[Congressional Record Volume 146, Number 92 (Monday, July 17, 2000)]
[House]
[Pages H6091-H6097]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         TAXES AND THEIR IMPACT

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 1999, the gentleman from Colorado (Mr. McInnis) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. McINNIS. Mr. Speaker, I have just come back from the district, 
and I

[[Page H6092]]

spent my entire weekend traveling throughout the district. 
Interestingly, the subject that came up time and time again were the 
death taxes. So this evening I am going to talk a little about taxes. I 
think it is a good forum for us to discuss really four basic taxes, and 
so I am going to address those with my colleagues here this evening.
  The first, of course, is the death tax. I will go into some detail 
about what that exactly encompasses and why it is so punitive on the 
citizens of this country; why it is an unjust tax; why there is no 
justification for the death tax in our tax system; what it does to open 
space and to the preservation of open space in districts such as mine, 
the Third Congressional District of the State of Colorado.
  Then I will move on and talk about the capital gains tax reduction 
that the Republicans put into place and what capital gains means as far 
as creation of capital and why it is critical for the economic well-
being of our country.
  From there, I will move on to talk a little about the marriage 
penalty. To the best of my knowledge, only in the United States of 
America, only in the United States of America do we tax couples because 
they are married. This, by the way, is the leading country in the world 
which advocates family. We advocate marriage. We want people to get 
together and tie that bond, the very basic entity of the family 
foundation which has made this country great. But Uncle Sam comes 
along, not to be left out of the game, and puts a tax on it. We will 
talk a little about that.
  Finally, I also want to talk about our homes. Every homeowner, every 
one of our constituents, colleagues, who are homeowners out there in 
this fine country of ours, we need to talk about what happens when they 
sell that home for a profit; what used to happen and what now happens 
as a result of the Republican leadership. And, frankly, that was a 
bipartisan vote, but it is a Republican bill; and we will discuss what 
it did to those homeowners and how it helps homeowners in this country.
  It has some bearing for every one of my colleagues in this Chamber 
because the majority of our constituents own homes. And in these good 
economic times, a lot of our constituents have the opportunity to sell 
their homes; or if they sell their home, they will sell it for a 
profit.
  But first of all let us begin with the tax that I think is without 
justification, a tax which was initiated as a vendetta, as a way to get 
even with the wealthy families, the families who met success in 
America: the Fords, the Carnegies, the Vanderbilts, the Rockefellers.
  Back then the feeling was, how dare those people make that much 
money; we have to figure out a way, without working for it, to take the 
wealth from them and transfer it to us, the Government, in Washington, 
D.C. What better approach than to put a tax on them on the day they 
die. The day that person dies, Uncle Sam will be at the door, right 
behind the mortician, except that Uncle Sam gets to collect before the 
mortician, by the way, on the death tax.
  So we will talk a little about what this death tax means; how it 
impacts things in the environment, like open space in Colorado; how it 
devastates families who were brought up and who lived the American 
Dream; how everyone's dream, those my age, is to leave something for 
the generation behind them, and how that dream has been dashed; what 
the impact is for the generation ahead of me that wanted to leave 
something for this generation to get kind of a head start, how it has 
been demolished in many cases; and what the impact is of death tax 
transferring, spinning money right out of the community to be 
transferred, without work, without value, simply transferred from our 
local community to the bureaucracy in Washington, D.C. under the death 
tax.

