U.S. Congressman Paul Ryan Serving Wisconsin's 1st District

U.S. Congressman Paul Ryan Serving Wisconsin's 1st District

U.S. House of Representatives

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At a time when Wisconsinites are facing economic uncertainty, a high unemployment rate and a rise in the costs of living, the last thing our country needs are tax increases.  Our country faces many challenges. U.S. economic growth is too slow, and our national debt has recently eclipsed the size of our economy—now well above $16 trillion dollars, and equaling more than $133,000 per household. Millions of families are stuck in foreclosure, student loans continue to pile up, and gas prices are at historic highs. 

Washington owes the American people a better path forward.  That is why I introduced "The Path to Prosperity: A Responsible, Balanced Budget," a budget resolution for FY2014 that reduces our deficits by $4.6 trillion over ten years and will produce a surplus of $7 billion in 2023.  Under current law, spending will rise an annual average of 5.0 percent, resulting in $46 trillion in federal spending over the next ten years.  Alternatively, my budget will allow spending to increase annually by 3.4 percent, reducing our spending over ten years to roughly $41 trillion. Among other things, this budget will fix our broken tax code and cut wasteful government spending.  It came before the House for a vote on March 21, 2013, and was passed by a vote of 221 – 207.  I was encouraged that my colleagues voted in favor of The Path to Prosperity instead of continuing down the path of debt, doubt, and decline.  By balancing the budget and tackling our debt, this budget will help grow our economy today and ensure the next generation inherits a stronger, more prosperous America.

Congressional Investigation into IRS Targeting

Concerns on both sides of the aisle have been raised about information that has come to light about the IRS and their tactics with organizations applying for tax-exempt status.  Congress has been investigating reports of such conduct for more than two years.  As early as June 2011, Representative Dave Camp, Chairman of the House Committee on Ways & Means, sent a letter to Douglas Shulman, the Commissioner of the IRS at that time, regarding the potential targeting of conservative donors and audits of certain types of tax-exempt organizations.  On April 23, 2012, Representative Charles Boustany and 61 additional House Republicans also addressed a letter to then-Commissioner Shulman inquiring about reports that “numerous nonprofit civic organizations across the country have experienced extensive delays and received excessively burdensome information requests” in their attempts to gain tax-exempt status.  In addition to these letters, IRS officials were questioned about these practices numerous times during Congressional hearings.  However, in all of their responses to these inquiries, IRS officials never acknowledged the discriminatory practices, which we now know to be true.  In one particular instance, when questioned about these practices during a House Oversight Subcommittee hearing, then-Commissioner Shulman stated, “I can give you assurances…there is absolutely no targeting.”  However, on May 10, 2013, Lois Lerner, the Director of Exempt Organizations for the IRS, admitted during an appearance at a legal conference that the IRS had indeed practiced discrimination in their handling of applications of conservative organizations for tax-exempt status. 

Soon after, on May 15, 2013, the Treasury Inspector General for Tax Administration (TIGTA), which provides independent oversight of IRS activities, released a report that found that the IRS had implemented a system of “filters” in order to target organizations applying for tax-exempt status on the basis of the organization’s political views.  Specifically, organizations were singled out in cases where (1) “Tea Party,” “Patriots,” or “9/12 Project” were referenced in the case file, (2) their issues included government spending, government debt or taxes, (3) they practice education of the public by advocacy/lobbying to “make America a better place to live,” or (4) a statement in the case file criticized how the country is being run.  The applications of organizations who met these criteria were subject to extraordinary processing delays—some waiting nearly three years.  In addition to delaying these applications, these targeted organizations were further scrutinized with unnecessary questionnaires and requests for sensitive information, such as resumes of all past or present employees, a list of past and present board members, and details of all interactions with press or media.

In light of the TIGTA report confirming that these discriminatory practices did indeed take place, various Congressional Committees have held hearings and called on IRS officials to testify regarding these issues.  On Friday, May 17, the House Committee on Ways & Means held a hearing on the IRS’s targeting of conservative organizations.  As a member of this committee, I had the opportunity to question the outgoing Commissioner of the IRS, Steven Miller.  During this hearing, I asked Mr. Miller about previous statements that he and other senior IRS officials had provided to Congress that failed to acknowledge these discriminatory practices even when, according to the TIGTA report, these officials had been aware that conservative organizations had been targeted since June 2011.  Mr. Miller responded to my question by stating that he had answered previous questions about this issue “truthfully.”  However, given what we now know from the TIGTA report, I find Mr. Miller’s answers to be more misleading than truthful.

It is important that Congress continues to investigate these issues in order to fully understand why these discriminatory practices ever occurred, and to ensure that they never happen again.  The IRS states that their mission is to “provide America’s taxpayers top quality services by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.”  It is clear that, in the case of handling these applications, the IRS failed to adhere to these principles.  No matter what the political affiliation is of an organization, they should not be subjected to this biased, inappropriate treatment.  There are many questions that remained unanswered, such as why the IRS found it necessary to target these conservative organizations, why the IRS mislead Congress and the public, and exactly who was responsible for implementing these practices.  The American people deserve to know the truth, and I am committed to working with my colleagues in Congress to ensure that these questions are answered. 

Fixing the Broken Tax Code

America has an economic problem, in large part due to our outdated, broken tax code. While the vast majority of our foreign competitors have moved aggressively to lower corporate tax rates and update their international-tax system, the United States imposes the highest combined federal-state corporate tax rate in the industrialized world and relies on an outdated international-tax regime designed more than 50 years ago, when the United States faced virtually no global competition.  Furthermore, the top U.S. tax rate on small-business income is 44.6 percent, the top rate on individuals' wages and salaries is 44 percent, and the total tax on investment income, such as capital gains and dividends, is 55 percent.  This combination of complexity, high tax rates on business income, and prevalence of double taxation of capital and investment suppresses innovation, job creation, and economic growth.

