[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 77 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 77

  To increase the unified estate and gift tax credit to exempt small 
               businesses and farmers from estate taxes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 19, 1999

    Mr. Lugar (for himself, Mr. Hagel, Mr. Roberts, and Mr. Helms) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To increase the unified estate and gift tax credit to exempt small 
               businesses and farmers from estate taxes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Farmer and Entrepreneur Estate Tax 
Relief Act of 1999''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The economy of the United States cannot achieve strong, 
        sustained growth without adequate levels of savings to fuel 
        productive activity. Inadequate savings have been shown to lead 
        to lower productivity, stagnating wages and reduced standards 
        of living.
            (2) Savings levels in the United States have steadily 
        declined over the past 25 years, and have lagged behind the 
        industrialized trading partners of the United States.
            (3) These anemic savings levels have contributed to the 
        country's long-term downward trend in real economic growth, 
        which averaged close to 3.5 percent over the last 100 years but 
        has slowed to 2.4 percent over the past quarter century.
            (4) Congress should work toward reforming the entire 
        Federal tax code to end its bias against savings.
            (5) Repealing the estate and gift tax would contribute to 
        the goals of expanding savings and investment, boosting 
        entrepreneurial activity, and expanding economic growth. The 
        estate tax is harmful to the economy because of its high 
        marginal rates and its multiple taxation of income.
            (6) The repeal of the estate tax would increase the growth 
        of the small business sector, which creates a majority of new 
        jobs in our Nation. Estimates indicate that as many as 70 
        percent of small businesses do not make it to a second 
        generation and nearly 90 percent do not make it to a third.
            (7) Eliminating the estate tax would lift the compliance 
        burden from farmers and family businesses. On average, family-
        owned businesses spent over $33,000 on accountants, lawyers, 
        and financial experts in complying with the estate tax laws 
        over a 6.5-year period.
            (8) Abolishing the estate tax would benefit the 
        preservation of family farms. Nearly 95 percent of farms and 
        ranches are owned by sole proprietors or family partnerships, 
        subjecting most of this property to estate taxes upon the death 
        of the owner. Due to the capital intensive nature of farming 
        and its low return on investment, farmers are 15 times more 
        likely to be subject to estate taxes than other Americans.
            (9) As the average age of farmers approaches 60 years, it 
        is estimated that a quarter of all farmers could confront the 
        estate tax over the next 20 years. The auctioning of these 
        productive assets to finance tax liabilities destroys jobs and 
        harms the economy.
            (10) Abolishing the estate taxes would restore a measure of 
        fairness to our Federal tax system. Families should be able to 
        pass on the fruits of the labor to the next generation without 
        realizing a taxable event.
            (11) Despite this heavy burden on entrepreneurs, farmers, 
        and our entire economy, estate and gift taxes collect only 
        about 1 percent of our Federal tax revenues. In fact, the 
        estate tax may not raise any revenue at all, because more 
        income tax is lost from individuals attempting to avoid estate 
        taxes than is ultimately collected at death.
            (12) Repealing estate and gift taxes is supported by the 
        White House Conference on Small Business, the Kemp Commission 
        on Tax Reform, and 60 small business advocacy organizations.

SEC. 3. INCREASE IN UNIFIED ESTATE AND GIFT TAX CREDIT.

    (a) In General.--The table in section 2010(c) of the Internal 
Revenue Code (relating to applicable credit amount) is amended--
            (1) by striking ``2000 and 2001'' and inserting ``2000 or 
        thereafter'',
            (2) by striking ``$675,000'' and inserting ``$5,000,000'', 
        and
            (3) by striking all matter beginning with the item relating 
        to 2002 and 2003 through the end of the table.
    (b) Effective Date.--The amendments made by this section shall 
apply to the estates of decedents dying, and gifts made, after December 
31, 1999.
                                 <all>