  One of the best articles I have read is out of a newspaper which I 
read on a regular basis, the Wall Street Journal. Excellent editorials, 
by the way, colleagues. I would urge all my colleagues to read those. 
It was interesting to me that the TV talk host, Oprah Winfrey, is 
quoted as saying, ``I think it is irritating that once I die 55 percent 
of my money goes to the government of the United States.''
  Why is that irritating? Because that individual may have already paid 
nearly 50 percent. What Oprah is referring to is that the money being 
taxed upon that person's death, if that estate qualifies, is property 
upon which that individual may have already paid taxes on. It is not 
money that was put away in some little chuckhole somewhere and not had 
taxes paid on it. It is money, in many cases, that has been taxed not 
only once, but twice and sometimes three times.
  Let me go on with her quote: ``When you leave a house or money to 
people, then they're taxed at 55 percent. So you've got to leave them 
enough so once they're taxed they still have some money.''
  When we talk about taxes in a country, we have to look around the 
world. It is, after all, America that is the symbol of free enterprise. 
It is the dream in America that a person can start out and if they can 
figure out a better mousetrap, a better way of doing things, a product 
that will benefit the people, give value to the people, then that 
person is rewarded the fruits of their labor. That is the American 
concept.
  Look at other countries. Look at some of the countries that have the 
reputations for high taxes in this world. Look at Switzerland. Not only 
Switzerland, but look at Germany, or look at Belgium. Even their death 
taxes are lower than the United States. Only one country that I can 
find in research, as cited by the Wall Street Journal article, Japan, 
has a higher rate than the United States.
  Now, as my colleagues know, the administration, the President and the 
Vice President, as a team, are prepared to veto the elimination of the 
death tax. The U.S. House, by a bipartisan vote, meaning Democrats and 
Republicans, supported the Republican bill to eliminate the death tax. 
The Senators, both Democrats and Republicans, adopted the Senate bill, 
the Republican Senate bill, to eliminate the death tax. Yet this 
bipartisan effort will be vetoed in the next few days by the President 
and Vice President team.
  A lot of us hoped, however, that they would just leave it alone. When 
we started this year, we were surprised when we got the President and 
Vice President's budget, which not only of course does not call for 
elimination of the death tax, it increases the death tax, and increases 
it by $9.5 billion. Today we are sending them a bill that will finally 
allow equity in regards to this, to eliminate it; but the President and 
the Vice President see fit to veto it.
  Now, some of my colleagues or their constituents out there may say, 
well, that does not impact me, the death tax is only for the wealthy. 
Interesting statistic I saw the other day. The American Association of 
General Contractors pointed out that a contractor, somebody who wants 
to go out and dig some dirt, who purchases the three basic tools 
necessary to move dirt, a bulldozer, a dump truck and a front-end 
loader, that contractor in America that buys a front-end loader, a 
bulldozer and a dump truck, their estate is now in the status that it 
will be faced with the death tax upon their death.
  Look, colleagues, this does not just apply to the wealthiest of 
Americans, this applies to a lot of Americans; and it applies to 
Americans who do not necessarily have high cash flow. This contractor 
who has a bulldozer, a dump truck, and a backhoe may have no cash flow, 
or their business is just breaking even, and upon the death of this 
contractor, the Federal Government comes in and they will crush that 
business because the only way that estate can pay that estate tax is to 
sell the bulldozer or sell the dump truck or sell the front- end 
loader. Now, how, as a contractor, when the business needs those three 
basic pieces of equipment, how can the business be operated with just 
two of the three? It cannot.
  The same thing applies to ranchers and farmers, in particular, in 
rural America. My State, for example: Colorado, the district I 
represent, the Third Congressional District of Colorado, geographically 
larger than the State of Florida, essentially all the mountains of 
Colorado. Do my colleagues understand what is happening to our ranching 
community out there because of this death tax?
  I wish the President's policy wonks and the Vice President's policy 
wonks

[[Page H6093]]

would come out to Colorado and see what they are doing to open space. 
They are forcing it to go into 35-acre ranchettes because the family, 
who is part of a ranching operation, does not have heavy cash flow. In 
some cases, not even positive cash flow. When the head of the family 
passes away and the estate is activated for the death tax, what choice 
do they have? It is like the contractor who has to sell one of the 
three or maybe two of the three pieces of equipment.

