture creates all these exceptions and exemptions and somebody is benefiting from it and somebody is getting paid off for it. Nonsense.

There is one bill in this Chamber that abolishes every single special-interest exception, exemption, carveout, and credit in the entire United States Tax Code. That bill is the FairTax, and that bill has more support in this Chamber than any other fundamental tax reform bill in Congress.

Madam Speaker, we have an opportunity to do this together. We have an opportunity to build a better economy together. We have an opportunity to take the IRS out of every single one of our constituents' lives forever.

It is going to take a lot of courage. It is going to take a lot of courage to abolish all of those exceptions and exemptions. It is going to take a lot of courage to hit the reset clock on the American Tax Code. It is going to take a lot of courage to get out of the business of trying to be mediocre with the rest of the world and kind of settle right there in the middle and to move from the very worst Tax Code on the planet to the very best Tax Code on the planet.

Worst to first, Madam Speaker. That is what the FairTax offers. I ask the support from each and every one of my colleagues that has not yet cosponsored this bill.

With that, Madam Speaker, I yield back the balance of my time.