[Congressional Record Volume 146, Number 87 (Monday, July 10, 2000)]
[Senate]
[Pages S6329-S6334]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     THE DEATH TAX ELIMINATION ACT

  Mr. KYL. Madam President, tomorrow the Senate is expected to vote on 
a motion to invoke cloture on the motion to proceed to the 
consideration of the House-passed Death Tax Elimination Act, H.R. 8. I 
want to take a few minutes today to explain a key element of that 
legislation, one that wasn't discussed much during the House debate but 
which I think is critical to Senators understanding actually how the 
legislation works.
  The bill which passed the House on June 9 by a vote of 279-136--
incidentally, 65 House Democrats joined Republicans in very bipartisan 
support for the bill--ultimately repeals the Federal estate tax. But 
the change in policy is really more substantial than just that. The 
details are very important because they offer a way for both

[[Page S6330]]

sides of the aisle to bridge past differences with respect to the 
estate tax, specifically with respect to how transfers at death are 
taxed.
  Although it is true that H.R. 8, the bill that passed the House, 
would repeal the estate tax at the end of a 10-year phaseout period, 
the appreciation and inherited assets would not go untaxed. That is a 
very important point, Madam President. This is a departure from 
previous estate tax repeal proposals.
  Under H.R. 8, a tax would still be imposed, but it would be imposed 
when the inherited property is sold; that is, after the income is 
actually realized, rather than at the artificial moment of death. The 
House bill, therefore, removes death from the calculation of the 
imposition of the tax. Earnings from an asset would be taxed the same 
whether the asset were earned or inherited.
  The plan broadens the capital gains tax base by using the decedent's 
basis in the property to calculate the tax. That differs from current 
law where the basis can be stepped up to the fair market value at the 
time of death. In exchange for the broader tax base, a lower tax rate 
would apply. The capital gains tax rate would be the general rate that 
would apply.