                              {time}  2030

  It demolishes it. The contractor's business is gone. And that is what 
is happening to ranches in Colorado. Yet our President and Vice 
President decided that it was appropriate not only to have a death tax 
imposed upon all of us but to increase the death tax this year in their 
budget by $9.5 billion.
  Let us go on with this article. I think it is very interesting. 
``Then there are casualties,'' speaking about the death tax, again from 
the Wall Street Journal, July 29, 1999, ``then there are casualties in 
small business, particularly family businesses. Hardest hit are owners 
of asset-rich enterprises and areas like farming or timber that, while 
growing, may not throw off much cash. In theory, again, the law 
provides a break for these families. However, the reality is that 
prohibitive estate taxes force the heirs to dismantle their legacy to 
pay the taxes on it.''
  That is what is happening to Colorado ranches. That is what is 
happening to ranches all around this country. Let me tell you, the very 
wealthiest people in this country are the ones that can afford the 
legions of attorneys and accountants to figure out how to preserve 
that, but the middle class in America who does not have the money to 
acquire the attorneys and the CPAs for the protection of that estate 
are suffering.
  Why should they suffer? It is one thing, we all have a tax burden. 
The citizens of this country acknowledge and know that we have to pay 
our fair share in taxes and the people who acquire these estates under 
the umbrella of the American dream they know they have to pay taxes and 
they pay them as they acquire their property. But then at the end, for 
the United States Government to step in through the door of death and 
say now that you have died it has become a taxable event, we all know 
what are taxable events. If you buy something at the store, you pay, it 
is a taxable event. If you buy a car, it is taxed, it is a taxable 
event. You get a license plate, it is a taxable event.
  But the U.S. Government and the President and Vice President think 
that the policy should be that when you die, it is an event so 
remarkable that it should be taxed, so remarkable that it should be 
taxed, regardless of the impacts of what that tax does.
  I have heard and I have read some editorials lately, not many, most 
of the editorials I read support doing away with the death tax, but I 
read a couple that say, hey, what are you talking about? All you are 
doing is hitting the rich people. How wrong those people are.
  Interestingly, one of those articles I saw in the Wall Street 
Journal, and it was not an editorial but it was a guest comment; and I 
thought to myself, I wonder if the author of that article had ever been 
outside of the boundaries of the Potomac River to the farmlands and to 
the ranchlands and to the small businesses in America and asked those 
people what is it going to be like when mom or dad dies and you have 
got to pay estate taxes? What kind of impact does it have on your 
community?
  Let us talk about that for a minute. What happens to the community? 
Some people as they write in these editorials think that the only 
impact is upon the family with whom the death occurred. My gosh, they 
need to open their eyes, my colleagues, because it goes much further 
than just the family that has the death.
  I will give my colleagues an example. In my district, I had a friend 
of mine who lived the American dream, who went out with soil in his 
hand and worked it and worked hard; and he was rewarded through life. 
He figured out a better mousetrap. He figured out how to build a better 
road. He knew how to work harder. He knew how to count his pennies. 
And, as a result, he got the fruits of his labor.
  Do you know what he did with the fruits of his labor, the money that 
he made? He made some money. Do you know what he did with it? He 
invested it in the community. He underwrote 75 percent of the local 
Episcopal church budget, 75 percent of it, every year. You could go to 
my buddy Joe and he would write the check. The United Way, the Cancer 
Society, the Lung Society, M.S., high school yearbook, you name it, Joe 
helped provide in that community. And it was money that Joe made but he 
kept in the community and it circulated.
  Joe also gave people jobs. He hired people to work in his 
construction company. He hired people to help him on his land. And 
those people then took their money home to their families in that 
community. That money was important to that community.
  And what happened when Joe died? Guess who comes in from Washington, 
D.C., as if they reserved a private jet just to fly into this small 
community in Colorado to go and smile over the deceased because it is a 
taxable event. They came into that community and they hit his estate, 
when you combine it with capital gains at a rate in excess of 80 
percent, 80 cents on every dollar, and by the way, every dollar that 
had already been taxed at the time it was accumulated, any interest or 
investment or return since then was taxed, 80 percent on every dollar.
  Do you know what happened to the 57 percent of the local Episcopal 
church budget that was underwritten? Gone overnight. Do you know what 
happened to your major contributions, to your charities and the 
community, the United Way, the Cancer Society, Lung Society? Gone 
overnight. Do you know what happened to jobs in that community that 
were there as a result of the investments that he made in that 
community? Gone overnight.
  And yet our President and our Vice President are willing to stand 
down there and veto the elimination of this unjustified death tax. It 
is not fair.
  I have a wonderful little niece. She is 2 years old. She has a way of 
crossing her arms and looking you in the eye and she says, ``it's not 
fair.'' That is exactly what is happening here.
  How can you justify in any regard other than the fact that you want 
to be vindictive against people who have been successful in our 
society, how can you justify a taxable event upon their death? How can 
you look at the surviving members of their family or how can we look at 
the young people, look at the 20-some-year-olds in this country who are 
out there working 60 and 70 hours a week, who have the energy that we 
all my age remember well, the opportunity to be something, the 
opportunity to make it your own way, you want it your way, make it your 
way, the American free enterprise system, only to know that your goal, 
and it was a goal I have had ever since my wife and I had our first 
child, it was a mutual goal, and that is we dedicated ourselves a 
certain portion of the hard-earned money that we made, and we are not 
wealthy, but the hard-earned money we made we dedicated a portion of 
that because we wanted the next generation to maybe have a home or 
maybe our son and daughter who wants to be a contractor and go out and 
buy those three basic pieces of equipment, a backhoe, a dump truck and 
a bulldozer.
  Whoever dreamed when we were young and those were the days, whoever 
dreamed when those were the days that it would be the United States 
Government that, upon your death, would call it a taxable event and 
come in and take away the dreams that you and your spouse have had for 
a long time, take away the prosperity that a community enjoys?
  Where does that money go? It spends right out of your community, 
right out of your family, right out of your estate. It spends East 
where and it comes to Washington, D.C., to be redistributed by the 
Government.
  Is it fair? Of course it is not fair.
  Let me go on. I am particularly addressing right now ethnic minority 
groups. It is worth noting that a good share of those people who are 
vulnerable are owned by two groups whom high tax leftists claim to 
protect, women and minorities.
  A survey of black-owned businesses by Kenneshaw State College in 
Georgia found six in ten firms by women and minorities, six in ten 
firms reported that the estate tax makes the survival

[[Page H6094]]

