January 22, 2001

Mr. President, I am introducing legislation today with my colleague, Senator Miller of Georgia, to provide tax relief for America's families by returning a portion of the tax surplus to the working men and women who are responsible for creating it.

Our proposal consists of the core elements of the plan that President Bush outlined during his campaign for the Presidency. There are three principle components: Lower income tax rates for all Americans, relief from the marriage tax penalty, and repeal of the death tax. The bill replaces the current tax rate structure with rates of 10, 15, 25, and 33 percent. Lower income Americans get a larger percentage cut in rates, higher income Americans get a smaller reduction, but obviously this is a tax cut for taxpayers.

The next provision of the bill begins the effort to repeal the marriage penalty. There is no reason in America that people who meed and fall in love should have to pay $1,400 a year in additional taxes as the price of getting married. Sen. Miller and I are for love and marriage, and we don't think they ought to be taxed.

The final major provision of the bill is repeal of the death tax. A death tax is double taxation in which people work their whole lives, build up a business or a family farm, and pay taxes on every penny they earn. Yet when they die, their children have to sell the business or the family farm in order to give the government up to 55 cents out of every dollar of its value. This is fundamentally unfair.

Finally, since our President was elected three things have happened, and every one of them argues for this package of tax cuts. No. 1, the economy is weaker and investment is falling off. Secondly, our estimates of the budget surplus have gone up, not down. And lastly, that surplus is being spent at an unprecedented rate.

We believe that Congress should enact the Bush tax plan, continue to pay down the debt, and resist the urge to spend the tax surplus so that we can return a portion of it to the working men and women who produced it.

Reduce Marginal Income Tax Rates

The five current tax rate brackets, which run from 15% to 39.6%, would be replaced with four rate brackets: 10%, 15%, 25% and 33%. The new 10% bracket would provide large percentage cuts in the taxes of those who have small taxable incomes. This phased-in reduction in marginal tax rates across-the-board will promote the saving and investment which is so critical to continued economic growth.

*$727b

Strengthen Families by Increasing the Child Tax Credit and Reducing the Marriage Tax Penalty

The child tax credit would be doubled, from $500 per child to $1000 per child, phased-in over a five year period. Working families with low or modest income, some of whom now face effective marginal rates of almost 50% because of the interaction of the earned income tax credit phase-out rate with the current 15% marginal tax rate, would obtain significant relief as a result of the increased credit.

Phase-in the restoration of a provision which would permit a married couple to exclude from their taxable income 10% of the lower-earning spouse's income, up to the first $30,000 earned.

$250b

Repeal the Death Tax

The current estate, gift and generation skipping transfer taxes, which have a statutory rate of 55% and which under some circumstances can rise to 80%, would be reduced gradually and eliminated in 2009. Ridding the tax code of this onerous provision would prevent the destruction of small businesses and family farms as they pass from one generation to the next. Under current law, many farms and businesses must be sold every year in order to pay the taxes.

$236b

Expand Education Savings Accounts

Increase the current $500 annual contribution limit on Education Savings Accounts to $1000 immediately and further increase the limit by $1000 per year until it reaches $5000 in 2006. As under current law, contributions to such accounts would not be deductible but earnings and distributions from the accounts would not be taxed if used to meet education expenses. Eligible expenses would be expanded to include K to 12 activities, in addition to higher education.

$3.5b

Encourage Charitable Donations

The 80 million taxpayers who do not itemize their deductions would be able to deduct charitable donations. Thus, taxpayers who file using the standard deduction would be permitted a separate charitable deduction as well. In addition, individuals age 59 and over would be allowed to make tax- and penalty-free withdrawals from their IRAs for charitable donations.

$80b

Permanently Extend the Research and Experimentation Tax Credit

A permanent extension of the Research and Experimentation tax credit, set to expire in 2004, would create an environment that encourages innovation and rewards investment in technology and industry. Permanent extension of this credit would prevent gaps in coverage -- such as the three that have occurred since the credit was created in 1981 -- and ensure the certainty and stability needed for meaningful investment.

$24b

Total: $1.3 trillion

*All estimates are from the May 2000 Joint Committee on Taxation estimate of the Bush plan for Fiscal Years 2001 through 2010.