[Congressional Record Volume 143, Number 85 (Wednesday, June 18, 1997)]
[House]
[Pages H3909-H3916]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE DEATH TAX
The SPEAKER pro tempore (Mr. Coble). Under the Speaker's announced
policy of January 7, 1997, the gentleman from Mississippi [Mr. Parker]
is recognized for 60 minutes.
Mr. PARKER. Mr. Speaker, I have listened with interest to all of the
different speakers today in the special orders. Many of them have been
talking about the different tax breaks and tax cuts that we are
discussing now. I find it very encouraging that after a long period of
time we are finally getting around to talking about giving a break to
the American people, something that they have needed for a long time.
Every once in a while there comes a point when an issue comes to the
fore and its time has truly come. I think that issue for many Americans
is going to center around what I consider the death tax. Some people
call it inheritance tax. Some people call it an estate tax. But it is
truly in every sense of the word a death tax.
At a point in a person's life when they do not need another emotional
blow or financial blow, they have been touched by a circumstance where
someone dies. All of a sudden the Government comes in and says, by the
way, we are going to add to your misery. What we want to do is disrupt
your entire life, and that is especially true for hard-working men and
women all over this country.
Mr. Speaker, I want to read a little story. It is about a lady, Idaho
rancher named Lee Ann Ferris, who experienced the most devastating
event in
[[Page H3910]]
her life after her father's death, which was terrible, in 1993. But it
was followed by this. Her accountant told her that there would be no
way to keep the ranch when her mother passed away. She was quoted as
saying, I was like a dazed deer looking in the headlights. How could
this be? We owned this land. We paid this land off.
Ferris related her story in testimony before the other body, and she
was testifying on the death taxes. Proponents of tax reform say that it
is needed to help family farms and businesses survive and promote
traditional values. Ferris told the other body's committee that the
accountant explained to her that, upon her mother's death, the heirs
would be liable for $3.3 million in taxes on an operation that was only
taking in $350,000 a year.
She then talked about costly estate planning, part of which involved
buying a life insurance policy for her elderly mother solely for the
purpose of paying off a third of the estate tax. That would still leave
the family with a $2 million-plus tax bill. Millions of Americans,
farmers, ranchers, small business people, private property owners face
a similar grim situation. If the estate assets are worth more than
$600,000, the Federal Government, in classic ambulance chaser style,
will come calling for what it claims is its share as soon as the
funeral is over.
Farmers and ranchers work long, hard hours over a lifetime to build
their businesses, says Charles Kruse, a member of the American Farm
Bureau Federation board of directors and president of the Missouri Farm
Bureau Federation. Quote, often farm heirs must sell business assets to
pay estate taxes. When taxes drain capital from a farm business, the
profit-making ability of the farm is destroyed and the farm business
dies. Farmers and ranchers should be able to save for the future
without having to worry about sharing the outcome of their efforts with
the Federal Government, especially after already paying a lifetime of
income taxes. Along the way they paid income taxes on their earnings.
It is wrong to tax those earnings again at death.
Mr. Speaker, I must tell my colleagues, as I look at this death tax
and what we do as a Federal Government to the American people, it is
truly what I consider immoral. How did we get to this point? I think
that it has been a gradual process through the years. Historically,
prior to 1916, we would have inheritance taxes from time to time. They
normally occurred at times of war when our export market was basically
hurt and we were not getting the revenue that we needed. So from a
national security standpoint, we would enact as a Congress an
inheritance tax to bring in more money to the Federal Treasury in order
to maintain our national security. That made a tremendous amount of
sense.
That occurred over 100 years, our first 100 years as a nation. But in
1916, we put into place a death tax that has pretty much remained
constant throughout the years. The death tax was established in 1916
basically to redistribute wealth to prevent certain families from
amassing the majority of the Nation's riches. However, as is the case
in most tax schemes aimed at the rich, the extremely wealthy find a way
to stay extremely wealthy in spite of the tax. And the middle class,
the small business entrepreneurs, are the ones who struggle. They are
the ones that are hurt. They are the ones that have to bear the brunt
of this tax policy.
If we look at the death tax, as far as what it does to the Federal
budget, roughly, we take in about 1 percent of our total revenue, our
total annual revenue that comes in from estate taxes. My personal view
is that the death tax is not worth the devastation it causes to family
farms and family businesses and to the entrepreneurship that is at the
very heart of our Nation.
Furthermore, less than one-seventh of 1 percent of total revenue
comes from death taxes on closely held businesses and farms. Farmers
expect that repealing death taxes would induce them to invest in their
businesses in ways that would enable revenue to grow 5 percent faster.
We see the results of the death tax being a burden on the growth in
business. More money is spent within our national economy to prevent
family businesses from being destroyed by death tax obligations than is
being collected by the Federal Government in the form of tax revenues.
We hear that over and over again. There are individuals in this
country, lawyers and accountants, who make their living trying to
figure out ways in order to save family farms and family businesses. It
is heard over and over again. These individuals make a very good living
at their profession. They spend all of their time trying their best to
create an environment so this business can just be maintained.
A 1996 study by the Heritage Foundation found that repealing death
and gift taxes would produce dramatically positive effects in the
American economy over the next 9 years. The Nation's economy would
average as much as $11 billion per year in additional output and an
average of 145,000 additional jobs would be created. Personal income
would rise by an average of $8 billion per year above current
projections. And finally, the deficit would actually decline due to the
growth generated by the abolishment of the death tax.
