 Well, in case somebody hasn't done it already, welcome to White House. I don't know how far you've gone on tax reform, but that was the reason for asking you all to come here. The question is, do you want to go to 50% or not? No, I think if you haven't given them already, those basic figures about the extent of the tax cut for the various groups in the top sector, well, the bottom gets almost 19% in cuts. The next group gets about 7.5%, and that top group only gets around 5%. So, I think that it has graduated appropriately. And if no one has told you, I had, I did some penning myself the other day. We were making a speech someplace in New Jersey, I think it was. In that particular area, we've taken a specific case of a middle-income person, someone with a low $40,000 range, and what their tax burden would be under our plan, and I just got curious and I multiplied it by 10 and decided to see someone with 10 times that earnings, the size in what their tax burden would be. So now they're earning 10 times as much as the other family. They'd be paying 30 times as much tax under the new plan. So I think our tax system is still progressing, progressing enough. I'm worried about plowing grounds you've already plowed. We, I know that when we last met in January, we had a frank discussion which was extremely helpful in our interest to fashion a proposal which achieved needed reform, which legislated very realistically. And since unveiling that, I've traveled to other places throughout the country. And I have been amazed because my principal subject was this. And a couple of those stocks were actually in industry plants where I was talking to my grandfather, Union Labor. And the reception was no different than it was anyplace else. It was a roaring approval of everything that we had to say about the tax reform. So I think they really wanted, and it's across the board out there in one of them, the, I think it's a historic opportunity for us to do something that we've talked about so many times. Good Lord, I've been reading some things and I think it was said by some of your colleagues back, whether they're still colleagues or retired, but back more than 10 years ago. And the subject then of tax reform would be discussed, but it was kind of wishful thinking that as if there was no chance that such a thing could ever happen, it wouldn't have been wonderful if we could. As Republican members of the House Ways and Means Committee, I'm counting on your help and support for the enactment of such legislation we were talking about. Though this is a bipartisan effort, I think it's vital to achieve solid Republican support. I realize that many of you have problems with specific provisions, and maybe you've discussed all of those already. And this is to be expected in any comprehensive review of our tax code, but I'd like to ask you to keep your options open and look at the whole package, and not just a particular spot here and there. There'll be ample opportunity during the legislative process and you're committed to working within the process to address any problem areas. There is and will continue to be, I think, in tax pressure from special interest to emasculate this package, and that should be done by picking a thing here and a thing there and forgetting the way up and see even some of the most controversial things. See is the individual, even if we, for example, take away that deduction, see the individual is still going to be better off. And I think in every instance you find them, they are. So, meaning for reform only be achieved if we can withstand this pressure and work for the only special interest that counts, and that's the public interest. It'll be a difficult task, but I know those members of the Ways and Means Committee are accustomed to dealing with difficult tasks and we can't allow this moment to slip by. Together we can make a tax reform reality. You need all of your help. Gali, if you need any reassurance, just talk to my friend Rasky. You heard me. No, but I know that you must have been in discussion with questions and so forth. We talked about the importance that delay could play with respect to tax reform and how the biggest enemy of tax reform in our opinion right now would be delay. And we've had a wide range of discussion here, and frank discussion quite frankly, of importance in making sure that there's fully complete hearings and an opportunity to assess the effect of these changes because of the significant changes we're talking about overhauling the entire tax bill. But maybe the impact would be pleased to hear your views on when you'd like to see this done or the importance of getting it done and that sort of thing. I've told them what I think, but I don't think so. I'd like to see a boom effect as of January 1st. And I would think that all of you who are going to be in election year beginning January 1st would prefer it that way rather than what I think TIP's dream is, and that is that this is still an issue on which they can campaign and take advantage of things as they did in Social Security matter in 1982. And he has even kind of carelessly expressed something that indicates that I'm not dreaming this up. But I think too, for us to go into that and having accomplished and having done this, I think we'll be riding the crest of a wave that would have to be to our advantage. I'd like to see it done this year and make it start in the beginning of the year. Imagine all those people out there who suddenly, as of January 1st, look at their situation and say, hey, I may not even have to fill out a form. I don't know any tax. Not going to owe any tax at all. Well, Mr. President, you make a good case out there when you speak in generic terms. I think if I go on speaking something out there, the same thing. You can get a good reaction when you talk in these generic terms about tax reform and tax simplification in the polls. Absolutely. We're all for it. These are the guys, however, that got to work for the specifics. It's always one thing to talk in generic terms and another thing to talk about specifics. And now the more those hearings go on and the individual little items and sensitivities come up, these are the ones that cause the most perplexing problem for us. And I've communicated to some of your folks, too, coming from an industrial section like I do, that average person out there isn't all that help about having his