[Congressional Record Volume 147, Number 47 (Tuesday, April 3, 2001)]
[House]
[Pages H1398-H1405]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 2045
ELIMINATING THE ESTATE TAX
The SPEAKER pro tempore (Mr. Cantor). Under the Speaker's announced
policy of January 3, 2001, the gentleman from South Dakota (Mr. Thune)
is recognized for 60 minutes as the designee of the majority leader.
Mr. THUNE. Mr. Speaker, when I came to Congress a little over 4 years
ago, I came here with some very specific objectives in mind as well.
And since coming to Congress, we have achieved a lot of the things that
I sought to do in working with the House and our brethren in the Senate
and the administration. For the 4th year in row we have balanced the
Federal budget. We are actually paying down the publicly held debt. We
have done that. This year it will be over $600 billion.
We have protected Social Security and Medicare. We cut taxes back in
1997, something that had not happened in a very long time. In fact, the
truth is the budget being balanced for the first time 4 years ago was
the first time since 1969 when I was 8 years old. All my formative
years all I heard about was deficits, deficits, deficits. And so
finally we have gotten the fiscal house in order here in the United
States Congress.
It is sort of ironic that our colleagues on the other side under
whose stewardship the debt ballooned and spending ballooned now have
this new-found sense of fiscal responsibility which in
[[Page H1399]]
the previous 40 years as these things were going on, they did not seem
to abide that same compulsion toward constraint.
As a result, we spent and spent and spent to the point to where our
children's future was very much in jeopardy and we piled up more and
more debt. We are in a position now, Mr. Speaker, where we actually
have gotten to the point that the Federal Government is taking in more
money than it takes to run the cost of government. That means that the
people in this country are overtaxed.
I would like to read for my colleagues something that a newspaper in
my home State of South Dakota wrote recently. It says,
For the first time in recent memory, someone in Washington
is looking the American people in the eye and stating the
obvious. The Federal Government taxes too much and spends too
much. It is refreshing to hear someone in Washington, D.C.
state candidly that reducing the growth of spending is not a
cut and that the source of deficits is unrestrained growth in
spending. For Bush's budget plan to work as advertised,
Members of Congress, the people who actually write the
spending bills, have to listen to Bush's message. We hope
they heard what the rest of us heard: ``You're taxing us too
much and spending too much of our money.''
That is from the Rapid City Journal dated February 28, 2001.
Tomorrow, Mr. Speaker, we take up yet another piece of the tax plan
that will allow the American people to keep more of their hard-earned
dollars. We have for several weeks now been working in a systematic way
here in the House to lessen the tax burden on working families in this
country, to put some fairness and equity back into the Tax Code as it
pertains to married couples who are penalized in the form of higher
taxes because they chose to get married.
We are trying to bring some much needed tax relief to people who are
raising families by increasing the per child tax credit and a number of
other things, marginal rate reductions which affects everybody contrary
to what our colleagues and our opponents of this legislation are
suggesting, actually benefits everybody who pays income taxes in this
country by lowering of rates.
The other thing is, Mr. Speaker, it actually brings tax reform to the
Tax Code. Not only are we talking about tax relief, but about making
the Tax Code more fair and reforming it in a way that makes it more
equitable for the American people who pay all the taxes.
Tomorrow we pick up another piece. We start a debate, a debate which
is long overdue, a debate which we have held here before this in this
body. And on previous occasions have actually passed legislation that
would eliminate the death tax, but unfortunately it ran into a veto pen
at the other end of Pennsylvania Avenue.
Tomorrow we will take that legislation up again, very important
legislation, and what I would like to visit about here in just a
moment, and that is the death tax. It impacts farmers and ranchers and
small businesspeople, the people who are the heart and soul of South
Dakota's economy and I daresay of economies all over this country,
particularly in rural areas of America.
We have some gentlemen on the floor this evening who are going to
join in this discussion, one of whom is a Member of the Committee on
Ways and Means and who had the privilege last week, I believe, of
actually reporting out of that committee the legislation that we will
be acting on tomorrow. I think it is important to note as we get into
this debate again that this is a tax which is fundamentally unfair
because after the Federal Government taxes and taxes and taxes people
throughout the course of their lifetime on their earnings, on their
work, on their accumulation of wealth and everything else, when it
comes time to actually pass on to the next generation some of that hard
work, the Federal Government comes in again and says, ``I'm sorry, you
can't do that. We want our fair share.'' It just so happens the Federal
Government and their fair share takes in some cases about 55 percent of
that estate. Now, that hits farmers and ranchers and small
businesspeople right between the eyes because in many cases if you do
not have the cash flow that is necessary to pay the tax, you have to
liquidate the very assets that are producing in this country, adding to
our economic growth and creating jobs.