The Path to Prosperity would simplify the tax code to make it fairer to American families and businesses.  My  plan would reduce the corporate tax rate and transition the tax code to a more competitive system of international taxation, creating a level playing field between American businesses and their foreign competitors.  The tax code for individuals would also be simplified by consolidating the current seven-bracket system into fewer brackets.  It is estimated that Americans spend more than $160 billion and six billion hours every year trying to figure out their taxes. The changes in our budget will reduce the unnecessary financial burdens that American families and businesses incur while trying to file their taxes.

It is also important to remember that 9 out of 10 businesses in Wisconsin file their taxes as individuals, not as corporations.  These small businesses, known as "sub-chapter S corporations," limited liability corporations (LLCs) and partnerships employ more than half of all private sector workers.  With two-thirds of the net new jobs in America being created by small businesses, raising taxes on these businesses would kill job creation. Some of our foreign competitors, such as Canada, are lowering their tax rates on businesses to as low as 15%.  By making the tax code more conducive to innovation, investment, and sustained job creation, we can safeguard the American Dream for generations to come by preventing jobs from moving overseas.

The Senate Budget Resolution for FY2014

For the first time in nearly four years, the Senate introduced and passed a budget resolution for FY2014.  I commend the Senate for finally taking action and putting for a plan that Washington may return to a normal budgeting process instead of the recent trend of “budgeting by crisis.”  However, the budget introduced by President Obama and the Senate budget never balances – ever.  The Senate Democrats’ budget proposes raising taxes by as much as $1.5 trillion, simply taking more from hardworking families and successful small businesses in order to spend more in Washington.  It ignores the true drivers of our debt, continues the raid on Medicare, and imperils the health and retirement security that our seniors depend on.

Before voting to pass this budget proposal, the House had the opportunity to vote on various other budget resolutions, including the Senate budget resolution.  The Senate’s budget was rejected with bipartisan opposition – failing to pass the House by a vote of 154-261, showing members of both parties can agree that taxing families and business more in order to fuel more out-of-control spending is the wrong direction for our country.

The President’s budget proposal for Fiscal Year (FY) 2014

Earlier this year, the White House announced that it was not going to meet the statutory deadline of submitting its budget proposal to Congress by February 4.  Two months after this deadline, on April 10, 2013, the President submitted his budget proposal to Congress.  According to the White House, they never balance the budget in their proposal.  Instead, the President’s budget increases taxes by $1.1 trillion, on top of the $1 trillion in taxes from the new health care law and more than $600 billion from the President’s recent tax hike.  Both sides have put plans on the table and there are many differences between them.  I am disappointed in the President’s budget proposal because it’s a missed opportunity.  It takes more from hardworking families to spend more in Washington, D.C.

Preventing tax increases on 98 percent of taxpayers

On January 2, 2013, taxpayers faced tax increases and automatic across-the-board spending cuts that were schedule to take effect as a result of last summer’s debate about raising our nation’s debt ceiling.  These spending cuts, known as sequestration, would have resulted in a 10 percent reduction in Department of Defense programs and an 8 percent reduction in certain domestic federal government programs.  These tax increases and automatic cuts in federal spending were referred to as the “fiscal cliff.”  According to the Congressional Budget Office, going over the fiscal cliff would have substantially reduced the deficit; however, this restrain would have also reduced our nation's economic growth from 4.4 percent to negative 0.5 percent in 2013, putting us at risk of another recession. Fortunately, there was bipartisan consensus that action needed to be taken.

Recognizing the importance of acting to prevent the expiration of current tax rates, the House passed H.R. 8, the American Taxpayer Relief Act of 2012, by a bipartisan vote of 257 to 167—with my support—on January 1, 2013.  H.R. 8 prevented a tax rate increase on 98 percent of taxpayers and made these lower tax rates permanent so they would not expire again.  H.R. 8 also makes permanent 97 percent of the tax relief provisions for small businesses enacted in 2001 and 2003.  Without Congressional action to address this issue, the American people would have been hit with a $4.4 trillion tax increase; instead revenues will increase by $600 billion.  In the end, the choice presented to Member of Congress was to either raise taxes by $4.4 trillion or by $600 billion—I voted for the latter.  While not perfect, I supported H.R. 8 because this legislation prevents tax increases on 98 percent of taxpayers, or 114 million households, and delays the automatic across-the-board cuts to our armed forces and key priorities.  The House had already passed legislation to prevent tax increases for every American family, and it is unfortunate that President Obama insisted on taking more from hardworking taxpayers.  In addition, the House also passed legislation to replace the sequester with reasonable spending reductions, such as stopping fraud by eliminating government slush funds, putting an end to bailouts, and reducing waste and duplicative programs.  Regrettably, the Senate failed to take action on this alternative to sequestration. 

Despite my concerns with other provisions in the bill, I commend my colleagues for limiting the damage as much as possible.  At a time when families and small businesses are facing high gas prices and overall increases in the cost of living, the last thing taxpayers need right now or in the future is a tax increase.

Additional Information

Washington, DC Office
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  • Phone: (202) 225-3031
  • Fax: (202) 225-3393
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Phone: (608) 752-4050
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Fax: (608) 752-4711
Janesville, WI 53545
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Phone: (262) 654-1901
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Racine, WI 53403
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