This tax, and there are individuals, by the way, in our society who
do not realize, some of them own businesses, some of them are starting
businesses, they do not realize what is going to happen to them when
they die, what is going to happen to this business that they have
sweated for and hurt for and they have sacrificed their families for.
{time} 1600
They are doing this for their families and for their future.
This tax, and we have to understand how much it is, is 37 to 55
percent of the present value of the business. It makes the death of the
owner and the death of the small business one and the same. Nearly 80
percent of failed family businesses that enter bankruptcy go bankrupt
after the unexpected death of the founder. And high death tax rates
force some heirs to sell businesses, break up that business or
liquidate most of their assets or all of their assets.
Any of these options is devastating to a community. It is devastating
to the employees of that business and to their surviving owners. And
let me point out one thing. When we talk about being devastated, we are
talking about, for example, a family farm, where an individual buys
land, he has a cost basis in that land, and the land has been in the
family for 40 years. He has a cost basis in that land of a small
amount. Let us say it is $100 an acre. But because of inflation and
different factors, that land has increased in value.
Now, understand that owner did not make it increase in value from the
standpoint of inflation. We, as a government, created certain monetary
policies, we did certain things that made the value of that land
increase. So all of a sudden that land that began 40 years ago, that
cost $100, all of a sudden is now worth $1,500 or $2,000.
When that individual dies, we are talking about the Government coming
in and saying, we created a problem by having inflation, and we
increased the cost of this asset that is held by this individual. Now
we are going to put this individual in a situation where they are going
to have to pay us for the problem that we created. That is not fair.
Now, I have heard people today talk about they do not like the
Republican tax bill. They have talked about the estate taxes, and
people from the other side of the aisle have been complaining about the
estate taxes. I have news for my colleagues. I do not like the
Republican plan either, and the reason I do not like the Republican
estate tax plan is because it still leaves it in the law. It decreases
the amount, but it is still law that we have a death tax.
Mr. Speaker, I want to finish this one statement and then I am going
to yield to the gentleman from Georgia [Mr. Kingston].
What I want is the total elimination of the death tax. It has no
business in our Tax Code. I believe it is un-American. I believe it is
the most cruel tax that has ever been put on the American people.
And with that, I will yield to the gentleman.
Mr. KINGSTON. Mr. Speaker, I thank the gentleman, and knowing the
interest of the gentleman from Mississippi in this death tax and the
repeal of it, and I certainly appreciate his leadership, as do most
taxpaying Americans, I wanted to bring an article sent
[[Page H3911]]
to me by Dr. Bert Loftman of Atlanta, that was in the Human Events
magazine on April 18 of this year, written by Terence Jeffrey, and in
that he goes into the history of the death tax.
The article points out that Lincoln imposed an emergency inheritance
tax during the Civil War but that it was repealed in 1870, and the
reason he did it was because of the national emergency of the Civil
War. Also this article points out that in 1894 we had a temporary
income tax, as well, but that was also repealed.
I guess the crowning blow that made this permanent was under
President Wilson in 1913 when he ratified the 16th amendment that, of
course, started the income tax law, but it also gave Congress the power
to lay and collect taxes on income. Wilson followed that by cutting
U.S. tariffs in half; to pay for or offset the revenue lost by imposing
progressive taxes on the incomes of rich Americans.
So here we have historically how this tax came about, to give foreign
traders a tax break, and how we increased the taxes on Americans.
What I hear over and over again, and I do not get calls from, say,
the Rockefellers and the Morgans or the Ted Turners and the Bill Gates,
I do not get those calls, but I do get calls from people who do not
have big corporations and big titles. They say they have worked their
rear end off for the last 50, 60, 70 years, and they have built up this
family farm that has 1,800 acres right now. It has a house on it, and
it is now worth $1.5 million.
Now, these people paid for that farm through sweat equity and they
paid taxes every single year this farm has been in existence, and now
their son or daughter wants to start out being a family farmer but they
cannot pass it on to them. So they have to go out and get a fancy
lawyer or an accountant or an estate planner to come up with some way
around the tax law so that they can pass what is already theirs, what
they have already paid taxes on, to their own children so that they can
be independent and continue being taxpayers themselves.
This is the fundamental American dream. For liberal colleagues of
ours to sit over here with the President of the United States and say
no to middle class America, to say ``We want your taxes when you are
born, when you are living, when you are working and when you are
dying,'' that is ridiculous. The middle class in America deserve
better.
While we are all mourning at the funeral, Uncle Sam is there counting
his pennies. It is absolutely ridiculous. Let people die with dignity.
Let them die knowing that their life and their labors have not been in
vain but that they can pass it on to the next generation.
Mr. PARKER. Mr. Speaker, reclaiming my time, I want to tell the
gentleman a story. I do not want to mention any names because I do not
want to hurt anybody's feelings. On the other side of the aisle
everybody always stands up and says, hey, this is for the wealthy, this
is not for middle class America.
I want to tell my colleague what the wealthy do. The wealthy will
take care of themselves, they always have and they always will. They
hire high-priced lawyers and high-priced accountants and they get by
and get around anything that Congress puts out.
Mr. KINGSTON. Let us point out, too, there are more millionaires in
the Clinton cabinet than there were in other cabinets. If we want to
talk rich and we want to talk class warfare, let us start with the
Clinton cabinet.
Mr. PARKER. Well, I want the gentleman to understand that I do not
have anything against people being rich. I do not mind it at all.
