Tax Relief Extension Reconciliation Act of 2005

TAX RELIEF EXTENSION RECONCILIATION ACT OF 2005

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Mr. GRASSLEY. Mr. President, 16 million additional American families could find themselves subject to the alternative minimum tax if we do not act quickly. Failure to pass a minimum level of alternative minimum tax relief, as was provided in the Senate-passed reconciliation bill, is not an option. In fact, I support full AMT repeal. Some of my colleagues are creating a false choice when they suggest that in order to provide AMT relief we need to remove incentives that encourage economic growth. We can design a tax package which will include dividends, capital gains, AMT, and a 1-year extension for all expiring tax relief, all within that $70 billion limit. I encourage my colleagues to vote for this motion which provides relief for alternative minimum tax and capital gains and dividends as well.

I yield.

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Mr. GRASSLEY. I am only going to use 10 seconds. I hope my friend from Montana will agree with me on this, that we do have differences on this one part, the capital gains part of this bill, but I think we agree on everything else in the bill. I hope people listening to Senator Baucus and I maybe differing on this one point will remember that on most everything that goes on in our committee, we agree. I do not want them to get a distorted view of our friendship and our working together on this legislation.

I yield back my time, and I ask for the yeas and nays.

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Mr. GRASSLEY. Mr. President, this vote has nothing to do with Medicare or Medicaid. This motion by Senator Kennedy calls for a tax increase in 2008 on millions of Americans. Critics of lower rates always want to persecute millionaires and at the same time punish everyone else trying to save money. The lower rates on capital gains have benefited low- and middle-income families in a very meaningful way and reduced the tax burden on citizens. They have contributed to our economic recovery and continue to help our economy grow. They have made capital investment in America more competitive so we can be competitive with global competition. They have helped impose transparency and discipline on corporate managers which is critical to protecting investors and workers. Business investors need certainty.

We need to act now. For these reasons, I encourage my colleagues to vote against this motion.

I point out something that directly involves the State of Massachusetts. We have heard the same old charge, that capital gains and dividends are only for rich folks. These charts behind me assert the opposite. According to Internal Revenue Service statistics on income for the State of Massachusetts, there are 589,000 individuals and families who benefit from the reduced tax on dividends, and 212,000 individuals and families benefit from the reduced tax on capital gains. There are not that many millionaires in that State regardless of how rich that State is. Not all of these folks are superrich. They are people like the average American benefiting from this. I don't know why anyone wants to persecute a few millionaires and punish everyone else.

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Mr. GRASSLEY. Mr. President, I appreciate Senator Reed's attention to the issue of funding for our military. Proper funding for those serving our country should not be controversial. The method of providing this funding should not be made into a controversial issue, and that is where the controversy is.

My colleague suggests that in order to provide funding for our military, we need to eliminate a tax benefit that doesn't even arise until 2009. Look at how ridiculous this motion is. How can you provide funds that are so badly needed today to ensure that we meet the operational needs of our courageous military service personnel when it won't be funded until 2009? I remind you that last night all of us voted for my amendment to support the operational needs of our military that provides the same benefits but doesn't raise taxes.

I urge my colleagues to vote against the Reed motion. In addition, I remind my friend from Rhode Island that there are 79,000 families in his State that benefit from not having the tax on dividends at 15 percent.

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Mr. GRASSLEY. Mr. President, I would like to inform the Senator from New Jersey that his motion would increase taxes on people in New Jersey through dividends of $838,000 and capital gains of $270,000.

If we don't do something about AMT, 600,000 people from New Jersey suffer; if we don't have the college tuition tax deduction, 121,000; and teacher deduction, 127,000.

I don't know how anybody would want to increase taxes on people in their States by that amount of money. If you take the approach of the Senator from New Jersey and have to offset all of these things, there are not enough offsets to go around to take care of the 100 ideas we have of where taxes ought to be reduced.

We now have taxes of 18 percent coming into the country into the Gross National Product for a 60-year high.

How high do taxes have to be to satisfy the Senator from New Jersey that taxes are high enough?

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