The Governor's tax cuts are reinvigorating what was once the most-strongest and diversified economy in the Nation and helping bring back to our State and our citizens and the jobs and the optimism that bring building strong communities and better lives. We in Washington should take this example to heart.

I am honored to introduce the great Governor of the State of New York, he is my friend, and my colleague, Governor George Pataki. Mr. BURTON. Governor, welcome, and a basketball fan.

STATEMENT OF GEORGE A. PATAKI, GOVERNOR, STATE OF
NEW YORK

Governor PATAKI. And a basketball fan.
Mr. BURTON. New York Knicks fan.

Governor PATAKI. Absolutely. Chairman Burton, thank you, and I appreciate the opportunity to testify before this committee this morning. Let me thank Congressman Lazio for that terrific introduction and for the great job he does for the people of this State. And I also want to acknowledge and thank Congressman Shays for his kind words. While Connecticut and New Jersey and New York occasionally compete, we all know that if we adopt the right policies, ultimately all of our States will be stronger.

And, Congressman McHugh, I thank you for the tremendous job you have done first in the State legislature and now down here helping us in Washington. And, Congressman Towns, thank you for your kind words. I very much appreciate it.

As Congressman McHugh noted, we are one State, and we have tried to take a comprehensive approach not just to the issue of taxes, but to the future of this State. And I know you are concerned, whether it is central Brooklyn or the central Adirondacks to make sure this State is stronger; and we are better because of that.

Chairman, if I may, I have some testimony, and let me say I am pleased to be offering it on April 15. This is, as everybody referred to, tax day. It should be tax freedom day, but it is not because for the average American family, they have to work into May before they are finished paying simply their tax obligation. I think that is wrong. And we have tried very hard in New York State to correct that.

For me and for many Republican Governors across this great country, we have been doing hard work in the area of taxesGoverner Bush, Governor Engler, Governor Whitman, Governor Huckabee, Governor Gilmore, and many others-this is more than just an issue of economics. For us, cutting taxes is a matter of fulfilling government's fundamental obligation to the people.

It all comes down to one simple question. Whose money is it anyway? In State capitols across our country, Governors are declaring without hesitation that the people's hard fought earnings belong to the people and not to the government. I am proud to be able to tell you that in no State has this basic fact of life been declared more clearly and more emphatically than in New York State.

I know it may come as a shock to you given New York's history and particularly its reputation under my predecessor, but it is true. In the 4 years since I have taken office, New York has cut taxes more than any other State. We have cut taxes 36 times, returning

$19 billion to the taxpayers, that is $19 billion to the taxpayers so far. And when all of the tax cuts on the books take full effect, that number will grow to over $52 billion.

Our tax cutting has sparked a new direction in New York State. We were once a State in crisis. Now our largest business organization calls us "the comeback State." I mean, New York State has gotten so much better than before, that even the First Lady of America is thinking of moving to New York State. What better testament to the success of our policies?

But perhaps there is no greater evidence of the profound turnaround in New York than the fact that the Governor of the place that once led the Nation in raising taxes is here today talking to Congress about how to cut taxes. As they used to say in Brooklyn, "Who would'a thunk it?" Congressman Towns knows that is correct Brooklynese.

Before I talk more specifically about what we have done with taxes in New York, I want to address the broader issue of freedom, because I don't think you can separate the two. If ever there were two things that had an inverse relationship, it is taxes and freedom. The more you have of one, it is necessarily so that you must have less of the other.

The more money a person has seized from them by government, the less freedom that person has to do what he or she wants with that money. It could not be any simpler.

Now many Americans have come to accept taxation as a necessary evil. They accept the fact that they have to surrender some of their earnings and, consequently, a degree of their financial freedom to sustain our government. The point I would like to make today is that excessive taxation does more than infringe on people's financial freedom. It drives up spending, and creates a bigger and more intrusive government that inevitably infringes on other freedoms as well.

