Congressional Record, Volume 146 Issue 88 (Tuesday, July 11, 2000)

[Congressional Record Volume 146, Number 88 (Tuesday, July 11, 2000)]
[Senate]
[Pages S6404-S6408]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

ESTATE TAX REPEAL

Mr. DORGAN. Mr. President, I will comment briefly on the remarks made
by the majority leader a few moments ago on the subject of the estate
tax.
First of all, the question of repealing the estate tax or changing
the estate tax is an important issue, but it is not an issue that is
important to the exclusion of all other issues. The majority leader
takes the position that the estate tax ought to be repealed completely
so those in this country who die and leave $100 million in assets or
$500 million in assets or $1 billion in assets, who now pay some estate
tax, will be tax free. That is what ``repeal'' means.
I happen to believe we ought to change the estate tax to provide a
significant exemption so that no small business and no family farm gets
caught in the estate tax. I don't want people to try to leave the
family farm or the small business to their children, only to discover
there will be a crippling estate tax to pay. So I say, let's get rid of
that situation. Let's provide an exemption--$8, $10 million--that takes
care of the vast majority of cases.
But how about those folks who leave half a billion dollars or $1
billion? Do we really want to repeal the estate tax on that kind of
estate? There are other and competing needs for the revenue involved.
For example, we could pay down the Federal debt; we could provide a
larger tax credit for college tuition; we could invest in elementary
and secondary education; we could provide tax relief to middle-income
families rather than to the wealthiest estates in the country.
I happen to believe we should change the estate tax, but I don't
believe we ought to repeal the estate tax for the largest estates.
The majority leader says the problem is with the Democratic side of
the Senate. No, the problem is that yesterday the majority leader came
to the floor of the Senate and tried to pass the repeal of the estate
tax by unanimous consent. No debate, no discussion, no amendments, $750
billion of tax cuts in the second decade after repeal--$750 billion in
tax cuts by unanimous consent, without any debate, and without any
amendments. That is what he tried to do yesterday. We objected to that.
Yesterday we proposed that he bring up this measure under a regular
order. The majority leader objected to that. Democratic leaders
proposed that the majority leader bring the bill up and allow 6, 8, or
10 amendments, with time agreements. But the majority leader has
objected to that.
His position is: I want my way or no way. I want to bring it up and
repeal all of the estate tax, which would mean generous tax cuts for
the wealthiest estates in this country. If we don't do it his way, we
were told, we won't have an opportunity to offer any amendments. That
is the majority leader's position. The people elected to the Senate on
this side of the aisle will not be able to offer amendments. He says in
effect, ``We have an idea, we intend to push that idea, we demand a
vote on that idea, and, by the way, you, Senators, don't have any right
to offer amendments.''
That is the majority leader's position. That is not a position that
is acceptable to me. It is not the way the Senate ought to work. There
is something called a regular order.
Mr. DURBIN. Will the Senator yield?
Mr. DORGAN. I am happy to yield to the Senator.
Mr. DURBIN. I thank the Senator for raising the point that they were
going to pass a $750 billion tax break for the wealthiest people in
America, those who pay estate taxes, and do it without one minute of
committee hearings--I see the chairman of the Senate Finance Committee
on the floor--not a minute of hearing. This was going to be done
without any discussion, any debate, $750 billion in tax breaks.
I ask my colleague, the Senator from North Dakota, whether or not he
believes it also says something about the priorities of the Congress,
that of all the different people who could be helped by this Congress,
the highest, the single most important priority for the Republicans
turns out to be the wealthiest. When it comes to helping people pay for
their prescription drugs, when it comes to helping people, dealing with
areas such as difficulties with HMOs, folks don't even have a voice in
this debate. They are not even being considered.
Would the Senator address the whole question of prioritization, as to
whether or not we are making the right decision in terms of helping the
people who really need it the most in this country?
Mr. DORGAN. The Senator from Illinois is correct.