Let me tell the gentleman one of the problems we have. I will tell my
colleague this story about a family. There is a family in this country,
one of the wealthiest families we have. Everybody knows their name.
They own some land, and they bought it dirt cheap.
Now, I had a farmer tell me one time, ``There are a lot of things in
the world that are dirt cheap, dirt ain't one of them,'' but I have
news for my colleague: This particular family bought some land and they
bought it cheap.
Now, on this land they put some hotels. Now, they did not pay much
for this land, but what they did, they kept it through the years and
they had these hotels on this land, and this was a pristine area. What
they decided they would do is, they would turn around and they would
give away the part that was not making money.
And they did, they gave literally thousands of acres to the Federal
Government. Their lawyers and their accountants out of New York sat
down and, smart people, they sat down and they devised this system
where they were going to give the Government this land at that day's
value but they were going to keep the moneymaking part. They were going
to keep the hotels. They did.
Now, in this agreement they said, now, we are going to give the
Government this land, and it is a national park now, but they said, we
will give the Government this land, but they are going to maintain the
roads to our hotels, they are also going to maintain the water, they
are also going to maintain the sewer. They are going to take care of
everything that costs us money, and they are going to maintain all the
land around. All the land we give the Government, they are going to
maintain it. It is a gift, but that is part of this transaction.
This family keeps all this lands, all these hotels, and they make a
lot of money. A few years ago they decided they had depreciated all
they could, made all they wanted to out of it, and they sold it to a
big national corporation who now owns it.
Now, the point I am making is this: We cannot imagine the amount of
taxes this very wealthy family did not pay because of the way they
handled this. They did not have to give this away to children or
grandchildren. What they did is, they gave it to the Federal Government
and they got a tremendous tax incentive by giving it away. Now, if they
had given this same land to their children, they would have been
penalized.
The point is that the wealthy in this country can get around the
issue. They always have. The problem is the middle-class people who,
all of a sudden, they do not know what they are worth. They may think
their farm, because they are only making $40,000 or $30,000 a year off
this farm, they think, well, this farm is not worth that much.
But whenever the IRS comes in, and they appraise that land and they
appraise that equipment and they appraise that farm at a value which is
at current standards, all of a sudden they realize they do not have
enough money to pay this off. They are going to wind up selling this
farm and being put out of business, not being able to continue, and
their family devastated.
If their child wants to be a farmer, I am sorry, they have to start
over again. The Federal Government is going to confiscate what they
have spent their life working for. Now, that is unfair.
Mr. KINGSTON. Essentially, Abraham Lincoln made this statement,
``that God must have loved the common man because he made so many of
them.'' Unfortunately, Uncle Sam loves the common man, too, because
that is who pays the taxes. It is not the poor, it is not the super
rich. They get around it through foundations, through tax shelters,
through whatever their lawyers and accountants can scheme up, but over
and over again the common man pays the taxes and carries the whole load
here.
I hear the same thing the gentleman hears. An individual's mama and
daddy died, left an estate over $600,000, and Uncle Sam came to the
funeral first and got his share. Big dog sat down and he ate, and after
he ate, what was left, these folks had to sell off whatever it was
their parents had worked all their life for. Then they cannot operate
that farm or family business any more because they had to sell a
portion of it to pay the taxes.
So Uncle Sam, in his greed, cuts out a revenue generating enterprise.
Just one more example of short-term greed and, I think, a horrible
punitive tax policy.
We were all raised hearing that we should learn our lessons in
school; go to school every day, do what is right and work, get that
job, show up on time and do what our employer tell us to do, and one
day we will be lucky enough to own something, own a house, own a farm,
maybe own our own business. But now, because we do that, we get an
organized group of say 150 liberals with the President of the United
States saying that is bad, that is evil, these people are rich.
[[Page H3912]]
Well, we know these people are not Rockefeller rich, but they still
have enough money that they are not dependent on the Government.
Therefore, they are going to be punished when they are living and when
they are dying. I think people in America have had enough.
Mr. PARKER. You know, this is what I find fascinating. If people sit
and do absolutely nothing, refuse to move and are as lazy as they can
be, the government will do anything they can to help them. The
fascinating thing is that that individual who turns around and they
work, as the President says, they play by the rules, they save, they
reinvest, they do everything they can to be good taxpaying citizens, at
the end of their time, when they have done all of this work and
accumulated something, and let me just say they did not just accumulate
it because it fell out of the trees, they accumulated it because they
had a plan and they worked that plan and they applied themselves to
save, and after they do this, the Federal Government says they have
done a great job, and what the Government is going to do is they are
going to now penalize them.
Now, personally, I think that is unfair. It is unfair to them, it is
unfair to their children, and I think it sends the wrong message to the
young people of this country who do not even realize what they are
coming up against now. A lot of them, only 58 percent of the owners of
small businesses even realize what their tax liability is going to be.
Many of them do not.
One of the reasons is not because they do not want to know, but that
they are busy running their businesses and building their businesses.
They do not have enough money to turn around and pay accountants and
pay lawyers to come in and give them an expensive way in order to get
around the taxes that they are going to be faced with. They have no
idea of what is coming.
Mr. KINGSTON. They do not.
Mr. PARKER. Mr. Speaker, I yield to my friend, the gentleman from
Kansas, [Mr. Tiahrt].