By nature, as we in government all know, government has an insatiable appetite, an inherent desire to grow. When politicians raise taxes beyond what is necessary to fulfill government's legitimate function, they feed that growth and produce not just a bigger government, but a costlier government that becomes a destructive force in people's lives. It created a destructive cycle of high taxes, perpetuating more bureaucracy and more spending, which in turn perpetuated more taxes and less economic freedom for the people who pay those taxes.

But the cycle doesn't end there. Excess bureaucracy created by overtaxation produces, not just more spending and further encroachments on people's economic freedom, but new limits on other freedoms. Because bureaucrats without a legitimate function have to justify their existence by creating an ostensible function.

In New York, bureaucrats justify their existence by generating scores of new rules and regulations, and government would use those regulations to assert itself over the people in every aspect of their daily lives.

Most of the regulations, however, were aimed at businesses, putting the men and women who create jobs under the close supervision of a government that sought to dictate their every move. It doesn't work. What you had in New York was an endless cycle of

high taxes leading to big bureaucracies and more regulations which led to higher taxes and bigger bureaucracies and even more regulations. This went on for more than a decade, and the results were devastating.

Let me just paint a picture of New York in 1994 for you. And bear with me, because as dismal as it seems, the story has a happy ending. And I might point out that in the end of 1994, we were 3 years into a national economic expansion following the earlier recession.

When I took office in January 1995, New York was in crisis. The State government was too big, too bossy, too expensive. It faced a budget deficit totaling a record $5 billion, a $5 billion deficit, a deficit larger than the budgets of 31 other States. The promise of tax relief had turned into a cruel hoax.

Our welfare roles were bursting, and jobs were on the run. The biggest taxes, income taxes, property taxes and school taxes, were all rising every year at an alarming rate. But there were other taxes as well, the sales tax, the estate tax, hidden taxes on goods and services, and scores of taxes that were imposed on businesses and paid by consumers.

All of those taxes served one purpose and one purpose only, to drive up spending and feed a government that was out of touch, and out of control. And that destructive cycle of taxes, more bureaucracy, more spending, more taxes, and less freedom was in full throttle.

As government got more, families got less. As bureaucracies thrived, business suffered. Taxes were literally destroying the greatest State in America.

Together with our allies in the State legislature, we confronted that crisis. From our first day, we held to a fundamental covenant that says, at all times and without exception, respect the people and let them lead the way toward real progress. And in a State where the guiding principle is respect for the people, big government and big government taxation simply does not compute; that is why, in New York, we have embarked on the most ambitious campaign of tax cutting in the State's history. It is working.

In fact, our philosophy is working so well, that it has created a new challenge for us. In that first year, 1995, we had to manage crisis. In 1999, our challenge in New York is to manage prosperity. Today, taxes aren't going up every year as they have been; they are going down by record amounts.

Private-sector jobs aren't going down as they did in the 1990's when the rest of the country was creating millions of new jobs, and New York lost 400,000 more. They are going up and jobs are now at the highest level ever in New York State history.

But economic revitalization has been the key to solving one of New York's most serious problems. When I took office, 1 out of every 11 New Yorkers was on welfare. Think about it; 1 out of 11 residents of our State, my State, and 1 out of every 7 residents in New York City was trapped on welfare. But today the welfare roles are shrinking every day, and people are finding the freedom that comes with work. Welfare roles are down by 653,000 people since January 1995.

And they have fallen below the 1 million mark for the first time since December 1967. And, Mr. Chairman, let me thank you and your colleagues in Congress for passing the welfare reform legislation that gave the States the ability to tailor our programs to meet the needs of our particular States. It is one of the major reasons we have had this tremendous success.

Families are buying new homes and refinancing their old ones, which says they are planning to stay in New York and build their future there. It is hard to think of a tax we haven't cut. We began by cutting income taxes. Today—the vast majority of New Yorkers pay 25 percent less on income taxes than they did in 1994.

We are cutting income taxes, business taxes, and school property taxes. Taxes are being cut for small business people, family farmers, senior citizens, working families, and retired couples. We are cutting taxes on entrepreneurs trying to start businesses, businesses trying to grow jobs, and on people trying to find work.

We are cutting taxes for families who are both buying clothes for their children and saving for their college education. Across the board and in every conceivable category, taxes are falling in ways some thought were impossible.

