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[Congressional Record Volume 141, Number 77 (Wednesday, May 10, 1995)]
[House]
[Pages H4790-H4791]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                              {time}  2215
                              THE FLAT TAX

  The SPEAKER pro tempore (Mr. Norwood). Under a previous order of the 
House, the gentleman from Pennsylvania [Mr. Fox] is recognized for 5 
minutes.
  Mr. FOX of Pennsylvania. Mr. Speaker, I appreciate the opportunity to 
address the House on an important issue. Now that the House has 
completed work on the Contract with America is a good time to begin 
looking past the first 100 days to future legislative goals.
  I believe, Mr. Speaker, that a flat tax is in America's future. It is 
an idea which is catching fire across the Nation. What is it about the 
flat tax that Americans find so attractive? I believe the answer can be 
summarized in three words: trust, simplicity, and fairness.
  [[Page H4791]] Today's Tax Code is artificially and unnecessarily 
suppressing living standards. The first problem in today's code is the 
fact we have double taxed business earnings, which places a strong bias 
against savings and investment. This makes saving and investing much 
less attractive relative to consumption.
  Capital, as we know, is the lifeblood of the economy. Without 
capital, workers cannot enhance their productivity and their wages 
stagnate. Today's double, even triple taxation of income discourages 
saving, reduces the pool of capital available to entrepreneurs and 
workers, slows productivity and wage growth.
  A second problem with today's tax code is its high marginal rates.
  The third problem with today's tax code is its complexity and its 
hundreds of sections, thousands of pages of regulations. The rates are 
high, loopholes abound, and noncompliance is rife because taxpayers 
feel that the code is written for well-organized special interests and 
not for them.
  Mr. Speaker, perhaps most disturbing, the complexity and unfairness 
of the code lead our citizens to take an excessively jaded and cynical 
view of their government.
  Fourth, I believe the overall level of taxes, Mr. Speaker, is too 
high, especially for families with children. The average family now 
pays more in taxes than it spends on food, clothing and shelter 
combined.
  There are two major flat tax proposals, Mr. Speaker, one in the House 
and one in the Senate. The one in the House is Congressman Dick 
Armey's. Under his plan, all income would be taxed once at 17 percent. 
There would be no credits or deductions. Under his flat tax, there 
would be no taxes paid by single individuals earning $13,100 or less 
and couples earning $26,200 or less. A corporation would simply 
subtract expenses from revenues and pay 17 percent on the remainder.
  Senator Arlen Specter has also offered a flat tax proposal. His is a 
20-percent tax rate but has a couple of deductions. It would have a 
home mortgage deduction retained for homes up to $100,000, and $2,500 
in charitable deductions, and maintains payroll withholding.
  America's current tax is a patchwork quilt. It should be replaced. 
The need for tax simplification is self-evident. Americans now spend 
approximately 5.4 billion hours each year just filling out the tax 
forms, Mr. Speaker. In 1994, businesses spent approximately $127 
billion in compliance with the Federal tax laws, and individuals 
another $65 billion.
  Both proposals meet the test, I believe, of fairness, simplicity, and 
economic neutrality. Americans would fill out merely a small postcard 
and answer a few easy questions, instead of toiling over reams of 
papers and instructions. These changes will get the IRS and the 
government off the backs of individual and corporate taxpayers, and 
will allow all of us to redirect our energies to more productive 
pursuits.
  I hope that our fellow colleagues in the House, Mr. Speaker, will 
look over these proposals in the coming months, and hope they will find 
favor with them.

                          ____________________
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