Tax Relief
For the first time in many years, our nation ran an annual budget surplus under
the last 3 years of the Clinton administration. These surpluses allowed us to
reevaluate our tax structure and provide appropriate tax relief.
As I evaluated a wide variety of proposals for tax relief, I was guided by
three principles:
1. Our tax system must be fair, and all Americans should share in tax relief
2. Any tax relief package must not lead the nation back to deficit spending
3. Any tax relief package must not threaten the future of Social Security and
Medicare.
I strongly supported a legislative proposal that would have cut income tax
rates in a more fiscally responsible way and would have done a better job of
targeting tax relief to average working families and individuals. This proposal
would have provided a rebate of payroll taxes, to ensure that all taxpayers
received relief. In addition, it fully protected the Social Security and Medicare
surpluses while setting aside sufficient resources for investments in education
and a Medicare prescription drug benefit. Unfortunately, that proposal was
defeated.
I voted against the President’s $1.35 trillion tax cut proposal because
it violated all of these principles.
First, that tax relief bill--which became law in early 2001-- left out millions
of Americans who pay payroll taxes, but not income taxes, while giving over
38% of the total tax relief to those with incomes in the top 1%--people with
a minimum annual income of over $373,000. The average income of people in the
top 1% is over $1.1 million per year. The proposal gave the very wealthiest
Americans more than their fair share of relief, while shortchanging those with
lower incomes.
Second, that tax cut bill, threatened our ability to shore up the Social Security
trust fund for future generations, and could make it impossible to provide
a prescription drug benefit under Medicare for the millions of baby boomers
who are expected to retire soon.
Third, the magnitude of the tax cut will make it difficult to keep the federal
government from reverting back to deficit spending and will prevent us from
paying down the national debt. It will also thwart our ability to meet today’s
challenges and respond to unforeseen emergencies.
Even before the terrorist attacks on September 11, 2001, the American economy
was in the midst of a gradual decline: unemployment had risen to 4.9 percent
and the previous quarter’s economic growth fell to just 0.1 percent.
Since then we have entered a recession. Now, as our nation faces terrorist
attacks, a war, and an economic recession, our ability to address these needs
without significant deficit spending is virtually impossible.
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Economic Stimulus
In light of our nation’s current recession, I support a sound economic
stimulus package. That package should be based on three principles: First,
it must be limited to a true stimulus package—that is, it must provide
a strong boost to our economy in the short term. Second, it should not be used
to provide further special tax breaks to the wealthiest individuals and corporations.
Third, the package should be targeted to assist those who are facing special
financial challenges as a result of the terrorist attacks, including those
who have lost their jobs due to the economic downturn.
I voted against the administration’s purported “economic stimulus” package
because there was little in the package that would stimulate the economy. Even
President Bush’s Secretary of the Treasury criticized the bill, calling
it nothing more than “show business.” The bill included massive
giveaways to corporate America, including returning taxes the wealthiest corporations
have paid over the last 15 years. I believe it is the height of irresponsibility
to hand out enormous corporate tax breaks and giveaways rather than target
assistance to individuals and small businesses most in need. The package jeopardizes
Social Security and Medicare and will lead us back into deficits.
I support a real economic stimulus that would put most of the money quickly
into the hands of people who are most likely to spend it to help revive the
economy - especially those who have become unemployed as a result of the post-September
11th economic downturn. I further support immediate investments in preparing
to respond to future emergencies and enhancing the security of the transportation
system. Finally, to restore confidence in the long-term budget outlook and
maintain our commitment to preserve the Social Security surpluses once the
economy has recovered, we should offset the cost of the package over ten years.
Sadly, the administration is opting, instead, to offer large tax cuts to those
who need them least.
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Estate Tax
I support estate tax relief that targets relief to farmers and small businesspeople
while protecting our ability to pay down the debt and shore up the long-term
solvency of Social Security and Medicare. The vast majority of people living
in Wisconsin’s Second Congressional District will receive no benefit
from the estate tax cut passed earlier this year. According to the bi-partisan
congressional Joint Tax Committee, fewer than two percent of all estates
pay estate taxes. In Wisconsin, only 828 estates had any estate tax liability
in 1998 (the last year for which statistics are available).
I strongly believe it is time to deliver estate tax relief to Wisconsin family
farms and small businesses. I voted for a proposal that would have given immediate
relief to 75 percent of small businesses and family farms affected by the estate
tax by implementing a $2 million exemption this year -- rising to $5 million
by 2006. The exemption in the Administration’s tax cut law will not reach
$2 million until 2006.
The tax bill that was signed into law will eliminate the estate tax, but it
will take nearly 10 years for it to be fully phased out. However, under the
new law, in 2011 the estate tax will again be part of the tax code.
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Marriage Penalty
I believe the marriage penalty is an unfair burden on many working families
and I strongly support legislation to eliminate it. The tax cut bill passed
in 2001 does far too little for Wisconsin families. It increases the standard
deduction for married couples and gradually increases the number of people
taxed at the lowest tax rate. However, despite all of the fanfare from advocates,
the tax cut bill provides no relief from the marriage penalty until 2005
and does not fully phase it out until 2009. Then, just as the marriage penalty
is eliminated, (in 2009) the bill restores the penalty in 2010. Wisconsin’s
families deserve better.
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