Swinging The Ax For Tax Cuts

An NASE exclusive interview with Congressman Bill Archer

Congressman Bill Archer, a republican from the 7th District of Texas, has been a member of the U.S. House of Representatives since 1971. He is Chairman of the House Ways and Means Committee and serves on the Joint Committee on Taxation. Known nationally as a tough fiscal conservative, Archer initiated the line-item veto and balanced budget amendments.

NASE: What is the outlook for tax reform now that Bill Clinton has been re-elected and the
Republicans have maintained control of Congress?

ARCHER: I want to tear the income tax out by its roots so that it can never grow back again. I want to get the IRS out of the individual lives of all Americans and eliminate all the loop-holes in the tax code, creating a new, fairer system. The only way to achieve this is by replacing the income tax with a tax on the consumption of goods and services. There is a reason why I am so firm in my commitment to abolish the income tax: As Chairman of the Ways and Means Committee, I do my own taxes. I am convinced that if most members of Congress did their own taxes, we would have had tax reform long ago.

NASE: The congressional GOP leadership has stated publicly that it is seeking the cooperation of President Clinton on the issue of tax relief for middle-income Americans. In what areas do you believe this cooperation may be possible? What are some areas of agreement between you and President Clinton?

ARCHER: If President Clinton honors his campaign promise to balance the budget while cutting taxes, I am confident we will find common ground. While we may have some differences on the size and type of tax relief, I am hopeful we will be able to reach agreement on many areas of tax relief.

NASE: What is the outlook for a capital gains tax cut or other incentives to spur investments
and savings?

ARCHER: In the area of taxing capital investments, the President proposed an exemption for Americans who sell their homes. I agree with this concept, but why stop there? Study after study has shown that cutting the capital gains tax would almost immediately increase federal tax revenues while creating jobs for American workers. The President needs to broaden his capital gains proposal if he is going to gain support on Capitol Hill. As we all know, labor multiplied by tools equals productivity. Increased productivity means higher wages and more jobs. Today, the average job requires $280,000 in invested capital. That money has to come from (a) the government through taxes, (b) foreign investors or (c) private American dollars. Higher taxes are out of the question. I think most Americans would rather the money to create jobs come from home than from abroad. But finding dollars to invest can be tough when the United States has one of the highest capital gains tax rates in the world. Due to the capital gains tax, the money we save is taxed as we earn it, after we invest it and after any inflation that occurs while we save it. With these disincentives, who wants to save? Not many. America has one of the lowest savings rates in the world. For every one dollar Americans earn, we spend a $1.10. Clearly, America needs to save more in order to invest in our future.

NASE: Which do you feel is the most important tax-cutting proposal?

ARCHER: The cornerstone of providing tax relief for American families is the child tax credit.
The President and Congress have submitted different versions of this credit which would help working families. The congressional proposal benefits more people than the president's, and I am committed to doing all that we can to maintain a child tax credit within the context of a balanced budget.

NASE: Can we get the kind of sweeping tax reform you favor in this Congress?

ARCHER: Tax reform will take time, and Americans want tax relief now. To give a kick to our economy and help working Americans keep more of what they earn, I will cooperate with the president to reach agreement on tax relief. But, I remain committed in my efforts to protect the American taxpayer. It is my hope that America's journey to the 21st century will begin today with tax relief and boldly move forward tomorrow by replacing the income tax with a tax on consumption.

NASE: In a recent poll, NASE Members said that the balanced budget amendment should be one of Congress' biggest priorities. What are the prospects for congressional passage of that amendment in 1997?

ARCHER: I have introduced the balanced budget amendment in every Congress since I first
came to Washington. The prospects for passage of the balanced budget amendment in the 105th Congress are very encouraging, with appar ently even more support for it now in the Senate than in the 104th Congress when it failed by one vote and about the same level of support for it in the
House where it passed.

NASE: The NASE strongly supports Medical Savings Accounts (MSAs). Will the Ways and Means Committee take action over the next year to remove the various restric tions imposed on the availability of MSAs, such as the limit of 750,000 policies?

ARCHER: On January 1, 1997, for the first time, qualified Americans were able to buy
tax-free Medical Savings Accounts. MSAs were passed by Congress and signed into law last summer as part of the overall health bill H.R. 3103 that is designed to make health care more available and affordable to millions of Americans. The cornerstone of the new health insurance reform law is MSAs. Currently, MSAs are only available to the self-employed and employees of small businesses with 50 or fewer employees. I would like to work in the next Congress to make MSAs available to all Americans. By giving Americans more control of their health insurance, MSAs will ensure that the American principles of free competition and individual empowerment will be allowed to continue to improve our health care system.

"I want to tear the income tax out by its roots so that it can never grow back again."

Congressman
Bill Archer

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