{time} 1615
I think my colleagues are carrying on a very interesting debate, and
I would like to add a little bit of a personal story that came out of
my life that adds to why I think we ought to change our tax structure
here in America. I know we are talking about death taxes. But you know,
we are taxed on the very first cup of coffee we drink in the morning.
We are taxed on every gallon of gas we use to drive to work. We are
taxed on the telephone when we use it to earn some money. We are taxed
on the income we earn. We pay sales tax on the way home if we stop to
buy something, pay property tax on our home. And then when we die, we
have to pay death taxes. And I think it is wrong, and it is wrong for a
couple reasons.
My colleagues talked earlier about the redistribution of wealth. I
think we ought to reward success in America. We want more success, and
more success means that we will have people that will have money
available that will invest and create more jobs. And this is a good
thing. We want more jobs and more opportunity. But also, death taxes
prevent parents from passing on their success to the next generation.
My grandpa was John W. Steele. He was born on a farm, and he spent
his whole life on a farm. He had some good times and some bad times. In
the 1920's they were very successful, and in the 1930's they lost it
all, and in the 1940's they were struggling. And my grandpa, at the age
of 67, I believe, borrowed enough money to buy the farm I grew up on,
and he paid it off before he died in 1979 at the age of 94.
At the time when he died, land prices were a little bit elevated. And
when the tax men looked at the property, they found 40 acres, a small
plot that was near my home, and it had sold for about $1,500 per acre.
And so, they assessed $1,500 per acre for this 1,200 acre farm, or two-
section farm.
What happened is that my parents, Wilbur and Marcine Tiahrt, and my
aunt and uncle, John and Mary Ruth Armstrong, had to borrow the
equivalent of about $750 per acre to pay off the death taxes so that
they could have the enjoyment of the success that my grandfather and
his brother had in their farm.
Well, today that land is worth somewhere between $900 and $1,000 per
acre. So not only did my grandfather and his brother borrow money and
pay for this farm once, but my parents and my aunt and uncle have had
to borrow and pay for that farm twice at an inflated value just to
maintain the success that our forefathers enjoyed.
I can understand that we have to generate revenue for this
Government. There are many wonderful things that we do in this
Government. But we should not penalize success. We ought to encourage
success. This is one way that people pass from one generation to the
next the fruit of their labor.
So I would join with the gentleman and say that we ought to eliminate
death tax in America.
Mr. PARKER. If the gentleman would yield, he brings up a great point.
Let me just say something to that.
My land back home at my house, I have got 125 acres. Now, land is
what it is worth on the market, it is worth what somebody is willing to
pay for it. I have got a neighbor who bought some land close to me, and
the point I am making is how these values are established. Now this guy
has been successful. And I think the world of him. He is a good man. He
established a Fortune 500 company. He has done well. But he has got
enough money to burn, you know, to cremate a dead mule with hundred
dollar bills. This guy has got a lot of money.
When he bought this land, he paid $3,000 an acre for it, which is
fine because he had the money to do it. The problem is that if I had
dropped dead right after this sale, the IRS would have come in and
looked at the sale that occurred down the road and said, by the way,
Parker, they would have told my wife, this 125 acres is worth $3,000.
Now, I got news for my colleagues. Somebody who wants to pay $3,000
for that land, they can have it. I will be more than happy to sell it.
That is not the point. It is not worth that on the market. But the IRS
would have looked at that, made a determination that was the value, and
that is what my wife would have had to evaluate that land for. Now,
that is wrong.
And let me point out, it is not only the Government that creates
inflated prices. There are times when market forces create inflated
prices. There is no reason for anybody to be caught in that situation.
It can destroy you. I appreciate the comments of the gentleman.
I yield to the gentleman from New York [Mr. Paxon].
Mr. PAXON. I appreciate the gentleman from Mississippi [Mr. Parker]
having me here today to join with him and the gentleman from Georgia
[Mr. Kingston] and the gentleman from Kansas [Mr. Tiahrt] in talking
about what I believe was referred to as the death tax, is the death on
jobs and opportunity tax.
Where I come from in western New York, the Buffalo and Rochester, NY,
areas, our economy is built on small business and on family business. I
come from a little village, Akron, NY, where the major employers in our
community were all multigenerational family businesses that had been
there since the turn of the century and before. And time and again, my
little home town of Akron, NY, and Erie County and western New York,
people tell me again and again that the biggest burden they face is
trying to figure out a way to keep that business together so that the
next generation can have an opportunity and the community can have an
opportunity.
I flew back from Buffalo down here a while ago with a business person
from Buffalo who was selling, in the process of disposing of a
multigeneration family business that been in the family for I think
five generations, and unfortunately, because of death taxes, found it
necessary to do that, to dispose of the business, selling it to a
company from outside of our country.
Eventually, I know what is going to happen, those jobs are going to
move to another State, we are going to lose jobs in our community; and
that is going to be terrible hardship to families. So all this effort,
all this cost is going for what purpose? The death to jobs,
opportunities for families. It just seems to me unconscionable.
I know, whether it is in Georgia or Mississippi or in New York State,
the statistics are shocking. Seventy percent of family businesses do
not survive through the second generation,
[[Page H3913]]
and 87 percent do not make it to the third generation. And again and
again, I know my colleagues hear the same thing when they both go home,
most of our Members do, the key reason for that is the burdens of death
taxes and of trying to figure out a way to keep those businesses
together; and it is much easier to dispose of them, to bring about the
loss of jobs and opportunity in the community, than it is to try to get
that down to the next generation.