of their business after the current generation significantly more 
difficult or impossible. Close to a third of those people said their 
heirs would have to sell their businesses just to pay the taxes.
  Let me read a few letters that I have gotten in my office that are 
right on point when we talk about the impact that happens by this 
Government upon its own people. Colleagues, it is happening to our 
constituents simply because they die and simply because they have lived 
the American dream and they have had success.
  Now, look, if you want to be vindictive, if you are against people 
being successful, then I guess you are satisfied with this death tax. 
And apparently that is perhaps the policy of the White House, because 
they are going to veto a bipartisan bill, Democrat and Republican. 
Although it is a Republican bill, the Democrats voted for it, some of 
them; and in the Senate Republican bill, some Democrats voted for it. 
The President still chooses to veto it.
  This gentleman is named Mr. Roberts. ``My family has ranched in 
northern Colorado for 125 years. My sons are the sixth generation to 
work this land. We want to continue, but the Internal Revenue Service 
is forcing almost all ranchers and many farmers out of business. The 
problem is the death tax. The demand for our land is very high, and 35-
acre ranchettes are selling in this area for as high as $4,500 per 
acre. We have many thousands of acres. We want to keep it as open 
space, but the United States Government is making it impossible because 
we will have to pay 55 percent of the valuation of that acreage upon my 
parents' death.
  ``Ranchers are barrel scrapping by these days, anyway. But since we 
want to save the ranch, we are in trouble. The family has been able to 
scrape up the death taxes as each generation dies up to now. This time 
I think we're done for. Our only other option is to give the ranch to a 
nonprofit organization. And they all want it.
  ``My dad is 90. We don't have much time left. We are one of only two 
or three ranchers left around this area. Most ranches have been 
subdivided. One of the last to go was a family that had been there as 
long as ours. When the old folks died, the kids borrowed money to pay 
the taxes. Soon they had to start selling cattle to pay the interest. 
When they ran out of cattle, their ranch was foreclosed on and is now 
being developed. The family now lives in a trailer near town, and the 
father works as a highway flagman.
  ``If you want to stop sprawl, you better ask the U.S. Government to 
get off the backs of family farms and ranches.''
  The next letter, Ron Edwards:
  ``Dear Representative McInnis,
  I'm writing to bring to your attention an issue of utmost importance 
to me and my family, employees, and the businesses: elimination of the 
death tax. I urge you to support and pass the death tax repeal 
legislation this year. Family-owned businesses need relief from those 
death taxes now. We are celebrating 66 years in business.''
  Now, that is the American dream. That is the American dream, Mr. 
Speaker, 66 years in business. Six generations in this letter, six 
generations on the same ranch. Do my colleagues want to be a part of 
the team that ruins those six generations? Do they want to be a part of 
the team that comes in here after 66 years of business? Let me 
continue.
  ``My grandfather, Vic Edwards, started with a fruit and vegetable 
farm in 1933 at our location in Colorado. The business grew into a 
grocery store and then a lawn and garden center. My father, Vic 
Edwards, is 80 years old, and he is in poor health. No business can 
remain competitive in a tax regime that imposes rates as high as 55 
percent upon the death of the owner. Our tax law should encourage 
rather than discourage the perpetuation of these businesses.''
  Let me repeat that. Our tax laws, Mr. Speaker, should encourage the 
continuity of these businesses, not discourage the continuity. This guy 
works in his family grocery store and that is what he is telling us, 
Mr. Speaker. He is saying we should encourage the continuity of these 
businesses, encourage them to go on, not destroy it.

                              {time}  2045

  If you support that death tax, you are going to destroy a lot of 
these family businesses. Leonard Harris, first-generation owner of a 
food center in Chicago, Illinois. His store is one of less than 20 
African-American-owned supermarket companies in the United States. Mr. 
Harris has said, my focus has been putting my earnings back into grow 
the business. For this reason, cash resources to pay the Federal death 
taxes based on the valuation, the way valuation is made, would force my 
family to sell the store in order to pay the IRS within 9 months of my 
death. Our yearly earnings would not cover the payment of this tax. I 
should know. I started my career as a certified public accountant. So 
here is an African American, first generation in business, taking the 
cash flow, the profits out of that business, putting it back into the 
business to create more business, to create capital, to create jobs, to 
create an economic solid block in a community. Now he is saying, 
``Look, it isn't going to go beyond one generation if this government 
continues to put the death tax on us.''
  Rich Newman, Sr. Our company was founded in 1917 by Rich Newman's 
father and uncle and currently operates 33 grocery stores in Illinois, 
Missouri, Kansas and Iowa and provides jobs for 3,000 people. 3,000 
people. When Rich's father passed away suddenly in 1969, the family was 
faced with a death tax of several hundred thousand dollars which by law 
was due within several months. The Newman family had to use all of the 
resources from the sale of the company's wholesale operations to pay 
the death tax bill. These proceeds could have been put to a better use 
by being reinvested in retail stores and new jobs. The sale of the 
wholesale side of the business provided the funds to pay the estate 
taxes. Now Mr. Newman, to preserve what is left of the business, has 
estimated over the years he has spent in excess of $600,000 just on 
accountants and CPAs to help him figure out how to pass that business 
on to the next generation without the death tax.
  Brookhart Building Centers in Grand Junction and Montrose, Colorado. 
Those are two thriving communities in my district out in Colorado. Last 
September the Brookhart Building Centers had to be sold in order to 
avoid paying the death tax. The owner said that it was the hardest 
decision the family had made in 52 years of business. And it was a 
decision that was not brought on by their failure because maybe they 
did not work hard enough. The decision to sell was not brought on 
because they did not have a good product to sell. It was not brought on 
because they could not service the community. It was not brought on by 
dissatisfaction of consumers. It was brought on by the Federal 
bureaucracy in Washington, D.C. which decided that they are going to 
tax this family upon the death and they are going to break that 
business apart. Watt said the current death taxes forced his father to 
make the sale prior to his father's death in order to protect our 
family. Can you believe that? We have a constituent, colleagues, 
talking about in order to protect our family from the government, in 
order to protect our family from a death tax, from a taxable event 
which was put in in the early 1900s just as a vindictive tool to get at 
the Rockefellers and the Carnegies, in order to protect our family and 
our employees. Remember what I said about the community impact? To 
protect our employees, too, and our community from a forced liquidation 
upon the death of the father and the wife, Betty, the best thing now 
would be to sell the company. And it was sold.
  Let me conclude with one other article and then we will move on to 
some other taxes. But listen to this. I do not like reading from 
scripts. But this is an important one. I hope you have the patience to 
listen to this. I think it is very moving. I think it shows you exactly 
how punishing, how punitive the death tax is and how unfair and how 
unjustified they are and how the President and the Vice President of 
this country with their policy can not only veto the bill, bipartisan 
bill to get rid of it, the President and the Vice President have 
actually proposed raising the death tax by 9.5 billion in their budget 
they proposed. This came out of the Aspen Times.
  There are lots of tales to be told about the conversion of former 
ranches into luxury homes or golf courses