  I also note that a limited step-up in basis would be preserved to 
assure that small estates bear no new tax liability as a result of 
these changes.
  What we have done is to ensure that nobody who would escape paying 
the estate tax would ever have to pay a capital gains tax on that 
amount of money, so everybody would be treated the same in terms of 
avoiding liability from any tax; and only those who choose to sell an 
asset at a later point in time, after the property is inherited, would 
pay a tax. They would pay a capital gains tax--a much lower rate than 
the estate tax--and they would have the benefit of an exemption even 
more generous from the estate tax today.
  Here is how the bill would actually work. The estate tax would 
essentially be replaced by a capital gains tax. That tax would be 
imposed on the gain or the increase in value of the inherited property 
relative to its original basis or cost, plus any cost of improvements. 
As with the estate tax, as I said, there would be an amount of property 
exempt from taxation. In the case of the new capital gains tax, the 
exemption would be $1.3 million of gain. That is, the decedent's basis 
would be exempt, whatever that amount of money is, plus $1.3 million. 
That exemption would be divided among all of the heirs. Now, $1.3 
million is the amount that can be currently shielded from the estate 
tax by family-owned businesses or farms. So we have provided a basic 
exemption here that is the same as the most generous exemption under 
today's law.
  In addition to that, we provide an additional exemption. A surviving 
spouse will be entitled to $3 million more, in addition to the 
exemption I just mentioned; that means the decedent's basis--his cost 
of the property--plus $3 million for the property transferred by the 
decedent to him or her. For married couples, there is an additional 
$1.3 million in exempt gains that can be added for the second spouse, 
for a total exemption of $5.6 million above the decedent's basis in the 
property, $1.3 million for the first spouse, plus $1.3 million for the 
second spouse, plus $3 million for spousal transfers.
  In each case, the exempt amount is added to the basis. It, of course, 
cannot exceed the fair market value of the property at the time of 
death. That is the way these exemptions add up. They provide a 
significant exemption from the payment of any capital gains tax even 
when the property was inherited and later sold.
  Why is this change important? For one thing, it removes death as the 
trigger for the tax. That is the object that most of us want to 
achieve--to take death out of the equation. It is an artificial event. 
People are certainly not making plans based upon death. I don't think 
anybody can justify death being a taxable event. Ordinarily, we see 
taxable events as the earning of income, the gain of profit from an 
investment, the sale of property, and the result of income from that. 
Those are taxable kinds of events. Death is purely an artificial event 
which should not be a trigger for any payment of tax. In fact, we all 
appreciate that it creates a great hardship on families at the very 
time of death.
  For example, frequently the owner of the business--the person who 
started the business--has to figure out at that very difficult time in 
their life how to pay the estate tax. Frequently, the only way to do 
that is actually to sell the business, sell the farm, or sell the 
assets in order to acquire enough liquid assets to pay the estate tax. 
It takes death out of the equation.
  That is the first object of this. I think it is the most important.
  But a tax would be imposed on the beneficiaries of an estate just as 
it would have been imposed if someone had realized a capital gain 
during his or her lifetime. The beneficiaries of an estate would not 
only inherit assets but they would also inherit the decedent's tax 
basis on that property. The trigger for the tax is, therefore, the sale 
of the assets and the realization of income. That is the appropriate 
time to levy a tax--not when someone dies.
  Advocates of the death tax often note that it serves as a backstop 
for the income tax by imposing taxes at death on income that previously 
escaped taxation. They are referring to capital gains that have never 
been realized. It is theoretically possible for that to be the case, 
although it is ordinarily true that you have spent ordinary income to 
acquire an asset and you have already paid income taxes on that 
ordinary income. But for someone who may have come into property in 
some other way, there could theoretically be unrealized gains that 
would escape taxation, except for the proposal that we have.
  It is true that under current law those gains, but for the estate 
tax, would go untaxed forever because of the step-up basis. In other 
words, under current law, you acquire the market value as of the date 
of death, and that is the value of the property. So if you later 
dispose of it, there is very little gain if you dispose of it quickly. 
But of course you have to pay a 55-percent or lower percent death tax 
on that property.
  The House-passed bill addresses this concern of unrealized gains 
never being taxed head on. It not only eliminates the death tax but 
also the step-up basis. So unrealized gains will ultimately be taxed if 
and when the inherited property is sold off. Therefore, nothing escapes 
taxation.
  This concept, I must confess, was one which I heard Senator Moynihan 
talking about when I first presented the death tax repeal to the 
Finance Committee. There was some concern. While we all appreciate that 
it is not good tax policy to impose a tax at the time of death, there 
has to be some way to recapture a tax on these unrealized gains. This 
is the proposal that does that. Therefore, it is not only eminently 
fair but it conforms the tax policy for everyone--people who acquire a 
decedents' estate or people who simply earn money--and it doesn't 
contain this bad element of taxing at the time of death. Instead, when 
you make the economic decision to sell property you have inherited--if 
you make that decision--you know what the tax consequences are. You 
know how much income you are going to receive. You can figure out how 
much tax you are going to pay. If you decide to go ahead and sell at 
that point, then you pay a capital gains tax using the original basis. 
But it is your decision based upon your timing and your economic 
circumstance and not because of a fortuitous event of death.

  It is interesting; President Clinton's fiscal year 2001 budget, on 
page 109 of the analytical perspectives, scores the existing step-up 
basis in capital gains and death at $28.2 billion in fiscal year 2001, 
and a total of $152.96 billion over 5 years. So elimination of the 
step-up basis as proposed in H.R. 8 can, therefore, be expected to 
recoup a portion of the revenue lost from the death tax repeal. That 
reduces the cost of the death tax repeal substantially.
  To say it another way, when you eliminate the death tax altogether, 
you are eliminating all of that revenue. But if you come back and 
collect a capital gains tax using the original basis on any of the 
inherited assets that are later sold, the Federal Government is at 
least going to recoup some of that revenue. Will it be 40 percent? Will 
it be 30 percent? I don't know.
  But it is interesting that the President's own people score the step-
up

