[Congressional Record Volume 144, Number 95 (Thursday, July 16, 1998)]
[Senate]
[Pages S8382-S8383]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CAMPBELL:
  S. 2318. A bill to amend the Internal Revenue Code of 1986 to 
phaseout the estate and gift taxes over a 10-year period; to the 
Committee on Finance.


             estate and gift tax rate reduction act of 1998

  Mr. CAMPBELL. Mr. President. It seems that in every Congress the 
issue of ``death taxes'' comes before this body at some time. Each year 
we tinker around the edges of the issue, making adjustments here and 
exemptions there. But the fact is, estate and gift taxes still remain a 
burden on American families, particularly those who own their own 
businesses.
  Family-owned businesses are hit with the highest tax rate when they 
are handed down to descendants. In fact, the highest estate and gift 
tax rate is fifty-five percent--that's far higher than even the highest 
income tax rate bracket of thirty-nine percent. Estate and gift taxes 
right now are one of the leading reasons why family farms and small 
businesses are declining; the burden of the inheritance tax is just too 
crushing. That hardly seems fair to me. It also seems to suggest that 
families should spend as much money as they can while they are still 
alive, since whatever they have managed to save will create a huge tax 
burden when passed on to their descendants.
  That is why today I am introducing the Estate and Gift Tax Rate 
Reduction Act of 1998, which will gradually eliminate this tax burden. 
That's right, I said eliminate, not reduce. This bill will phase-out 
the estate and gift tax by gradually reducing the amount of the tax by 
five percent each year until the highest rate--55%--reaches zero. 
Several states have already taken the initiative and phased out this 
type of tax on their own. I think it's time we follow the example they 
have set, and eliminate them across the board. At the same time, we 
will be encouraging better investment, savings and retirement planning 
by relieving the threat of an impending tax crisis.
  This legislation is a companion bill to H.R. 3879, introduced by our 
colleague in the House, Congresswoman Jennifer Dunn. I hope my 
colleagues will support passage of this bill, and will join me in 
putting a real end to this oppressive and unfair tax.
  I ask unanimous consent that the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2318

       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 ``Estate and Gift Tax Rate 
     Reduction Act of 1998''.

[[Page S8383]]

     SEC. 2. FINDINGS.

       The Congress finds and declares that--
       (1) estate and gift tax rates, which reach as high as 55 
     percent of a decedent's taxable estate, are in most cases 
     substantially in excess of the tax rates imposed on the same 
     amount of regular income and capital gains income; and
       (2) a reduction in estate and gift tax rates to a level 
     more comparable with the rates of tax imposed on regular 
     income and capital gains income will make the estate and gift 
     tax less confiscatory and mitigate its negative impacts on 
     American families and businesses.

     SEC. 3. PHASEOUT OF ESTATE AND GIFT TAXES.

       (a) Repeal of Estate and Gift Taxes.--Subtitle B of the 
     Internal Revenue Code of 1986 (relating to estate and gift 
     taxes) is repealed effective with respect to estates of 
     decedents dying, and gifts made, after December 31, 2008.
       (b) Phaseout of Tax.--Subsection (c) of section 2001 of 
     such Code (relating to imposition and rate of tax) is amended 
     by adding at the end the following new paragraph:
       ``(3) Phaseout of tax.--In the case of estates of decedents 
     dying, and gifts made, during any calendar year after 1998 
     and before 2009--
       ``(A) In general.--The tentative tax under this subsection 
     shall be determined by using a table prescribed by the 
     Secretary (in lieu of using the table contained in paragraph 
     (1)) which is the same as such table; except that--
       ``(i) each of the rates of tax shall be reduced (but not 
     below zero) by the number of percentage points determined 
     under subparagraph (B), and
       ``(ii) the amounts setting forth the tax shall be adjusted 
     to the extent necessary to reflect the adjustments under 
     clause (i).
       ``(B) Percentage points of reduction.--

                                                          The number of
``For calendar year:                              percentage points is:
  1999...........................................................5 ....

  2000..........................................................10 ....

  2001..........................................................15 ....

  2002..........................................................20 ....

  2003..........................................................25 ....

  2004..........................................................30 ....

  2005..........................................................35 ....

  2006..........................................................40 ....

  2007..........................................................45 ....

  2008..........................................................50.....

       ``(C) Coordination with paragraph (2).--Paragraph (2) shall 
     be applied by reducing the 55 percent percentage contained 
     therein by the number of percentage points determined for 
     such calendar year under subparagraph (B).
       ``(D) Coordination with credit for state death taxes.--
     Rules similar to the rules of subparagraph (A) shall apply to 
     the table contained in section 2011(b) except that the number 
     of percentage points referred to in subparagraph (A)(i) shall 
     be determined under the following table:

                                                          The number of
``For calendar year:                              percentage points is:
  1999......................................................1\1/2\ ....

  2000...........................................................3 ....

  2001......................................................4\1/2\ ....

  2002...........................................................6 ....

  2003......................................................7\1/2\ ....

  2004...........................................................9 ....

  2005.....................................................10\1/2\ ....

  2006..........................................................12 ....

  2007.....................................................13\1/2\ ....

  2008........................................................15.''....

       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 1998.
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