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Let me correct something I said a moment ago. The majority leader
yesterday tried to bring up H-1B legislation, not the estate tax. I was
mistaken about that. I should have known better. I was on the floor at
that time, as a matter of fact.
But it is true that the majority leader wants to bring up the estate
tax and say to half of the Members of the Senate: You don't have a
right to offer amendments, and if you don't like it, tough luck. That
is what the issue is about.
The Senator from Illinois asked the question, Shouldn't this proposed
repeal be measured against other priorities, and shouldn't this suggest
what is important in the Senate? It sure does. There is not the time or
the energy or the inspiration on the part of those who control the
agenda in the Senate to have a real debate about protecting people
against HMOs, and to try to pass a Patients' Bill of Rights. No, there
is not time for that. Can we work to put a prescription drug benefit in
the Medicare program? No, not quite enough time for that either. In
fact, the other side understands that is an important issue, so they
have cobbled together a goofy proposal that says OK, the senior
citizens are having trouble affording prescription drugs, so let's give
a subsidy to the insurance companies. Even the insurance companies see
through that. They have come to my office--and I assume to the
Senator's office--and said: We will not be able to offer a prescription
drug plan. We would have to charge $1,200 for a plan that has $1,000 in
benefits.
The point the Senator from Illinois makes is we have other
priorities. Those other priorities somehow don't get to the floor of
the Senate because the big priority at the moment is to give an estate
tax repeal to the largest estates in the country.
As I said, I think we ought to provide a significant exemption so
that every family farm and every small business can be transferred to
the kids upon the death of the parents, with no estate tax at all--
none, zero. However, when a billionaire or someone with $500 million in
assets dies and there is an estate, is it not unreasonable to have some
transfer here, some estate tax, in order to use those resources for
other purposes, such as reducing the Federal debt, providing middle
income tax relief--a whole range of urgent needs? Is that not a
reasonable thing? That is what we ought to measure this against.
Mr. DURBIN. Will the Senator yield?
Mr. DORGAN. I am happy to yield to the Senator.
Mr. DURBIN. If the Republicans have their way to totally repeal the
estate tax for the wealthiest in America and take $750 billion out of
the surplus for that purpose, doesn't that diminish the likelihood,
doesn't that reduce the possibility, that we will have the resources to
pass a meaningful prescription drug benefit for the elderly and
disabled in America, one that helps all of them pay for the outrageous
cost of prescription drugs?