[[Page H6095]]

throughout the valley. Sometimes it was a simple financial decision, a 
choice to take advantage of soaring development values in the face of 
plummeting cattle prices, but for other families the passing of a 
parent meant the passing of a way of life. Listen to that sentence, 
colleagues. But for other families, the simple death of a parent meant 
the death of a way of life. The death of a parent meant the death of a 
way of life for the whole family. We have been around a long time, said 
Dwight. The family roots are dug deep along Capital Creek Road in Old 
Snow Mass and for nearly a century, heritage and hard work were enough 
to sustain those who lived on our 13-acre stretch of land. But it all 
changed. Until Dwight's father's death, each generation, each 
generation in that 100 years, presided over a working cattle ranch 
which was both the lifeblood and the livelihood of the clan, the Monron 
clan. His later years were lean times for Dwight's father but the fate 
of this ranch was not at risk until the government came around to 
collect its due on the death of Dwight. The tax bill came to $750,000. 
And what it took to pay the bill was this. We had to sell half the 
ranch, the ability of the Monron cattle to migrate in the winter months 
in 10 years, until we were able to pay our final last installment. What 
those taxes took was also something very vital, the ability of the next 
generation to support their family by working the land that had been 
theirs for such a long, long time.
  So the government came in and not only took the money but they took 
away the future ability of this family to continue ranching operations. 
It is just like the contractor. If you come in and you have the three 
pieces of equipment, the bulldozer, the dump truck and the backhoe and 
you take one of those pieces of equipment away, you can no longer 
function as a construction operation. What those taxes have done to our 
family is exactly that. Now one of our heirs works full time as 
a mechanic, the son, works full time as a mechanic for the school 
district and then works on the ranch when he gets home at night. He 
doesn't mind the long hours he has to put in. What does get under his 
skin is the memory of how IRS agents overseeing his father's taxes 
either didn't recognize the devastation that was about to occur or 
didn't care. It was just pay us or we'll seize everything. If 
anything's left over, you can keep it, or if you can't make ends meet 
on what's left, you can hit the streets. He has no intention of selling 
the remaining 640 acres but he wonders if his daughters will be willing 
to go through what he has gone through just to keep the ranch intact. 
With only half of the land to graze and falling beef prices, the ranch 
itself is only making enough to cover its operating costs and annual 
property taxes. It is the day job at the school district that pays the 
doctor bills, the car insurance, the grocery bills and everything else. 
There has always been hope that things will change before his daughters 
have to make decisions. But he wonders if people really think about the 
permanent changes that take place when the ranch is sold. It's not just 
a loss to the family, it is a loss to the community. It is a loss to 
the people who work on that ranch. There are some movements in the 
right direction but are they moving quickly enough? Because once our 
land is sold to developers, it is gone forever. It will never again 
have the integrity of a ranch.

