Daniel Moynihan

Mr. MOYNIHAN

Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to. Amendment No. 3850

Mr. MOYNIHAN. I move to reconsider the vote.

Mr. MOYNIHAN. Mr. President, I suggest the absence of a quorum.

Mr. MOYNIHAN. Mr. President, there is no quorum call. I urge the adoption of the chairman's proposal.

Mr. MOYNIHAN. As modified, sir.

Mr. MOYNIHAN. That is the spirit. Let's get on with it.

Mr. MOYNIHAN. Mr. President, are there 2 minutes equally divided for the rest of the evening?

Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the Democratic alternative, amendment No. 3863, and related amendments and motions be considered next, and that amendment No. 3863 be considered germane.

Mr. MOYNIHAN. Yes.

Mr. MOYNIHAN. I regret that I have to disagree with my chairman. The Byrd rule has proved such an important measure to maintain budgetary discipline. It has brought about the present happy circumstances; and this is no time, in our view, to move back to earlier practices which were so devastating in their effect during the 1980s.

Mr. MOYNIHAN. Mr. President, I yield back our time, and I raise a point of order that the Roth amendment No. 3864 to strike would worsen the Nation's fiscal position in years beyond those reconciled in the budget resolution and, thus, violates section 313(b)(1)(e) of the Congressional Budget Act of 1974.

Mr. MOYNIHAN. Mr. President, this amendment can be described in one sentence. There are not many such, and I would hope the body might hear me: We propose that married couples be enabled to file jointly or singly, period, end of subject. There are, sir, 65 marriage penalties in the Tax Code. This amendment abolishes them all. It would not allow the alternative minimum tax to take away the benefits of marriage penalty relief either. Whereas we have before us as a basic amendment that which would only take care of one marriage penalty and touch two others, here is the opportunity to get rid of them all. In our tax system, no matter how large or small, whatever we do, we must see that the American public believes the tax system is fair. If there is a considerable judgment anywhere that something is not fair, then it ought to be corrected. Our amendment will do that, sir. Thank you.

Mr. MOYNIHAN. Mr. President, we are now having 10-minute votes, under the previous order; is that right?

Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.

Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to. Amendments Nos. 3854, 3855, 3859, 3860, 3877, and 3888

Mr. MOYNIHAN. Mr. President, I ask unanimous consent that Senators Daschle and Johnson be added as cosponsors of the Dorgan amendment No. 3877.

