Opening Statement Charles Boustany (R-LA)
Ranking Member, Subcommittee on Oversight
Hearing on IRS Operations and the 2010 Tax Return Filing Season 

(Remarks as Prepared)

Mr. Chairman, thank you for yielding time.  Commissioner Shulman, thank you once again for appearing before the Subcommittee.  More generally, I want to thank you and every IRS employee who works for you for your hard work and dedication to public service.  And I want to make it clear that even when we in Congress criticize certain IRS operations and question how the IRS is handling certain responsibilities, we are not attacking personally the fine public servants who work at the agency.

I also want to mention briefly the horrifying attack on the IRS offices in Austin, Texas, on February 18th.  Let us continue to honor the memory of Mr. Vernon Hunter, the IRS employee and Vietnam veteran who lost his life in this senseless attack.  And as I said on the House floor on March 3rd: “We also should recognize the courage and heroism of those men and women – including IRS employees, first responders, and others – who responded to the attack to ensure that our country did not suffer even greater losses.” 

Before Commissioner Shulman begins his testimony, I would like to highlight two issues of particular importance to me.  The first is the IRS’s role in the health legislation that President Obama just signed into law.  The legislation envisions the IRS having a central role in administering a new national health insurance system and enforcing its rules.

During the 2008 presidential campaign, then-Senator Obama attacked Senator McCain’s health care reform plan on two main grounds.  In an October 4, 2008 memo, then-candidate Obama argued against the McCain approach because it “pays for his new tax credit by taxing employee health benefits for the first time in history,” and “the new tax credit would go directly to insurance companies, not to individuals.”

I find it incredibly ironic that the Democrats’ government takeover of health care does precisely these two things.  The health care bill imposes a 40 percent tax on what the Democrats call “excess benefits”, and turns the IRS into a collection agency for health insurance companies.  These so-called tax credits won’t actually end up in taxpayers’ pockets.  Instead, they will end up in insurance companies’ profits.

The second topic I’d like to mention involves the Democrats’ failed stimulus bill.  This past Monday, Commissioner Shulman, you joined Vice President Biden and Treasury Secretary Geithner in celebrating this year’s increase in average tax refunds.  You said: “The average tax refund has reached $3,036 this year, a $266 increase from a year ago. The Recovery Act is a major factor behind these larger, record refunds.”  You then went on to suggest that tax benefits provided in the stimulus bill were putting more money in people’s pockets.

But we’ve done some analysis of the economic data, and we see a different story being told.  In fact, higher refunds provide further proof that the stimulus bill was a failure.

The economic data show that people earned less income in 2009 than in 2008, due to job losses and wage cuts.  For instance, between the end of 2008 and the end of 2009, the unemployment rate increased from 7.4% to 10%.  Non-farm private sector employment dropped by 5 million jobs over the course of 2009.  Yet, many people who first became unemployed in 2009 probably over-withheld during the period they were working because they set their withholding based on an annualized salary that later disappeared.  As a result, their year-end income was lower than expected and now they are entitled to a tax refund.  Thus, larger refunds are evidence of a worsening economy in 2009, which in turn is evidence of a failed stimulus bill.

Commissioner Shulman, I look forward to your testimony today, and to hearing your thoughts on these and other issues.

Thank you, Mr. Chairman.  I yield back.
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