  That is what your estate, those death taxes are doing. Some of you 
out there, colleagues, who are supporters of the death tax and claim to 
be guardians of the environment, well, you are not doing it in rural 
America because in rural America you are costing us, you are forcing us 
to develop those communities. By now you should have drawn the 
conclusion, I hope, that the death tax is fundamentally flawed. There 
is no basis for it. There is no justification for it. The only reason 
really it came about were two reasons: One, vindictively to settle a 
score with the wealthy people. It was jealousy in my opinion that drove 
it. And, two, the government as usual looks for an easy way to take 
money without earning it and transfer it to somebody else who did not 
work for it. Remember that every time you give a dollar to somebody 
that is not working, you are taking it from somebody who is. Every 
debit has a credit, every credit has a debit. That is exactly what we 
are doing with this death tax. We ought to, every one of us to the 
person in these chambers, ought to stand up to the President and the 
Vice President of this country and say, sign the bill to eliminate the 
death tax, Mr. President and Mr. Vice President. Quit standing by and 
letting our small businesses, our family ranches and our family farms 
be destroyed. Quit standing by, Mr. President and Mr. Vice President, 
with this policy and letting our communities, our minority communities 
who are now finally getting the opportunity, the fair opportunities 
that should have been given to them a long time ago only to find out 
now that the very government which espouses its push for affirmative 
action and equality and so on and on forth is the very one who steps in 
on the day of death and says, come here, we want the money, we want the 
money to transfer.
  Let us move on to another tax I want to visit with you about. This 
one you will feel good about. It is a big break if you own a home. 
There are a lot of young people out here today. Our country now has 
homeowners that I think probably are the youngest age in the history of 
our country, or certainly in recent years. I mean people in their 20's, 
early 20's are able to buy a home, and economically it is probably the 
largest investment most of those families will make during their 
lifetime. Let me show you what happened in the past if you sold that 
home for a profit. We will just take a couple of examples here. Let us 
say as an individual you have bought a home for $100,000 and over time 
you sold the home, let us say 10 years later you sold the home for 
$350,000. So your profit, and this applies to every homeowner in the 
country, your profit if you own a home was $250,000 and you were taxed 
on $250,000, although you could defer the tax by rolling it over into a 
home of greater or higher value or if you were over, I think, 62, you 
got a once-in-a-lifetime exemption I think of $125,000. We felt that 
this was punitive. Let me say to you, I am not up here to get in a 
partisan battle. But the Democrats, frankly, you could have gotten rid 
of that death tax a long time ago, and you could have done something 
when you held control for 40 something years on these home taxes. But I 
am proud to say you joined us, you joined the Republicans in doing away 
with this tax. In my opinion, this tax break on the profit of your home 
when you sold it is probably the biggest tax break that you have seen 
in our tax structure, I would guess in the last 15 years.
  How so? We changed the law completely. It is the Republicans' 
position that, sure we need to have taxes, we do not disagree with 
taxes. But we believe we are under a fiduciary duty to take the taxes 
that are necessary to give you the functions that you demand. But 
beyond that, we think you should have the tax back. The money in your 
pocket works a lot more effectively than the money back here. Take, for 
example, if you won the lottery and you won $2 million, do you think 
for one minute, any one of my colleagues out here, that you would take 
that $2 million and send it to the government in Washington, D.C. to 
invest? Of course you would not. Or even to distribute. Of course you 
would not. If you wanted to give it to the poor people, would you send 
your money to Washington to be distributed to the poor people? Of 
course not. Because of the inefficiencies. This is one of the 
inefficiencies we saw in the government. So what we did is we put in a 
tax bill. Let us take the same example. The individual, again, buys the 
house for $100,000, again sells the home for $350,000, realizing a 
profit of $250,000. Under our bill, which became law, it is the law 
today, this is not a hope, it is not a dream we are hoping for, it is 
here. The Republican tax break passed. Your taxes today, zero. The 
amount you were taxed on before, $250,000. What we have said today, and 
everyone out there who owns a home, listen up, colleagues. Any of you 
that own a home now under our tax law as a result of that Republican 
bill, and I am proud of it, I am proud as a Republican to say we did 
this, now as a result of that, you get to take the first $250,000 of 
net profit, not gross profit, of net profit from the sale of your home 
per person. So, remember, most homes are owned by individuals.

[[Page H6096]]

                              {time}  2100

  In those cases, it is $500,000, the $250,000 per person doubled, 
$500,000, we get to take the first $500,000 of our net profit. I said 
net income, I meant net profit, I stand corrected, of your net profit; 
and we get to put it into your pocket taxfree. That is great.
  Mr. Speaker, that is a tremendous tax benefit that many, many people 
in this country do not realize; but, colleagues, every time we go back 
to our districts, we should tell homeowners, which are most of the 
people that we represent, we should tell them what an opportunity now 
exists out there for them. They are not going to be penalized when they 
sell their home at a profit up to $500,000.
  The benefit of what we did in this bill is it is renewable every 2 
years. If we have a colleague outside of maybe Vail or Aspen, Colorado, 
where we have really escalating profits, or the Hamptons, most people 
are not going to make that kind of money every 2 years, there is maybe 
an exception here and there; but the reality of it is, this is a blue 
collar working family, middle income, lower income tax break of 
significant portions. I am very proud of that.
  Mr. Speaker, keep that in mind, any of my colleagues, any of our 
constituents that we hear, they are saying we are selling our home or 
we are getting ready to move or we may have some constituents that say 
to us, we are getting ready to buy a new house; and in a lot of those 
cases, they are also selling their old house.
  We ought to take just a moment and explain to our constituents what a 
great tax benefit they have ahead of them. In fact, they do not have to 
roll it over. It goes straight to their pocket. By the way, unless our 
constituent takes that money and digs a hole and puts it in the ground, 
that is the only exception, unless that happens, the money then will 
regurgitate in the community; they will take their money; they will put 
it in the bank. The bank will loan it out or they will take their money 
and build a bigger and better house, so we will have contractors and 
workers going. That money circulates.
  The beauty of this tax break, the big beauty of this tax break is it 
keeps the money in your community; that is one of my issues with the 
death taxes. The death tax, taxing death as an event takes the money 
from your local community and moves it east to Washington, D.C. This 
took money from your local community and moved it from your community 
east to Washington, D.C.
  This law that we have passed and if the President and Vice President 
will sign the repeal of the death tax, it will keep money in your 
community. It will be money that will be used for our local charities, 
not for the national ones. It will be money that will keep local people 
employed. It is money in your community. It spends in your community. 
It is worth it.