Mr. Speaker, this evening I would first like to yield to the
gentleman from Arizona, a distinguished member of the Committee on Ways
and Means who was instrumental and had a hand in writing that
legislation that we will be acting upon tomorrow.
Mr. HAYWORTH. I thank my colleague from South Dakota for taking this
time, Mr. Speaker. We are joined by our colleague from Pennsylvania.
Again we give thanks for the opportunity to come to this Chamber as a
free people, holding opinions and living out notions that may be
diametrically opposed.
Mr. Speaker, I could not help but notice the vision of America
proffered by my friend from Oregon in the preceding hour. It seems we
have a fundamental difference of opinion. He believes the highest and
best use of a citizen's money is by the Washington bureaucracy. There
is an element of thought here that everyday Americans should surrender
more and more and more and more of their hard-earned money to the
Federal Government through taxation because Washington can somehow do a
better job with that money. Mr. Speaker, I would simply say to those
who join us tonight, I think we have come to understand certainly in
the last half of the preceding century that that notion is exactly
backwards.
Mr. Speaker, I would suggest that for years my friends on the other
side have offered that outmoded notion that your family should
sacrifice more so that Washington can do more, when instead we embrace
the fundamental notion that Washington should make some sacrifices and
be a good steward of the people's money so that families across America
can have more. That is the crux of what we are discussing tonight.
Indeed, when you look throughout our history, and I am so glad we are
joined by a friend from the Commonwealth of Pennsylvania. Seeing him
here on the floor, I am reminded of another great Pennsylvanian who one
biographer calls really the First American, Dr. Benjamin Franklin, a
noted scientist, statesman and a humorist. As a publisher in Poor
Richard's Almanac, it was Dr. Franklin who observed there were only two
certainties in life, death and taxes. But even with his prescience,
even with his foresight, I doubt very seriously, Mr. Speaker, that Dr.
Franklin could envision the day that the constitutional republic which
he helped to found would literally tax Americans on the day of their
death. Yet that is the spectacle we see today.
My colleague from South Dakota stated the problem accurately. For so
many family-held businesses, for so many family farms and ranches, for
indeed, Mr. Speaker, virtually the bulk of American commerce in rural
areas, this death tax is especially egregious.
And we stand united tonight, Mr. Speaker, to reassure the American
people that we offer a variation, a departure that rings out with
echoes of the past. Our new slogan might be, ``No taxation without
respiration.'' It is fundamentally unfair to ask an American family to
visit the undertaker and the tax collector on the same day. We have
seen time after time small businesses, Mr. Speaker, what I would
instead suggest are more accurately described as essential business
because we know they employ more Americans than the major corporations
in our society, but we see small businesses, essential businesses,
family-owned enterprises snatched away by the hand of government and
this excessive tax. We see ranches and farms, the proverbial land rich
but cash poor circumstance because so many of those who literally make
their livings off the land, pump their energy and their hearts and
their very being not to mention what liquidity, what cash they have,
back into the land, back into the farm, back into the ranch and when
the holder of the estate dies, to liquidate, to come up with the cash
to pay an extensive and expensive tax bill, the farm or the ranch is
sold or divided up, subdivided, what some might suggest is the plague
of urban sprawl.
So we come to this Chamber with a respectfully different approach
than those on the other side who believe the highest and best use of
your money is by Washington bureaucrats. We believe every American
family should hang on to more of their hard-earned money and send less
of it here to Washington.
[[Page H1400]]
That is why our colleague from South Dakota outlined the fact that just
last week, we decided to say good-bye to the marriage penalty. We
decided to raise the per child tax credit an extra $100 this year to
$600 retroactive, eventually up to double what it was, to a full
$1,000.
We went back earlier as my colleague outlined and reduced the tax
rates, the margins for every American paying income tax because we
realized to reduce the tax bill, that is an important step. And now we
come to this juncture, where last week the Committee on Ways and Means
on the same day when on this floor we voted to get rid of the marriage
penalty, we voted to increase the per child tax credit, we voted for
common sense, family-friendly policies. We went back last week into
committee and passed out of committee and will bring to the floor here
tomorrow another common sense piece of legislation to put the death tax
to death, because it is fundamentally unfair.
It is a job killer. It is a business killer. It drives a stake
through the heart of family-owned enterprises. And it is patently
wrong. How wrong? Simply stated, for all the headaches, for all the
hassles, for all the heartaches, for all the turmoil, when you take a
look at the vast expanse of Federal revenues, Mr. Speaker, the death
tax brings into our Treasury about 1 percent of the total take from
American citizens in terms of taxation. Yet three-quarters of that 1
percent is spent in hot pursuit of those families who are grieving, of
those families who are trying to deal with the estates, of those
families who are trying to come to grips with a fundamental change in
circumstance, and that leads to the unfairness.
Mr. Speaker, for these reasons and several others, the death tax
deserves to be put to death. We will take a very important step here
tomorrow in that action.
