[Congressional Record Volume 143, Number 36 (Wednesday, March 19, 1997)]
[Senate]
[Pages S2563-S2569]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE NATIONAL MONUMENT FAIRNESS ACT OF 1997
Mr. HATCH. Mr. President, along with my colleague, Senator Bennett, I
am pleased to introduce the National Monument Fairness Act of 1997.
This act will promote procedural fairness in the creation of national
monuments on Federal and State lands under the Antiquities Act of 1906
and further congressional efforts in the area of environmental
protection. Identical legislation is being introduced today in the
House of Representatives by Congressman Jim Hansen with the support of
Congressmen Merrill Cook and Christopher Cannon.
As my colleagues know, on September 18, 1996, President Clinton
invoked the Antiquities Act of 1906 to create the Grand Staircase/
Escalante Canyons National Monument. The 1.7 million acre monument,
larger in size than the States of Rhode Island and Delaware combined,
locks up more than 200,000 acres of State lands, along with vast energy
reserves located beneath the surface.
Like the attack on Pearl Harbor, this massive proclamation came
completely without notice to the public. Although State officials and
members of the Utah congressional delegation were told that the
Administration would consult us prior to making any change in the
status of these lands, the President's announcement came as a complete
surprise. The biggest Presidential land set-aside in almost 20 years
was a sneak attack.
Without any notification, let alone consultation or negotiation, with
our Governor or State officials in Utah, the President set aside this
acreage as a national monument by the stroke of his pen. Let me
emphasize this point. There was no consultation, no hearings, no town
meetings, no TV or radio discussion shows, no nothing. No input from
Federal managers who work in Utah and manage our public lands. As I
Stated last September, in all my 20 years in the U.S. Senate, I have
never seen a clearer example of the arrogance of Federal power than the
proclamation creating this monument. It continues to be the mother of
all land grabs.
We in Utah continue to work with the hand President Clinton has dealt
us. That is, we are attempting to recognize and understand the
constraints placed upon the future use of the land and resources
contained within the monument's boundaries. We are trying to identify
the various adverse effects this action will have on the surrounding
communities.
Personally, while I would have preferred a monument designation
considerably smaller in scope, I could have enthusiastically supported
a monument designation for the area covered by the proclamation had I
been consulted prior to last September and invited to work with the
President on a designation that was tailored to address the many
concerns we have heard over the years on this acreage. Two of these
concerns involve the 200,000 acres of school trust lands captured
within the monument boundary and the locking up of 16 billion tons of
recoverable, low-sulfur, clean-burning coal.
Remember, our wilderness bill considered last year proposed
designation of approximately one-quarter of this land as wilderness. I
wanted to protect most of it; the people of Utah wanted to protect most
of it. But, we were not consulted; we were not asked; our opinion was
not sought. Rather, in an effort to score political points with a
powerful interest group 48 days before a national election, President
Clinton unilaterally acted.
In taking this action in this way, the President did it all
backwards. Instead of knowing how the decision would be carried out--
and knowing the all ramifications of this implementation and the best
ways to accommodate them--the President has designated the monument and
now expects over the next 3 years to make the designation work. The
formal designation ought to come after the discussion period. It is how
we do things in this country. Unfortunately, however, the decision is
now fait accompli, and we will deal with it as best we can. I hope the
President will be there to help our people in rural Utah and our school
system as the implementation of the designation order takes place.
The legislation we are introducing today, the National Monument
Fairness Act, is designed to correct the problems highlighted by the
Clinton Antiquities Act proclamation in Utah. It will do this in two
significant ways.
First, the act makes a distinction between national monument
proclamations greater in size than 5,000 acres, and those 5,000 acres
and less. The President retains his almost unfettered authority under
the Antiquities Act over monument designations 5,000 acres and less.
Specifically, the Antiquities Act delegates to the President discretion
to declare as a national monument that part of Federal land that
contains historic landmarks, historic and prehistoric structures, and
other objects of historic or scientific interest--but only as long as
the declared area is confined to the ``smallest area compatible with
proper care and management of the objects to be protected.'' The 5,000
acre limitation will give effect to this ``smallest area compatible''
clause, which both the courts and past Presidents have often ignored.
For areas larger than 5,000 acres, the President must consult,
through the Secretary of Interior, with the Governor of the State or
States affected by the proposed proclamation. This consultation will
prevent executive agencies from rolling over local concerns--local
concerns that, under the dictates of modern land policy laws such as
the Federal Land Policy and Management Act of 1976 [FLPMA] and the
National Environmental Policy Act, certainly deserve to be aired.
The National Monument Fairness Act also provides time constraints on
the consultation requirement. From the date the Secretary of Interior
submits the President's proposal to the appropriate State Governor, the
Governor will have 90 days to respond with written comments. Ninety
days after receiving the Governor's comments, the Secretary will then
submit appropriate documentation, along with the Governor's written
comments, to the Congress. If the Governor fails to comment on the
proposal, the Secretary will submit it to the Congress after 180 days
from the date of the President's proposal. These time constraints
assure that the process will be fair. It will prevent State officials
from unnecessarily delaying proposed proclamations, but will allow
appropriate time for State and localities to voice their concerns
through the Governor's comments on the President's actions.
