[Congressional Record Volume 143, Number 69 (Thursday, May 22, 1997)]
[Extensions of Remarks]
[Pages E1046-E1047]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                    DEFANGING THE ESTATE TAX EMPIRE

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                           HON. NEWT GINGRICH

                               of georgia

                    in the house of representatives

                         Thursday, May 22, 1997

  Mr. GINGRICH. Mr. Speaker, I would like to bring my colleagues' 
attention to the attached Washington Times editorial from May 19, 
1997--``Defanging the Estate Tax Vampire.'' This piece thoughtfully 
lays out the arguments for repealing the death tax.
  As I often say, I do not believe that Americans should have to visit 
the IRS at the same time they must see the undertaker. Abolishing the 
death tax is one of the most important actions we can take on behalf of 
America's family owned businesses and farms.
  Building a successful business to pass onto children and 
grandchildren is a part of the American dream that we should lift up--
not squelch. It is vital that we use examples such as this piece to 
make our case and build support everywhere in America for abolishing 
the death tax.


[[Page E1047]]

               [From the Washington Times, May 19, 1997]

                    Defanging the Estate Tax Vampire

                          (By Bruce Bartlett)

       There is a growing support on Capitol Hill for abolishing 
     the estate tax, which has been part of the federal tax system 
     since 1916. A number of bills that would do so have been 
     introduced, including H.R. 902 and S. 29, sponsored by Rep. 
     Chris Cox and Sen. Richard Lugar, respectively. Hearings have 
     already been held in both the House Ways and Means Committee 
     and Senate Finance Committee.
       One of the strongest arguments for repeal is that the 
     estate tax is disproportionately burdensome relative to the 
     revenue it raises. In no country is the estate tax a 
     significant source of revenue. Even egalitarian Sweden raises 
     just 0.1 percent of its revenue this way. And the average for 
     all members of the Organization for Economic Cooperation and 
     Development, the association of Western industrialized 
     countries, is just 0.4 percent. In the United States, the 
     estate tax raises about 1.1 percent of total revenue, which 
     puts us at the upper end of the list.
       With the estate tax raising such a small percentage of 
     revenue, it would not be difficult to find alternative 
     revenue sources that would raise the same amount. For 
     example, taxing capital gains at death would raise as much 
     revenue as the estate tax far more simply and at a lower 
     rate. (Under current law, heirs pay capital gains tax only 
     on the increase from the time of inheritance. Thus the 
     estate itself pays no capital gains tax at all, no matter 
     how much the assets may have appreciated.)
       Supporters of repeal often point to Canada and Australia as 
     examples of countries that have abolished their estate taxes 
     in recent years. However, the number of countries with no 
     estate tax is actually much longer. A review of Coopers & 
     Lybrand's latest international tax guide found at least 46 
     countries with no estate or inheritance taxes. Although some 
     are small countries known for being tax havens, many are not. 
     These include Israel, Mexico, New Zealand and Switzerland, 
     among others.
       To be sure, the absence of an estate tax does not mean 
     wealth transfers are entirely free of tax. Canada, Australia 
     and Israel tax capital gains at death. Some countries treat 
     inheritances as ordinary income for tax purposes, while 
     others impose stamp duties and transfers. New Zealand and 
     India tax gifts even though there is no tax on estates. And 
     while Switzerland has no federal estate tax, 25 of the 26 
     canons (states) impose such a tax. Nevertheless, this review 
     shows that should the United States choose to eliminate its 
     death taxes, we would have a good deal of company.

     

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