Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. I ask unanimous consent that we accept the amendment.

Mr. GRASSLEY. Mr. President, how much time do I have?

Mr. GRASSLEY. Mr. President, I ask my colleagues to vote against this amendment. I am not going to raise a point of order. I ask for a voice vote.

Mr. GRASSLEY. Mr. President, I raise a point of order on the germaneness of the amendment.

Mr. GRASSLEY. Mr. President, I oppose this amendment. This is an increase in the price of gasoline. Also, I don't know how many times we have to vote on a windfall profits tax. This is at least the third or fourth time. Although there is a tax credit that the tax funds, I want everybody to know there is no guarantee that the tax will not be passed on to consumers with these higher prices at the pump as well as home heating. This amendment raises revenue. The bill before us raises revenue from oil already taxed. This new tax is not well designed and should be defeated. I raise a point of order that the amendment is not germane.

Mr. GRASSLEY. Mr. President, I have a request for 2 Members to change the order of authorship of amendments, so I ask unanimous consent that the previously agreed amendment No. 2645 should be listed as Coleman and Pryor, instead of Pryor and Coleman.

Mr. GRASSLEY. Mr. President, I yield my 1 minute.

Mr. GRASSLEY. As modified?

Mr. GRASSLEY. Mr. President, I send to the desk the managers' amendment. Traditionally, managers' amendments have been worked out with both sides of the aisle. I urge adoption of the amendment.

Mr. GRASSLEY. The modified amendment.

Mr. GRASSLEY. Yes.

Mr. GRASSLEY. Let me say that I agree with the amendment's purpose to combat abusive tax shelters. We need to eradicate the phony tax schemes that abuse our tax laws at the expense of honest taxpayers. I have worked hard to enact legislation to combat tax shelters by shutting them down and raising the penalties on those who promote and participate in those phony deals. This bill contains many more provisions that do just that. I will add to the bill the increased penalties on tax shelter promoters and on aiders and abettors, and I will support these provisions in conference. These provisions will help deter the activities of those who sell illegal tax schemes and those who help participants in these schemes. I share the Senator's desire to combat tax shelters, and I share his goals of deterring banks' participation in tax shelters and in exploring ways to let agencies work together to prevent tax shelter activity. However, I think that your amendment has some technical matters that I would like my staff to work through with your staff for future consideration. Combating tax shelters is a constant battle that we will continue to fight.

Mr. GRASSLEY. I will be glad to yield to the Senator from Utah.

Mr. GRASSLEY. No, it is my intention that the provision should not affect the ability of charities to borrow to purchase life insurance, particularly where the people insured are officers, directors, employees or in some cases established donors of the charity that benefits.

Mr. GRASSLEY. Mr. President, there is substantial research that shows the way to make progress in eliminating poverty is to encourage healthy marriages, responsible fathership, full-time work, and education. The poverty rate for married couple families is 5.5 percent. The overall poverty rate is 12.7 percent. The poverty rate for single- family households, if there is no husband, is 28 percent. So it is quite obvious, poverty reduction should not be a partisan issue. We know what we need to do to reduce poverty. So we need to roll up our sleeves, work together, strengthen marriage, strengthen fatherhood, promote education, and get people full-time work. That is the way to end poverty. Statistics prove it. I make the point that the pending amendment is not germane to the measure now before the Senate, and I raise a point of order against it under section 305 of the Budget Act.

Mr. GRASSLEY. Mr. President, are we now ready to dispose of the Conrad amendment?

Mr. GRASSLEY. Yes, we would be willing to do that. We are looking at some votes around noon. Yours would be one of those. We don't have unanimous consent on that.

Mr. GRASSLEY. Madam President, I thought Senator Kyl wanted some time. What I would like to do, if it is OK with the other side, is give Senator Kyl some time off of our time and then right after him, Senator Thomas, because Senator Thomas has been waiting for a long time to speak. I ask unanimous consent to make that the speaking order. These folks are talking about maybe 20 minutes apiece or less.