[[Page S6331]]

basis of capital gains at death at over $28 billion in fiscal year 
2001. That is roughly the amount of the estate tax that is going to be 
collected.
  So if you assume that all of the property would be immediately sold, 
then the Government theoretically would recoup all of that money.
  That won't happen. Obviously, people will wait a while to sell 
assets. But the point is that it illustrates the Government is not 
going to have a total loss of revenue as a result of the repeal of the 
estate tax. There will be revenue coming in from the capital gains tax 
that replaces it.
  I think whatever revenue losses are associated with repeal, of 
course, also needs to be put in perspective. This is the point that is 
most important to me.
  The President's budget, on page 2, estimates that revenues for 2001 
will amount to over $2 trillion, rising to $2.92 trillion--almost $3 
trillion--by the year 2010, the year that the death tax repeal would 
actually be implemented. In other words, by 2010, the Federal 
Government will collect an additional $840 billion in just that 1 year. 
Surely, with an $840 billion surplus in just that tenth year that the 
estate tax is repealed, we can afford to eliminate this unfair tax and 
still satisfy pressing national needs with the additional $840 billion.
  It is pretty clear when you put that in perspective that no one 
should vote against estate tax repeal on the basis that the Federal 
Government can't afford it. Clearly, it can afford it.
  One final point: I call Senators' attention to a letter that should 
be reaching their offices from the National Association of Women 
Business Owners, or NAWBO as it is sometimes called. The organization 
is writing in very strong support of death tax elimination. They write 
that women business owners in the country employ one out of every four 
workers.

  By the way, about half of the small businesses in the country are 
women owned. So this is a very important point to the National 
Association of Women Business Owners. It is one of the groups that very 
strongly supported us when we had the White House conference, and 
repeal of the death tax was No. 4 on the list of legislative items.
  In any event, here is what they write with respect to the point that 
one out of over four workers, or about 27 million workers in the United 
States, are employed by women business owners:

       When a woman-owned business has to be sold to pay the death 
     tax, jobs are lost.

  This was written by president Barbara Stanbridge and vice president 
for public policy, Sheila Brooks.
  They say, ``on average, 39 jobs per business, or 11,000 jobs, have 
already been lost due to the planning and payment of the death tax.''
  It is not only the payments that will suffer, but it is also the 
planning. The payments that go to the lawyers, estate planners, and 
insurance also increases expenses and results in job loss.
  NAWBO projects on average 103 jobs per business--or a total of 28,000 
jobs--will be lost as a result of the tax over the next 5 years.
  Ms. Stanbridge and Ms. Brooks note that women businesses are just 
starting to grow. Many are first-generation businesses, and they have 
just begun to realize that, due to the death tax, their business will 
not be passed on to the next generation--at least not without a 55-
percent estate tax and perhaps a 55-percent gift tax during life. Most 
of the businesses can't afford to pay the tax. As I said before, they 
are sold off frequently to big corporations that are not subject to the 
death tax.
  Let me make this point.
  I was asked by a reporter today what the original theory of death tax 
was. The reporter said it doesn't seem to make any sense. It doesn't 
make sense. But the original theory was they would prevent the 
accumulation of wealth. It was put in at a time when it was kind of the 
progressive or populist time, and there was a feeling that we should 
prevent the accumulation of wealth.
  Let me give you a story of a friend of mine in Phoenix, AZ. He came 
to Arizona from New York and built a printing business. Eventually, he 
employed about 200 people. He was a very successful entrepreneur. A lot 
of people depended on Jerry Wisotsky, a pillar of the community, who 
contributed huge sums of money to all kinds of causes. He was a very 
rough and gruff guy on the exterior. On the interior, he had a heart of 
gold. He could not turn down any request for a charity in town. He was 
very generous. All of his family were. When he died, the family found 
that everything had been plowed back into the business--the latest of 
printing equipment and so on. He had no hard cash to pay the huge 
estate tax. They had to sell the business.
  To whom did they sell it? It was some big conglomerate--a big German 
company, I think. But it was a big corporation.
  So much for the death tax preventing the accumulation of wealth. It 
took a whole bunch of wealth from one family in Phoenix, AZ, and 
transferred it to a big international corporation.