Mr. THUNE. Mr. Speaker, I recognize my colleague from Pennsylvania,
someone who came to this Chamber at the same time I did and a
distinguished member of the Committee on Appropriations and someone who
also has been a leader on this issue and someone who I believe probably
has a good number of people in his fine State just like in my fine
State who are impacted day in and day out, the people who are creating
the jobs and helping create economic activity in this country and who
are feeling the penalty of this very punitive tax.
And it is costing not only in terms of the tax itself and the people
that it affects directly but the people day in and day out who take
steps and spend dollars and spend time trying to figure out ways to
avoid the tax, planning for the estate. It has become a cottage
industry.
Frankly, it is hard to factor in and to quantify in specific terms
all of the dollars that are affected here, all the dollars that are
taken, soaked out of the economy, not just by the death tax and the
loss of jobs it has created when a small business or a family farm has
to sell assets in order to pay that tax but also in the cost of
avoiding the tax. That, too, I think robs our economy in a big way of
much of the productivity that it could otherwise generate.
I yield to the gentleman from Pennsylvania for his observations as
well about this important legislation and what we can do to further
improve the plight of small businesses and farmers and ranchers in this
country, many of which I know live in his district.
Mr. PETERSON of Pennsylvania. I am pleased to follow the gentleman
from Arizona and my friend from South Dakota. I bring a background of
being a small businessman myself. I owned and operated a supermarket
for 26 years. I built it from scratch. I right now find that those who
say this is about taxes for the rich do not have any idea what they are
talking about. Because real rich people do not pay this tax. They use
the complications of the tax system and the way they shield their
resources, they are not the ones that pay it. Let me tell you who does.
In the next 2 weeks, most of our small businesses that employ the vast
majority of Americans are paying their income tax. They pay a lot of
that, too, because they are the ones that pay the high rate. If you
have a local business that has 100 employees and makes a decent profit,
they are paying a lot of taxes and they are creating a lot of growth
and wealth for our communities.
{time} 2100
If you are building a community, what kind of a business do you want?
Would you choose some global corporation that would put 500 jobs in
your community or would you take five local companies that would put
100 jobs in your community where the families live there and work in
the communities and serve on local governments and serve on boards and
agencies and do all of those things that make communities good places
to live?
I think we would all choose those five employers that have 100
people, because they are not going to be moving to Mexico; they are not
going to move the plant to another State because this is their
community.
If you want to talk about growing your community, I have come from a
part of Pennsylvania that has been hit hard with companies closing. We
have been hit hard for a lot of things that are no fault of the
workforce and no fault of our area.
When you lose the local ownership of a company, the large global
corporations may take a look at one of the businesses that have been in
your community for years and has grown to 400 or 500 jobs and has a
good workforce and a good product line, and let a death in the family
come and that is the chance to buy that business and make it part of
their global corporation.
Now, I am not against global corporations but when you lose that
local ownership to the global corporation, it is never the same,
because 5 years from now that business could be on a little bit of a
hard time and it is very easy to take those machines and move them down
the road or another country, and those jobs are gone.
The backbone of our communities is independent business, and this tax
hits them really hard. This is the tax that forces them to make that
decision, because they cannot borrow that much money and still make the
business profitable, and the only economic choice they have is to sell
it.
I think that is the part that people must realize. This is the
backbone of our communities, independent businesses that are growing
and prospering. They pay that tax on January the 15th, this year, next
year, the year after. They build this nest egg. They do not have huge
Keoghs and huge IRAs. They have their resources in the business, in the
building, in the inventory, in the machines. That is their family nest
egg, and maybe the funds have helped grow the business and they have
worked like troopers to grow this business and create more jobs in the
community; and the father or the parent dies and the business has to be
sold because there is not enough equity left after you pay the estate
taxes.
Whether it is farmers, whether it is a local supermarket, whether it
is a local manufacturer, a local processor, whatever, it is local
employers that make our communities good places in which to live, and
the estate tax is the greatest threat to local jobs of any part of our
tax package. That accumulation of wealth by buying more machines and
adding on to the building and all of that, that is out of profits that
they have paid their taxes on. This is not through some cheating or
somehow taking money out of the business. This is taking the profits,
paying their taxes, taking what is left and putting it back into the
business and hiring 5 more people. That is what America is all about.
That is where we are better than most any part of the world. The free
market system allowed someone like me, when I started my business, to
borrow against my father's home. Now, today banks will not do that.
I knew one thing, though. I knew that I could not fail, I could not
jeopardize my mother's and father's home. I had to pay that loan back,
but that is how I got started in business because I didn't have any
cash of my own. My father mortgaged his home and some land he owned so
I could go into a little small, corner grocery store and I grew it into
a supermarket that served the community for more than 2 decades.
