September 16, 1976
Page 30720
Mr. MUSKIE. Mr. President, the tax reform bill has come back to the Senate after a long and, frankly, discouraging fight on the Senate floor — after a long and difficult conference.
I voted against this bill when it left the Senate. It has come back a much better bill, and I shall support the conference report.
Hopefully, this summer's long struggle for reform marks a turnaround.
Hopefully, we are beginning to slam the door on the kind of insidious special interest tax loopholes which cost taxpayers billions in lost revenues each year, to no good public purpose.
Hopefully, our hard-won success with this tax bill will give us the courage to take further steps in the future — toward more loophole closing — toward a fairer tax system — and toward a simpler tax system.
If we expect each American to file an honest tax return every year — and the vast majority of us do — we had better show steady progress toward a fair and understandable tax code. The very complexity of the bill shows how far we have to go in this regard.
As it has emerged from the conference, the bill is consistent with two major assumptions underlying the second concurrent budget resolution revenue floor.
First, the bill provides full year extension through 1977 of all the temporary tax reductions first enacted in 1975. This extension is necessary for continued progress toward economic recovery.
Second, the bill will raise $1.6 billion in fiscal 1977 from elimination or modification of tax expenditures.
The conference report is a far better version of H.R. 10612 than the one passed in August by the Senate that I voted against. That bill, instead of raising $1.6 billion in fiscal 1977 through elimination or modification of tax expenditures, would have lost $300 million. That bill was $2.3 billion below the first concurrent resolution revenue floor, the then applicable congressional budget revenue target. The conference report is also far better than the bill initially reported by the Finance Committee that would have raised only $1.0 billion in 1977.
At least as important as the substantial net revenue gain in 1977 from tax expenditure and estate and gift revision provisions under the conference report is the fact that the conference bill also will raise substantial revenues in subsequent years from these provisions. It is estimated these conference report provisions would raise approximately $1.0 billion in 1981. By contrast, the comparable provisions passed by the Senate would have lost $2.8 billion in 1981. The comparable provisions of the bill initially reported or approved by the Finance Committee would have lost $4.3 billion in 1981. This change in the long run revenue impact was necessary if we are to balance the budget by 1980 or 1981.
Senator LONG, the distinguished and able chairman of the Finance Committee, and the other Senate conferees are to be praised for a conference report so much improved over the Senate- passed version of the tax reform bill.
On balance, the conference report now contains more positive provisions repealing or modifying tax expenditures and the estate and gift tax laws than it expands or creates new unjustifiable tax expenditures for limited classes of taxpayers.
However, despite the solid improvements in the tax system that will result from enactment of this legislation, much more can be done to make the tax system more efficient and more equitable.
I believe some of the shortcomings in our Revenue Code are attributable to the prevailing attitudes exhibited in the Senate toward tax legislation — attitudes reflected by the bill originally passed by the Senate. Instead of meeting the $2 billion revenue gain target then set under the congressional budget process, that bill would have lost $300 million in 1977.
Many new revenue-losing provisions that were adopted by the Senate — most but not all of which were diluted or eliminated in conference — had laudable purposes but were insufficiently supported by analyses indicating they could meet these goals efficiently. With respect to many existing tax expenditures, a majority of the Senate often voted to retain benefits even though there was insufficient justification or economic analysis supporting their continuation.
The same strict standards of efficiency that the Senate applies to direct spending programs are infrequently applied to the review of both new and existing tax expenditures. Many Senators who are extremely discriminating and even penurious in approving direct spending programs do not apply the same strict standards to enactment of legislation intended to meet comparable policy goals through the use of tax expenditures. Changing this attitude will take strong discipline that will have to be applied by the Senate itself. The Senate cannot abdicate its sense of fiscal responsibility and rely on its appointed conferees to modify tax legislation to provide appropriate tax policy.
The congressional budget process can facilitate the growth of this necessary discipline. In fact, I believe the final product of the tax legislative process in the form of the conference report now before the Senate reflects the substantial impact of the new budget process.
I urge the Senate to adopt the conference report. In the future, I hope the Finance and Budget Committees will work more closely together to achieve our common goal of fiscal responsibility. With good will, I believe we can avoid the conflicts that developed this summer on the Senate floor.