  It doesn't prevent the accumulation of wealth. It concentrates wealth 
in the big companies that end up being able to afford to buy the 
business--frequently at bargain basement prices. It is unfair. It is 
not good for communities.
  I made the point about contributions of this one family. As I said, 
that family used to contribute to every charity in Arizona. They are 
still very generous, but they don't have the assets they used to have 
when Jerry owned the business. This argument that charities are going 
to suffer if we repeal the estate tax I know to be wrong.
  I am waiting for the first executive director of some big charity 
organization in the community to come back to me and lobby against the 
repeal of the estate tax on the grounds that it will hurt contributions 
to charity. I will immediately call every member of that person's board 
of directors and say: Do you know what your hired person is lobbying 
for back here? They are lobbying to pay 55 percent of the estate tax to 
the U.S. Government because it might be an incentive to contribute more 
to their charity.
  I think these folks will turn tail and go home. The reality is people 
who are big hearted will make big contributions, as the Wisotsky 
family, and they can do it if they have an income stream coming, rather 
than if they have to sell the business to somebody else.
  I talked about the women-owned businesses. Minority-owned businesses 
are in the same position, which is why we have strong support from 
various minority business organizations. However, the point of repeal 
of the estate tax is it is in keeping with the American dream. The 
American dream is to work hard, be successful, and give your children a 
greater opportunity than you had. That is the American dream. The 
estate tax works counter to the American dream, the ability to pass on 
something to your children and grandchildren after you have worked very 
hard during your lifetime to save that money.
  That is another point. The death tax penalizes savers. We talk about 
tax policy and trying to promote savings and investment. The estate tax 
is exactly contrary to that. On the one hand, the Federal Government 
seeks to encourage people to save through IRAs, Roth IRAs, 401(k)'s, 
education savings accounts, and lower tax rates on capital gains. Yet 
on the other hand, it penalizes savers upon their death with death tax 
rates as high as 55 percent.
  Consider two couples with similar lifetime earnings. One spends 
lavishly during their lifetime and leaves only a small estate. That 
couple is not subject to the death tax. The second couple who foregoes 
lavish spending and sets money aside for family, for the future, for 
contingencies in the future--as the Government policy seeks to have 
them do--gets hit with a substantial tax on death degree. That is not 
right. It is not good tax policy or good national economic policy.
  It is particularly not fair because there is a better way: Tax the 
gains when they are realized; don't tax at death. That is what the 
Death Tax Elimination Act is all about. I urge Senators to take a very 
close look at this when we have this issue of the cloture vote. Think 
very carefully about not allowing us to proceed. There is some notion 
that politically some people will want to use the death tax repeal 
legislation to offer all kinds of nongermane amendments to make 
whatever other points they may want to make. Everybody around here 
knows the Senate schedule is very tight. Everybody knows the death tax 
repeal is

[[Page S6332]]

extremely popular around the country. A very high percentage, 70 to 80 
percent of the American people, support its repeal. It passed the House 
of Representatives. If everyone had been there, it would be a veto-
proof vote. I believe it will be a veto-proof vote. It is pretty clear 
the death tax repeal is going to pass. It will be successful if it 
comes to a vote.