Mr. DORGAN. I say to the Senator from Illinois, it is exactly as he
states. With the wonderful economy we have had and the surpluses that
are expected, there is a certain amount of revenue available. The
priority, for the majority side, is to repeal the estate tax, including
that top half of the estate tax that applies to the wealthiest estates
in the country. If we follow this priority, that will crowd out the
ability to do other things.
This is a question of making judgments about what is important, what
is the priority of this Congress. Should we provide a prescription drug
benefit for Medicare? Should this Congress make the investments in
education that we should make? Should this Congress decide we should
pay down the Federal debt? Should this Congress decide college tuition
should trigger an increased tax credit that helps kids go to college?
These are all priorities, and there are more of them that we ought to
measure against this proposal to repeal the estate tax for the largest
estates in the country.
As I said, it is a matter of priorities, and it is also a matter of
will. What do we have time to do in the Senate? We are told by the
majority leader that we do not have enough time to deal with Patients'
Bill of Rights, prescription drugs for Medicare, the minimum wage,
closing the gun show loophole. We do not have time for those things, we
are told, but we have plenty of time for the things the majority wants
to do. We have plenty of time to decide to repeal the estate tax
completely, including repeal for the largest estates in the country. Do
my colleagues know what that will do on average to an estate above $20
million? It will provide about a $12 million tax cut for the estate.
Mr. DURBIN. Will the Senator yield for another question?
Mr. DORGAN. Yes, I yield.
Mr. DURBIN. Is the Senator telling me we could give estate tax
reform, virtually exempt all family farms, all small businesses--say
your business is worth $8 million or less; you are not going to pay a
tax on it; families with assets of $4 million would not pay an estate
tax--and still then have the resources to provide for a prescription
drug benefit if we refuse to go along with the Republican approach
which gives this estate tax break to the very wealthiest in America,
those in the multimillion-dollar, maybe even billion-dollar category?
Mr. DORGAN. I say to the Senator from Illinois, that is exactly the
case. In fact, one of the proposals we offer as an amendment that is
prevented by the majority leader would provide an $8 million exemption
for a small business or small farm.
The PRESIDING OFFICER. The Senator's 10 minutes have expired.
Mr. ROTH. I yield 5 minutes to the distinguished assistant majority
leader.
Mr. NICKLES. Mr. President, I remind my colleagues from Illinois and
North Dakota, we have rules in the Senate, and that is to go through
the Chair. The dialogs are interesting, but we are supposed to go
through the Chair, and that has not happened in a while.
I want to correct some of the factual misstatements that were just
made. My colleagues said we want to bring up the repeal of the death
tax and offer no amendments. That is not correct. We have told our
friends on the Democratic side that we will allow them to offer a
substitute. They can have relevant amendments. We are willing to enter
into time agreements to pass this bill. Frankly, what they want to do
is unload an agenda they cannot pass.
My colleagues mentioned that we will not allow them a debate on the
Patients' Bill of Rights. We already voted on it a couple of times. We
voted on it last year, and we voted on it twice in the last month. The
problem is they have a flawed proposal that will not pass and cannot
pass.
We voted on the Patients' Bill of Rights. We voted on minimum wage.
For them to say, instead of voting to repeal the death tax, which we
are hopefully going to do, they have a lot of other things on which
they would rather vote--we have given them votes on almost every issue
that has been mentioned. On the death tax, we have said--and I will
propound a unanimous consent request--we will have an amendment on each
side; we will have three amendments on each side; we will consider
their alternatives.
My colleague from Illinois said let's have an exemption, not change
the rates; let's vote on this issue. We are willing to do that. The
problem is our colleagues on the Democratic side really do not want a
tax cut, period.
We are trying to eliminate the death tax so there will not be a tax
on death. What there will be is a tax on the sale of the property when
whomever inherits the property sells it. We will eliminate the taxable
event on someone's death. This is a very significant and I believe one
of the most positive things we can do if we want to help the economy,
if we want fairness.
We are trying to help the small business people, the Democrats say;
the Democrats are willing to do that. Hogwash. I used to run a small
business. I did not want it to be small; I wanted it to be big. I do
not know if it would meet the Democrats' definition. A lot of us really
do believe we should eliminate the tax on someone's death and turn it
into a taxable event when the property is sold. If individuals who
receive this business or receive this property do not sell it, there
will not be a taxable event. When they do sell it, there will be a tax,
and that tax will be capital gains. That tax rate is 20 percent, not 39
percent, not 55 percent.
I want to correct a misstatement just made. We are willing to enter
into time agreements. We are willing to consider

[[Page S6406]]

relative amendments, substitutes. If they want to have a substitute
that has an exemption, fine; let's vote on it. If they want to vote on
an alternative, let's do it. We are willing to do it. But to say we are
not willing to consider amendments and that it is ``take our proposal
that passed the House''----
Mr. DORGAN. Will the Senator yield?
Mr. NICKLES. In a moment I will.
The facts are, the cost over 10 years, which is the most we ever use,
is $104 billion. I heard them say it is $750 billion. I do not know
from where they are grabbing these figures. If we use that kind of
analogy, it would be fun to see how much the tax increase of 1993 cost
because if this tax cut is $750 billion over the next 20-some-odd
years, I would hate to think how much the cost of the tax increase the
Democrats passed in 1993 is.
The facts are, the estate tax repeal is $104 billion over the next 10
years. That is what passed the House. Hopefully, that is what the
Senate will pass today, tomorrow, or in the near future.