Consequently, the consultation requirement ensures that large
monument designations will be made fairly, and in a manner that allows
the participation, through their Governor, of the people most directly
affected by the proclamation.
Second, the National Monument Fairness Act allows all citizens of the
United States to voice their concerns on large designations through
Congress. The act provides that after the Secretary has presented the
proposal, Congress must pass it into law and send it to the President
for his signature before the proposal becomes final and effective.
Thus, the Nation, through its elected representatives, will make the
decision whether certain
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lands will become national monuments. This is the way our democracy
ought to operate. Indeed, it furthers the intent of the Framers in the
Constitution who anticipated that laws and actions affecting one or
more individual States would be placed before the legislature and
debated, with a State's representatives and senators able to defend the
interests of their State.
Mr. President, the purpose of our legislation is to ensure that a
fair and thorough process is followed on any future large-scale
monument designations under the authority granted in the Antiquities
Act. Since Utah is home to many other areas of significant beauty and
grandeur, I am concerned that this President or those within his
administration, or a future President or administration, might consider
using this authority in the same manner as last September. In other
words, it will be ``deja vu all over again.'' We cannot afford to have
the entire land area of our state subject to the whims of any
President. Many have proposed plans, including myself, for these areas,
that have been the subject of considerable public scrutiny and comment.
The consensus building process must be allowed to continue without the
threat that a Presidential pen will intervene to destroy any progress
and goodwill that has been established or that may be underway among
the citizens of our State.
I am aware that Interior Secretary Babbitt stated publicly last month
that ``there are no plans for any additional executive withdrawals''
during the remaining years of the Clinton administration. That is fine.
However, as my colleagues know perfectly well, Secretary Babbitt told
me and other members of our congressional delegation last December that
there was no final decision to designate the Grand Staircase/Canyons of
the Escalante Monument and that we, the congressional delegation, would
be consulted prior to any designation. Since then, we have learned from
press reports that many decisions leading to the monument announcement
had already been made, if not finalized, prior to our meeting with the
Secretary.
But, regardless of whether the Clinton administration plans to
designate any more monuments, I do not think it is unreasonable to look
at the authorities contained in the Antiquities Act--particularly the
authority that permits such sweeping and long-lasting changes for
individual States and towns without State input and congressional
approval. That is the issue.
That is why we are introducing this legislation today. This matter of
due process for State and local officials--as well as for small
business people, ranchers, school systems, and many others affected by
locking up lands--is an issue about which I believe all Senators and
Congressmen need to be concerned. While Senators representing the so-
called public lands States may need to pay particular attention, if the
long arm of the Federal Government can do this to Utah without so much
as a day's notice, it can do it to your State as well.
It is time we incorporate some common sense protections for all
States into the Antiquities Act. I continue to believe that last
September's act was a Federal land grab, and I unwilling to stand by
and let it happen again in my State or any other State without a fair
and proper airing in the court of public opinion.
Some may ask why this legislation focuses only on proposed areas over
5,000 acres. First, it is not our desire to completely withdraw the
authority granted the President in the 1906 act. But, the original act
is clear when it States that this authority should be limited to ``the
smallest area'' possible. In my mind, this authority should be
available for those areas that are small in nature that may require
quick or emergency protection for which a monument designation is
warranted. That is how I envision this authority being used.
Second, there is already precedence in Federal law for 5,000 acres as
the threshold amount for determining certain pending or future Federal
action or consequence. For example, the Wilderness Act of 1964 defines
wilderness as having ``at least 5,000 acres of land.'' Also, FLPMA
authorizes the Secretary to withdraw 5,000 acres or more for up to 20
years ``on his own motion or upon request by a department or agency
head.'' And, there is reference to ``roadless areas of 5,000 acres or
more'' in that section of FLPMA that authorizes the 15-year Bureau of
Land Management wilderness study process.
I am sure that any detractors of this bill will State that had our
bill been enacted in the past, some of the Nation's most gorgeous and
long lasting monuments would never have been designated as a national
monument. I would say two things to this point.
First, our bill will not prevent the establishment of any monument
consisting of 5,000 acres or more. The bill simply modifies the process
by which proposed monuments of acreage above this amount can be
designated. Second, and most importantly, I understand that there are
72 national monuments in the United States. Of that number, only one-
third, or 24, have a total acreage figure greater than 5,000 acres.
Enactment of our bill will not bring a halt to the ability of
Congress--or even the President--to designate national monuments.