That is the future of America, the ability of individuals with a new
idea, a new concept, to grow business, and the estate tax or the death
tax is one of the greatest threats for that business staying in your
community, staying in the next generation.
[[Page H1401]]
There are very few businesses, because of the estate tax, that last
to the third generation, a small fraction. There is a myth, a Federal
estate tax is an efficient way to distribute wealth. Well, the reality
is, and the gentleman said it very similarly, the Joint Economic
Committee found that the cost of collection and compliance, and that
includes the litigation and disputes between the IRS and taxpayers,
makes it a wash. So the government really does not benefit from all the
money they spend collecting the estate taxes. It is a wash. But at the
same time those 500 jobs, those 300 jobs, those 50 jobs, those 40 jobs
from our communities are gone forever.
It is the second and third tax on the same income, and it just should
not be.
Mr. THUNE. If the gentleman would yield back, I could not agree more.
I think, unfortunately, the gentleman hit it exactly on the head. If
you are talking about a small town environment, a rural area like the
one I come from, oftentimes it is. I mean, the only economic activity,
the only hope for jobs and that sort of thing in some of those small
communities, really is those small independent businesses. If those
people cannot stay in business because the Federal Government insists
on taxing them, as you said, over and over and over again and then when
it comes time to expire they get taxed again, there is only so much
that those small businesses can abide and still continue to do what
they do, and that is provide the jobs and provide not only the jobs but
the benefits to their employees.
What the gentleman is talking about here again is the cost of
compliance with the estate tax and everything else. It robs dollars
that otherwise could be put into things like providing health care for
their employers.
Now we have a gentleman with us here this evening, and I would note
that there is a famous gentleman from Illinois, from his home State,
who once said, and I quote Abraham Lincoln, ``It is not the years in
your life that count. It is the life in your years.''
Unfortunately, there are thousands of hard working business owners
and family farmers who have a difficult time enjoying the life in the
years with the shadow of the estate tax looming over them.
The gentleman from Illinois (Mr. Shimkus) is with us this evening on
the floor. He is someone who as a member of the Committee on Commerce
and someone who as well also has a number of small businesses and
people in his district who are affected by the death tax, and someone
who I might add whose in-laws live in South Dakota so he has an extra
special reason to be interested in this because my constituents care
very deeply about this. I would be happy to yield to the gentleman from
Illinois (Mr. Shimkus).
Mr. SHIMKUS. Mr. Speaker, I came over on this side because I know
tomorrow we will have a lot of our friends on the Democrat side of the
aisle who are going to come and join us in support. I am speaking on
behalf of my constituents and also for all my friends on this side who
again I know will join us.
I will try to be brief. I cannot match the eloquence of the folks
down here.
Yesterday, some interest groups took opposition with my support of
the death tax. One of the comments was made, well, only one in 20 farms
actually have to be sold. And my point to them was, well, obviously it
is not your farm. If there is one in 20 farms, which we know is not a
good measure, it is definitely not their farm that has to get sold, and
we can give countless cases in the 20th District of Illinois of farms
being sold.
I have one in Christian County that was just devastating, but I would
like to talk especially about the agricultural economy as was addressed
by my colleague from Pennsylvania, the compliance costs, because we
know that we are in one of the lowest periods of commodity prices since
the Depression.
Part of farm income, income on the balance and income statement, you
have revenue and you have expenses. Well, people fail to understand the
compliance cost to save the farm from the death tax is an added cost of
doing business, which in these low commodity prices makes it very, very
difficult to make ends meet. So in eliminating the death penalty, what
you do is you are going to help the farm income of the family farm in
the 20th District and throughout the country.
The second thing I want to mention, I have two cases both in Quincy,
Illinois. One was back in 1969, Rich Neimann, who when his father
passed away, and he is the chairman and CEO of Neimann Foods,
Incorporated, of Quincy, Illinois, when Richard's father passed away
suddenly in 1969 the family was faced with an estate tax bill of
several hundred thousand dollars which was due, by law, within 9
months. The Neimann family had to use all the resources from the sale
of the company's wholesale operations to pay the estate tax bill. In
essence, they sold the wholesale operation of their business to provide
funds to pay the death tax. That was in 1969.
More recently, 17 months ago, a good friend of mine, a small business
owner from Quincy, Illinois, Mike Nobis, his brothers and sisters lost
their parents 17 months ago when there was a travel accident involving
their motor home, and both the mother and his father passed away.
The parents left behind a family printing business and estate tax
bill of more than $370,000. To prevent this tax burden from destroying
the family business, listen to what they did, the company put off
buying capital expenses, which you would expect. They also got the 45
employees to agree, so they could keep their jobs, to double as much as
they pay in health insurance. The employees agreed to double the amount
that they paid in health insurance to keep the business in operation.
