[Congressional Record Volume 143, Number 58 (Wednesday, May 7, 1997)]
[House]
[Page H2338]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




[[Page H2338]]



                 ANOTHER NAME FOR THE DEATH TAX: THEFT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Washington [Mr. Metcalf] is recognized for 5 minutes.
  Mr. METCALF. Mr. Speaker, a lot of controversy was generated recently 
when Deputy Treasury Secretary Lawrence Summers stated that anyone who 
wants relief from the inheritance tax, the death tax, is selfish. He 
later retracted that remark, but revealed a basic philosophy shared by 
many high officials in our Government. I am an original cosponsor of 
two bills dealing with the death tax.
  The first introduced by my good friend, the gentleman from 
California, Mr. Chris Cox, would totally repeal the death tax. The 
other sponsored by appropriations chairman, the gentleman from 
Louisiana Mr. Bob Livingston, would increase the inheritance tax, the 
death tax, exemption from $600,000 to $1.2 billion.
  By the way, the budget agreement between congressional leaders and 
the President lifts the exemption to that level, but over a period of 
years. We should do it immediately. At least this is a step in the 
right direction.
  I want to emphasize again that I am a deficit hawk. I have opposed 
some tax cut proposals because they were not accompanied by 
corresponding spending cuts. It would have made it much harder, if not 
impossible, to balance the budget in the near future.
  However, I would point out that the Federal Government receives 
virtually no benefit from the death tax. In fact, it probably loses 
money. It sounds incredible, but it is true. According to Investors 
Business Daily, the death tax accounts for only about 1 percent of all 
Federal taxes collected. What is worse is that the IRS spends as much 
as three-fourths of that 1 percent to collect the tax.
  When we add in lost businesses, lost jobs, and lost output, the death 
tax becomes a net loser in terms of Federal tax dollars. In other 
words, after all the grief it causes small business owners and farmers, 
the death tax ends up costing more, at least as much or more than it 
brings in.
  We often hear from death tax supporters that repealing or reforming 
it would be a tax cut for the rich. It simply is not true. The very 
wealthy spend thousands of dollars on accountants and attorneys to find 
ways around the death tax, such as setting up trusts. But average 
people cannot afford such tax dodges, so they have to pay the death 
tax.
  In a recent editorial the Seattle Times pointed out that when the tax 
was first enacted in 1916 it primarily affected the very wealthy. 
Quoting now from the editorial, ``Times have changed. Today's farmers, 
ranchers, lumbermen, merchants, and small- and medium- and large-family 
business owners alike feel the crunch of estate taxes. The estate tax 
is out of date and out of step with the Nation's proud tradition of 
supporting family-owned businesses.''
  Mr. Speaker, the death tax harms small businesses and threatens their 
very survival. According to the Small Business Survival Committee, 60 
percent of family businesses fail to survive in the second generation, 
and 90 percent do not make it to the third generation. A leading cause 
of their demise: the death tax.
  This also harms the Nation's economy. As the head of a family 
business grows older, there is little reason to expand his or her 
company. When a company goes out of business or is sold to a large 
corporation, people lose their jobs. A study and research on the 
economics of taxation indicates that if the death tax had been repealed 
in 1993, by the year 2000 the gross domestic product would be $79 
billion greater and 228,000 more people would be employed.
  Mr. Speaker, another reason we need to reform or even repeal the 
death tax is that it is inherently unfair. The money a person earns 
during his or her lifetime is taxed over and over again in the form of 
income taxes, capital gains, taxes on investment, taxes on interest. 
When someone dies, is it fair for the government to take another 55 
percent of a lifetime accomplishment? Absolutely not.
  A constituent of mine from Oak Harbor, Washington recently wrote, and 
I quote:

       People work and pay taxes all their living years to pass on 
     to their children and grandchildren some assets: a house, a 
     farm, a business. Upon death the government wants to tax the 
     estate again, taking the lion's share. I call that theft.

  When we take into consideration that the death tax hurts business, 
harms the economy, is unfair to many families, and that it does not 
really raise any net money to help reduce the deficit, there is only 
one conclusion that can be reached: There is no logical reason to 
continue the death tax.

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