[Congressional Record Volume 143, Number 44 (Tuesday, April 15, 1997)]
[House]
[Pages H1457-H1458]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           THE AMERICAN DREAM TAX FAIRNESS EQUITY ACT OF 1997

  The SPEAKER pro tempore (Mr. Snowbarger). Under the Speaker's 
announced policy of January 21, 1997, the

[[Page H1458]]

gentleman from Montana [Mr. Hill] is recognized during morning hour 
debates for 5 minutes.
  Mr. HILL. Mr. Speaker, I am planning to introduce a bill to reduce 
the high rate of capital gains and eliminate the current estate tax 
burden that falls disproportionately on farmers and small business 
owners.
  My legislation will restore the American dream to hard-working 
citizens who choose to invest in or expand a business. It will give 
hope to those who wish to pass along their life's work to their 
children and grandchildren without fear that more than half of their 
estate will go to the Government.
  Reducing the high rate of capital gains is vital to our ability to 
compete in the global marketplace and to expand our work force here at 
home. My bill will reduce the capital gains rate to a new, lower 15 
percent rate on investments held 3 years or more. Taking this action 
would create a strong incentive to help establish a vibrant and growing 
economy. And a strong, growing economy will help us achieve a balanced 
budget.
  Mr. Speaker, reducing the burdensome estate tax has long been a goal 
of mine. My bill will entirely replace the estate tax. At the time of 
death, the estate would pay a 15-percent capital gains tax rate on 
investments held 3 years or more in excess of the $600,000 unified 
exemption credit and in excess of the tax basis. The gains on assets 
held less than 3 years would be taxed at the current 28 percent rate. 
Any assets without gains would be passed without tax.
  By replacing the current estate tax with a lower capital gains tax, 
children of farmers and small business owners would not be forced to 
break up their inheritance to pay estate taxes. Unlike most other tax 
proposals, my legislation will pay for itself. It would simplify the 
tax law by establishing the same treatment for the taxation of trusts. 
A trust would pay a 15-percent capital gains tax and follow the same 
tax treatment as the estate tax on all capital assets.
  My bill would create an even playing field between trusts, estates, 
and prior gifting. Life insurance proceeds would not be taxed and there 
would be no tax on cash transfers.
  When the estate tax began in 1913, it was limited to 10 percent of 
one's inheritance. Today the tax has become exorbitant and punitive. 
With the highest marginal rate of 55 percent, more than half of an 
estate can go directly to the Government. It hinders passage of many 
family owned farms and small businesses to the next generation.
  In addition, if the estate must be sold to pay the tax, application 
of current capital gains tax can further diminish the inheritance. Many 
observers rightly see this as double taxation of income from capital 
assets. And it does not end there. Families must often pay lawyers and 
accountants and planners for estate tax planning purposes, one of the 
most complicated areas of our Tax Code.
  According to the IRS, families average 167 hours complying with the 
maze of estate tax law. Further, even after the best tax planning, the 
IRS undertakes tax audits in nearly 40 percent of the estate returns 
compared to a mere 1.7 percent on normal income tax returns.
  After all the money and effort spent on compliance, the estate tax 
contributes only 1 percent of our national revenues. The inefficiencies 
of the estate tax are further demonstrated in recent economic studies 
that indicate compliance and enforcement costs 65 cents of every dollar 
collected. Every IRS field office has separate estate and gift tax 
units to handle the more than 80 pages of the Tax Code and almost 300 
pages of rules in the Federal Register that are devoted to enforcing 
this tax. The Federal courts are now clogged by 10,000 estate tax 
cases.
  Mr. Speaker, the bill I will soon introduce reduces the capital gains 
tax rate, replaces the estate tax with a simpler, fairer tax on capital 
gains. It will revitalize the American economy and restore the American 
dream to hard working citizens who choose to pass their assets onto 
their children and grandchildren instead of pouring them into the 
Government's tax grinder.
  The American Dream Tax Fairness Equity Act of 1997 will help level 
the playing field between estate tax, trusts and gifting. It will 
stimulate the economy, expand investment incentives and reinvigorate 
the American tradition of individual enterprise and risk taking. Unlike 
most tax proposals, it will pay for itself.
  I urge my colleagues to join me in doing the right thing. Let us 
restore the American dream with an equitable estate tax policy and 
provide America the capital gains incentive she needs for competition 
in tomorrow's marketplace.

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