This is not just a burden on the small business. This is a burden on
the working men and women who are employed by these small businesses. I
just think it is a compelling story that in small town USA that these
employees would go to bat for the employer and suck it up to keep the
business in operation.
Two last points I want to make to the super wealthy who think this is
unnecessary, there is a simple solution; and I challenge them. All they
have to do is gift it to the Federal Government, just get out their
checkbook. We will take it. We will put it in the Treasury. We will use
it to pay down debt. If they want to turn over that money, I think we
would welcome it.
The last point I want to talk about is just ideology. I think
ideology is so important, and as a former government teacher sometimes
we get lost in the view of government. The death tax really speaks to
the debate on ideology, conservative versus liberal. It really
addresses a point of who controls after-taxed wealth in America. And
that is what, for me, this debate is all about. It is very simple. Who
controls after-taxed wealth that has already been created after it has
already been taxed?
My friends, the liberals, would say, well, government ought to
control it because government has plans to redistribute that wealth
throughout the country.
We would say that is an award and a benefit for taking the capital
risk and creating jobs and keeping our economy going and if you want
other people to go back to small town America to create five to 10 to
15 jobs, you ought to make sure that they can pass on their after-taxed
wealth, after-taxed wealth, to their family.
So I appreciate the gentleman scheduling this hour to talk about
this. It is very timely with our vote tomorrow. I know I have a lot of
friends on this side that are going to be very supportive. I look
forward to the debate and I look forward to casting the votes. It is a
pleasure to join my colleagues down on the floor.
Mr. THUNE. Mr. Speaker, I would simply say in echoing the remarks of
the gentleman that if we think about the way that this impacts people,
okay, yes, obviously they are going to talk about and we are going to
hear a lot of rhetoric on the floor tomorrow and a lot of propaganda
and demagoguery about how this is going to help the really mega rich in
this country, but the reality is it affects people, average people, who
are investing, who are taking that risk, who are using the market
system that we have in this country, to create a better life for
themselves and their families, but also to create jobs and a better
quality of life for the people who are working for them and to build
their communities.
There is not a small businessperson in a small town who is not the
one who
[[Page H1402]]
gets asked to support every single charity, every single activity that
is going on, whether it is the local baseball team or whatever, and
they are there to step up and to support those many activities, and it
is part of our community life.
I am going to give an example. I want to read a short letter here
that I received from a constituent in South Dakota. This is a family
farmer and this is again a direct impact not on the super rich but on
the family farmer, ``Eleven years after my mother died and 7 years
after my father passed away, I still cannot be sure that the estate is
settled. We sold off 480 acres of the family farm to pay the taxes, but
I do not have a final signed letter from the IRS stating that the
estate and the audit are officially closed. My wife and I have to meet
with an estate planning team on a regular basis to try to keep our
children from experiencing the same estate tax problems we have had.''
Those are the words of a South Dakota farmer who has been hit hard by
this death tax. Surprisingly enough, he considers himself one of the
lucky ones. He actually survived the death tax and he can still farm
after selling a quarter of his land, land that has been in his family
for generations.
{time} 2115
His family farm narrowly survived, even though he was hit 3 times.
Not only did he and his family pay the Federal estate tax, he paid
nearly $71,000 in State inheritance taxes and he had to shell out at
least $30,000 in legal fees to settle the estate. Now, his children, of
course, stand to face the same problem if we do not do something about
repealing this tax.
Unfortunately, this farmer's story is all too common in rural
America. The death tax literally can destroy family-owned farms and
ranches by forcing farmers and ranchers to sell off land, buildings and
equipment just so that they can pay Uncle Sam.
Make no mistake about it. Despite the rhetoric we are going to hear
here tomorrow, when farms and ranches disappear, the rural economy
suffers. We are seeing people move out of rural areas into more
populated areas of this country. If we want to preserve the fabric and
the bedrock values of this country and make it strong by allowing
family farming to survive, we have to do something about this death
tax.
Mr. Speaker, I yield to the gentleman from Arizona (Mr. Hayworth).
Mr. HAYWORTH. Mr. Speaker, I thank the gentleman from South Dakota,
and I would say to the gentleman from Illinois, he sells himself short,
Mr. Speaker, when he supposed a lack of eloquence on his part, because
nothing is more eloquent than the real-life experiences of fellow
citizens that he outlined for us. The gentleman from South Dakota has
followed suit. Then, of course, we have the gentleman from Pennsylvania
here who built a business, a grocery store in his hometown, employing
local folks. Talking about the local perspective is so vital.
Mr. Speaker, I would note that the gentleman in the chair, the
Speaker pro tempore, from the first district of Arizona, we can claim a
unique vantage point because the Speaker pro tempore hails really from
the 6th congressional district, the town of Snowflake, named for the
founding families, the Snow family and the eponymously named Flake
family. Yes, Mr. Speaker, we understand how this affects rural and
small town America. But as we have seen in Arizona, with the incredible
growth and, indeed, over the last 10 years, the equivalent of the State
of Nebraska has moved to Arizona; we have growing urban areas, we have
people coming in from all over the United States.
