[Congressional Record Volume 142, Number 126 (Friday, September 13, 1996)]
[Senate]
[Pages S10554-S10556]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. GRAMS:
  S. 2072. A bill to amend the Internal Revenue Code of 1986 to 
eliminate the requirement that States pay unemployment compensation on 
the basis of services performed by election workers; to the Committee 
on Finance.


              the election workers unemployment reform act

 Mr. GRAMS. Mr. President, I offer legislation that would 
remove a costly and unnecessary burden imposed by Washington upon our 
State and local governments.
  Current Federal law requires States and counties to pay unemployment 
tax and benefits for people who work as election officials--even if 
they work as few as two days a year.

[[Page S10555]]

  This requirement has created a serious inequity for State and local 
governments. Under the law, polling place officials are considered as 
employees for unemployment insurance purposes, regardless of the number 
of days they work. Local governments are liable for payment of 
unemployment insurance for those election workers who apply for it 
after the elections, since they are being ``laid off from the 
employment through no fault of his or her own.'' As a consequence, 
their unemployment benefits could far exceed the stipend they receive 
for services on election day, because unemployment benefits are based 
on income from the previous year.
  During this time of belt-tightening at every level of government, 
many communities are having difficulty financing even the most 
fundamental activities, including election administration. Requiring 
local governments to spend their precious tax dollars paying 
unemployment benefits for such short-term employees would add a 
tremendous financial burden to budgets that in many cases are already 
strained to the breaking point.
  Mr. President, this current requirement does more harm than good to 
those it intends to protect. It hurts those civic-minded Americans who 
play a vital role in our democratic system through their willingness to 
serve as election officials, because it diverts limited public funds 
that would otherwise be used to balance local budgets or increase the 
salaries of election workers. It also makes it more difficult to retain 
and recruit an adequate number of qualified people to serve as election 
officials in our communities.
  My legislation seeks to free our communities and the taxpayers from 
this costly and unnecessary, federally imposed burden. It simply 
eliminates the requirement that state and local governments must pay 
unemployment compensation tax on the basis of services performed by 
election workers. Instead, it gives the States the freedom to design 
and run their own unemployment compensation programs for their election 
workers.
  I might add that according to the Congressional Budget Office, this 
bill is budget neutral.
  Mr. President, this is a reasonable and moderate attempt to correct 
an inequity for our States, cities, and counties, whose budgets are 
already tightly stretched providing the services upon which our 
communities depend. I therefore urge my colleagues to support this 
legislation.
                                 ______
                                 
      By Mr. THURMOND:
  S. 2074. A bill to repeal the Federal estate and gift taxes and the 
tax on generation-skipping transfers; to the Committee on Finance.