Mr. MOYNIHAN. Mr. President, I ask unanimous consent that Senator Johnson be added as a cosponsor of the Moynihan amendment No. 3863.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, the proposal we make is somewhat without precedent as a tax measure. It can be described, sir, in one sentence: It says, with regard to the marriage penalty, married couples are free to file jointly or individually. They choose. The present regime, with persons having the sense of being treated unfairly, I hope disappears in this regard. The one thing about the Tax Code--whatever its size--it must not be seen to be unfair. There are people--and they are many--who think this present arrangement is unfair. We say: You choose; it is your choice. Mr. President, for the second time in three months, the Senate is considering a marriage penalty relief bill that only partly addresses the marriage penalty. While Democrats strongly support marriage penalty relief, we cannot support the bill before us today because it fails to eliminate the marriage penalty. I will soon explain the specific objections to the GOP bill and the benefits and simplicity of the Democratic substitute amendment. First, I would like to frame the debate by explaining what a marriage penalty tax is and the history of the tax. The ``marriage penalty'' is the additional tax paid by a husband and wife over and above what the couple would have paid in the aggregate if they were not married. Marriage penalties are more likely to occur where both spouses have roughly similar income, i.e., a division between 50/50 and 70/30. On the other hand, a marriage bonus can occur where one spouse receives substantially more income than the other, i.e., a disparity in earnings of 70/30 or greater, where the spouses together pay less tax in the aggregate than they would if not married. For years, we have struggled to achieve the right balance in the taxation of single and married taxpayers. In 1948, to maintain parity between married couples in community property and separate property states, Congress created the joint tax return with rate brackets double the width of the rate brackets for single filers. Thus, a married worker with a non-earning spouse had a much lower tax liability than an equal-income single person. Not surprisingly, single taxpayers viewed this change as creating a singles penalty rather than a bonus for married couples, an effect magnified by the high marginal tax rates paid by upper-income taxpayers. By 1969, a single taxpayer with the same income as a married couple could expect to pay as much as 40 percent more in income tax. To address this inequity, a special rate structure was introduced for single taxpayers in the Tax Reform Act of 1969. The 1969 Act limited the tax liability of single taxpayers to no more than 20 percent above that of married couples with the same taxable income. Now married couples have come to view the current structure as penalizing them, and we are therefore on the verge of changing the tax code once again in the never ending attempt to find balance. Why do we repeatedly revisit this issue? Because of the inherent conflict in three fundamental tax policies: (a) the use of progressive tax rates, under which persons with higher incomes pay higher marginal tax rates, (b) neutrality among married taxpayers, where all married couples with the same income face identical tax burdens, and (c) neutrality between marriage and remaining single, where the tax burden does not change due to marital status. Only two of the three conditions, in any combination, can be satisfied. Which leads me to my objections to the bill before us today. First, many Democratic members believe the best thing we can do with on-budget surpluses is to pay down the federal debt. I think all Democratic members agree that if we are going to have tax cuts, however, we should consider them in a comprehensive fashion that allows us to balance priorities. Instead, this Congress is considering tax cuts in piecemeal fashion. Although the magnitude of any one individual proposal may not threaten our expected 10-year budget surplus, Congress has already passed--in one chamber or the other--$551 billion in tax cuts, including the marriage tax proposal now on the floor when considered on a normal 10 year basis. The 10-year price tag on these cuts, however, is not exhaustive. The cuts come with an additional cost. For every dollar that goes toward cutting taxes rather than paying down debt, there is a corresponding interest cost. For example, the interest cost associated with the $551 billion in tax cuts already passed is $127 billion. The country wants a responsible Congress that allocates the surplus to provide sufficient funds for reducing the national debt, bolstering Medicare and Social Security, and investing in other priority programs such as a prescription drug benefit. Second, while several of the marriage penalty bill's provisions have merit as tax policy matters, the bill is not targeted at eliminating the marriage penalty. Instead, the standard deduction and bracket expansion proposals would increase the marriage bonus for millions of couples. The Department of Treasury estimates that only about 40 percent of the tax reduction would go to couples currently experiencing a marriage penalty. I point out that a marriage bonus is equivalent to a singles penalty. The GOP bill increases the singles penalty because it increases the marriage bonus for people already receiving a bonus. Marriage bonuses cause undue and unfair burdens on singles, including widows and widowers Third, the GOP bill does not comprehensively address the marriage penalty. Of the 65 known provisions in the Internal Revenue Code that have a marriage penalty effect, the Committee-passed bill eliminates only one and partially addresses only two more. If the committee bill is enacted, we will have made little progress in eliminating discrimination in the tax code based on marital status. Finally, because the GOP bill does not completely exempt its marriage penalty relief benefits from the alternative minimum tax calculation, some 5 million taxpayers would immediately lose those benefits as a consequence of becoming newly subject to the AMT. In March of this year, Democratic members of the Finance Committee proposed an alternative marriage penalty relief bill which was more comprehensive, more targeted, and more generous to those actually experiencing a marriage penalty than the majority proposal. However, Committee Republicans rejected it, opting for a flawed proposal identical to the one they have passed. In the June 28, 2000 markup of the Budget Reconciliation Bill, Finance Committee Democrats offered another proposal that varies slightly from the March proposal. The new version caps the benefit with a phase out that begins at adjusted gross income of $100,000 and phases out completely at AGI of $150,000. The Democrats' marriage penalty relief proposal is a comprehensive, targeted, and fiscally responsible approach. Democrats believe, first of all, that if we are going to address the marriage penalty, we must do it comprehensively. The Democratic alternative would give married couples the option of filing as single individuals or as a couple. When fully phased in by 2004, this approach would eliminate for eligible couples all 65 marriage penalty provisions in the tax code by allowing them to choose whichever filing status is more beneficial. Separate filing would address all aspects of the marriage penalty, including penalties associated with such divergent matters as the taxation of social security benefits, education tax incentives, and retirement savings. Moreover, this proposal would eliminate the penalty inherent in the earned income tax credit--the most severe marriage penalty in the tax code--which creates a substantial disincentive to marry for EITC beneficiaries. Finally, the benefits of this approach would also be available under the AMT. Perhaps the most striking difference between this approach and the Republican plan is the targeting of benefits. The Democratic alternative would dedicate 100 percent of its benefits to fixing the marriage penalty problem and would not spend resources on expanding marriage bonuses. Permitting married couples to file as if they were two single individuals is not a new concept. Nine states and the District of Columbia allow married couples to pay taxes on their separate incomes as if they were single. And in 1994, 19 of the 27 OECD countries provided one rate schedule whether taxpayers were married or single. Countries such as Canada, Australia and the United Kingdom treat each individual as a taxpaying unit. Thus, in those countries marriage has little effect on the couple's tax liability. Optional separate filing is the correct approach. We urge the Senate to adopt the Democratic alternative. Mr. President, I yield the floor.

Mr. MOYNIHAN

Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.

Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.

Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to. Vote on Amendment No. 3840

Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to. Vote On Amendment No. 3843

Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to. Vote on Amendment No. 3842