In addition, I realize that some of our existing national parks, such
as Arches and Canyonlands National Parks in Utah, were originally
established as national monuments, only to be designated a park
afterward. It is not fair to say that had our bill been in law prior to
the designation of these monuments that parks like Arches and
Canyonlands or the Grand Canyon National Park would never have been
designated. Certainly, any monument proposal consisting of more than
5,000 acres that is proposed by the President where a consensus exists
within Congress that such a designation is warranted would be favorably
received and acted upon by Congress. And, at least home State senators
and representatives have a voice. In many cases, it is likely that they
would pursue a designation of these areas prior to the President
exercising his authority under the Antiquities Act.
But, let's not lose focus of the purposes of this bill. We simply
want to ensure that a public process is undertaken prior to any large
monument designation under the Antiquities Act. As I stated earlier, we
conduct such a process whenever a similar proposal is introduced in
Congress; why can't Congress insist that it be done when the President
desires to achieve the same purpose?
I mentioned that we are in the process of recognizing and
understanding the constraints this proclamation will place on the
economic and social aspects of the surrounding communities. When an
area the size of the Grand Staircase-Escalante Canyons National
Monument is withdrawn from public use and given a special designation,
there are many ramifications that need to be addressed, the burden of
which falls primarily on the shoulders of the local community. These
include the following items:
First, county land-use plans will have to be studied and amended to
address necessary changes relating to the new monument.
Second, consideration of the transportation improvements required to
improve the existing inadequate transportation system to access the new
monument for visitors to the area.
Third, increased visitation to the area will place greater burden on
services provided by local government, such as law enforcement, fire,
emergency, search-and-rescue, and solid waste collection.
Fourth, increased visitation to the area will place greater burden on
the proper disposition of limited natural resources, such as water,
both for culinary and irrigation purposes.
These are just a few items that are currently being discussed and
reviewed by local leaders in the area of the new national monument.
These are not trivial matters; they are critical to continuing the
livelihood of the cities and towns in the area. So, no one should think
that creating a new monument of this size, as endearing a concept as
that is, does not create significant matters that must be addressed.
Of course, the other consequence the creation of this monument has
created which continues to be of utmost concern to me is the final
disposition of the State school trust lands captured within the
monument's boundaries. The inability to access the natural resources
contained on these lands will
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have a devastating impact on providing crucial funds to Utah's public
school educational system. The Utah Congress of Parents and Teachers
has indicated that ``the income from the mineral resources within the
Monument could have made a significant difference in the funding of
Utah schools now and for many generations to come.'' It remains to be
seen the manner in which the President will fulfill the promises he
made to the children of Utah last September when he created the new
monument. Specifically, he said ``creating this national monument
should not and will not come at the expense of Utah's children.'' He
also added that it is his desire to ``both protect the natural heritage
of Utah's children and ensure them a quality educational heritage.'' I
am eager to work with him to fulfill these promises.
I mention these items to simply paint a picture for my colleagues
that there are many pieces to the monument puzzle that remain to be
resolved. The President can come to town--or 75 miles to the south in
another State--and designate a monument, but Utahns are left to pick up
the pieces of his action to make sure that it works--and that it works
properly. That is what I want, and I am sure that is what the President
wants.
Finally, Mr. President, I must point out that the adoption of this
act will likely result in more stringent environmental protection of
Federal lands. The most ironic fact of the administration's monument
designation in Utah is that national monuments permit a greater level
of activity than does a wilderness designation. Last year, the Utah
delegation proposed that 2.1 million acres of land on and around the
Grand Staircase/Escalante Canyons area be declared wilderness, under
the language of the Wilderness Act of 1964. The wilderness designation
is far more stringent than the administration's monument designation
and prevents the construction of the roads and visitors centers
envisioned under the monument designation. The Utah proposal of the
104th Congress included more area than BLM had officially recommended
to Congress following its 13-year inventory of the lands in Southern
Utah. This is yet another compelling reason why it is vital for local
and State officials to be consulted prior to national monument
declarations.
Mr. President, the Antiquities Act is antiquated. It needs to be
updated. It can be amended in a manner consistent with today's pressing
land policy concerns without destroying the original intent behind the
act. That is what we have proposed in this legislation and why I urge
passage of the National Monument Fairness Act of 1997. This bill will
preserve the President's ability to act to protect lands of historic
and scientific significance that are threatened with development.
However, the act will promote greater environmental stewardship by
forcing the executive branch to consider the views of local and State
officials prior to making large-scale changes in land designation and
management.
Finally, the requirement that massive monument proposals be passed
through the Congress, under the strictures of article I of the
Constitution, will ensure that all Americans have a say in land policy
decisions that fundamentally change the Nation. And, this, Mr.
President, may be the most compelling reason of all to enact this
measure.
I invite Senators to join me in support of this legislation and ask
unanimous consent that the text of the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 477
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 ``National Monument Fairness
Act of 1997.''
SEC. 2. CONSULTATION WITH THE GOVERNOR AND STATE LEGISLATURE.