  I don't know whether some people plan to play political games and use 
this vehicle to score political points on totally unrelated matters. I 
urge those Members to think very carefully about that strategy. If we 
are not able to get the clean version of the House bill, H.R. 8, to a 
vote, I will be standing on the floor pointing fingers at those people 
who have prevented the Senate from doing that. I think that is very 
fair. It is very appropriate.
  The House of Representatives overwhelmingly repealed the death tax. 
The American people want it repealed. We will have an opportunity to 
consider it in the Senate. Those Senators who stand in the way of this, 
playing parliamentary games, using amendment tactics with amendments 
that are not germane to the estate tax, we are going to be on the floor 
pointing out the results of their efforts. If they stop this with those 
tactics, they will have to accept the consequences of their actions. It 
is fine with me to have people try to amend the bill. I don't think 
they will be successful. This bill, written by Chairman Bill Archer and 
Representative Dunn and others in the House of Representatives, 
including members of the minority, is very well put together. It 
reduces rates for the first 10 years and has a repeal at the end of the 
10-year period. By then it is all gone. That should give everybody time 
to adjust to the fact that it is going to be repealed, however it will 
be repealed.
  I hope my colleagues will not decide to try to derail the opportunity 
to repeal the death tax through a strategy either of denying cloture--
in other words, the ability to bring the bill to a final vote on the 
floor of the Senate--or alternatively, to require the majority leader 
to agree to nongermane amendments, which obviously would sink the ship.
  It is my understanding from talking to the majority leader today that 
he does not yet have an agreement to permit bringing the bill to the 
floor with a limited number of germane amendments, with a clear vote 
before the end of this week. If that can't be accomplished, we will 
have to move for cloture and we will have a cloture vote. I believe we 
will get cloture. When we do, then only germane amendments are allowed. 
There will be a vote by the end of the week. Members can't say they are 
for repeal of the death tax and then engage in tactics which prevent 
the Senate from ever getting to that vote.
  Let me make a couple of other points. This is a very bipartisan 
approach both in terms of outside groups and the strong support we have 
had both in the House and in the Senate from Members on both side of 
the aisle. That is why I do not make a blanket action over who might 
use dilatory tactics. Many members of the minority are cosponsors of 
this legislation. When I originally developed this concept, Senator Bob 
Kerrey of Nebraska was very supportive and immediately became a 
cosponsor of what is now known as the Kyl-Kerrey bill. We have 29 
cosponsors. Frankly, we could have more. Nine are members of the 
minority party. The rest are members of the majority party.
  Let me single out these members of the minority party who have been 
willing to support us. I am sure there will be more, but cosponsors 
include Senators Bob Kerrey, John Breaux, Chuck Robb, Blanche Lincoln, 
Ron Wyden, Mary Landrieu, Max Cleland, Evan Bayh, and Patty Murray. 
These are all Senators who I think have studied this and realize there 
is a tax on the unrealized gains incorporated in this bill, so it 
becomes a very fair bill just taking death out of the equation. I 
particularly thank those Senators for putting aside any partisanship in 
recognizing the importance of this repeal.
  For those who are not totally familiar with the overall essence of 
the bill, let me describe the key elements of it.
  As amended, H.R. 8 would, first, in the year 2001 convert the unified 
credit to a true exemption and repeal the so-called 5-percent bubble 
and expand the availability of qualified conservation easements. It 
would also repeal rates in excess of 53 percent in that first year.
  Between 2002 and 2009 it would phase down the estate tax rates by 1 
percent to 2 percent each year.
  Third, in 2010 it would implement the Kyl-Kerrey language eliminating 
the death tax and implementing a carryover-basis regime, as I discussed 
earlier.
  Over the Fourth of July, I had occasion to attend some ceremonies and 
hear our Founding Fathers quoted. Of course Benjamin Franklin is always 
one of the most fun to quote, but he is one who, some 200 years ago, 
said: Nothing in this world is certain but death and taxes.
  It should come as no surprise that after 200 years the Federal 
Government would find a way to put those two inevitabilities together 
to create a death tax which is not only confiscatory but also offensive 
to the American sense of fairness and also harmful to small business 
and to the economy. It was also harmful to the environment, and this is 
so because what happens is families find, in order to pay the tax, they 
have to sell land they would like to keep in the family for its 
environmental value. But they find they have to sell it to generate 
income. Inevitably what happens is the property is developed. That 
development is the reason why there are conservation groups who have 
also joined us in opposition to the estate tax and in favor of its 
repeal.
  There is another point I want to mention. Opponents of our 
legislation say this only affects a few people. First of all, it is not 
true; it affects a lot of people. It is true in the end only a few 
people have to end up paying. But a lot of people have spent a lot of 
money preparing various tax shelters to escape the payment of the 
estate tax.
  Who benefits, of course, are the lawyers and the estate tax planners 
and the insurance companies. I have nothing against any of those folks, 
but I don't think we need to create tax policy just to create jobs for 
lawyers. I am a lawyer. I know I always had plenty to do without having 
to get into this. So I don't think any of those folks would have real 
grounds for suggesting that in order to keep them in business we have 
to keep the estate tax. So it is not just the people who pay, it is 
also the people who have to try to avoid paying.
  There is another thing. The Chair is well aware of this because she 
and I share the same concern about this problem, as a result of which I 
understand either tomorrow or Wednesday there is going to be a hearing 
before the Aging Committee, talking about senior citizens who end up 
getting bilked or scammed because of people who come to them and say to 
avoid the death tax they have to give them a bunch of money to set up 
some kind of trust to save their assets. Most of these people are 
people who would not have to pay the tax; their estates are just not 
big enough to be taxed. They fall within the exemption. But they are 
afraid. They have heard about this death tax and they are susceptible 
to these scams which take large amounts of money from them under the 
guise of estate planning which is not necessary for them.
  So you not only have the people who have to pay the tax, you not only 
have the people who have to pay not to pay the tax, but you also have 
people who get scammed into paying some of these unscrupulous folks, 
setting up trusts they do not need because they would never be subject 
to the tax.