We should be celebrating. I am the father of a little 1-year-old. And
I think to myself, nobody in this country would take a 1-year-old
child, walk him out to the corner of the street, and say, ``Go find
your way down to Aunt Mary's house,'' and walk back in the house and
leave that child out there.
But that is what we do to that small business. We say to that small
business, we really celebrate you, we love you; but find your way down
the street. And in the meanwhile, the Government puts up every barrier
to the growth of that small business, just as we would do to that
child. We should celebrate those little kids and celebrate business
starts. We should not penalize them from the day they start by saying,
we are going to tax you to death; and when you die, we are going to
take it back from you. It is just wrong.
Mr. KINGSTON. If the gentleman would yield, this is a very old story
but it is a very good story, I guess that is why it has lasted so long,
about the guy who is driving down the road and sees a farmer who has a
pig. The pig has two wooden legs where the ham should be and he stops
and says to the farmer, ``I have got to ask you about that pig. I have
never seen a pig with two wooden legs. What is going on here?''
He said, ``Oh, let me tell you about that pig. That is a very special
pig. About 2 years ago, my little boy was out on the pond when it was
frozen and the ice cracked and he fell in and that pig dived right in
and grabbed the boy by the collar, pulled him out and saved his life.''
And the man said, ``That is impressive.'' And the farmer said, ``Well,
that is not all. A couple years ago, a guy was breaking into our house
at night. We were sleeping. The guy had a gun in his hand. The pig
leaped on him and knocked him over. And the guy ran out the door and
ran and the police caught him. That is a special pig.''
Then he said, ``Well, why does he have two wooden legs?'' And the
farmer said, ``I am not quite through. I have got to tell you another
story. Then our house caught on fire about 6 months ago. The pig ran
in, pulled us out of bed, woke us up and saved the entire family. That
is one special pig.''
And the guy says to the farmer, ``Well, I still do not understand.
Why does it have two wooden legs?'' And the farmer said, ``Well, it is
very simple. You don't slaughter a pig like that all at once. That is a
special pig.''
And that is what is happening to the middle class, day in day out. We
pay for Bosnia. I said, ``we.'' I am middle class. Middle class pays
for Bosnia. Middle class pays for Desert Storm. Middle class pays for
Medicare. Middle class pays for the Park Service. Middle class pays for
Medicaid. I am saying good programs here, but it is paid for on the
backs of the middle class. And yet year after year, the taxes are just
creeping up and up and up.
Today, a two-income family with a household income of $55,000 is
paying $22,000 in taxes on an average. Which means, the second income,
that spouse is working strictly for the Government. They may be working
for a dry cleaners, may be working for an insurance company or bank,
but the reality is when you are paying $22,000 in taxes on a $55,000
income, the second income goes straight to Uncle Sam, you are working
for the Government.
Mr. PARKER. If the gentleman would yield, let us go beyond that.
Because we talk about family farms. We talk about businesses. But from
a national perspective, let us look on this thing from the standpoint
of just exactly how does it affect a lot of people.
A lot of people do not realize the difficulty they are going to have.
There are different values in this country for a lot of different
things. It is regional in nature for many things. We can take a house
in Mississippi that we pay $100,000 for and it would be a nice home. If
we put it in New York, we put it in Washington, DC, that house is going
to be half a million dollars.
Now people back home in Mississippi cannot fathom that. Conversely,
people from Washington, DC, and New York that come down to Mississippi
and see a house, they cannot fathom that it is only $100,000. The point
is this: Down in Mississippi, people may have a little land with that
house. But in New York or in Washington, DC, or San Francisco or
Chicago, they may not have that land. But that house is valued so
greatly that what happens is that person who owns a home who may have
paid $40,000 for it 35, 40, 45 years ago, when they come to their time
of death and their spouse is left with the bill on this thing, all of a
sudden they find out, I did not know that I was going to have this
terrible bill. I had no idea. What am I going to do? You are going to
take the money that I was going to live the remainder of my life on.
What am I going to do?
The IRS says, do not worry, we will take care of you. We are going to
let you have a payment plan over the next 10 years, and you are going
to pay the IRS every month. IRS are kind people. They are sweet as they
can be. But what they will do is keep food out of your mouth, make you
sell that house, move you someplace where you do not want to move,
change your plans where are you going to spend the last years of your
life in a place you do not want to be, simply because you did not know
that the increase of cost on your home would put you in that situation.
Mr. PAXON. That is what I think the gentleman from Georgia [Mr.
Kingston] and the gentleman from Mississippi [Mr. Parker] just
highlighted. It is absolutely fundamental to what we are trying to do
in the Congress.
Our goal is to balance our Nation's budget. Like every family back at
home has to do, like every small business has to do, this Government
should do it. But we are going beyond that. We are finding other ways
to save money so we can allow families back at home to keep more of
theirs.
As the gentleman from Georgia [Mr. Kingston] points out, that dollars
go to the government because of taxes. Study after study has indicated
that about 50 percent of household income in this country ends up in
the pocket of the government at some level, about 38 percent in Federal
and State local taxes.
I come from New York where that number is even higher. And then you
add in the indirect cost of everybody and the goods and services we
buy. That means, as the gentleman points out, one income earner in
every family has got to be working to provide the government with the
dollars. That is just fundamentally wrong. It removes the choice from
the families, maybe parents stay home with the child or the vacation
they want to take or something else they want to do to enhance the
quality of life with their children.