                            Marriage Penalty

  Let me talk for a moment about something else, the marriage penalty. 
Can we believe it? I mean, can we really believe it that in the United 
States a country that prides itself upon encouragement of family, that 
talks about the great foundation, accurately talks about the great 
foundation of our country is family, and yet this government always is 
looking for a taxable event, always trying to figure out how to put 
another tax on us. They figured out well, we take them on death. Guess 
what else, there is another ceremony.
  Mr. Speaker, I think they look at ceremonies. There is a ceremony 
called a wedding. Let us go ahead and put a tax on a marriage. That 
certainly is a good way to espouse family relations; that certainly is 
a good way to encourage people to be married and living as a family 
unit. Our government actually penalizes people for being married. They 
tax them for being married.
  We have had a long time to change that. It has not changed. Again, I 
stand proud as a Republican. One of our priorities was to eliminate not 
just the death tax, not just give a break on the sale of your home, 
which is now a law, but also to go out to those people that are being 
taxed as a result of being married and say this is a mistake in policy.
  We are not above ourselves to admit that Washington sometime back 
made a mistake. Washington should have never taxed the marriages. 
Washington should not have a death tax. The House tax was excessive. 
Let us get rid of the marriage tax. I was surprised that we would have 
opposition to that.
  I was also surprised that we had no votes on the repeal for the death 
tax. Frankly, I was shocked that the President not only did not oppose 
eliminating the death tax, but also proposed a $9 billion increase. We 
actually had people on this floor back to the marriage tax who opposed 
it who said we ought to be penalized.
  Mr. Speaker, remember, here we are, we are penalized at death, and 
now when we get married on that great day. We have a bill working its 
way through. We have a bill which will take the eraser to the death 
tax, that will be in front of the President in the next 3 or 4 days. He 
has promised to veto it, unfortunately. I hope we all remember the 
President's and the Vice President's policy is to support the death 
tax.
  We also have another bill making its way down to the White House, and 
that is to eliminate the marriage penalty. We want to get rid of the 
marriage penalty. Now, the President also has promised to veto on that; 
although, in the last few weeks the President and Vice President said 
let us make a deal, kind of like the movie show, ``Let Us Make a 
Deal,'' we go ahead and support a brand new massive spending program 
for prescription care in this country. It is a massive obligation of 
taxpayer dollars, billions and billions and billions of dollars, and we 
will be fair and eliminate the marriage tax penalty. No deal; no 
bargain.
  The marriage penalty is a tax that is not justified. It should not be 
there. The same way with the death tax; no deal. It is not right. It is 
not fair. It is not justified. Stand up, Washington, D.C., and have 
enough gumption to say these things are not good tax policy. It does 
not work out in theory, and it does not work out in reality.
  I would urge the President and the Vice President to change their 
policy. I would urge the Vice President and the President to repeal, to 
get rid of the death tax, join Republicans, by the way, Democrats, join 
Republicans and Democrats in the House of Representatives and then in 
the United States Senate to get rid of the death tax. Join Republicans 
on the Republican bill, Democrats in both the House and Senate to get 
rid of the marriage penalty.
  I say to the President and the Vice President that the President down 
there has an opportunity to change it; do not play let us make a deal. 
On its face, standing alone the marriage penalty is fundamentally 
flawed, and obviously the death tax is unfair.


                         Capital Gains Taxation

  Let me, with my remaining time, speak about another issue, and that 
is called capital gains taxation. Now, capital gains taxation really 
used to be a description that we applied to the wealthy people who had 
lots of investments. Those were the ones that made the so-called 
capital gains.
  Guess what has happened? The small, little things happened in the 
last few years with the economic boom; a lot of people in America are 
now facing capital gains. There are mutual funds. There are retirement 
funds, the sale of their land or the sale of investments. Investments 
in this country are not restricted to the upper class or to the 
wealthy. And more than ever in the history of our country, the middle 
class and even the lower-income class are now making investments, 
monetary investments.
  Mr. Speaker, we felt that in order to encourage this, that is what 
creates capital, not taxation, taxation does not create capital. 
Taxation is simply a transfer from your pocket to the Government's 
pocket. What creates capital is us out there plowing a field or making 
a product or delivering a service, but we felt the encouragement out 
there was being disassembled by a punitive tax called the capital gains 
tax. That tax was at 28 percent.
  Mr. Speaker, 28 cents on every dollar, 28 cents out of every dollar 
that we made on the sale of an investment went east to Washington, 
D.C.; that is right where it went. We felt that tax was too punitive. 
We felt the tax should be eliminated.
  If we eliminate the tax, what happens to the 28 cents? The 28 cents, 
it does not go to Washington, D.C. No, it stays in your community. It 
stays at home where it is going to be invested, where it is going to 
create jobs.

