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And let me introduce my colleague Mr. Davis of Virginia, who is one of your outstanding Representatives and head of our NRCC, as you know as well, to introduce you.
Mr. DAVIS OF VIRGINIA. Well, thank you very much. I was also co-chairman of the Gilmore for Governor Campaign-for attorney general and for Governor.
Mr. BURTON. He was also co-chairman of the Gilmore for Governor Campaign. (Laughter.]
Mr. Davis OF VIRGINIA. Well, and I might add, Jim and I have known each other since law school, and I followed his early days, when he was prosecutor in Henrico County. But I think his most unique attribute is he took something that had never been an issue in Virginia politics on cutting the car tax, which no one liked, but everybody just kind of routinely paid; saw a huge surplus coming in the Virginia budget, and decided that, instead of the State just spending it, that he would give it back to the people who were responsible for putting it there. And a lot of the pundits criticized him and laughed, and there were editorials, and there was a point I wasn't quite sure what to do when he came up with it, but Jim stayed on message and he followed through. I got my first rebate this year on the car tax, and I have a voucher for next year's car tax.
They are moving ahead not only in that way, but we have put more money into education. We have put State money into school construction for the first time in our history. We are extending healthcare to more people than have ever been covered before in Virginia. And it shows that cutting taxes is not a zero-sum game; that if you cut taxes and you continue to lure and attract industry, your tax base expands, and there are more revenues. And the answer is really not more taxes, but more taxpayers, and that is what we have done in the Commonwealth of Virginia.
And his leadership has won plaudits nationally. His opinion polls are very high in Virginia. But I think the real testimony here is that it is working well in Virginia, and things that political leaders have been talking about for a generation are now being enacted. So we do, indeed, have it both ways, and the tax base continues to expand.
So I am really pleased to introduce our Governor of the Commonwealth of Virginia, my friend, Jim Gilmore.
Did I miss anything there, Jim? STATEMENT OF JAMES GILMORE, GOVERNOR, COMMON
WEALTH OF VIRGINIA, ACCOMPANIED BY RONALD TILLETT, SECRETARY OF FINANCE, COMMONWEALTH OF VIRGINIA
Governor GILMORE. I think that about does it, just like we wrote it. (Laughter.]
Governor GILMORE. Great. Thank you. Mr. Chairman, I appreciate the opportunity to be here and to see you again, as well as, of course, your counsel, who I have known for quite a period of time; Congresswoman Morella, who I have gotten to know, and she and I worked together on some mutual projects in Maryland, and I was very happy about that.
Mr. Terry, nice to see you, sir.
And, of course, Tom Davis; we were in law school together. He was much older than I was at the time. [Laughter.]
But it is a pleasure to be here with all of you, and I want to thank you very much. I have a statement which I, of course, will naturally submit for the record. But, with your indulgence, I would like to present it to you.
First of all, before I do that, though, I want to introduce to you all my secretary of finance, Ron Tillett, who is here with us today. The secretary came along at my request, so that if there were any specifics that we needed to address, that he would be here to do that.
We live during the most prosperous time in our Nation's history right now. Working men and women are earning higher wages than we have ever seen before. Our economy is booming, and it is nearly inflation-free. And our stock markets are climbing, which seems to be a ladder of almost endless ascent.
America's working men and women toiled long and hard to see this day. Through war, depression, social unrest, they bore the heaviest and harshest burdens during the toughest times of this century.
In its proper role, government provides essential services, but also a framework in which people can pursue their individual goals to make their version of the American dream a reality. But government has become a great burden. While the era of big government might be over, big government itself remains with us.
The Federal Government now takes more than 20 percent of the Nation's earnings. That is the highest proportion since the American people willingly sacrificed their paychecks, and many their lives, to win World War II. In addition, taxes from all levels of government take 32 percent of the Nation's income. Taxes now take away a third of every American's capacity to define their own lives. So, clearly, taxes in America are too high.
But I believe there is hope for the overtaxed in America. Recordbreaking economic growth and historically high taxes have boosted revenues and created State government surpluses, and will in the future create Federal Government surpluses. Elected leaders now have a unique opportunity—and I believe an obligation—to reduce taxes while strengthening essential government services.
By the end of these hearings, you will have heard how four Republican Governors have cut taxes at the State level. Many more Republican Governors have made tax cuts a priority as well. Together, we are sparking a new type of tax cut movement, one for all Americans, not just for an elite few; one providing significant relief while protecting vital government services, and one sparing economic growth, both in traditional and information age industries.
Now while campaigning for Governor in 1997, President Clinton came to Virginia to criticize my no car tax plan. The President said, “This is really a question about whether Virginians will be selfish in the moment or selfless for their children in the future." This was his comment when he was addressing or opposing my no car tax plan.