  You also find--again I go back to the example I cited before--when 
businesses are sold, frequently jobs are lost, and those jobs are also 
affected, as I pointed out, by the reduced income from the businesses 
that have to prepare not to pay the tax. So it is just not true the tax 
only affects a limited number of people. In fact, I believe it was 3 
years ago that we had the latest statistics for the amount of money 
spent to avoid paying the estate tax. It was almost exactly the same as 
the amount of tax paid in that particular year. In effect, it is a 
double taxation and a very inefficient tax when you have to pay that 
much money to avoid paying the tax.
  Edward McCaffrey--I don't think he would mind me putting this label 
on him--who is a liberal, a professor of law at the University of 
Southern California, put it this way.


[[Page S6333]]


       Polls and practices show that we like sin taxes, such as on 
     alcohol and cigarettes. . . . The estate tax is an anti-sin, 
     or virtue tax. It is a tax on work and savings without 
     consumption, on thrift, on long-term savings.

  He is exactly right. We may all be for sin taxes. But one of the 
reasons why the bulk of Americans, whether they will ever have to pay 
the tax or not, oppose the estate tax is they realize it is contrary to 
everything we believe in America. It is not a tax on sin; it is a tax 
on virtue--saving something for your kids when you die.
  Let me also cite economists Henry Aaron and Alicia Munnell, making 
the very same point. Writing in a 1992 study, they said that death 
taxes:

       [H]ave failed to achieve their intended purposes. They 
     raise little revenue. They impose large excess burdens. They 
     are unfair.

  As I noted, opinion polls constantly show between 70 percent and 80 
percent of Americans favor repeal of the death tax. When Californians 
had the chance to weigh in with a ballot proposition, they voted 2 to 1 
to repeal their State's death tax. I think that is a very important 
point because that vote was very recent.
  The legislatures of six other States have enacted legislation since 
1997 that would either eliminate or significantly reduce the burden of 
their States' death taxes. In fact, the minority leader was here a 
moment ago. I note on the ballot in the home State of the distinguished 
minority leader, South Dakota, there will be a proposition this fall 
for the elimination of the death tax.
  If you talk to the men and women who run small businesses around the 
country, if you talk to people who join in meetings, gatherings that I 
talk to all the time, you will find very strong support for repeal of 
the tax. Remember, it is a tax that is imposed on a family business 
when it is least able to afford the payment, on the death of the person 
with the greatest practical and institutional knowledge of that 
business' operations. That is the reason why so many businesses cannot 
make it to the second generation or the third.
  I mentioned before the women- and minority-owned businesses. Instead 
of passing hard-earned and successful businesses on to the next 
generation, many of these families have had to sell their companies in 
order to pay the death tax. That certainly stops the upward mobility 
that is so important to some of these groups. It is why death tax 
repeal is supported by groups such as the National Association of Women 
Business Owners, the U.S. Hispanic Chamber of Commerce, the National 
Black Chamber of Commerce, the National Indian Business Association, 
and the National Association of Neighborhoods.

