[Congressional Record Volume 147, Number 7 (Monday, January 22, 2001)]
[Senate]
[Pages S307-S308]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CAMPBELL:
  S. 31. A bill to amend the Internal Revenue Code of 1986 to phase out 
the estate and gift taxes over a 10-year period; to the Committee on 
Finance.


             Estate and Gift Tax Rate Reduction Act of 2001

  Mr. CAMPBELL. Mr. President, today I reintroduce a bill that I feel 
is of vital importance to farmers and family business owners, the 
Estate and Gift Tax Rate Reduction Act of 2001.
  This bill is based on legislation I introduced in the 105th Congress 
and the 106th Congress. Unfortunately, the 105th Congress adjourned 
before we could debate and pass this bill and President Clinton vetoed 
similar legislation during the 106th Congress. Since then, I have heard 
from numerous Coloradans and National organizations and am fully aware 
that the problems the bill would correct still exist. In fact, I have 
heard from hundreds of Coloradans and constituents from other states 
regarding this burdensome and overreaching tax. I believe that 
eliminating this tax is a fundamental issue of fairness. Death should 
not be an event government prospers from.
  Estate and gift taxes remain a burden on American families, 
particularly those who pursue the American dream of owning their own 
business. That is because family-owned businesses and farms are hit 
with the highest tax rate when they are handed down to descendants--
often immediately following the death of a loved one. Families ought to 
be encouraged, not discouraged, from building successful farms, ranches 
and businesses and keeping the ownership of those enterprises within 
the families that worked to make them successful.
  These taxes, and the financial burdens and difficulties they create 
come at the worst possible time. Making a terrible situation worse is 
the fact that the rate of this estate tax is crushing, reaching as high 
as 55 percent for the highest bracket. That's higher than even the 
highest income tax rate bracket of 39 percent. Furthermore, the tax is 
due as soon as the business is turned over to the heir, allowing no 
time for financial planning or the setting aside of money to pay the 
tax bills. Estate and gift taxes right now are one of the leading 
reasons why the number of family-owned farms and businesses are 
declining; the burden of this tax is just too much to bear.
  This tax sends the troubling message that families should either sell 
the business while they are still alive, in order to spare their 
descendants this huge tax after their passing, or run-down the value of 
the business, so that

[[Page S308]]

it won't make it into the higher tax brackets. This is not how America 
was built. Private investment and initiative have historically been a 
strong part of our American heritage and we should encourage those 
values, not tax successful family businesses into submission.
  That is why I again introduce this bill and will fight for its 
passage during the 107th Congress. It will gradually eliminate this tax 
by phasing it out--reducing the amount of the tax 5% each year, 
beginning with the highest rate bracket of 55%, until the tax rate 
reaches zero. Several states have already adopted similar plans, and I 
believe we ought to follow their example. We need to change the message 
we are sending to farmers and family business owners. Leading 
organizations agree, and have continuously endorsed this legislation. 
In fact, over 100 organizations, like the National Federation of 
Independent Business and the Farm Bureau, have joined together to form 
the Family Business Estate Tax Coalition, which strongly endorsed this 
bill during the 106th Congress.
  Mr. President, this tax should be eliminated across the board, and I 
ask my colleagues to help in working to achieve that goal.
  I ask unanimous consent that this bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Estate and Gift Tax Rate 
     Reduction Act of 2001''.

     SEC. 2. FINDINGS.

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

     SEC. 3. PHASEOUT OF ESTATE AND GIFT TAXES.

       (a) Repeal of Estate and Gift Taxes.--Subtitle B of the 
     Internal Revenue Code of 1986 (relating to estate and gift 
     taxes) is repealed effective with respect to estates of 
     decedents dying, and gifts made, after December 31, 2011.
       (b) Phaseout of Tax.--Subsection (c) of section 2001 of 
     such Code (relating to imposition and rate of tax) is amended 
     by adding at the end the following new paragraph:
       ``(3) Phaseout of tax.--In the case of estates of decedents 
     dying, and gifts made, during any calendar year after 2001 
     and before 2012--
       ``(A) In general.--The tentative tax under this subsection 
     shall be determined by using a table prescribed by the 
     Secretary (in lieu of using the table contained in paragraph 
     (1)) which is the same as such table; except that--
       ``(i) each of the rates of tax shall be reduced (but not 
     below zero) by the number of percentage points determined 
     under subparagraph (B), and
       ``(ii) the amounts setting forth the tax shall be adjusted 
     to the extent necessary to reflect the adjustments under 
     clause (i).
       ``(B) Percentage points of reduction.--

                                                          The number of
``For calendar year:                              percentage points is:
  2002...........................................................5 ....

  2003..........................................................10 ....

  2004..........................................................15 ....

  2005..........................................................20 ....

  2006..........................................................25 ....

  2007..........................................................30 ....

  2008..........................................................35 ....

  2009..........................................................40 ....

  2010..........................................................45 ....

  2011..........................................................50.....

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

                                                          The number of
``For calendar year:                              percentage points is:
  2002......................................................1\1/2\ ....

  2003...........................................................3 ....

  2004......................................................4\1/2\ ....

  2005...........................................................6 ....

  2006......................................................7\1/2\ ....

  2007...........................................................9 ....

  2008.....................................................10\1/2\ ....

  2009..........................................................12 ....

  2010.....................................................13\1/2\ ....

  2011........................................................15.''....

       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2001.
                                 ______