And I thought about it at the time that he did it, and I thought to myself, “Selfish for working men and women to want to enjoy the fruits of their labors rather than forfeiting them to the tax collector? Selfish to think it unfair to annually tax a car, which is a necessity, so that you really never own it?"
Virginians knew better. They knew taxes were too high, and they knew that the car tax was wrong.
Last April I signed a personal property tax relief act of 1998, and it will phaseout the car tax on the first $20,000 of every personal vehicle's value by the year 2002. The car tax will annually return more than $1 billion to Virginia's working men and women. That is the largest tax cut in Virginia's history.
We are also eliminating the State's share of the sales tax on food. The food tax takes more from working families of modest means, when the government should take less. The bigger the family, the greater the struggle to make ends meet, and the more the food tax takes.
The legislature recently passed, and I signed, my plan to eliminate the State's share of the food tax. When fully implemented, the food tax cut annually will return another $270 million to Virginia's working men and women.
Many of Virginia's working men and women serve in the Armed Forces. Their commitment to protect America and America's interest often requires them to spend lengthy amounts of time abroad, away from their homes and their families. We are proud in Virginia of our brave military men and women, especially those who are fighting on the front lines in Kosovo. We are eliminating the tax on the first $15,000 of military pay, so that they can keep Virginia as their home.
Tax relief empowers working men and women with financial freedom. It creates incentives for businesses to grow and to invest, and to create more and better jobs for their families.
In Virginia we are expanding the number of Enterprise Zones and cutting industry-specific taxes to make our business environment more competitive. And we especially want to strengthen our burgeoning technology industries. Northern Virginia is home to the greatest concentration of Internet companies and users in the United States. Global Internet giants, such as America Online, PSINet, MCI WorldCom's Division of UUNet, Network Solutions, and many others are headquartered in Virginia.
I recently signed legislation to cut the sales tax on equipment used to provide Internet access. This Internet tax cut, coupled with our comprehensive Internet policy act, will strengthen Virginia's leadership role as the Internet capital of the world.
Now I have mentioned just a few of the tax cuts that we have enacted during the first 500 days of my administration. When all 16 tax cuts are fully implemented, $1.5 billion will be annually returned to Virginia's working men and women.
Now have we sacrificed our duty to be responsible stewards of the public good? Of course not. We are increasing our support for colleges and universities, while making them more affordable by cutting tuition 20 percent.
We are implementing our nationally acclaimed standards of learning to list student achievement in kindergarten through the 12th grade. We are strengthening our transportation infrastructure throughout the State, and we have cut violent crime to the lowest level in this decade.
What my administration is doing in Virginia, and other Republican Governors are doing in their States, the Federal Government can do in Washington. The Federal Government can both cut taxes and strengthen vital government services, like Social Security and national defense. The Republican budget does exactly that.
But sustained tax relief and responsible public stewardship require discipline. Government must make tough spending choices, just as working men and women do every day. Government must weigh every dollar it taxes against the needs of those who are earning those dollars. Let me say that again: Government must weigh every dollar it taxes against the needs of those who earned the dollars: the need of a single working mother to pay for daycare, so she can earn a living; the need of a wage-worker without a pension plan to save for retirement; the need for an Internet entrepreneur to save for seed money for a startup.
We can meet the obligations of a secure and humane society while still empowering people to build better and more independent lives. And I urge the Congress to follow the lead of Republican Governors and pass a budget that balances the need for significant tax relief with the priorities of responsible public stewardship.
Mr. Chairman, thank you very much, and now I would be happy to answer any questions.
[The prepared statement of Governor Gilmore follows:]
COMMONWEALTH of VIRGINIA
Office of the Governor
James S. Gilmore, III
Mark A. Miner
Testimony of Governor Jim Gilmore before the House Committee on Government Reform
Wednesday, April 14, 1999
Thank you Chairman Burton and members of the committee for the opportunity to speak with you today.
We live during the most prosperous time in our nation's history. Working men and women are earning a higher wage. Our economy is booming nearly inflation-free. And our stock markets are climbing a ladder of seemingly endless ascent.
America's working men and women toiled long and hard to see this day. Through war, depression, and social unrest -- they bore the heaviest and harshest burdens during the toughest times of this century. In its proper role, government provides essential services, but also a framework in which people can pursue their individual goals to make their version of the American dream a reality. But government also has become a great burden. While the era of big government” may over, big government itself remains with us.
The federal government now takes more than 20 percent of the nation's earnings – the highest proportion since the American people willingly sacrificed their paychecks and many, their lives to win World War II. In addition, taxes from all levels of government take 32 percent of the nation's income. Taxes now take away one-third of every American's capacity to define their own lives. Clearly, taxes in America are too high.
But I believe there is hope for the over-taxed in America. Record-breaking economic growth and historically high taxes have boosted revenues and created state government surpluses and will create federal government surpluses. Elected leaders now have a