  This is a very wide spectrum of organizations representing a very 
broad spectrum of the American community. I cannot think of a policy 
that has come to the Senate in recent times that has a more broad 
appeal to it than the repeal of this very unfortunate and unfair tax.
  I mentioned before the argument about concentration of wealth. I just 
want to go back to that for a moment. There is a February 2000 study by 
the National Association of Women Business Owners, the Independent 
Women's Forum and the Center for the Study of Taxation combined. It 
found the death tax costs female entrepreneurs nearly $60,000 on death 
tax planning, obviously money they could use to put back into their 
businesses. They report that 39 jobs were lost per business due to the 
costs of death tax planning during the last 5 years. Think about that. 
Women business owners report that the cost of death tax planning will 
create 103 new jobs per business in the next 5 years.
  Think about that statistic. Most of the businesses we think about are 
much smaller than that to begin with, but we know small businesses can 
grow to 200 or 300 employees if they are successful. These numbers are 
staggering when you stop to think about the amount of job loss that 
results, just from the costs of planning to avoid the estate tax. It is 
an incredible statistic.
  There is a June 1999 survey of the impact of the death tax on family 
business employment levels in upstate New York which found that the 
average spending for death tax planning was as much as $125,000 per 
company. Think of that. For the 365 businesses surveyed, the total 
number of jobs lost already as a result of the cost of death tax 
planning was over 5,100 jobs.
  The average estimated number of jobs these businesses would lose over 
the next 5 years if they actually had to pay the death tax exceeds 80 
per business, with the numbers of jobs at risk at a minimum of 15,000 
jobs. This is just among something like 300 companies in upstate New 
York. These are staggering statistics. If you expand that to the rest 
of the country, it is impossible to argue that the estate tax is not my 
problem, that it is just for a few rich folks. It affects everybody in 
this country.
  What it suggests to me is that although it is paid by only a small 
number of individual taxpayers, it has a disproportionately large 
negative impact on the economy. As someone said, it is the tax with the 
longest shadow of any on the books.
  The adverse consequences are compounded over time, too. A December 
1998 report by the Joint Economic Committee concluded that the 
existence of a death tax in this century has reduced the stock of 
capital in the economy by nearly half a trillion dollars.
  Think about what a half of a trillion dollars of capital stock 
infused into the economy in the future could mean. These surpluses that 
are projected now would be expanded even more significantly because the 
growth in capital would obviously provide a lot more return on 
investment.
  It is really staggering when one stops to think about the impact of 
this one tax and how pernicious it is, all the way from the individual 
minority-owned business to the economy of the United States losing half 
a trillion dollars in capital stock. Just think, by repealing the death 
tax and putting those resources to better use, the joint committee 
estimates that as many as 240,000 jobs could be created just over a 
period of 7 years. Americans would have an additional $24.4 billion in 
disposable personal income over that period of time. If we said to the 
American people: We have a great deal for you; how would you like 
another $25 billion in the next 7 years and all we have to do is repeal 
this tax that does not bring in revenues to the United States 
proportionate to the cost that it imposes on the economy, I think they 
would say that is a very good deal.
  It seems to me almost all of the arguments for those who used to 
favor the tax have been pretty well laid to the side, and the only 
question now is how we are going to get this to a vote in the Senate 
and how we are then going to be able to send it to the President.
  I mentioned the cost to the environment a moment ago. Maybe those who 
have in mind offering amendments would like to consider this for just a 
moment: An increasing number of families who own environmentally 
sensitive lands, as I said before, have had to sell property for 
development to raise the money to pay the death tax, which destroys 
natural habitats as a result. With that in mind, Michael Bean of The 
Nature Conservancy observed that the death tax is highly regressive in 
the sense that it encourages the destruction of ecologically important 
land. So maybe folks who were planning to speak in opposition to this 
would like to take that into consideration.
  Because it tends to encourage development and sprawl, a lot of 
environmental organizations have endorsed its repeal. Among those 
organizations: The Izaak Walton League, the Wildlife Society, Quail 
Unlimited, the Wildlife Management Institute, and the International 
Association of Fish and Wildlife Agencies.
  Incidentally, pending repeal in 2010, as I noted before, H.R. 8 
expands the availability of qualified conservation easements, which is 
something I am sure all of these conservation organizations support.
  For all of these reasons, it is going to be very hard to explain why 
we would not support repeal of this tax. It overwhelmingly passed in 
the House of Representatives.
  The repeal portion of the death tax recaptures taxes on unrealized 
gains, something that had been a problem for some Members of the other 
side of the aisle. I understand why, and I was happy to include that 
compromise in this legislation, and Representative Archer did the same.

