John Kerry on Tax Reform
Jr Senator (MA), Democratic nominee for President
But Beatty said the abolition of the state income tax would act as an economic stimulus for families and businesses and would bring more jobs and opportunities to the state.
A: We put together a $5.6 trillion surplus in the ‘90s that was for the purpose of saving Social Security. If you take the tax cut that Bush gave to Americans in the top 1 percent of America-just that tax cut that went to the top 1 percent of America would have saved Social Security until the year 2075. Bush decided to give it to the wealthiest Americans in a tax cut. I support Bush’s tax cut for the middle class, not that part of it that goes to people earning more than $200,000 a year. When I roll it back and we invest in the things that I have talked about to move our economy, we’re going to grow sufficiently, it would begin to cut the deficit in half, and we get back to where we were at the end of the 1990s when we balanced the budget and paid down the debt of this country.
KERRY: Absolutely. Yes. Right into the camera. Yes. I am not going to raise taxes. Now, I’m going to restore what we did in the 1990s, ladies and gentlemen: pay as you go. We’re going to do it like you do it. The president broke the pay-as-you-go rule. I’m pledging I will not raise taxes; I’m giving a tax cut to the people earning less than $200,000 a year. Now, for the people earning more than $200,000 a year, you’re going to see a rollback to the level we were at with Bill Clinton, when people made a lot of money. And looking around here, at this group here, I suspect there are only three people here who are going to be affected: the president, me, and, Charlie [Gibson, the moderator], I’m sorry, you too.
BUSH: Well look at the budget. One is to make sure Congress doesn’t overspend. But let me talk back about where we’ve been. The stock market was declining six months prior to my arrival. It was the largest stock market correction - one of the largest in history, which foretold a recession. Because we cut taxes on everybody - remember, we ran up the child credit by a thousand, we reduced the marriage penalty, we created the 10 percent bracket - everybody who pays taxes got relief.
KERRY: Most of the 2001 tax cut went to the wealthiest people in the country. Bush came and asked for a tax cut. We wanted a tax cut to kick the economy into gear. You know what he presented us with? A $25 billion give-away to the biggest corporations in America, including a $254 million refund check to Enron.
A: I will roll back the Bush tax cuts for the wealthiest Americans. However, I don’t believe that we should be raising taxes on the middle class. Specifically, I want to protect the increases in the child tax credit, the reduced marriage penalty, and the new 10 percent tax bracket that helps people save $350 on their first level of income.
That’s a fight I look forward to, because if George W. Bush wants to stand there beside me and defend raising taxes for people who earn more than $200,000 a year, which are the only people who might be argued will have a tax increase by rolling back the Bush tax cut that they rushed through, instead of giving all of America health care and education so we truly leave no child behind, that’s a fight we deserve to have in this country. That’s a fight we will win. I am going to protect the middle class.
And in the course of my career, I have voted for countless numbers of tax cuts. When I arrived in the US Senate, the highest marginal rate was 72%. We took it down to 28%. I voted for cutting the capital gains tax, I voted for tax incentives for businesses.
KERRY: We Democrats fought hard to put those tax cuts in place. Those represent trying to reach the middle class of America. I think Governor Dean is absolutely wrong. And he’s wrong on his facts. The fact is that 32 million American couples get about $1,000 out of the tax cut. The fact is that 16 million American families get $1,500 to $3,000 from it.
DEAN: With all due respect to Senator Kerry that voted for these tax cuts, this is exactly why the budget is so far out of balance. The fact of the matter is that 60% of Americans at the bottom got $325. That is not a tax cut. Tell the truth: We cannot afford all of the tax cuts, [all the programs we want], and balancing the budget. Let’s call this one right. Let’s be fiscally responsible and balance the budget.
DEAN: I’m a strong supporter of Medicare. The rest of our Social Security is not on the table. I’m a strong supporter of Social Security. What you need to do is get rid of every dime of the Bush tax cuts. Some say we should keep the middle-class tax cuts. What middle-class tax cuts? On the average, 60 percent of the people in this country got a $304 tax cut. One percent, which are rapidly writing $2,000 checks to George Bush, got a $26,300 tax cut.
KERRY: When Dean said, “What middle-class tax cut,” let me tell him. The Burnett family earned $70,000. But under his plan, they are going to pay $2,178 more in taxes because they lose the child credit, they pay a penalty for being married again because he puts it back, and they lose the 10 percent bracket. Those aren’t Bush cuts, those are the Democrat cuts that we worked hard to put in place to protect the middle class.
CNN FACT CHECK:Kerry has not cast 350 votes in the Senate to actually increase taxes. Many of the votes were to leave taxes unchanged (in opposition to Republican-proposed cuts), or in support of Democratic tax cut packages instead of larger Republican packages. This could be characterized as “supporting higher taxes,” but it’s more accurate to say that he opposed lowering taxes, or supported the smaller of two tax cut proposals.