Mr. DORGAN. Will the Senator from Oklahoma yield?
Mr. NICKLES. Not on my time. I will be happy to yield under the
Senator's time. I only had 4 minutes.
Mr. DORGAN. Can I take 30 seconds?
Mr. REID. I yield Senator Dorgan 2 minutes.
Mr. DORGAN. I respectfully say that the Senator from Oklahoma is not
accurate when he says that his side is willing to entertain amendments;
I do not see a problem here; let's bring it on and have amendments and
a discussion. That is exactly what the majority leader has denied. That
is exactly what the majority leader said he will not allow to happen on
the floor of the Senate.
If the Senator from Oklahoma is speaking for the majority leader on
this issue, I say get the Democratic leader on the line, make an
agreement, and let's have this issue on the floor where some amendments
can be offered and votes taken, and we will see how people feel about
the estate tax.
The Senator from Oklahoma is not accurate in leaving the impression
that this has been a reasonable circumstance here and they are willing
to entertain all kinds of amendments. That is not the case at all. In
fact, our side has offered a reasonable number of amendments with time
agreements, and the majority leader has said no, and that is the fact.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. Mr. President, I said the majority leader, to my
knowledge, is willing to enter into a time agreement and has given it
to the minority leader. It said we will have relevant amendments. I
have a list of amendments on prescription drugs, long-term health care,
Medicare, retirement--in other words, a lot of things on the Democrats'
agenda that have not been accomplished.
I said relevant amendments pertaining to the death tax and,
unfortunately, our Democratic colleagues have not been willing to
comply or agree. I had hoped we would have had a little less partisan
exchange on a Tuesday morning. Let's go back to the Cloakroom and come
up with two or three relevant amendments dealing with this issue and
vote. That is the way we should work.
Mr. DORGAN. Do I have time remaining on the 2 minutes?
The PRESIDING OFFICER. The Senator has 1 minute remaining.
Mr. DORGAN. I say to the Senator from Oklahoma, there is nothing
partisan in my intent to correct the impression left by the Senator
from Oklahoma. I was simply saying that proposals have been made on the
specific number of amendments and time agreements by our side and the
majority leader has rejected them.
The Senator from Oklahoma seemed to suggest they are willing to
entertain this, that, and the other thing; they are very reasonable;
they will accept amendments. I was simply trying to correct a
misimpression. I did not intend to be partisan.
This is an important issue. There are differences in how we view the
issue. I happen to think we should change the estate tax so no small
business or family farm ever gets caught in its web. We can do that. An
$8 million or $10 million exemption would mean that virtually no family
farm or small business ever would get caught in the web of the estate
tax. But I do not happen to believe we should totally exempt the
largest estates in this country from the estate tax. That is the
difference.
Let's debate that difference and have amendments on the choices and
make judgments as a Senate. It is not my intent ever to be partisan
about this issue, but I want the right information to be given, and the
right information is that we offered limited amendments and limited
time agreements, and they were rejected.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. I yield 2 minutes to the Senator from Arizona.
Mr. KYL. Mr. President, Senator Nickles made the point that the
amendments the minority have sought to bring up have nothing to do with
repeal of the death tax. That is why the majority leader said he will
enter into an agreement with them but let's make it relevant and
germane to the issue before the Senate.
When the American people see us going through these charades, I
wonder how they can have any confidence in a body that seems to be so
partisan and intent on changing the subject.
We have one subject before us today: repeal of the death tax. It is
the House bill that passed overwhelmingly. Why can't we simply consider
this bill with relevant and germane amendments? Why do we have to get
off into prescription drugs and the rest?

Our distinguished colleague from North Dakota has said there is an
alternative with respect to the repeal of the death tax. I would like
to take that on because it relies on a section of the code today that
is absolutely unworkable. Two-thirds of the cases that have been
brought with respect to this section of the code have been won by the
IRS. It does not work. Try to qualify, if you are a small business or a
farm, under the section that they are taking about; you are not going
to get relief. It is a sham proposal.
You can raise the exemption all you want, but if the definition
precludes you from qualifying, you have not gained a thing. I can't
wait to debate the alternative that the members of the minority want to
propose. I will agree, right now, to consider that as an amendment that
we would vote on here. If we can agree to consider that, we can move
right on to the consideration of the death tax repeal because the
provision they are talking about is unworkable, it is unfair, and it
will not provide an adequate alternative to the repeal of the death tax
that is called for under H.R. 8, the House-passed bill.
I urge my colleagues to support the cloture motion so we can get on
with the debate about how we can finally bring an end to this most
unfair and pernicious section of the Tax Code.
I welcome a debate of any germane alternative that members of the
minority would like to present because I think when you hold them up
side by side, H.R. 8 will win.
The PRESIDING OFFICER (Mr. Frist). The Senator from Delaware.
Mr. ROTH. Mr. President, I yield myself 10 minutes.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I rise today in support of the motion to
proceed to H.R. 8, the Death Tax Elimination Act of 2000, which
overwhelmingly passed in the House by a vote of 279-136. I point out
that it was a bipartisan vote. It included 65 Democrats. So this
legislation that we are about to proceed to has significant bipartisan
support.
This is an historic opportunity to repeal the onerous estate and gift
taxes which currently have rates as high as 60 percent. In an age of
surpluses where taxpayers are, indeed, paying too much, it is time to
repeal the estate and gift taxes. Families who toil all their lives to
build a business and diligently save and invest should not be penalized
for their hard work when they die. Their assets were already taxed at
least once--and it is unconscionable that their estates are taxed again
at rates as high as 60 percent on the value of their assets at the time
of their death.
This bill would address this problem.
I point out, we have held hearings on estate taxes in the Finance
Committee as of the last Congress. It is the Finance Committee that is
the committee of jurisdiction.
I also point out, this bill is substantially similar to the estate
tax provisions in the tax bill that was vetoed by

