FROM THE OFFICE OF PUBLIC AFFAIRS

Good morning Mr. Chairman, Mr. Rangel and members of the Committee. It gives me great pleasure to be here this morning, as we move one step closer to providing comprehensive income tax relief to American taxpayers. On Thursday I presented the President's tax package to House and Senate leaders, and I urged then that we get right to work to deliver tax relief to working Americans as soon as possible.

I am pleased that you are starting the hearing process so quickly. I hope that your leadership will help ensure early passage of the President's proposals. With you I am ready to roll up my sleeves, get down to work and leave money in the pockets of every income tax paying American.

Through hard work and ingenuity, Americans have created a booming economy that has spread prosperity around the world. Individuals have created new technologies that have made our industries more productive and have improved the standard of living for millions of Americans.

Our prosperity has made the unthinkable possible. After decades of budget deficits, we now have the opportunity to wall off the Social Security surplus so it can't be spent on other government programs. And even after we lock away Social Security, we still have more tax dollars coming into Washington than Washington needs to pay for agreed upon public services.

This isn't just a budget surplus, it's a tax surplus. We have no business continuing to collect more in Federal taxes than the cost of the services the government provides. If the phone company overcharged one of your constituents, you'd join them in calling for a refund. The same principle applies to this tax surplus - it's not the government's money, it's the people's money, and we should return it to them as quickly as possible.

The President has proposed tax relief that reinforces the values that make America great - opportunity, entrepreneurship, strong families and individual success.

First, the President has proposed reducing income taxes for every American who pays income taxes. The current five rate system will be simplified to four rates, and the tax rate on the first $6,000 of taxable income earned by every American -- $12,000 in the case of married couples -- will fall from 15 to 10 percent.

High income tax rates block access to the middle class for working Americans struggling to get ahead. And high income tax rates punish success. We should not allow the threat of higher taxes on the next dollars earned to discourage Americans from working harder. Increased productivity has been one of the fundamental engines of our economic success, and the tax system should not dampen our ability to be more productive. We must have a tax code that keeps the American Dream in everyone's reach and helps people move up the economic ladder of success. We must have a tax code that encourages entrepreneurship and rewards hard work.

The President's tax relief plan also strengthens the ties that bind families together.

• It doubles the child tax credit to $1,000 per child. Parents everywhere have one goal above all others: to give their children the best possible opportunity for success and happiness in life. The increased child tax credit will give parents more resources to save for college tuition, pay for braces or hire a tutor.
• This plan also reduces the unfair marriage penalty. We as a society celebrate when two people decide to spend their lives together. Why would our tax code punish them?
• And this plan eliminates the unfair death tax. Government has no business confiscating the legacy parents work their entire lives to build for their children.

Today we are proposing a tax cut for every income tax payer. Four-person families earning $35,000 a year will no longer bear any federal income tax burden. Four-person families earning $45,000 will see their income taxes cut in half. And four-person families earning $75,000 will see their tax burden reduced by 22 percent.

The President's tax relief plan ensures that higher income earners pay a larger share of taxes than they do now. In 1998, the top 10 percent of income earners paid 65 percent of federal income taxes, while the bottom half of income earners paid 4.2 percent of the total federal income tax burden. After implementing the President's tax relief plan, the top 10 percent of income earners will pay 66 percent of all federal income taxes.

This plan provides relief to all income tax payers. There's a strange attitude around this town that once the money gets here it doesn't belong to the taxpayers anymore - it belongs to some amorphous thing called government. That's simply not true. Every person who paid income taxes created the tax surplus. And every one of the people who paid income taxes deserves to get some of it back.

Taxpayers in the higher tax brackets will invest their tax relief in the economy, creating jobs for all Americans. Economic studies have documented that higher income individuals tend to save the bulk of any new income they receive. A small businessman receiving tax relief will plow that back into the firm, either to increase productivity, which results in higher wages, or to hire more workers. A farmer receiving a large tax relief check will be able to trade in his tractor and purchase the newest technology to improve his crop yield. America's economy will grow as these investments go forward.

This tax relief package is sound fiscal and economic policy. It fits easily within our budget framework which walls off the Social Security surplus and continues to pay down the public debt in increasing amounts each year. I like to refer to it as the Goldilocks tax relief plan - not too big, not too small, just right.

There is no downside to enacting this tax relief package. Today, Washington takes more from American taxpayers than it needs to run the government. That's not fair. And it isn't useful to pile up resources in Washington, where they will be spent to enlarge government. Alan Greenspan has pointed out that at the current pace, we'll pay off most of the publicly held debt in a few years, and then there will be no place to put the surplus. We do not want government taking money from the taxpayers and using it to buy up private resources.

Individual Americans know better how to spend their money. The typical family of four will keep $1,600 a year that they would otherwise have sent to Washington. That's enough for two monthly mortgage payments or for a year of junior college tuition.

Evidence of an economic slowdown makes this tax relief all the more compelling. While the Fed has already acted to stem a downturn, I believe in a 'belts and suspenders' approach. Cutting income tax rates can help keep this downturn from taking root. If the economy does worsen, I don't want to look back and say "if only we had acted sooner." We have a surplus that should be returned to the American taxpayers. To the extent that getting it back to them sooner can help stave off a worsening of the economic slowdown, we should move forward immediately. Taking action soon will boost consumer confidence, which in turn will boost consumer demand. And getting money in people's pockets quickly will enable Americans struggling with consumer debt to pay their credit card bills and get ready for another consumer-led expansion.

I can't accept the idea that it takes nine months to get tax relief on its way to the American people. I used to run a 140,000-employee company. If I decided to give my employees a raise, I wouldn't wait nine months to do it. With our economy slowing, now is the time to boost consumer confidence with quick congressional action.

I look forward to working with Congress to give relief to every income tax payer, and to do it quickly. It's time to give working Americans a raise.