Section 2 of the Act of June 8, 1906, commonly referred to
as the ``Antiquities Act'' (34 Stat. 225; 16 U.S.C. 432) is
amended by adding the following at the end thereof: ``A
proclamation under this section issued by the President to
declare any area in excess of 5,000 acres to be a national
monument shall not be final and effective unless and until
the Secretary of the Interior submits the Presidential
proclamation to Congress as a proposal and the proposal is
passed as a law pursuant to the procedures set forth in
Article 1 of the United States Constitution. Prior to the
submission of the proposed proclamation to Congress, the
Secretary of the Interior shall consult with and obtain the
written comments of the Governor of the State in which the
area is located. The Governor shall have 90 days to respond
to the consultation concerning the area's proposed monument
status. The proposed proclamation shall be submitted to
Congress 90 days after receipt of the Governor's written
comments or 180 days from the date of the consultation if no
comments were received.''.
______
By Mr. GRASSLEY (for himself, Mr. Murkowski, Mr. Torricelli, Ms.
Landrieu, Mr. Craig, Mr. Kerrey, Mr. Hagel, Mr. Baucus, Mr.
Lott, Mr. Breaux, Mr. Nickles and Mr. Hutchinson):
S. 479. A bill to amend the Internal Revenue Code of 1986 to provide
estate tax relief, and for other purposes; to the Committee on Finance.
THE ESTATE TAX RELIEF FOR THE AMERICAN FAMILY ACT
Mr. GRASSLEY. Mr. President, I rise today to introduce a bipartisan
effort to relieve the estate tax burden on the American family. I want
to thank the other original cosponsors and particularly the Majority
Leader. Estate tax relief is on the respective top ten legislative
objective lists of both parties. It is my honor to lead the effort for
my party. I think that estate tax reform will happen in this Congress.
Therefore, I encourage my colleagues to associate themselves with our
bipartisan legislation. It doubtlessly will become the focus of the
estate tax reform efforts in the Senate efforts. The list of original
cosponsors already includes Senators Baucus, Lott, Breaux, Nickles,
Murkowski, Kerrey, Hagel, Torricelli, Landreiu, and Mr. Hutchinson.
I will go about this introductory statement in two steps. First, I am
going to discuss the importance of this legislation to my state of
Iowa. Then, I will make some remarks about the specific provisions of
the bill.
In nearly every area of my state and the nation, we saw in the past
decade estate tax ultimately confiscate many family farms. For example,
in 1981, the children of two family farmers in Hancock County, Iowa,
inherited tracks of land that were debt free. In both of these cases a
father was passing the farm to one of his children. The estate was
forced to borrow the amount to pay for both the state inheritance tax
and the federal estate tax. At the time, the profitability of farming
was low, and the value of farm land plummeted. In both cases the estate
tax unfortunately brought about the foreclosure of these farms which
had been in each family for four generations.
That was sixteen years ago, and the estate tax has hardly improved
since then. The general estate tax exemption has risen to $600,000, but
that number is over $200,000 behind the rate of inflation. The
important thing to keep in mind about estate tax reform is that estates
do not pay taxes, surviving families pay taxes. This bill is simply
about fairness and equity for families. Furthermore, it is about
correcting latent defects in the estate tax rules that make tax lawyers
rich, but also make families crazy.
Reform in this legislation comes in three major parts. First, we
increase the broad based estate tax exemption from $600,000 to
$1,000,000 over a period of six years. Second, we grant family owned
businesses relief similar to what was introduced by former Senators
Dole and Pryor. For businesses passed down among the family, this bill
provides a complete exemption for the first $1,500,000 of family
business assets. It also provides an additional 50 percent exemption on
the next $8,500,000. Thus, there is a $10,000,000 cap on our family-
owned business relief. This provision is therefore a smaller provision
than the original Dole/Pryor legislation.
Finally there is a section that I call repair and maintenance. Here
we improve some popular existing provisions. For example, housekeeping
and improvement is done to special use valuation. The Government
financed estate tax deferral provision is improved. A generation
skipping tax equity problem is fixed that has already been passed twice
but vetoed for unrelated reasons. Finally, an IRS gift tax audit
statute of limitations problem for families is fixed.
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Because it is especially complicated, I want to discuss the
generation skipping transfer tax problem that is addressed in the
repair and maintenance section of this bill. For reference purposes,
this legislation was known as bill number S. 1170 in the 104th
Congress. It too was passed on the Balanced Budget Act of 1995 which
was subsequently vetoed.
The GST tax is an extra tax that families pay when a grandparent
makes a gift to a grandchild. The provision in our bill has the support
of over 200 charities in the Nation including the public universities
in my State of Iowa. It has passed twice in the last 10 years, but was
not enacted because the greater legislation was vetoed for unrelated
reasons.
Our provision expands the current law predeceased parent exception.
This is an exception to the GST tax where a grandparent gifts to a
grandchild but the grandchild's parent has already died. The grandchild
steps up into the place of the parent. In our bill, this exception is
broadened to include gifts not only to grandchildren with predeceased
parents but also grandnieces and grandnephews. The expansion to include
these gifts that are affected by trusts is necessary to promote
charitable giving and also protect families. The White House supported
this provision during the debate of the Balanced Budget Act of 1995,
given the prospective effective date as in our bill.
