May 16, 1977
Page 14867
Mr. MUSKIE. Mr. President, I will support the conference report on H.R. 3477, the Tax Reduction and Simplification Act. This legislation is improved in a number of important ways from H.R. 3477 as it was passed by the Senate on April 29.
The level of fiscal year 1978 tax reductions provided in the conference report — $17.8 billion — is consistent with the revenue assumptions contained in the first budget resolution for 1978 as agreed to by the House and Senate budget conferees this past Wednesday. This resolution assumes net tax reductions of $17.6 billion — $17.8 billion of reductions offset by $0.2 billion in revenue increases from legislation affecting trust fund receipts.
I congratulate the Senate conferees for returning with legislation which eliminated $2.3 billion of revenue reductions from the $20.1 billion level of reductions provided in the bill passed by the Senate. This $20.1 billion level was too high. It was $1.7 billion over the level initially recommended by the Senate budget committee, as well as $1.7 billion over the level of reductions contained in the tax bill initially reported by the Senate Finance Committee.
As in the case of the Tax Reform Act last year, the Senate conferees have returned with a bill consistent with sound fiscal policy after the bill passed by the Senate provided excessive tax reductions. It is not sufficient for the Senate to rely on its tax bill conferees to return with legislation consistent with overall budget targets. The Senate must impose greater discipline upon itself in future tax legislation if the Congress is to adhere to responsible budget targets.
With respect to the specific major provisions of the Tax Reduction and Simplification Act, first, I support extension of the 1977 temporary tax reductions through calendar 1978. These reductions are necessary to maintain the steady economic growth that stems from congressional fiscal policies established through the congressional budget process.
Second, I support the simplification and tax relief provided by the uniform standard deduction rules established under this legislation.
Third, I am encouraged that the level of business tax relief provided by the conferees in fiscal year 1978 has been reduced by $1.3 billion from the $3.8 billion level provided in the Senate- passed bill. Although this is a significant improvement, I still firmly believe the new employment tax credit provided in this bill at an annual cost of $2.5 billion will prove largely ineffective. Businesses simply will not hire adequate numbers of additional employees they would not otherwise have hired for an annual subsidy to an average corporation of only $1,092 per qualifying employee. Moreover, the employment credit will add unnecessary complexity to the tax code and will be unavailable to companies struggling in declining markets or regions to maintain employment at current levels.
Business tax relief is integrally related to the issues of capital formation and long range economic growth matters requiring detailed analysis and long term goals. It would have been much more appropriate to have considered business tax relief in the context of the structural tax changes to be proposed by the administration in the coming months, than to have provided any business tax reductions in this legislation initially intended to provide only short term economic stimulus and tax simplification.
Finally, I support the amendment which authorizes countercyclical funds. Because there was no similar provision in the House-passed bill, the amendment, adopted by the Senate, was reported to the House in technical disagreement. The House has now receded and concurred with an amendment in the Senate position. Since the House substitute is nearly identical to the measure adopted by the Senate, I understand that Senator LONG will move to have the Senate concur in the House amendment. The Parliamentary procedure will thus require two votes: One agreeing to the conference report, and a second one concurring in the amendment to the amendment reported in disagreement by the conference. I will vote favorably on both votes and will have more to say on the countercyclical issue at the time of the second vote.
In conclusion, despite the reservations I have expressed with respect to the business tax aspect of the legislation. I want to again congratulate the Senate conferees, and especially the chairman of the Finance Committee, Senator LONG, for returning with a conference report both consistent with the 1978 budget revenue target recently approved by the Senate, and much less costly than the legislation initially approved by the Senate. It is only with the cooperation of the members of the Finance Committee, its distinguished chairman, and the Senate as a whole, that the necessary discipline can be developed to make the congressional budget process work.