One lady stopped me in one of our cities the other day and she talked
of the experience of her father who was a milkman in post-World War II
America. He got up every day very early, ran his route, saved what he
could, invested wisely, and built what some would call a nest egg, but
what the Federal Government calls a substantial estate in the millions
of dollars. The lady who stopped me, Mr. Speaker, said, you would never
have thought that. My father was a hard-working man, but even he said
about his profession that he was blessed to live in America and to have
those opportunities, but in much the same way our colleague from
Illinois outlined the problems, in much the same way our colleague from
South Dakota read of the plight of a farmer in his home State, so this
was this suburban housewife, the beneficiary, if you will, of her
father's estate, having to grapple with this incredible problem. She
and her siblings were bearing the brunt of liquidating their father's
estate. His hard work, the wages on which he had been taxed, his very
success was being penalized.
My colleague from Illinois had it right when he talked about a grand
debate, a fundamental difference of vision. When it comes to the notion
of wealth, there are those in this chamber who honestly believe, as
difficult as it is for most Americans to grasp this, they honestly
believe that the Federal Government, that the Washington bureaucracy
should have first dibbs on your money, and that death is a watershed
event, and that the family should pay up, oftentimes in excess of 50
percent.
My friend from Illinois brought up another topic that bears
amplification because, Mr. Speaker. In this town, there is the
punditocracy. There are special interest groups who step forward with
the most curious ideas, and the irony we have seen of the mega rich
stepping forward to say that this death tax should be enforced deserves
some comment. The gentleman from Illinois, Mr. Speaker, was exactly
right. If our friends who are mega rich, billionaires and in some slang
gazillionaires, if they believe that their progeny would receive the
fruit of their labors as some ill-gotten gains, if they honestly
believe that sending their wealth to the Federal Government is the
highest and best use of their funds, then by all means, Mr. Speaker,
they should find their attorneys, they should prepare their estates or
perhaps have the check ready right now to hand over the bulk and
entirety of their estates to the Federal Government. But for the
milkman who passed away, whose daughter, the proverbial soccer mom is
having to deal with this real problem, to the family rancher in the 6th
district of Arizona, to the small business owner in the town of
Snowflake, I respectfully say, let us restore some fairness. Is it fair
to expect those people who survive to liquidate assets and send over 50
percent to the Federal Government? No, that is wrong.
Mr. Speaker, the fact is, tomorrow we will take steps to address this
fundamental issue of fairness when we take the steps to eventually put
this death tax to death.
Mr. THUNE. Mr. Speaker, I would just say that many opponents of the
Federal estate tax, including me, I criticized it as being a death tax;
it is a death tax, there is no question about it, and I believe it is
fundamentally unfair, as the gentleman just noted, to tax death. But
again, characterizing the death tax as only taking effect when someone
dies does not paint the full picture of this thing, and it is a
misguided policy. Because the estate tax does not just rear its ugly
head when someone dies; as Abraham Lincoln said, it is not just the
years of your life that count, it is the life of your years. It is
present through the life of our years, and this fact can be plainly
demonstrated by looking at the arguments being made by those who are
opposed to its repeal, because they talk a lot about targeting tax
relief by increasing the small business and family farm exemption
already found in the Tax Code. This is, again, of how the IRS, how much
paperwork it takes to maintain this Tax Code, the exemption consumes
nearly 13 pages in the Tax Code. Now, ironically, it is so narrow and
so complex that it only applies to roughly 3 percent of small
businesses and family farms. So in order to qualify for that exemption,
taxpayers have to start planning while they are alive in order to meet
the rigorous adjusted gross estate value and material participation
requirements that are in that Tax Code. We talk about it as a death
tax, and it is that, but it is also a tax during people's lives that
they have to plan for over and over, again and again, depriving the
resources, the time, the investment that could be put to much more
productive use.
Incidentally, I just want to mention too, because I think the
gentleman from Pennsylvania noted earlier how often it is that actually
a family farm or small business or operation gets passed on to the next
generation, and
[[Page H1403]]
the numbers I have here in front of me say that 80 percent of small
employers spend the costly resources to protect their families from the
death tax and in spite of that, in spite of that, they still often
fail, because 70 percent of small and family-owned businesses do not
survive through the second generation, and 87 percent do not make it to
the third generation. So 9 out of every 10 successors whose family
business failed within 3 years of the owner's death said death taxes
played a major role in that company's demise.