Humility requires me to admit that each of these provisions passed as
part of the vetoed Balanced Budget Act of 1995. In some places we have
made technical improvements suggested by the tax experts, but by and
large there is little original thought here. If you have good
legislation you don't need to improve upon it.
Some will ask about how this estate tax bill fits into the debate
over a balanced budget. The answer is that the balanced budget is still
a No. 1 priority and this bill will need to fit in a balanced budget.
Since the White House has supported provisions in the President's
budget similar to these provisions, we should expect the White House to
offer assistance to us in resolving the estate tax problem. If the era
of big government is over, then the White House should step up to the
plate and aid us in eliminating estate tax theft upon surviving
families.
Mr. BAUCUS. Mr. President, I am very pleased to join with Senator
Grassley and my other colleagues in introducing the Estate Tax Relief
for the American Family Act of 1997 today. This bill is designed to
provide farmers, ranchers, and others who own family businesses and
much needed relief from the estate tax.
Montana is a small-town, rural State, Mr. President. People run
farms, ranches, and work in small businesses. One of the wonderful
things about life in rural Montana is the way these operations stay in
the family. It holds communities together, and creates a lasting bond
between generations.
As I listen to farmers, ranchers and small business owners, one topic
comes up every time, and that is the estate and gift tax. I hear about
the burden it puts on agricultural producers and small businesses, and
about how difficult this tax makes it to hand down an operation to your
sons and daughters.
To avoid this tax, an operation today has to be under $600,000 in
value. That amount hasn't budged since 1987. Our State, one the other
hand, has changed a lot in that time. In 1988, the average Montana farm
was worth $579,735. In 1995, that amount was up to $867,769. If we had
figures for today, I am confident this amount would be even higher.
So if you're an average fellow, you often have three choices when
your farm goes on to the next generation. You can subdivide the land
and thus decrease production. You can sell off part of the farm to pay
the taxes. Or, you can sell the whole thing and get out of farming
altogether. None of these options are good for the family, nor are they
necessarily good for the community. Unbridled development brings with
it its share of problems, and changes the nature of Montana life--not
always for the better. Our farms, ranches and other small businesses
are a part of our heritage and valuable contributors to our economy and
the Montana way of life. It is simply not right to destroy them with
onerous estate taxes.
The Estate Tax Relief for the American Family Act of 1997 is the
first step toward bringing the estate tax up to date and making it more
fair. Our bill raises the unified credit to cover estates up to $1
million, which is roughly where the cap would be if the credit had kept
pace with inflation all these years. We give folks a bit longer to pay
off the bill when they do have a tax due, by lengthening the deferral
from 10 years to 20. We provide additional exemptions for family-owned
small businesses, by allowing them to exclude completely the first $1.5
million in value of their estates, and one-half of the next $8.5
million. We also make a few other common-sense changes to make it
easier to keep these business operations in the family.
That's good news for farmers, ranchers and small business owners.
It's good for the communities they live in. And more than anything
else, it's the right thing to do. So I'm very proud to be a part of
this effort today, and I look forward to working with my other
colleagues, and with the administration, to get this relief enacted
into law this year.
Mr. LOTT. Mr. President, I am delighted to take part in introducing
the first bipartisan family tax relief bill of the 105th Congress--the
Estate Tax Relief for the American Family Act.
Today, the Government can confiscate up to 55 percent of an estate in
tax when a person dies. This tax is a grotesque relic of an earlier era
when some people believed it was the Government's job to determine who
should be allowed to keep what they earn. They believed it was the
Federal Government's job to confiscate the hard-earned dollars of
working Americans when they died.
The estate tax is a monster that must be exterminated. If it were up
to me, we would simply repeal the estate tax in its entirety.
Unfortunately, our budget process does not allow us to completely
repeal this tax all at once. We must do it in stages.
Therefore, the bill we are introducing today will increase the amount
of every estate that will be exempt from estate tax. When fully phased
in, up to $1 million will be automatically excluded from every estate
before imposition of the estate tax.
The bill also creates a new category of excludable assets for family-
owned businesses that are passed on to succeeding generations. No
longer will small business owners be forced to sell part or all of
their business assets merely to feed the voracious tax appetite of the
Federal Government. Our bill allows an exclusion of $1.5 million of the
assets of a family-owned business from the estate tax, and 50 percent
of the next $8.5 million. For many small businesses this will make the
difference between staying viable and closing their doors. It will
preserve jobs, give many communities around the country stability and
certainty, and encourage entrepreneurship. It is the right thing to do
for our farmers, for our ranchers, for every American who owns a small
business that he or she wishes to keep in the family.
These businesses are, after all, the engines of prosperity in
communities across America, and we must help them to remain so.
This bill is the first step. The tax on death should be zero, and
that is what we will continue to work for.
I want to thank Senator Grassley for his leadership on this bill, and
Senator Baucus and Senator Breaux as well for joining in this
bipartisan effort to reduce the crushing tax load on all Americans.