taxes reduced as he is making sure he's got a job. And in heavy industry areas, they see their jobs waiting and their taxes reduced. Well, they want to be able to pay taxes, but they've got to have a job to pay taxes. Some of our areas are still like with severe unemployment and heavy industries. You know, there's nothing in this tax bill that heavy industry gets a big charge on it because, well, we gave them an 81. We take away an 85. And then we even recapture beyond that. And you're going to find those, those questions arriving and coming up on a more frequent basis. And I think we've got to be prepared to answer those. We're in-house now, we can talk very frankly, but we have to do that, otherwise we're not going to make the best image when we get out there. Bob, the Bethlehem Steel is supported with this, actively supported. One more thing is that Dark Craft is kind of a cross-section of some of those industries, and they have all of them heavily supported. The one that has crossed so much the production of local and state taxes, well, California is one of the high-taxing states. There's an income tax for the top record, 11%. And the polls show that in California they're not before it, but also I think we've taken some examples there and proven that people get a tax cut. I'm quite interested in this because that's where I pay my taxes, but that even so, even with that high tax, you're going to get a tax cut. Mr. President, we don't want you to think that the bill, if it doesn't come out on the basis you wish, that there's any member of the Republican member of the Ways and Means is trying to delay anything, but I think we are looking at reality and committed. If you look back at the history of tax reform and nothing compared to this tax reform, it just doesn't quite move that fast. The last big bill we had, any one that took over a year, and that was nearest as large as this one, and nearest comprehensive, you can read a lot about it in the Senate, but you haven't much trouble. In the Senate, the Moore's Office in the middle of the House is trying to do that. They said, we're off for tax reform. But I remember that some problem with this bill, Warren Hussey, who grasped the bills for us, we had to meet with the Republican members about two weeks ago and they said, tell us, can you draft the bill? He could, like, do the framework along as you work. And he said, I can give you a 25-cent bill in November. Bob Packwood says he must have it, he must have it to get the bill out of the Senate. Bob Melvin knows they don't say he forgets it then. They can get it out of the Senate. That's what they tell us prior to that. I think it's my duty to tell you this. And we discussed it earlier with the Secretary that he can talk to the Hussey and the people who draft the bills. And Ross Calfee said, I mean, he has a few problems there. And the Secretary, he'll have one problem, one next week, there aren't no problems with others. And you can see some long filibuster in the Senate, but we don't want you to think that we are trying to work it out because we're working closely with the Secretary and his staff. And we've had some very frank discussions around the place this morning that we want you disappointed because we're with you and we want tax reform, too. But just as much as Senator Calfee said, Bob's got a problem with all of it. Archie's got a problem with red grass in New York. There are pieces. Maybe I could be as a candidate as I can. I appreciate it, Mr. President. You were saying that you're somewhat flexible on this. Up to this point, we haven't been as flexible as I think we could be on the issue of state and local tax, which impacts, I think, probably disproportionately my area more than perhaps anybody else's, but that's where I represent. At this point in time, to be very candid with you, I can't support this bill under any circumstance unless we address that problem to some extent. Which problem? The state of local tax. I can tell you that if you're just beginning to hear about this as a problem now, beginning this Friday and continuing every day until this is accomplished one way or another, you're going to hear about this. There will be a national coalition formed this week and there's going to be day-to-day operations on this. So I would urge that you can be flexible at all on this particular part of the bill that you exercise that flexibility. It's probably already been said there today, even more than once, and it's not. Let me just remind you that more than two-thirds of the taxpayers presently do not deduct state and local taxes now. But the only ones who are, again, here we are, Mr. Cohen talking about us, the tax bill for the rich. Actually, the only ones that benefit from that present deduction are those in the top bracket. I would suggest that the tax should come down to 11,000 and see the 27,000 or 30,000 people who live there working defense plans around. We make about 30,000 policies. Last Sunday when I was speaking at a commencement of a high school in my district, there were maybe 5,000 people on the football field. I was introduced to somebody who was trying to preserve state and local deductions about standing ovation from people who don't make the kind of money that you're referring to. But right at all fairness, I would doubt that those people really understood where they would be net. Everybody's against losing their state and local tax deduction in the abstract. If you tell somebody you're going to take the state and local tax back away from them, they're against it. I saw a poll that said that the sanctity of state and local deductions is the same as the sanctity of state numbers as the sanctity of the mortgage engines deduction on the first phone. We have to look at this in one way. We've talked for decades about tax simplification. We know that the present system is a Mickey Mouse arrangement by which actually the employees of the Internal Revenue Service can make it anything they want it to be. I well recalled in Los Angeles some years ago when the regional director of IRS retired and then he went public with an interview that astounded everybody in the region when he told how they set a figure every year that was sent to him as to how much money they wanted from our district. And he was like a salesman. He had to tell the fellas, you know, get this. And then when it was all in, he'd get another figure