[[Page H6097]]

  We had to have negotiations on this. The President would not agree 
with us, the President and the Vice President. They would not go with 
our bill of no capital gains, and we had to have their signature or 
enough votes to override the veto which we did not have. So we made a 
compromise. We at least have gotten this far. We dropped the 28 cents 
to 20 cents.
  Mr. Speaker, that does not sound like a lot, but wait until we sell 
our investment and the tax, the IRS comes knocking on your door, all of 
a sudden 8 cents on the dollar savings, it adds up. It makes a 
difference.
  Now, our goal is not to be satisfied with the 20-cent capital gains, 
because capital gains, the taxation itself simply is not a creation of 
wealth, it is a transfer of wealth. Again, it moves the money from our 
community to Washington, D.C.
  Our idea, and we will not stop until we get to this point, our idea 
is eliminate the capital gains taxation, so when we make money on our 
investment we send zero dollars to D.C.; we keep all of the money, all 
of it, 100 percent of it in our community to invest in new projects.
  I will give my colleagues an idea. There is a farming family in New 
Castle, Colorado, a good, good, family. I was out visiting them not 
long ago, actually, about 3 or 4 years ago. I remember to this day what 
the father said. He said, You see those fields, Scott. He said they are 
not being worked, they are being wasted. He said, by all rights, there 
should be a young couple, a couple that has just gotten married, 23, 24 
years old, a kid or two, and they want to work the land. There should 
be a young couple working on that land up there.
  He said, But because of the capital gains taxation and the 
government, because of the taxing policy of the government, I cannot 
afford to sell it. So as a result, that land sits empty, and that young 
couple will never have the opportunity that my wife and I had many 
years ago when the ranching generation or farming generation ahead of 
us allowed us to go up and work the field, allowed us to have our turn 
with our hand in the soil. It makes a difference.
  Let me wrap up this evening with the time that I have remaining 
telling my colleagues why I talked about taxes. I am so focused on what 
is good at the local level, at the community level. Our Federal 
Government is important, and we have to finance the Federal Government 
to operate. But we have seen over the years a vast expansion of what 
the Federal Government is expected to do in our lives.
  We have seen a dramatic dilution of individual responsibility; and 
more than that, we have seen a focus shifting government from the local 
level to the Federal level and a lot of that follows tax dollars. I 
think that the best government is the government at the communitywide 
level, at the State level.
  Obviously, we need to have that Federal Government; but our real 
focus of power in this country should be at the local level, not the 
Federal level. In order to do that, we need to come up with policy that 
encourages money to stay in the community, that encourages money that 
stays in the community to create capital, not take the capital from the 
community in a transfer transaction and send it to Washington, D.C. for 
redistribution, because the dollar that goes out of our community, one, 
is a transfer, it is not a creation. The dollar that goes out of our 
community will never come back to our community as a dollar; some of it 
is necessary.
  We need a national defense. We need a national commerce system. We 
need a national highway system. We need a commitment to education. We 
need a commitment to certain health care with closely defined 
parameters; but we also need to recognize that taxes, if they are 
unfair, are punitive or if they are in the excess, then we ought to 
have enough courage to stand up to the American people.
  By the way, it is not an act of courage. It is a fiduciary 
responsibility of all of us in these Chambers to stand up and say, hey, 
we collected too many tax dollars. We are overcharging our 
constituents.

                              {time}  2115

  It is a fiduciary duty of us to stand up and say, is it right, 
colleagues, for us to tax people because they are married? It is a 
fiduciary responsibility on our part to stand up and say, is it really 
a taxable event because somebody dies and they leave property that has 
been taxed and taxed already? Is that a taxable event?
  It is a fiduciary responsibility of ours to stand up and say, gosh, 
does the 28 percent capital gains rate really make sense? Does it 
really encourage American free enterprise? Does it encourage those 
young people, those couples just starting out, individuals starting out 
in their early twenties, does it really encourage them to be 
prosperous?
  Remember, when our people in this country are prosperous, our country 
as a whole is prosperous. If our local communities are prosperous, then 
our States are prosperous. When our States are prosperous, the Federal 
government is. It makes sense to keep those dollars in the community.
  In conclusion, Mr. Speaker, I urge all Members tomorrow to pick up a 
phone and call the President and the Vice President and say to them, 
Mr. President and Mr. Vice President, they need to listen to the 
American people. Let us get rid of this death tax. Death should not be 
a taxable event. Hang up the phone, pick it back up and call them back, 
Mr. President and Mr. Vice President, it is not fair to tax people in 
this country for being married. Regardless of the ramifications to the 
dollars coming in, it is fundamentally not fair to tax on death and it 
is fundamentally not fair to tax on marriage. It is a big difference. 
We have an obligation to be fair to the people we represent.
  I hope all Members take me up on that challenge and make every 
attempt they can to persuade the President and the Vice President to 
change their policies and not veto our bipartisan effort to eliminate 
the marriage penalty, and to not veto our bipartisan effort to get rid 
of the death tax.

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