Taxes & Budget
1981 Economic Recovery Tax Act
The Economic Recovery Tax Act, proposed by Rep. Jack Kemp and Sen. William Roth, reduced marginal tax rates in the U.S. by 25 percent over three years and drastically cut taxes for wealthy Americans. One of the first pieces of major legislation handled by Dole as Senate Finance Committee chair, Dole supported this act with the understanding that it would need to be coupled with a decrease in government expenditures.
Tax Equity and Fiscal Responsibility Act of 1982
“It is a pleasure to be here this afternoon to talk about taxes. Not that taxes are the most pleasant thing to discuss these days- lately every time I mention taxes I have a lurking fear that the next day I will be accused of having destroyed another industry or driven some company into bankruptcy.”
– Sen. Dole to the American Bar Association, May 15, 1982
The sweeping tax cuts of 1981 combined with failures to cut spending resulted in a massive budget shortfall that was further exacerbated by the recession of the early 1980s. To address this problem the Tax Equity and Fiscal Responsibility Act rescinded some of the tax cuts from the year before in exchange for an agreement from Congress to control spending.
1986 Tax Reform Act
The Tax Reform Act of 1986 both tested the resolve of and solidified the reputation of Sen. Dole as a true leader. At one point saying the bill was “hanging by a thread,” and facing road blocks at seemingly every turn, this legislation eventually went on to become one of the most historic changes to tax legislation in the history of the country.
Under the act, the federal income tax system was simplified, creating two individual income tax rates. Millions of Americans saw significant drops in their taxes and over 6 million were removed from the tax rolls all together. Corporate tax rates were lowered significantly, becoming the lowest rates in the industrialized world.
1995 Balanced Budget Amendment
Sen. Dole supported a Constitutional amendment that would require the government to balance the federal budget. A balanced budget requirement would force the government to end deficit spending and stop growing the national debt. Congress has debated this amendment several times previously, but at no point were they closer than they were in 1995.
The Republican takeover in Congress made many people, including Majority Leader Bob Dole, believe that the time for passing the balanced budget amendment had arrived. On March 2, 1995, the amendment reached the floor of the Senate having already achieved the two-thirds vote required in the House. Sen. Dole took the floor of the Senate immediately before the vote was taken:
“We are not changing the Constitution if we pass this amendment. The Founding Fathers did not give Congress that power. Instead, they reserved that power to the States and to the people, and by passing this amendment, we are in effect authorizing a national debate on the merits of a balanced budget amendment to the Constitution. That is all we do. And, over the years, we will have the pros and cons because all 50 states chosen by people in our states are going to make that determination–Democrats and Republicans and state legislatures in 50 states. There is a word for that process. It is called democracy.”
The amendment failed by one vote.