So if we think about the impact this has on the transfer of the
economic engine in this economy for the next generation and what we are
doing, which is, in effect, making it even more difficult than it is,
and it is difficult enough to make that happen. So again, this is a tax
on death, it is a tax on life; it is something that is so costly to
comply with and something which literally deprives one generation of
Americans who have worked very, very hard for the benefit of passing
that hard work on to the next generation.
So I just think again, we have an opportunity to do something about
this and we have tried and tried and tried, as the gentleman from
Arizona always says, to get this done, and yet despite our best efforts
in the last couple of years, because again we met the veto pen at the
other end of Pennsylvania Avenue; this year it is different. There is a
new sheriff in town and we have an opportunity to do what is right by
family farmers and ranchers and small business people, not just in the
rural areas of the country, but in the more populated areas, like the
gentleman from Arizona where he lives.
I might add that a lot of people from my State like to go down there
because it is a little warmer climate than what we have had to deal
with, but there are a lot of us who like to live in South Dakota in
spite of the climate because of the quality of life, and part of the
quality of life hinges upon having an active economy and making sure
that the government is not making more out of that economy than is
necessary and allowing it to continue to grow and provide jobs. So
there are a lot of young people who want to live in South Dakota when
they grow up to have that opportunity.
Mr. Speaker, this is important work that we are doing. I yield to the
gentleman from Pennsylvania who again spoke so eloquently earlier about
his personal experience with this issue.
Mr. PETERSON of Pennsylvania. Mr. Speaker, if you want less of
something, tax it another way, another time; if you want more of
something, do not tax it. Any time we can remove an impediment from
businesses succeeding, we ought to be about it.
I am going to diverse just for a moment, because Bill Gates has said
this 3 or 4 times in my presence and it has made a big impact on me. He
said, as he travels around the world, because he is one of the leaders
of the technology revolution that has brought about the strong economy
in this country, he says, everywhere he goes, he will go to Japan and
he said, why did it not happen here first? Why did it happen in the
States? He will go to Germany and Europe and other countries, and he
will say, why did it not happen here? We are smart people. And he said
the reason it did not happen there and that it happened here is we have
the most economic freedom. We have the least bureaucracy. We have the
least power in the bureaucracy to control and regulate.
Now, a lot of us think we have too much, but we do not have as much
as they do. He said, they could not have brought about the changes that
were necessary to implement this. This technology was around a while
before it took off, before it became this spur to our economy. I just
want to say that, because it is that economic freedom of this country
that we must defend.
The difference in America from anywhere else in the world, and our
future, in my opinion, depends on the ability of any individual that
has a process, a manufacturing process or a commodity to market that
process or that commodity or manufacture that product and compete
against the big boys. Now, when I was in the food business, I was an
independent supermarket. I had to fight the chains. Now, I do not
dislike the chains. They are large, they are powerful, they have
hundreds of stores and the power of buying, and I had to compete with
them. But that is what America is about, allowing little people with
big ideas and lots of intense hard work to build a business. We never
know when we have an employer of 50 people that can suddenly bust out
and be 500 people, 5,000 people. I have seen it happen, where somebody
started in a garage and then moved into a vacant building and the next
thing we know, they are building new factories and they are employing
hundreds, if not thousands, of people.
{time} 2130
We do not want to do anything to trip those people up on their way,
because that is what makes America different: It is a land of
opportunity. It is a land of economic freedom. When we tax two and
three times and take that power of earnings away from people and cause
families to lose that whole thrust, they may salvage the business, but
for the next 5 to 10 years they are paying interest on this debt that
they have accumulated to pay the taxes.
If we add up the money that is spent in this country avoiding this
tax, I would not be surprised if this tax, what it costs people and
businesses and what it costs the government to collect it, that it is
an absolute loser. It is not time to tinker with it, it is time to get
it out of the way as an impediment to growing successful businesses in
this country. It is one less impediment for families and hard-working
people.
Most people who own a business do not work 8 hours a day, they work
double shift, triple shift, whatever it takes to make the business
work, to pay the bills. Those people should not be threatened and have
the problem of spending all their resources and time trying to salvage
the family business.
It is time to put the death tax to bed. It is time to just remove it
and get it out of the way as something that really is not in the best
interests of our economic future.
Mr. THUNE. Mr. Speaker, I thank the gentleman from Pennsylvania.
I also recognize on the floor right now a new addition to the
Congress, the gentleman from Missouri (Mr. Akin), who has joined us
this year. He also, I think, represents a good number of people who
probably care very deeply about this issue.
He has come to this Congress I think intent, like many of us have, on
making a change for the better to try and create an environment in this
country where the American people get to keep more of what they earn,
and where we are distributing power out of Washington, getting more
power back into the economy and back into the hands of individuals and
families and less in the hands of Washington bureaucrats.
Mr. Speaker, I yield to the gentleman from Missouri (Mr. Akin).
Mr. AKIN. Mr. Speaker, I thank the gentleman for yielding to me.
