Remarks and a question-and-answer session at Los Angeles Valley College in Van Nuys, California - Bill Clinton's speech, May 18, 1993

Weekly Compilation of Presidential Documents, May 24, 1993

Now, let me say one other thing. I have also supported having the Federal Government give States the right to issue tax-exempt bonds to provide for lower interest financing for middle class families and for working families with modest means. And again, one of the things that I have tried to do in my program, if it passes, is to make sure that we make that permanent so that every State in America will be able to continue to do what I did vigorously in my State, which is to make available more low-income, low-interest financing to people to buy homes.

Taxes

Q. Mr. President, there are many different claims on how much your economic plan will actually increase middle-income taxes. Can you tell us in very simple, nonpolitical language how much more money middle-income people, those making less than $60,000, will pay in new taxes?

The President. Yes, I'll be glad to. First of all, there is one tax in this program that falls on middle-income people. And that's the so-called BTU tax. It's an energy tax based on, basically, the heat content of various sources of energy.

The purpose of the tax, aside from raising money, is to encourage utilities and industries to shift to the most fuel-efficient and environmentally sensitive forms of energy so that we can do more energy conservation and do more fuel shifting. And we've made some changes in it to try to make sure it works in a more practical way.

But because you consume energy, eventually those things will find their way down to you. That is, some of it will be in the fuel you buy; some of it will be in products you buy that themselves use fuel; a little bit of it would be in anything that's brought to a store by a truck. In other words, ultimately, all people pay these things.

Now, here's how the pricing works. The average family of four, next year will pay virtually nothing. I mean, literally virtually nothing, $1 a month or less. The next year after that, it will be probably about $6 a month. This is $60,000 a year and less. The next year it will be, and the year after that and from then on, it will be someplace between $14 and $17 per month, maximum for a family of four. If you're single, it's much less.

Now, if your income is under $60,000, but is also under $30,000, and especially if you have children, there is a good chance that you will not pay any more money, net, because another provision of this tax bill does something that I personally think is very important; I've wanted to do it for a long time. It increases the earned-income tax credit, which is already in the Tax Code, to the point that we'll be able to say to anybody who works 40 hours a week and has a child in the house, if you do this, you will not be in poverty. In other words, even if we have to give you a tax credit, we're going to lift you out of poverty. We're going to reward work instead of welfare. We're going to say that you'll be out of poverty.

Now again, I want to be very specific. The higher you go toward $30,000, the more likely you are to pay a little bit. But if you have children, you can make maximum use of the earned-income tax credit so that if you've got, let's say, a family of four with an income of $29,000, you will pay nothing or next to nothing on the energy tax, because while you pay it, you'll get an offset on your income tax.