No. 2, we just keep putting these burdens on and putting them on
without any rational reason because of the money we are wasting here in
Washington. We undermine the people's faith in government. I think it
is time, whether it is in the form of that $500-per-child tax credit,
whether it is rolling back the tax on investment and saving, some
people call it capital gains. That is a tax on investment and savings,
and also the death taxes.
Mr. PARKER. If the gentleman would yield, this is an interesting
thing, because I always hear the liberals talk about the capital gains
as being a tax break for the wealthy, and I have always been fascinated
by that.
I turn around and look at somebody and they have worked hard all
their life, they consider themselves middle class, and they bought a
house in the 1950's and they are coming up close to retirement and they
bought a house for $25,000, and they turn around and that house has
increased in value over the last 40 years a considerable amount. And
let us say that house is now $100,000, they have an increase of
$75,000.
The question is this: When you get that check for $100,000, which
that took care of the $25,000 original investment and the $75,000
increase, do you think the Federal Government is owed basically one-
third of that amount? Do they need to get a check for between $20,000
and $25,000? Do they deserve that? Is it their money?
My position is, it is not the Federal Government's money; it never
was
[[Page H3914]]
their money; it should not be their money; and this tax should be
changed. Whether it is on capital gains or estate tax, it is all the
same principle. We are talking about private property rights here.
Mr. KINGSTON. If both the gentlemen would yield, let me just ask both
of my colleagues, quiz time: What do these countries have in common?
Australia, Canada, Egypt, Ghana, India, Indonesia, Israel, Kuwait, New
Zealand, Switzerland, Uruguay? What do they have in common?
Mr. PARKER. I would hope they have no capital gains.
Mr. KINGSTON. No death taxes.
Mr. PAXON. Well, they are way ahead of us.
Mr. KINGSTON. The gentleman from Erie County [Mr. Paxon], where my
dad is from, knows well that there are a whole lot of his friends who
are probably now working and living in Canada, a lot of people he went
to high school with.
{time} 1630
I went to school at Michigan State. A whole bunch of folks, brothers
ended up over there for other reasons. But the reality is for people to
move from border States in America to avoid taxes is a great one.
Mr. PAXON. Let me just say to the gentleman, I live in a community
that has been devastated economically over the years by the flight of
jobs outside the country, moving outside of New York State and one
reason, we for 20 years in New York until Governor Pataki came along
had a policy in New York, tax everything the highest in the country. In
addition to the Federal death taxes, the State death taxes are such
that today when you pass away in New York State, you can almost be
assured of the fact that your business is going to be dissipated. What
that has meant is those jobs are gone. We go right back to what we
started with. Families are harmed. It is the family that ends up
getting hurt. I am tired of the politicians in Washington talking about
class warfare, helping the rich, hurting the poor and all this about
the rich. Who ends up getting hurt the most? It ends up being Joe and
Mary 6-Pack out on Main Street trying to earn a living, working in a
small business and when that business is dissipated, their jobs are
gone. When they try to sell their house and the Government takes their
money, that means their kids may not have an education or they may not
be able to retire someday, or some politicians in Washington say, ``We
don't want to give them that $500 per child tax credit because it
doesn't mean anything,'' they forget that to Joe and Mary back home it
may mean the difference in that kid getting a better education or
putting food on the table.
It is time we remember it is our constituents' money, it is not ours,
it is not the IRS's or the Government's.
Mr. PARKER. Let me point out something. We are talking about a
private property issue. Private property rights is I think the
cornerstone of our Nation. It is fundamental.
I like liberals. I always have. I think liberals are very important,
because they have done some important things for our Nation. They have
brought to light certain things that we needed brought to light. But a
lot of times their solutions, I do not care for. I think that liberals
have a right to believe the way they want to believe. This is America.
But one problem that I have, and we disagree strongly with this, there
are a lot of liberals in this country who believe that all property
belongs to the people collectively. There is no such thing as private
property rights. When we look at things like capital gains but more
importantly when we look at things like death taxes, it really brings
it to the fore. People have to understand that the Federal Government
does not own this property. They act as though they do. We as
individual citizens have paid for this property. We have paid for this
business out of the blood and sweat of our own bodies. The Government
has done nothing except try to inhibit us. Because of that, the
Government has no right to come in and say, ``We want part of that.'' I
believe there should be absolutely no death tax. One of the purposes of
this special order today, and there are going to be many more of these,
is because this point is coming home to people finally. People are
finally understanding that we must be in a position where we change the
direction of this country. We do that by changing the fundamental tax
structure. We are going to be talking about different items concerning
the death tax and how it affects people and the changes that need to
occur so that the American people will understand exactly what is going
to happen to them. Many of them are not aware.
Mr. KINGSTON. If the gentleman will yield, I want to make a point. I
am sorry the gentleman from New York [Mr. Paxon] left because he has
this 1-year-old baby. I am sure that he and the gentlewoman from New
York [Ms. Molinari] will be fortunate enough to have other children and
before they know it, they are going to be doing what we do in the
Kingston household nearly every weekend, and, that is, we go down to
the sports complex and watch one of our four children playing baseball,
tee ball, or soccer. My wife Libby is the soccer mom. That is what we
do. We drive station wagons, we have got two girls and two boys, and
they are playing sports. Out there on the soccer field are tons and
tons of other soccer moms. These are people who work real hard and they
kind of cram all their recreation into a 48-hour period called the
weekend. But during the week they are working hard, paying taxes,
trying to raise their children right, working two jobs, doing homework,
doing laundry, organizing school, PTA-type activities, volunteering at
the hospital or the United Way and so forth. These are the people that
this tax system is kicking in the face.