Mr. BREAUX. Mr. President, today I join with several of my colleagues
to introduce the Estate Tax Relief for the American Family Act of 1997.
Tax policy should meet two criteria. It should provide an effective
and efficient way to collect taxes for the operation of our Government
and it should encourage positive economic and social policies. This tax
does neither. After looking at the current system, I have concluded
that Federal estate and gift taxes are not worth the cost to our
economy, to businesses and to American families.
In 1995, the estate tax generated $14.8 billion in revenue, only 1.09
percent of total Federal revenues. Conversely, the cost of collecting
and enforcing the estate tax to the Government and taxpayers was 65
cents of every dollar collected.
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The effects of the estate tax are felt most by family-owned
businesses. More than 70 percent of family-owned businesses do not
survive the second generation and 87 percent do not survive the third
generation. Many families are forced to liquefy their businesses in
order to pay the estate tax.
There is a definite need to remedy these problem and this bill takes
steps in the right direction. The legislation would increase the estate
tax exemption from $600,000 to $1 million, and allow estate tax-free
transfers of certain qualified small business assets.
I hope that any tax bill we put forth this year will include estate
tax relief based on the principles we have put forth in this bill.
Mr. NICKLES. Mr. President, I have always believed that economic
freedom is a critical part of life, liberty, and the pursuit of
happiness. Unfortunately, the Internal Revenue Code does not always
promote or encourage economic freedom, and one area where this is
strikingly clear is the confiscatory, anti-family, anti-growth estate
tax.
Most Americans work diligently throughout their lives to provide for
their families and give their children and grandchildren a better
future. This work often results in the accumulation of assets like
homes, businesses, and farms; all acquired with hard work and bought
with after-tax dollars. Unfortunately, those without high-paid lawyers
and accountants realize too late that up to 55 percent of those assets
could be confiscated by the Federal Government upon their death.
Some people mistakenly believe estate taxes only affect the rich, but
there are thousands of small businesses and farms throughout the
country owned and operated by middle-income Americans that are affected
by existing estate tax laws. These small businesses may appear to be
economically significant on paper, but often they have little liquid
assets to cover estate tax liabilities. Historically, these businesses
have created most of the new jobs in this country and fueled the growth
of the economy.
The unfortunate result of high estate taxes is that families are
frequently forced to sell off part of the family business to pay the
taxes incurred by the deceased family member's estate. This liquidation
of productive assets to finance tax liabilities is anti-family and
anti-business. At the very least, families and businesses are forced to
employ an army of expensive experts to avoid the worst estate taxes, a
make-work exercise that exacerbates the inefficiency of the system.
Mr. President, I believe it is patently unfair for the Federal
Government to assume that it has the right to take an individual's
hard-earned assets and redistribute them to others. If our goal as a
society and a government is to encourage long-term, private savings and
investment we cannot continue the policy of confiscating estates. With
an average savings rate in the United States of 2.9 percent, which is
lower than that of any other industrialized country, we should be
encouraging individuals, families, and businesses to save and invest.
Since 1987, a unified tax credit for gifts and estate transfers has
effectively exempted $600,000 worth of assets from estate taxes. This
basic exemption has increased modestly over the years, from $60,000 in
the 1940's, 1950's and 1960's to $225,000 in 1982. Unfortunately, the
current estate exemption of $600,000 has been greatly eroded by
inflation.
The legislation I am introducing today with the Senate majority
leader, Senator Grassley, Senator Breaux, Senator Baucus, and others
addresses the problems associated with the estate tax in a thoughtful,
bipartisan manner. It is not the perfect solution to these problems,
Mr. President, but it is a good first step. I believe that ultimately
we must radically restructure the estate tax by reducing marginal
rates, which now exceed 55 percent for estates larger than $3 million,
and I believe we must strive to treat all types of family businesses
equally. However, I recognize the budget constraints Congress is
working under, and I believe it is important to move forward in a
bipartisan manner.
The legislation we are introducing today increases the estate tax
exemption from $600,000 to $1,000,000, thus allowing more homeowners,
farmers, and small businesses to keep their hard-earned wealth.
Further, our bill would provide special relief for closely-held family
businesses. We would allow estate-tax free transfers of up to $1.5
million in small business assets to qualified family members, and a 50
percent exclusion for up to $8.5 million in assets above that
threshold, as long as the heirs continue to operate the business.
The legislation we are introducing today makes simple pro-family,
pro-business, and pro-economy changes to our tax code. It will allow
more homeowners, farmers, and small businesses to keep their hard-
earned wealth. I encourage my colleagues to join us as cosponsors of
this bill.
Mr. TORRICELLI. Mr. President, I am proud to include my name as an
original cosponsor of the Estate Tax Relief for the American Family Act
of 1997, which was introduced today. This is a critical tax reform bill
that will modernize our antiquated estate tax policy, provide
significantly improved economic security for family businesses, promote
efficient and pro-growth economic policy and ensure sound financial
practices for millions of American working families.