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the President last year. Some may ask why this House bill did not come
through the Finance Committee. The reason is that the bill holds to the
estate tax provisions the House and Senate agreed to last year. Since
the Finance Committee has already debated and approved these provisions
and we have negotiated these provisions with the House, I saw no need
to delay the bill in the committee and perhaps kill the chance of
repealing the tax.
Now, I would like to briefly go through the bill before us. I point
out, there are really two time periods to which the bill applies. In
the first period, generally from 2001 to 2009, estate tax relief is
provided on several fronts. In the second period, beginning in 2010,
the entire estate and gift tax regime is repealed.
During the first part, from 2001 to 2009, the estate and gift tax
rates are reduced on both the high end and low end. On the low end,
currently, there is a unified credit that applies to the first $675,000
of an estate. That amount is scheduled to rise to $1 million in 2006.
While current law provides some relief for the smallest estates, for
modest estates, those above the credit amount, a high tax rate applies.
For example, now a decedent's estate of $750,000 faces a tax rate of 37
percent on each dollar over the credit amount. Keep in mind that is
where the rate starts. For larger estates, the rates can be as high as
60 percent.
For the lower end estates, the bill converts the unified credit to an
exemption. What this means is that estates right above the unified
credit amount will face tax rates starting at 18 percent rather than 37
percent. In other words, for modest size estates, this bill cuts the
tax rate in half.
For the larger estates, some now facing marginal rates as high as 60
percent, the bill includes a phased in rate cut. The rates are reduced
from the current regime, with its highest rate of 60 percent, down to a
top rate of 40.5 percent for the highest end estates. Please keep in
mind that the base of the tax is property, not income, and the rate is
still above the highest income tax rate of 39.6 percent.
Prior to full repeal in 2010, the bill would also expand the estate
tax rules for conservation easements to encourage conservation. In
addition, the bill provides simplification measures for the generation
skipping transfer tax.
In 2010, the whole estate and gift tax regime is repealed. At the
same time, a carryover basis regime is put in place instead of the
current law step up in basis. This means that all taxable estates--and
I emphasize we are only talking about taxable estates--that now enjoy a
step up in basis will be subject to a carryover basis. Carryover basis
simply means that the beneficiary of the estate's property receives the
same basis as the decedent. For example, if a decedent purchased a farm
for $100,000, and the farm was worth $2 million at death, the tax basis
in the hands of the heirs would be $100,000. The step in basis is
retained for all transfers in an amount up to $1.3 million per estate.
In addition, transfers to a surviving spouse receive an additional step
up of $3 million.
As I have already pointed out, the House passed the bill on a
bipartisan basis with 65 Democrats voting in favor of repeal of the
estate and gift taxes. Now is the Senate's opportunity to pass this
bill on a bipartisan basis and send it to the President. It is my
understanding this will be the only chance this year that we will have
to pass this bill and repeal estate and gift taxes. If we fail, the
bill dies. If we come together and vote in favor of the house bill--
estate tax repeal that the Congress passed last year--it will go
directly to the President for his signature.