Mr. GRASSLEY. Mr. President, I yield myself such time as I might consume. This is for the purpose of addressing two amendments before the Senate. I wish to make a short comment on the amendment that was just proposed by Senator Cantwell. In regard to this amendment, what she terms the anti-gouging amendment, obviously I can't help but say the intent of the amendment might be good, but this is a tax relief bill that is before us. It is not a crime bill before the Senate right now. We just received a copy of the amendment. There are all kinds of policy questions that need to be considered. So because of this and the fact that it is not germane to the bill, I will be raising a point of order at the appropriate time. Amendment No. 2610 I also wish to make a comment on the amendment proposed about a half hour ago by Senator Feinstein. Before I go into the problems behind the Feinstein amendment, let me say that it is unfortunate that our Nation has had to respond to so many unexpected crises over the past 4 years. Most recently, we have had to provide an enormous amount of hurricane relief to families in many of our Southern States. Despite this fact, our economy is growing and continues to grow and, even considering the hurricanes, growing at a rate that nobody would have anticipated considering a possible ripple effect that presumably is not rippling as much as we thought through the economy because of that natural disaster. As far as Federal receipts are concerned, these are up $275 billion over the prior year, and Federal revenues are returning to their average level of GDP. That average level, if you want a little leeway, is somewhere between 17 percent of GDP and 19 percent of GDP, and that is not just recently, that would be a 50-year average where all Federal taxes coming into the Federal Treasury have fallen within that band. Also, it has been our policy, at least in this administration, to do tax policy that falls within that band of 17 to 19 percent of gross domestic product. I would like to take a look at the tax increase that Senator Feinstein put on the table. It would increase the top rate by almost 5 percent for ordinary income. The premise of Senator Feinstein's position seems to be that taxpayers in the top brackets are solely Park Avenue millionaires, that somehow these people are sitting around clipping coupons and drawing all the income from them. The facts show differently, so I would like to go to the facts that are put out by the nonpartisan people in the Treasury Department. About 80 percent of the benefits of the top ordinary income tax rate go to taxpayers with small business ownership. Those of us from the heartland know that the definition of small business is not determined by some gross revenue taxable income that is used as a basis and the arguments for this amendment. It depends upon whether the business is locally based. It depends on where the business finances its growth from its earnings. The people who own these businesses are drawn from the community. They go to the local church. They support the local little leagues. Small business, as I see it, and as I know it coming from a Midwestern State, is a very stabilizing yet very dynamic social and economic force in their respective communities and tends to be the bulwark of the strength of the American middle class. Small business income is generally taxed at an individual rate. In most cases, owners of small businesses put the income of the small business on his or her tax return. As a practical matter, then, the individual tax rate is the rate that is paid by these small businesses as opposed to the corporate rate. The corporate tax rate, with some exceptions, in the case of some older, smaller corporations, generally applies to big business. The relationship between the top individual rate and the top corporate rate then has a bearing on our policy toward small business and whether or not we are going to give small business the incentives to grow and create jobs because these people create 70 percent of the new jobs in America. If the top individual marginal tax rate is higher than the top corporate marginal rate tends to be--it is very obvious that you can quantify it--then we are sending a bad signal to small business. Before 2001, the top marginal rate for small business was 39.6 percent, the rate that Senator Feinstein's amendment would return us to. The top corporate rate is 35 percent. When you look at the difference, that is about a 15-percent difference between the top rate for big corporations and the rate that is used for a small business that is not incorporated. So small business was paying then, before we made these changes in 2001, about 15 percent more. It is what I call a 15-percent small business tax penalty. When you tax labor, when you tax business--the old principle, you tax more and you get less of it, that was the law at that time. We recognized the detrimental impact that was having on the economy. So we looked at the Federal tax policy bias against small business, and then we had a bipartisan majority in this Senate, including Senator Baucus, the ranking Democrat, and one-fourth of the Democratic caucus at that particular time voted to gradually--because we couldn't do it all at once--gradually equalize the top marginal rate between big