This legislation gradually increases over 6 years the estate and gift
tax exemption from the current limit of $600,000 to $1 million. The
graduated time schedule would increase the exemption by $100,000 in
each of the first 2 years following enactment and $50,000 in each of
the next 4 years.
For families with their own small business, the bill would provide a
new small business exemption of $1.5 million of business-related assets
above the first $1 million in an estate as well as 50 percent of the
next $8.5 million of such assets. This proposal would provide new
safeguards for family business solvency that is not currently provided
under current law.
These changes are desperately needed as our current estate tax policy
has not been upgraded in a decade. Even worst, the current policy has
proven to be a economic failure. Estate and gift taxes are one of the
smallest sources of revenue, collecting only $10 to $15 billion per
year, mostly because Americans have found legal means of avoiding the
tax. Indeed, Prof. Douglas Bernheim of Stanford University has
theorized that more income tax revenue may be lost through clever
estate planning than is actually collected through the estate tax.
Even worse, the current policy encourages Americans to spend capital
on consumption items rather than save because saving their money would
increase the value of their estate and, ultimately, their estate tax
liability. Indeed, it has been estimated that the tax cost of a dollar
saved increases by an amount somewhere between 7.4 cents and 55 cents
because of current estate tax law.
And for small business, the current policy is devastating. The
family-owned pizza parlor, dry cleaning store, grocery and family farm
are failing to provide the kind of generational economic continuity
that national policy should be encouraging. Indeed, more than 70
percent of family businesses don't survive the second generation and
almost 90 percent don't survive to a third generation. Most of these
failures occur because current estate tax policy drains a family's
financial ability to keep a business afloat as it passes from one
generation to the next.
The existing estate tax policy creates economic inefficiencies and
places its heaviest burdens on the middle class. The rates of estate
taxes are excessive, unfair, punitive, and contrary to the interests of
both business owners and their employees. Indeed, these taxes destroy
the work of a lifetime and the dreams of a generation of Americans. The
time to make genuine and sensible changes is now.
Enactment of the Estate Tax Relief for the American Family Act of
1997 is an essential part of any plan to balance the budget by 2002. It
would likely provide a net increase in revenues while at the same time
restore tax fairness for millions of Americans. I am proud to be an
original cosponsor of this legislation and will be a tireless advocate
for its enactment into law.
______
By Mr. WELLSTONE:
S. 480. A bill to repeal the restrictions on welfare and public
benefits for aliens; to the Committee on Finance.
[[Page S2568]]
THE FAIRNESS TO IMMIGRANTS ACT
Mr. WELLSTONE. Mr. President, on April 1, the Nation will
begin to see the disastrous effects of the Personal Responsibility and
Work Act of 1996, passed and signed into law in the 104th Congress.
When Congress debated the bill, strong arguments were made for getting
people off welfare and back to work. I supported those intents.
However, I believed then as I do now that the bill we were debating
went beyond what is humanly justifiable in terms of repealing basic
assistance to people who are in need. This bill was not about able
bodied people working. It was about good people suffering. Under the
guise of able bodied people working, we are forcing disabled and
elderly people into hunger, into homelessness.
Beginning around April 1, roughly 500,000 legal immigrants will lose
their SSI benefits and about 1 million will lose food stamps. By the
year 2002, approximately, 260,000 elderly immigrants and 140,000
children will lose Medicaid coverage.
The bill I am introducing today restores those benefits to elderly
and disabled immigrants by repealing provisions of the Personal
Responsibility Act of 1996.
When the American people supported welfare reform, they supported
that able bodied people would work. I want that. You want that.
However, I do not think that the American people intended the ensuing
consequences.
These consequences are people like Yanira, who, with her husband came
to the United States legally 20 years ago from her native El Salvador.
For 20 years they raised three children. For 20 years, they paid income
taxes. For 20 years, they paid sales taxes. For 20 years they paid
State taxes. For 20 years, they paid their car registration. For 20
years, they abided by the laws and rules here.
Then Yanira's husband divorced her. So, Yanira got a job. For about 8
years she cleaned toilets, washed floors and laundered towels in a
hotel near her home. Eventually, the work became too demanding
physically and she quit. At 64, Yanira has received SSI for a few
years. Soon, she will not.
Since her husband is no longer married to her, she is not entitled to
count her husband's work history toward the required 40 quarters--10
years. In spite of the fact that we willingly took her taxes and other
fiscal contributions, we are denying her the basics for human survival,
human dignity. How will Yanira survive? She doesn't know. Neither do I.
Yanira's situation is not isolated. There are Yaniras living in
Minnesota, in Ohio, in New York and Mississippi. They are here legally
but will not receive SSI until they become U.S. citizens. Many of them
are elderly and cannot work and considering their age, learn all that
is necessary to become citizens. They will be denied benefits for the
rest of their lives.