[[Page S6334]]

  In the meantime, it enhances conservation easements, reduces rates. I 
really cannot think of a good argument against this. And yet 
constituents may ask: Why can't you get it to a vote? Why do you need 
to worry about this?
  The reason is, frankly, because of the rules of the Senate, any 
Senator has the ability to raise nongermane matters until we have had a 
cloture motion voted on and approved. There are those who would like to 
take advantage of this opportunity to raise their favorite issue in 
that way. If enough people do that with these nongermane riders which 
we have all heard so much about, it can sink the ship that otherwise 
would carry the legislative business to the President for his 
signature.

  I hope that will not happen. I hope very much we can reach an 
agreement to quickly take up and consider any amendments and then vote 
for the repeal of the estate tax, vote for the House-passed bill, H.R. 
8. I hope we can do that tomorrow at the very latest. If we cannot, 
then obviously we are going to have to file cloture and have that vote 
on Thursday.
  I encourage all of my colleagues to look at this legislation very 
carefully because there is some misinformation about it. I know I 
talked for some time today, but hopefully I have been able to answer 
some of the questions that have been raised in my remarks. I stand 
ready to work with Senators who want to understand better exactly what 
we are trying to do here, what the effect of it will be, and what the 
many organizations are that support this legislation because they are 
significant. I certainly hope they will make their feelings known 
during the course of the next few days, too, because it is important 
for our colleagues to understand the depth and breadth of support for 
repeal of the estate tax.
  I conclude by thanking Senator Levin, again, for allowing me to take 
this time and to urge my colleagues to support H.R. 8, to agree to a 
time agreement that will enable us to take it up in a timely fashion, 
to get it disposed of with germane amendments as quickly as possible so 
we can have a vote on repeal sometime this week.
  That is something the American people would feel very proud we 
accomplished. Everyone can go back to their constituencies and brag 
about it. It is not partisan; it is bipartisan. Republicans cannot brag 
they did it all alone because many Democrats in the House made it 
possible with a veto-proof margin. Without the support of our 
Democratic colleagues in the Senate, I know we would not have gotten 
this far today.
  I am very hopeful people on both sides of the aisle will see not just 
the fairness of it but the political benefit in responding to our 
constituents, which is, after all, what we are supposed to be doing 
around here. We know they would like to see repeal, and I think it is 
time for us to show them we can get something done here; we can do this 
and not hide behind all of the usual parliamentary maneuvers that are 
so common in the Senate.
  I am very hopeful we will be able to finish this bill by the end of 
this week, send it on to the President, and go back to our constituents 
and say we did something very important for them: We repealed the death 
tax.
  I thank the Chair, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. LEVIN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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