KERRY: I have supported or voted for tax cuts over 600 times. I broke with my party in order to balance the budget, and Ronald Reagan signed into law the tax cut that we voted for. I voted for IRA tax cuts. I voted for small-business tax cuts.
BUSH: Kerry voted to violate the budget cap 277 times. You know, there’s a main stream in American politics and you sit right on the far left bank. As a matter of fact, your record is such that Ted Kennedy, your colleague, is the conservative senator from Massachusetts.
SUPPORTER'S ARGUMENT FOR VOTING YES:Sen. SANDERS: The wealthiest people in the country have not had it so good since the 1920s. Their incomes are soaring, while at the same time the middle class is shrinking, and we have by far the highest rate of childhood poverty of any major country. The time is now to begin changing our national priorities and moving this country in a different direction.
This amendment restores the top income tax bracket for households earning more than $1 million a year, it raises $32.5 billion over 3 years, and invests that in our kids, including $10 billion for special education. OPPONENT'S ARGUMENT FOR VOTING NO:Sen. KYL: The problem is we are spending the same dollar 3 or 4 times, it appears. The Sanders amendment is paid for by raising taxes another $32.5 billion, ostensibly from the rich; that is to say, by raising taxes on people who make over $1 million a year. Here is the problem with that. The budget on the floor already assumes the expiration of the current tax rates; that is to say, the rates on the highest level go from 35% to 39.6%, and that money is spent. If you took all the top-rate income, you would come up with $25 billion a year, not even enough to meet what is here, and that money has already been spent. The reality is somewhere or other, somehow, more taxes would have to be raised. I don't think the American people want to do that, particularly in the current environment. LEGISLATIVE OUTCOME:Amendment rejected, 43-55
SUPPORTER'S ARGUMENT FOR VOTING YES:Sen. GRASSLEY: The Senate voted to make sure that middle-class America didn't pay the AMT, and we did it without an offset, by a vote of [about 95%]. So here we are again with an opportunity to say to middle-class America that we are not going to tax the people who were not supposed to be hit by the AMT. This amendment gives us an opportunity to get over that hurdle that is in this budget resolution that, under pay-go, you would have to have an offset for the AMT. Unless my amendment is adopted, the 25 million families who will be hit by the AMT increase will get a tax increase of over $2,000 apiece. They deserve a guarantee of relief.OPPONENT'S ARGUMENT FOR VOTING NO: Sen. CONRAD: If you want to blow a hole in the budget as big as all outdoors, here is your opportunity--a trillion dollars not paid for, a trillion dollars that we are going to go out and borrow from the Chinese and Japanese. That makes absolutely no sense. I urge my colleagues to vote no.LEGISLATIVE OUTCOME:Amendment rejected, 47-51
SUPPORTER'S ARGUMENT FOR VOTING YES:Sen. KYL: This amendment is a reprise of what we did last year in offering to reform the estate tax, sometimes referred to as the death tax. Now, in the budget itself, there is a provision to allow the death tax to be changed from the current law to a top rate of 45% and an exempted amount of $3.5 million, and there are some other features. My amendment would reduce that top rate to no higher than 35% so that if you had more than one rate, at least the top rate could not exceed 35%, and both of the two spouses would have a $5 million exempted amount before the estate tax would kick in. Now, the reason for my amendment is: current law [is] getting up to a high rate of 55% and an exempted amount of either $2 million or $1 million, probably $1 million--a continued unfair burden on primarily America's small businesses and farms.
OPPONENT'S ARGUMENT FOR VOTING NO:Sen. CONRAD: This amendment would virtually eliminate the estate tax. Let me say why. Let me first say there is no death tax in the country. Of course, if you poll people and you ask them: Do you want to eliminate the death tax? they will say sure. But you are not going to pay any tax when you die unless you have $2 million. There is no death tax in America. There is a tax on estates. At today's level of $2 million, that affects only 0.5% of estates. When the exemption reaches $3.5 million in 2009, 0.2% of estates will be taxed. If the amendment is agreed to, we would be borrowing money in the name of 99.8% of the American people, borrowing primarily from China & Japan, to give it to the Warren Buffets, the Paris Hiltons, & others of enormous wealth in this country.
LEGISLATIVE OUTCOME:Amendment rejected, 50-50
Proponents recommend voting YES because:
This amendment repeals the AMT. Except for the telephone tax, the alternative minimum tax is the phoniest tax we have ever passed. The AMT, in 1969, was meant to hit 155 taxpayers who used legal means to avoid taxation, under the theory that everybody ought to pay some income tax.