Gladys has lived in the United States for 40 years, working as a
nanny--caring for children in our Nation. Though she paid taxes and
followed all the rules of the United States, she will lose her SSI
benefits in July. She does have the option of struggling through forms
and tests to become a citizen. Sounds like a good option until you
realize: Gladys is 105 years old, blind and housebound. Gladys spent a
good share of her times caring for and nurturing our children. She now
needs the same.
Lucrecia has lived here for 17 years. For 8 of them, she labored in a
factory, assembling artificial Christmas trees. At 75, facing the loss
of her sole means of support, Lucrecia is desperate.
Rose, a 92-year-old, came from Lebanon 76 years ago. She has lived in
a nursing home for the past 30 years. She has dementia. In December,
she received a letter from the Government. The letter said, in essence,
Rose had been shirking her responsibilities and she will no longer
receive her benefits that support her stay in a nursing home. She can't
speak for herself. I think we should speak for her. We should send the
message that this is unacceptable. We must not let this happen to Rose.
During my many visits with communities in Minnesota and while talking
with folks here, I have never seen more fear in the faces of so many
people, so many good people, people who came to this country and
followed the rules. I hear stories every day of people so full of fear
that they take their own lives.
The Personal Responsibility and Work Opportunity and Reconciliation
Act has abjured the contributions the legal immigrants like Yanira have
made to our economic livelihood. I ask, How will their contributions be
rewarded? Taxation without benefits is morally wrong.
Last year, we discussed and debated the merits and failings of the
welfare reform law. As you know, I voted against it. I did not vote
against it because I am against people working, people contributing to
our country. I did not vote against it because I am against paychecks
replacing welfare checks. I voted against it because I am against
pushing the unemployable into poverty. I am talking about benefits for
the disabled and elderly immigrants in our country. On April 1, we will
see the first trickle in the torrent of suffering that this bill will
inflict on our Nation's most vulnerable.
Around this time last year, we heard testimony from Robert Rector of
the Heritage Foundation that ``welfare is becoming a way of life for
elderly immigrants.'' A picture was painted depicting newly arrived
immigrants being picked up by a sponsor at the airport and driven in a
Cadillac directly to the welfare office to sign up for benefits such as
SSI and food stamps. While I will not argue with you that there has
been some abuse, I think this assertion is absurd.
Last year, Robert Rector also testified that ``the presence of large
numbers of elderly immigrants on welfare is a violation of the spirit,
arguably, the letter, of U.S. immigration law.'' I beg to differ. This
country was based on the dignity of the human spirit, fairness and
equity. The spirit of this country is to give voice to the voiceless,
to care for the elderly and to nurture the children.
When we talk about reform, we should focus on change for the better,
improvements to the system, revisions on our mistakes. When we talk of
reform, we should not be discussing more people in hunger, more people
who are homeless, more people in poverty. That is what this ``reform''
has led to.
People who supported the welfare reform bill said they ``responded to
the wishes of the American people and put an end to the widespread use
and abuse of our welfare system.'' I am asking you now to respond to
the voice of the American people. A recent nationwide L.A. Times poll
found that 56 percent of the American people favor restoring cuts to
legal immigrants. Not too long ago, several Republican Governors were
here. They are already anticipating the effects of this legislation.
The American people do not want people like Gladys and Lucrecia left
hungry and homeless. They want responsible, ethical government.
Responsible, ethical government costs money. I know that. I propose
that instead of taking food from our Nation's elderly and children, we
tax oil companies, we tax tobacco companies, we tax pharmaceutical
companies. Why should wealthy corporations flourish and benefit from
our policies while hardworking, law abiding people go hungry? This is
not reform. This is a sham. Furthermore, it is shameful.
People like Gladys and Lucrecia don't have high-paid lobbyists.
Privileged industries avoid paying their fair share of taxes because of
the efforts of lobbyists. I propose that we take away the privileges of
the wealthy and provide necessities for the poor.
Today, I am imploring you to look beyond politics and look beyond
polls and see the faces and hear the stories that this reform will
portend. This is no longer a political issue. This is an issue
concerning humanity. To disregard this population, to turn our backs on
those who are so vulnerable is disgraceful and dishonorable. Tonight,
you know where you are sleeping. Tonight, you know what you will eat.
Soon, Gladys and Lucrecia will not be able to say the same.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 480
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. REPEAL.
(a) In General.--Title IV of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 (Public Law
104-193;
[[Page S2569]]
110 Stat. 2260-2277), as amended by title V of the Illegal
Immigration Reform and Immigrant Responsibility Act of 1996
(Public Law 104-208; 110 Stat. 3009-1772-3009-1803), is
repealed.
(b) Notice and Redetermination.--Not later than 30 days
after the date of enactment of this Act, any Federal or State
official responsible for the administration of a Federally
funded program that provides benefits or assistance to an
individual who, as of such date, has been determined to be
ineligible for such program as a result of the provisions of
title IV of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (Public Law 104-193; 110 Stat.
2260-2277) (as so amended), shall--
(1) notify the individual that the individual's eligibility
for such program shall be redetermined; and
(2) shall conduct such redetermination in a timely
manner.
____________________