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Updated 09/20/01 04:32 PM EST | Today in Congress | |
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 news release from BARNEY FRANK
FOR IMMEDIATE RELEASE 09/20/01 FRANK PROPOSES NEW TAX
POLICY "On September 21 I will introduce a bill to repeal the recently adopted reduction in the top income tax rate as of January 1, 2002, and to put the revenue that results from this change into the Social Security and Medicare Trust Funds. My bill will divide these revenues between Social Security and Medicare in the same proportions as the revenues from the existing payroll tax are allocated. "According to the best estimates I have been able to get, this will mean approximately $100 billion in additional federal revenue above what is now estimated over the next 10 fiscal years. This means that Congress and the President will be able to spend the additional $40 billion we have just appropriated -- and more if it is called for -- without violating our commitment to preserve Social Security and Medicare. "In fact, my proposal goes even further and provides both of these critical and under funded programs with additional revenue over what is now allocated for them. That is, this proposal goes beyond the accounting mechanism that was inherent in the lock-box. Under this bill, approximately $100 billion of additional revenue will be made available to the Social Security and Medicare funds over the next 10 years. "Sadly, our country faces a situation drastically changed from that which existed when Congress enacted President Bush's tax cut proposal. Even before last week's terrible attacks, it was clear that our economy was weaker than we had anticipated, and I believe that appropriate federal spending increases must be part of our counter-cyclical response. And the mass murders unleashed on us by our enemies obviously call for very significant spending increases, for reconstruction, for an assault on these enemies, and for enhanced -- and costly -- security measures immediately and in the future. "Moreover, the terrorist attack itself will further weaken the economy. In sum, there is an indisputable need to spend tens of billions of dollars more in the next fiscal year than Congress could have anticipated when it passed the tax cut. And I stress that the need for more spending, while heavier in the immediate future, will not go away. The security, defense and law enforcement measures now widely supported will cost tens of billions more per year indefinitely. "No one suggests we hold back on spending more now, as the recent Congressional vote for even more money than the President requested shows. But it would be an error to focus only on the spending with no thought of how to pay for it. "The answer is to spend appropriately now and pay for this in part out of tax reductions for the very wealthy that will have their primary impact years in the future. "We need the ability to increase federal spending by far more than the $40 billion just voted, unconstrained by concern over its effect on the two bulwarks of our social safety net. That is why I propose undoing a small part of the overall tax cut and dedicating that revenue to Social Security and Medicare. "Those who pay the top rate will still benefit ultimately from the estate tax reduction and other tax cuts. And they will still receive the fullest measure of the cuts in the lower rates, meaning that in dollar amounts, the tax cuts they receive even on income tax rates alone will be the largest of any taxpayers. "Not only will this legislation help provide the resources we need to preserve Social Security and Medicare, but it also has the additional advantage of reducing some of the unfairness of the most regressive tax we maintain -- the payroll tax. "My bill begins to address the inequity of taxing those who earn $80,400 per year and below on all of their income for Social Security, while those making more than $297,350 are taxed on less than a third of their income. "I have been asked if it is somehow inappropriate to advocate a controversial tax measure at this time of national solidarity. My answer is that I think it is entirely appropriate for some of my colleagues to support a capital gains tax cut at this time, although I differ strongly with them on its merits, and it is especially appropriate for those who differ with that approach to put forward our own proposal. "At a time when there is virtual unanimity on the need for more spending by the federal government, it cannot be a breach in national unity to propose tax changes that enhance our common resources, but rather an act of patriotism."
Click Here for a Copy of the Bill (PDF Document)
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