This very year, more than 2,000 people who are very wealthy are not paying any income tax or alternative minimum income tax. So it is not even working and hitting the people it is supposed to hit. Right now, this year, 2007, the year we are in, there are 23 million families that are going to be hit by this tax. It is a phony revenue machine, over 5 years, $467 billion dollars. We are going to have to have a point of order this year to keep these 23 million taxpayers from paying this tax. We might as well do away with it right now, once and for all, and be honest about it.
Opponents recommend voting NO because:
The reality of the budget resolution is this may not have anything to do with eliminating the alternative minimum tax. The one thing it will do is reduce the revenue of the Government over the next 5 years by $533 billion, plunging us right back into deficit. Look, we can deal with the AMT. We have dealt with it in the underlying budget resolution for the next 2 years. There will be no increase in the number of people affected by the AMT for the next 2 years under the budget resolution, and that is paid for. Unfortunately, this amendment is not paid for. It would plunge us back into deficit. I urge my colleagues to vote no.
Proponents recommend voting YES because:
It is disappointing to many family businesses and farm owners to set the death tax rate at what I believe is a confiscatory 45% and set the exemption at only $3.5 million, which most of us believe is too low. This leaves more than 22,000 families subject to the estate tax each year.
Opponents recommend voting NO because:
You can extend all the tax breaks that have been described in this amendment if you pay for them. The problem with the amendment is that over $70 billion is not paid for. It goes on the deficit, which will drive the budget right out of balance. We will be going right back into the deficit ditch. Let us resist this amendment. People could support it if it was paid for, but it is not. However well intended the amendment is, it spends $72.5 billion with no offset. This amendment blows the budget. This amendment takes us from a balance in 2012 right back into deficit. My colleagues can extend those tax cuts if they pay for them, if they offset them. This amendment does not pay for them; it does not offset them; it takes us back into deficit. It ought to be defeated.
Proponents recommend voting YES because:
The permanent solution to the death tax challenge that we have today is a compromise. It is a compromise that prevents the death rate from escalating to 55% and the exclusion dropping to $1 million in 2011. It also includes a minimum wage increase, 40% over the next 3 years. Voting YES is a vote for that permanent death tax relief. Voting YES is for that extension of tax relief. Voting YES is for that 40% minimum wage increase. This gives us the opportunity to address an issue that will affect the typical American family, farmers, & small business owners.
Opponents recommend voting NO because:
Family businesses and family farms should not be broken up to pay taxes. With the booming economy of the 1990s, many more Americans joined the ranks of those who could face estate taxes. Raising the exemption level and lowering the rate in past legislation made sense. Under current law, in my State of Delaware, fewer than 50 families will face any estate tax in 2009. I oppose this legislation's complete repeal of the estate tax because it will cost us $750 billion. Given the world we live in today, with clear domestic needs unmet, full repeal is a luxury that we cannot afford.
To add insult to this injury, the first pay raise for minimum wage workers in 10 years is now hostage to this estate tax cut. We are told that to get those folks on minimum wage a raise, we have to go into debt, so that the sons and daughters of the 7,000 most fortunate families among us will be spared the estate tax. We must say no to this transparent gimmick.
Every year National Taxpayers Union (NTU) rates U.S. Representatives and Senators on their actual votes—every vote that significantly affects taxes, spending, debt, and regulatory burdens on consumers and taxpayers. NTU assigned weights to the votes, reflecting the importance of each vote’s effect. NTU has no partisan axe to grind. All Members of Congress are treated the same regardless of political affiliation. Our only constituency is the overburdened American taxpayer. Grades are given impartially, based on the Taxpayer Score. The Taxpayer Score measures the strength of support for reducing spending and regulation and opposing higher taxes. In general, a higher score is better because it means a Member of Congress voted to lessen or limit the burden on taxpayers. The Taxpayer Score can range between zero and 100. We do not expect anyone to score a 100, nor has any legislator ever scored a perfect 100 in the multi-year history of the comprehensive NTU scoring system. A high score does not mean that the Member of Congress was opposed to all spending or all programs. High-scoring Members have indicated that they would vote for many programs if the amount of spending were lower. A Member who wants to increase spending on some programs can achieve a high score if he or she votes for offsetting cuts in other programs. A zero score would indicate that the Member of Congress approved every spending proposal and opposed every pro-taxpayer reform.
OnTheIssues.org interprets the 2005-2006 CTJ scores as follows:
Citizens for Tax Justice, founded in 1979, is not-for-profit public interest research and advocacy organization focusing on federal, state and local tax policies and their impact upon our nation. CTJ's mission is to give ordinary people a greater voice in the development of tax laws. Against the armies of special interest lobbyists for corporations and the wealthy, CTJ fights for:
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