Money Magazine this month has a great article on the profile of the
millionaire. It says, if you think millionaires are the people who are
living in these huge houses with brand new cars and beach or mountain
houses or whatever, you are wrong. Most of those folks are simply in
debt and in debt in a very, very big way. The typical millionaire,
according to the Money Magazine survey, and it was a national survey,
are the people who have worked in the same job 20 to 30 years, many
school teachers, for example, they are people who own their own
business, but not big, expensive businesses, dry cleaners, scrap metal,
whatever, just what you would assume is maybe a modest business, if you
will. They are folks who live under their means. They do not buy the
house that they can afford, according to their real estate agent, they
buy the house they feel comfortable with so they can pay it off. They
work 60 hours a week, they work 50 hours a week, they save 15 percent
of their income, they tend to stay married, they tend to not go on
fancy vacations. They really have what we would call in psychology a
dull, normal life-style. They are just regular folks. Yet those are the
people who are paying for the whole $4.5 trillion budget that we have
in Washington.
Mr. PARKER. We have got a lot of people around this country when I am
talking to them about death taxes, they sit back and go, ``That doesn't
affect me.'' But whenever I start asking them, I say, ``Didn't you
inherit a little bit of land from your daddy and mama?''
``Well, yeah, I've got 150 acres.''
``Do you know what the current value is?''
They think in terms of what the value was when they inherited it. But
inflation has changed that over a period of time. It shocks a lot of
people out there to realize that the IRS comes in and values their
property much more than they think their property is worth. They are
looking at it from a realistic standpoint. The IRS looks at it from a
fair market value and what other property has sold in the region. They
have all these criteria.
What happens is all of a sudden these people who turn around and say,
``Hey, I'm not rich, I don't have that much,'' they find out whenever
the time comes that they had more than they thought. All of a sudden
the Federal Government is going to come in and say, ``By the way, we're
going to take part of that.'' That is when it hits home. That is when
all of a sudden people are in a situation that they say, ``Hey, I had
no idea that I was going to be affected.''
Let me point out, we spend in this body all kind of time talking
about investment and savings. We need more investment and savings. I
must tell the gentleman, if we reward investment and savings, we are
going to get more of it. If we penalize it, we are going to get less of
it.
[[Page H3915]]
It is no wonder that we have a lot of people in this country who do
not worry about investment and savings because some of them realize
that whenever their time comes, after they have spent a lifetime
working, that the Federal Government is going to come in and confiscate
it. If that occurs, all of a sudden all they have worked for all of
these years is null and void.
We as a Nation have got to change that. We as a Congress have got to
realize that the people in this country are pretty much fed up, they
are sick and tired of being sick and tired and they are ready to make
some changes.
Mr. KINGSTON. Going back again to the middle class soccer moms and
dads, one of the taxes that we Republicans are pushing is a $500 per
child tax credit. In sophisticated boardrooms, folks do not want that.
That is the least popular. However, that is the one that is going to
benefit the most people. I support it for that reason.
Number two, because it is the biggest cut in the size of the Federal
Government. The less money middle class folks send to Washington, the
less influence Uncle Sam is going to have on their lives and the less
the bureaucracy in Washington is going to be able to grow.
What is ironic is that the President of the United States now,
instead of giving a $500 per child tax credit to working, let me repeat
that, working middle-class taxpayers, he wants to make it a welfare
payment to people who are not working enough to pay taxes. In other
words, we have got the Jones family over here who is busting their
tails working 50 or 60 hours a week, mom, 50, 60 hours a week, dad, and
they are in line for a $500 per child tax credit, and we have got some
other folks who are working through public assistance type programs but
they are not paying taxes. The President wants to give them both a $500
per child tax credit, but the difference is this group right here, they
are paying taxes, and the other group is not paying taxes, so it is
just a gift to them. It is an expansion of welfare even though the
welfare rolls are decreasing.
I know we are talking death taxes, but again it goes back to the
overtaxation of working, middle-class Americans. The harder you have to
work, the less time you have at home. The less time you have at home,
the less time you have to impart information and values to your
children.
One thing I have learned about children, I guess two things. Number
one, it is the hardest thing in the world to try to get them on the
right path. I do not know what I am doing wrong. If anybody has
suggestions, let me know. I try my best. Anybody who has been a parent
knows the feeling.
Number two, you have got to spend lots of time with kids trying to
teach them right from wrong, trying to teach them the work ethic. It is
not any fun doing homework, it is not any fun memorizing multiplication
tables, it is not any fun waking up 7 days a week and making your bed
and picking up laundry, but I know this, that it is all tied into the
big picture. As a father and Libby as their mother, if we do our part,
then they will grow up one day to be independent, independent of
government programs and government dependency. They will be taxpayers.
Mr. PARKER. That independence that the gentleman is talking about
basically is getting the government out of somebody's pocketbook and
out of their lives.
I must tell the gentleman, some of this stuff is pretty simple to me.
One of the reasons I support the death penalty is because I know for a
fact that whenever that murderer is put to death, he will commit no
more crimes. No more crimes will be committed by that individual. I
support that.