Our family-owned businesses and farms must not be denied this relief.
This should not be a partisan issue.
Unfortunately, the White House has indicated its opposition to repeal
of estate and gift taxes and has promised to veto this bill. With
roughly $2 trillion of estimated non-social security surpluses over the
next 10 years, I believe the approximately $105 billion cost of
repealing estate and gift taxes to be well within reason--it is only
about 5 percent of the projected budget surplus. Other than being a
money grab--estate and gift taxes do not serve any legitimate purpose.
Taxpayers are taxed on their earnings during their lives at least
once. Our Nation has been built on the notion that anyone who works
hard has the opportunity to succeed and create wealth. The estate and
gift taxes are a disincentive to succeed and should be eliminated.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the
distinguished chairman have as much time as he requires to finish his
address, which I see is not much longer.
Mr. REID. Mr. President, I ask unanimous consent the vote scheduled
for 10:15 be delayed until the Senator from Delaware and the Senator
from New York have time to finish their statements. They are both
managing this bill and should have an opportunity to speak.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, as I was saying, the estate and gift taxes
are a disincentive to succeed and should be eliminated. I believe it is
the right thing to do. I urge my colleagues to vote in favor of the
motion to proceed to this bill to repeal the estate and gift taxes.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. Mr. President, as a New Yorker--and I am sure my
esteemed chairman will understand--I rise in defense of Theodore
Roosevelt's estate tax: One of the great achievements at the beginning
of this century and of the last century--although we have members of
the Finance Committee staff who still think we are in the last century,
but we won't get into that matter. Today, we are here to decide if a
century later we should repeal it.
Again, I don't want to press this on my colleague and friend, the
Senator from Delaware, but this matter should be in the Finance
Committee. My friend doesn't have to say a word. We are the Committee
that considers tax matters. It should have been referred to us and not
sent directly to the floor.
When we begin the debate and the voting begins, the Democrats will
have an alternative. It is simple. I say forthwith and I will say no
more, it is less costly than the measure we have received from the
House. We would increase the general exemption from the present
$675,000 to $1 million immediately--it was scheduled to rise to that
level in the year 2006--and then to $2 million in the year 2009. We
would increase the exemption for family-owned businesses and farms from
$1.3 million to $2 million immediately and to $4 million by the year
2009. This increase would eliminate the estate tax on virtually all
family farms and 75 percent of family-owned businesses that would
otherwise be subject to the estate tax. This measure will cost $64
billion over 10 years, roughly half the cost of the Republican
proposal.
Of course, the measure the House has sent us, as our Chairman has
stated, in the year 2010 repeals all estate taxes, and thereafter the
true cost would be approximately $50 billion each year indefinitely.
We think this is an extravagant proposal driven by the legitimate
politics of the hour. I understand that. I understand the President
will veto the measure. I look forward confidently to its being passed
and vetoed and not forgotten. It will be raised in the campaign. That,
too, is legitimate.
But I have to say, sir, having lived on a farm for 36 years in
upstate New York, the dairy farming world of that State has not
prospered for half a century. We have a considerable number of meadows,
in one of which the press gathered just a year ago last week to have
Mrs. Clinton announce her candidacy for the seat I have the honor to
hold right now. There were hundreds of journalists there. It amazed the
world to look at it.
Sir, I have to suggest that if we had an equal gathering of family
farmers in New York State whose farms would sell for $2 million, the
turnout would be desultory and the press would report disaster. Does
anybody here know a family farmer whose farm is worth $2 million a
year? I don't mean farms in the eastern end of Long Island where
viniculture takes place.
Mr. ROTH. I do.
Mr. MOYNIHAN. My dear and esteemed chairman says he knows a family
farmer whose farm is worth more than $2 million.

[[Page S6408]]

Mr. ROTH. In Delaware.
Mr. MOYNIHAN. Therein, sir, lies the difference between the
Democratic and Republican parties. I know of no such farmer; my friend
from Delaware does. What more can I say? How pleased I am for him; how
regretful I am for the toil-driven, poverty-stricken farmers of upstate
New York.
With that, sir, the vote being announced 4 minutes late, I yield the
floor and suggest we proceed under the order.

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