back that would tell him after it was all in and recorded, we want X number of dollars more from your district. So they sent agents out just to corral people where they thought it was available and get into a thing that they were challenged in some of these deductions that were not as hard and fast as others. All the things from business travel to an award roll if you were in that kind of a business, things of that kind. And it revealed that, hell, we don't have a tax system today that is hard and fast and that the individual knows exactly what the rules are. But in this one, as Jim says, I don't think these people have been told that if you're going to have the dream of lower rates and simplification, then you can't have a tax system that is made up of a book full of deductions. But in return for those, you get a reduction in rate that leaves you better off than you were before. You can't have both unless you're going for a tax cut. Mr. President, I think it gave the members of the committee who I speak to on this issue every day that this has been historical, a deduction coming back to the Civil War that had been imposed from the presidents of the United States that we shouldn't tax on tax and there's been a historical deduction in our post in 1913 that was put in based on the philosophical double taxation argument. And I think I even saw some rhetoric, some time back on yourself, because I can do that articulation. Plus, the point is it's very difficult for me to go back to my area and tell them that they're going to lose it and not have the certainty that those rates can be adjusted at any time. You lose a deduction, you lose a deduction. Rates can be changed for us every year. Well, the original basic green of tax reform and many people simplistically have gone shouting at and doing members of the Congress and that was the flat rate just everybody pays like an agents commission with gross income. Well, in that context, that deduction would have gone too. There would be no deductions if you had that. But we felt and I think all of us agree that you can't have that the other was overly simple but it could be harmful to such things as why we kept the charitable deductions too. Our country, unlike almost any country in the world has a tradition of the private sector of volunteerism and we sure as hell don't want to discourage that or appear to substitute government for that volunteerism. So there were some things we kept. Some things we couldn't have the lowered rates and remain neutral if we kept the deductions. And here was a deduction that, I say when we looked at it, only a third of the taxpayers or less were using to take advantage of the others were paying. The two thirds were already paying the tax. The two thirds that don't ironize are already double-paid. Yes. Nobody's been complaining about that. Mr. President. Mr. President, if I could shift for a second. Mr. President, if I could shift for just one minute I'd like to say that many of us who are for capital formation and in a far stronger economy believe, I personally believe that a new tax bill as the Secretary testified his opening day would reduce the cost of capital, would increase the GNP. You talked about your State of Union address about how we were essentially diverting investment capital in this country from the new jobs of the future into tax shelters. We have a four-year supply of apartments and office buildings in my home town because the tax code, quite frankly, they've been sold to doctors and whatever money's going, a potential base of a day advertised in Pittsburgh, a 64-office story building that had a 52-to-1 return. If you provide $750, they give you $41,000 in tax deductions your first year in 1984. I'd like to see you begin to emphasize that a little more, rather, how many dollars you're going to get reduced. I know the average taxpayer won't know how it's going to affect him, but a lot of people out there are saying, that's all right, I'm out to hill of beans. But the larger argument of what this is going to do to the future of our country and the growth of our country to me is far more important than how much we're going to do so many taxes are increasing. I don't really believe that's what we're trying to get to with this tax bill and would urge you to make a bigger point in that. I would like to tag on what Henson said. I was going to make the same point and add one other thing. Remember, those one-third of the tax payers and that's the reason this issue is as hard as it is. And I don't think you've got to overlook them. They're the people that... They're the ones carrying the loan. They're the ones carrying the loan. I understand that. Maybe others around the table forgot the same experience. I came from an industry in which they were paying self-beneath money out of Hollywood. And I can tell you what it was like when the top tax bracket was 90%. Now most of Hollywood is freelance and it's true. The camera people, the scripts, the stage hands and all, they waited home waiting just like the actors do for a phone to ring and tell them to report to the studio and making a picture and so forth and tell them what the picture is. Well, after I made a couple of pictures somebody came out of the script and I looked at the part and I drew one to do the part. But for ten cents on the dollar and I say hell no. Maybe not me, but an awful lot of people in the star category. If they said no, the picture wasn't made. Gary Cooper or some of that kind it just wasn't made. So there's other fellas. They sat at home and waited for the phone to ring. Well, I have to tell you with all the deductions and yeah, I tried to... I put some money in the wildcat oil at least and so forth. Why would I do that? I'm hoping that I could get something something capital gains, guys. I said what? And it never did. It never worked out. But if you had told me then that by damn I would be taxed I wouldn't have any of those those tax breaks or anything to look at but I'd get 65 cents out of every dollar. I would not only have been saying yes to that picture I would have called on people and asked them if they didn't have another one on top of that. We're talking about any more that the most that anyone is ever going to have to pay out of the dollar they earn is 35 cents and, you know, a Doug Flutey out of bitches on our side with that $7 million contract. Well well well well well well