When we first proposed cutting income taxes 25 percent, there were some who swore we could never actually do it. But we did, and it is saving New Yorkers $5 billion every year and helping revitalize our economy.

There was once a time when New York was one of only a handful of States that imposed its own estate taxes on estates. But this year New York's added-tax on death finally dies along with the added-gift tax.

Once upon a time, we not only had one of the highest corporate income tax rates in the Nation, but we had a 15 percent surcharge on top of that. We got rid of the surcharge, and this year the corporate income tax rate starts coming down too. When all is said and done, New York's corporate tax rate will be at its lowest rate since 1970.

There is more. We cut the corporate franchise tax, the gross receipts tax, the real property transfer tax, the tax on motor fuel, the container tax, and the tax on beer. We cut bank taxes, insurance taxes, and the petroleum business tax. And we cut the tax that had the dubious honor of being named after my predecessor the socalled "Cuomo tax." That was a transfer tax of 10 percent on all real estate transactions over $1 million, a true job killer that was wreaking havoc on New York's real estate investment industry.

When Governor Cuomo signed it into law, he called it the perfect tax. As it turned out, he was half right. It was the perfect tax for New Jersey or Connecticut, for Georgia or North Carolina, but it was a disaster for New York State.

In 1997, we did something else unprecedented. We signed a law called the STAR Program, that cut school property taxes for every homeowner in New York for the first time in New York State history. This truly is remarkable, because New York-and in New York, the State doesn't even levy school taxes, the localities do, and so essentially the State is cutting taxes we don't even impose, and reimbursing local governments for the lost revenue.

And the reason we can afford to do that is because we have reduced the size and costs of government so dramatically. As Congressman Lazio pointed out, our STAR Program is cutting school taxes by 27 percent on average and seniors are seeing now a cut of more than 45 percent in their school taxes, and in 10 of New York's 62 counties the average senior citizen now pays no school taxes at all.

In 1996, we not only lead the Nation in cutting taxes, we cut taxes by more than the other 49 States combined. And in 1997, we cut taxes by more than Texas, California and Illinois combined. New York's Public Policy Institute, a pro-growth think tank, calculated all of our tax cuts and then considered what they would mean here on the Federal level. They said that if equivalent tax cuts were done nationally, Americans would save over $300 billion. We have had great progress in New York, but there is much more to do. This year I proposed another billion dollars in tax cuts including a $600 million income tax cut that will raise the threshold at which the maximum State tax rate applies, and it doubles the deduction for dependent children. Another 5 million taxpayers, including tens of thousands of small businesses, will see major savings.

Bad tax policy goes beyond bad taxes. There is the bureaucratic mindset perpetuated by those taxes. This year I sent the legislature a bill that will remove one of the great absurdities from the State's tax code.

For years, hundreds of thousands of New Yorkers have had to file State income tax returns every year, even though both they and the State know they will owe no tax. It takes 2 minutes to figure it out, but State law makes them file anyway. It is a waste of the taxpayer's time, and a waste of taxpayer's money. Because guess where the dollars come from to pay for the processing of those useless tax returns?

If ever there was a tribute to twisted bureaucratic logic, this is it. By raising the taxable income needed to file a State return, to match the State's standard deduction, a simple commonsense proposal, we can wipe this dumb rule off the books for good. And in the process, we will help 500,000 New Yorkers, mostly seniors, by relieving them of the paperwork that they never should have had to deal with in the first place.

The States have proven that cutting taxes works, but putting tax cuts on the books is only part of the winning formula. New York was once run by those who would approve tax cuts, then delay them, and then totally forget about them, and finally, turn around and raise taxes.

The tax-cut movement cannot be allowed to become a blip on the screen of our State's or Nation's history. The act of raising taxes is a destructive act and should therefore be a difficult act.

Last week, I joined with Congressman Joe Barton of Texas, in calling for constitutional amendments that would require supermajority approval for any tax increases. At the State and Federal levels, requiring a two-thirds vote for any tax increase would protect millions of hardworking taxpayers from unnecessary and counterproductive tax hikes.