corporate business and small unincorporated business, small unincorporated business paying the individual rate that was 15 percent higher, a 15-percent small business tax penalty, something that common sense ought to dictate is totally unfair. Since 2003, for the first time in many years, the top rate, 35 percent, has been the same for Fortune 500 companies incorporated, obviously, as for successful small businesses that file the individual return. Senator Feinstein's amendment would take the first step to restore and perhaps even enhance the 15-percent penalty on small business. With all the appetite for taxing and spending around here, rest assured, small business will be facing even higher taxes. Small business creates 70 to 80 percent of the jobs in this country. Why, then, at this time would any Member of this body want to raise taxes on people for their ingenuity and their willingness to take a gamble in creating a small business? Why would they want to do that to people who create 80 percent of the new jobs in America? So, without a doubt, anyone voting for Senator Feinstein's amendment is, in effect, saying they support raising taxes on these small business people who create 70 to 80 percent of the new jobs in America. That does not pass the commonsense test. In 2003, it is worth noting that the business community told us reducing the top rate of taxation was their tax policy priority. The small business community told us, when we were writing this legislation, that doing away with this 15- percent penalty, the small business tax penalty, was their top priority. Now let's think about this. There seems to be a link between tax relief, economic growth, and jobs. Taxes make a difference. They make a difference whether we are going to have economic growth. Without economic growth, there is no increase in jobs. We have seen evidence of that linkage since 2003. Economic statistics prove that when tax relief kicked in, the economy has grown and more jobs have been created. That is the dynamic of the American free market economic system. Public policy made by Congress makes a difference, and reducing taxes on small business, or at least making sure there is not a penalty against small business vis-a-vis major corporations, have a great deal to do with whether the free market system works. So that tax policy has helped the enhancement of our economy. We are in the process of thinking about reversing that course. Whether it is intended or not, that is the impact of Senator Feinstein's amendment. Some would speculate that for the minority party--and that is the Democratic Party--it is good politics for the economy to go into the tank; raise taxes as the economy is coming back and economic growth will be stifled. If economic growth is stifled, then jobs will disappear. If jobs disappear, then voters are more apt to throw out members of the President's party, members of the Republican Party. I am not that cynical. I do not believe some of the opposition would want to put short-term political advantages over the economic well- being of their constituents, but obviously that is the impact of this amendment. So it does make one wonder what everything is about as we deal with these issues. To sum up, a vote for the amendment by the Senator from California is a vote that will increase taxes. It is a tax increase that comes during economic recovery. I remind people of a quote from somebody who people listen to more than anybody else on how the economy is going and they respect what he says, Chairman Greenspan. He says that the reason we have had these 2\1/2\ to 3 years of economic recovery is because of the tax policies that have been put in place in the recent couple of tax bills. So we do not want a tax increase when we have a recovery. It is a tax increase on the folks that create jobs in America, and that is our hard-working small business owners. For those reasons, I ask that we reject the Feinstein amendment. I yield the floor.

Mr. GRASSLEY. Mr. President, I raise a point of order that the Feinstein amendment is not germane to the underlying bill.

Mr. GRASSLEY. Mr. President, I yield such time as he might consume to the Senator from South Dakota.

Mr. GRASSLEY. On the bill.

Mr. GRASSLEY. I call up the Grassley amendment.

Mr. GRASSLEY. Mr. President, I raise a point of order that the Dorgan amendment is not germane to the underlying legislation.

Mr. GRASSLEY. I am against the Feinstein amendment. It is a typical Democratic response to a budget: Raise taxes. They happen to think that Americans are crying, ``We are undertaxed.'' I don't hear that from my constituents. I bet they don't hear it in California either. If those taxpayers she is talking about were only coupon-clipping, Park Avenue millionaires or somebody from Rodeo Drive, a resident of Beverly Hills, I would not be concerned. But we are talking about taxing small business people 80 percent by the Treasury Department. The people that fall into this category whom she wants to tax are the small business people that create 70 to 80 percent of the jobs in America. There is no reason, when we finally have the individual tax rate at 35, the same as the corporate tax rate, to treat small business the same as we treat corporations--not have a bias in the tax bill. We shouldn't go back to that bias.