                        estate taxes legislation

  Mr. THURMOND. Mr. President, I rise today to join my colleagues in 
discussing reform of our tax system. I commend the Senator from 
Georgia, for his leadership on this issue. I wish to address another 
aspect of our unfair tax system--the estate tax.
  Today I am introducing a bill to repeal the Federal estate and gift 
taxes and the tax on generation-skipping transfers. This bill is very 
simple. It repeals, in its entirety, subtitle B of the Internal Revenue 
Code of 1986. This repeal is effective for estates of decedents dying 
and gifts and generation-skipping transfers made after the date of 
enactment.
  Mr. President, the Federal estate and gift tax structure is perhaps 
the most unfair and inefficient revenue source used by our Government. 
First, these taxes represent multiple taxation on savings and 
investment. Income is initially taxed when it is earned. If any of that 
income is saved, the earnings on the savings are taxed. A third level 
of taxation occurs as capital gains taxes are paid. Finally, after a 
lifetime of savings and investment, estate and gift taxes are assessed. 
Estate and gift tax rates are much higher than income tax rates.
  Second, these taxes inhibit economic growth and job creation. Family 
owned businesses, farms, and ranches are the source of most new jobs 
created in the United States. Yet it is these family owned businesses 
that are most affected by estate and gift taxes. In many cases, family 
businesses do not have sufficient liquid assets to pay estate taxes 
upon the death of the owner. Frequently the business is liquidated or 
they sell the farm. As a result, jobs are lost and economic activity 
ceases.
  Estate and gift taxes further stifle economic growth because of the 
increased cost for capital accumulation. When lifetime savings are 
taxed at high rates, the incentive to save is reduced. Spending and 
consumption replaces savings and investment. As a result, wage rates 
and employment suffer.
  Third, estate and gift taxes result in economic inefficiencies, as 
taxpayers attempt to avoid or minimize these taxes, or allocate 
resources for estate planning. A survey by the Center for the Study of 
Taxation found that 80 percent of owners of family businesses reported 
taking some steps to plan for estate taxes. Such mechanisms included 
life insurance, buy/sell agreements, restructuring family partnerships 
and trusts, and charitable bequests. According to a report on this 
survey, 62 percent of the family businesses stated they would not have 
spent the time or money on estate planning. They did so because they 
felt estate and gift taxes threatened the survival of their businesses.
  Mr. President, with all the negative economic consequences resulting 
from estate and gift taxes, one must ask if these taxes are worth the 
cost. I, and many others, have concluded they are not.
  There is a misconception that such taxes only affect the very wealthy 
and that these taxes generate large amounts of revenue. The fact is, 
these taxes impact everyone, directly or indirectly. Furthermore, these 
taxes are a minor revenue source for the Federal Government, accounting 
for only 1 percent of total Federal receipts. The amounts actually 
collected must be offset by the billions spent each year for 
enforcement and compliance activities.
  Mr. President, it is time to abolish Federal estate and gift taxes. 
These taxes are unfair and inefficient. They hinder economic growth, 
destroying family businesses and jobs. They result in resources being 
diverted to estate planning activities, away from economic growth. 
These consequences, as well as the actual costs of collecting these 
taxes, do not justify such taxes or the minimal revenues they produce. 
I urge my colleagues to support repeal of the Federal estate and gift 
taxes. I ask unanimous consent that a copy of the bill be printed 
following my remarks.

                                S. 2074

       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 ``Estate and Gift Taxes Repeal 
     Act of 1996''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) The Federal estate and gift tax structure is an unfair 
     and inefficient revenue source. Such taxes represent a 
     multiple tax on earnings. After paying income taxes, capital 
     gains taxes, and property taxes, lifetime savings are finally 
     subjected to estate taxes at rates that are generally higher 
     than income tax rates.
       (2) Owners of family-owned businesses and farms are among 
     those who suffer the greatest impact of such taxes. Many 
     businesses fail after the death of the founder because of 
     estate taxes. Families faced with these taxes are often 
     forced to liquidate farms or businesses to pay estate taxes. 
     In the process, jobs and financial security for family 
     members and employees are destroyed.
       (3) The estate tax results in inefficiency in the economy 
     because of ``estate planning'' and other tax avoidance 
     mechanisms.
       (4) Estate and gift taxes have a negative impact on 
     economic growth. Such taxes foster spending and consumption, 
     rather than savings and investment. Repeal of these taxes 
     would result in increased capital formation, additional jobs, 
     and a higher gross domestic product. Increased economic 
     activity and investments would also result in additional 
     personal and corporate income tax revenues.
       (5) Estate and gift taxes are a minor revenue source for 
     the Federal Government. In fiscal year 1995, estate and gift 
     taxes accounted for only 1 percent of total Federal receipts. 
     Furthermore, the Government spends billions of dollars each 
     year for administrative and compliance costs for these taxes.
       (6) The repeal of Federal estate and gift taxes is 
     consistent with and will be a major step toward establishing 
     a tax code based on fairness, simplicity, neutrality, 
     visibility, and stability.

     SEC. 3. REPEAL OF FEDERAL TRANSFER TAXES.

       (a) General Rule.--Subtitle B of the Internal Revenue Code 
     of 1986 is hereby repealed.

[[Page S10556]]

       (b) Effective Date.--The repeal made by subsection (a) 
     shall apply to the estates of decedents dying, and gifts and 
     generation-skipping transfers made, after the date of the 
     enactment of this Act.

                          ____________________