I also support certain things that other people look at a little odd,
I think. I listened around here to Democrats, and Republicans, talk
about shutting down the Federal Government. Democrats were tickled to
death that the Republicans were blamed with the shutdown. The
Republicans were all worried that they were getting blamed with the
shutdown. My personal view is a little bit differently. I do not think
the American people were that upset with the government shutting down.
I think they were more upset that we opened it back up.
My personal view is they would have liked to have seen the government
shut down, and I wanted to see it shut down for longer than it was,
simply because the American people after a few months would realize
they do not need a lot of the things that the Federal Government says
that we have to have in order to survive.
I think that makes a tremendous amount of sense. Why do we have all
these programs? Why do we have programs that are not working? Why do we
add new programs without getting rid of the old programs? Why do we
have over 700 programs in the Department of Education? When the
President says that a lot of those programs are not working, instead of
getting rid of a lot of the programs that are there, he just adds more
on to it.
I think it is fascinating, and the American people are getting fed up
with this. They are finally seeing that things need to be changed. One
thing I like about the family tax credit is it gets the government,
maybe just $500-per-child, but it gets that $500 away from the
government and gives it back to the family.
Mr. KINGSTON. Per family, that is not going to make or break you
necessarily. You are going to be able to buy some more stuff with it
and it is going to be good, but it is going to help 11 million kids.
Let me give the gentleman some fun facts on taxes. The Tax Code
itself is 5.6 million words. It is 7 times longer than the Bible,
according to the Heritage Foundation. Americans spent last year about
$225 billion to comply with the Tax Code, and they devoted 5.4 billion
hours to comply with it.
{time} 1645
And the Tax Foundation estimates that the median two-earner family
paid 39.4 percent of its income in taxes last year, which had increased
from 38.1 percent in 1995. And in 1955 the median two-income family
just paid 27. 7 percent of income taxes. That is 10.7 percent less than
what that same family paid in 1996.
Those are real numbers, and I will be happy to share those with
anybody who wants.
Mr. PARKER. I thank the gentleman.
I yield now to the gentleman from Ohio [Mr. Boehner].
Mr. BOEHNER. Well, I like to thank my colleague for yielding and
certainly want to congratulate the gentleman from Mississippi [Mr.
Parker] and the gentleman from Georgia [Mr. Kingston] and others who
have been to the floor this afternoon talking about the issue of taxes.
As the gentleman from Georgia just pointed out, the American people
are paying more in taxes to all levels of government than at any time
in the history of our country, and when we look at the middle class and
the fact that wages are not growing as fast as we like, all we have to
do is to begin to look at why this crunch is occurring to American
families, and it is as a result of taxes, higher taxes at the Federal
level, State level, local level that are continuing to take more of
their hard earned paychecks.
I am proud of the fact that for the first time in 16 years this
Congress is going to pass a plan that will cut taxes for middle-income
Americans.
We are hearing an awful lot of demagoguery and noise coming from the
White House and others that this plan only helps the rich, and it is
just not true. Nine-three percent of the taxes that will be reduced in
this plan are for people who make under $100,000 a year. Nine-three
percent of the tax package goes to those people. As a matter of fact,
72 percent of the tax package goes to families that make between
$20,000 a year and $70,000 a year.
So if you look at this package in terms of the focus and where the
savings are going, they are going to American families who pay the bulk
of our taxes.
Yes, the wealthy pay their share of taxes in America. But when you
look at the numbers of people in America, most people find themselves
in the middle class, and they are the ones that pay the big bulk of the
taxes to this Government.
And I just want to come down to say I congratulate Mr. Parker and Mr.
Kingston and those that have been here before for standing here on the
floor today and outlining to the American people just how important
this tax package is.
Mr. PARKER. I thank the gentleman from Ohio [Mr. Boehner]. We do not
[[Page H3916]]
have but just a few minutes left, and I want to personally thank
everyone that has been involved in the special order.
We are going to have special orders on this issue over the next few
months, weeks and months, to familiarize the people of this country
with what is going on. Now I realize that it is very true that you can
save a lot of money to pay the taxes, or you can have insurance, or you
can do different types of financial planning. But I want people to
consider this one thing:
When you are preparing for death taxes, the average family business
or farm spends nearly $20,000 in legal fees, $11,900 for accounting
fees and $11,200 for other advisers. The typical small business owner
normally makes around $40,000 a year.
Now I have got one question. Who among us who makes $40,000 a year
can afford to meet the staggering burden of a death tax?
Now to me the clear solution is this: We should eliminate the death
tax. It is an unfair tax. It is a tax that puts burdens on people when
they do not need any more burden. It also creates an environment where
people no longer want to save, they no longer want to work, there is no
reason for them to, and we are not giving them an incentive. And we
create an environment that hurts our economy, and hurts our small
businesses and small farms all around this Nation.
People need to realize the effect it is going to have, and I am
looking forward to the liberals in this body coming to the floor,
justifying the death tax. I want to see them stand and tell the
American people and our colleagues why we should confiscate property,
why we should confiscate money from individuals when they die, and
spread it around and hurt people for doing what we ask people to do
every day, and that is to work hard, to save, to take care of their
families, to create jobs, to build their business, to make life better
for their fellow man and their community. I want to see people come and
defend that, the whole idea of death taxes.
Mr. Speaker, I think when that occurs, we will see the American
people understand what position and what side they should be on, and I
am looking forward to this debate over and over again until we get
total repeal of the death tax.
____________________