One of the things we could comment on here is the timeliness of this
measure that is before us. One of the things we are aware of is that
the economy has not been as strong as it might be. There is no
coincidence that we are dealing with the repeal of the death tax.
I think people sometimes do not understand the connection, though. I
think that the connection is rather straightforward when we consider
where is it that people are employed in America. What we find is, and
it is not intuitively obvious, I do not think, is that about 80 percent
of our jobs are in small businesses. Those small businesses, many of
them are started either by some individual or the parent of some
individual.
Those small businesses, with the death tax the way it is now, stand
at risk. Because if we take a lot of those businesses and all of a
sudden we have to tax that asset at a 55 percent rate, we basically
close the business down and send those jobs somewhere else. I do not
think that is what we want to be doing with this economy.
Mr. Speaker, the whole point of getting rid of the death tax really
has a lot to do with keeping jobs in this country and really helping,
because if we take a look, all of our big corporations which we
consider to be national assets, they all started at one time as a small
business somewhere. So protecting those small businesses, allowing them
to remain solvent, allowing those jobs to remain in this country and
not closing down the family farm,
[[Page H1404]]
those are the kinds of things that affect our economy.
So this I would say, gentlemen, is a particularly timely measure, and
it is well past due that we get rid of the tax on widows and orphans
known as the death tax.
Mr. THUNE. Mr. Speaker, I thank the gentleman for his comments.
I think just as a matter of fundamental tax policy and principle in
this country, we have said this before and it is true, when a family
member dies the family should not have to deal with the undertaker and
the IRS at the same time. That is in effect what we have created with
the Tax Code in this country.
As we again move into this debate tomorrow, we are going to hear a
lot of arguments from the other side which will range in all kinds of
ways. I cannot even envision, imagine, and contemplate at this point
what we might hear in terms of opposition to this, but I can imagine a
lot of it will center on the fact that this is going to help those who
are particularly affluent and wealthy in this country.
The fact of the matter is they will use examples like Bill Gates and
others. Those are people who have done well in this country. Yet, the
people that I represent in the State of South Dakota are not the Bill
Gateses, Steve Forbeses, Donald Trumps, they are hard-working American
men and women who are trying to make ends meet, and who are trying to
raise their kids and educate them, and create a better quality of life
for themselves and their families and their communities.
Someone said earlier, I think the gentleman from Illinois when he was
here on the floor, that only one in 20 farms is lost in this country or
has to be sold to pay the death tax.
If we think about that, in my State of South Dakota there are 32,000,
in round numbers, family farmers. If we lose one in 20, that is 5
percent. That is 1,600 farms.
Mr. Speaker, one does not have to be a real serious mathematician
over time to look at what happens as far as a trend line. We will see
in a very short order that what is the backbone of the economy in rural
areas, and that is our family farmers, are very much at risk, very much
imperiled, and very much in jeopardy if we do not take the steps that
are necessary, not only to increase prices and to reduce the cost of
production, two issues that are separate issues, but also to lessen the
tax and regulatory burden on many of these people.
So again, I think this is a timely debate. I hope this is an issue
that we will see broad bipartisan support for.
I am happen to yield to the gentleman from Arizona (Mr. Hayworth).
Mr. HAYWORTH. Mr. Speaker, I thank the gentleman, and welcome my
friend, the gentleman from Missouri, to this Chamber and to service in
the United States House.
My friends from Missouri often say, Show me. Sadly, the Federal
government has taken a slogan that Hollywood popularized a few years
ago, show me the money, and taken it from family enterprises.
It has been noted before, Mr. Speaker, that the power to tax is the
power to destroy. Mr. Speaker, nowhere have we seen it with a more
egregious impact, with a more unfair specter, with a fundamental
departure from our values and ethics, than we have seen with this death
tax.
Yes, for years it was called an estate tax, offering this type of
placid, pastoral recognition. But what it is in reality is the death
tax: the destroyer of jobs, the destroyer of economic opportunity, the
destroyer of communities and a way of life.
Some have come to service on this Hill offering a slogan and a
written word, It takes a village. Well, Mr. Speaker, I think it is fair
to ask, what happens when we tax the businesses and farms and ranchers
in said village literally to death? What happens when we abandon the
notion of basic fairness and penalize people whose only offense is to
succeed?
Why punish those who have worked to establish a growing business, an
agricultural or economic enterprise creating jobs, generating wealth,
and not coincidentally, Mr. Speaker, paying taxes on those funds even
as they are accumulated? Why then turn around and tax the survivors,
and destroy the businesses or drive them into arcane policies where
time and money is drained from job creation in the conventional sense,
instead to go to lawyers and accountants, and to drain the productivity
of the economic enterprise?
Now, Mr. Speaker, we will have those who come to the floor, and we
should acknowledge the fact, as my colleague from Illinois and now
Missouri has done standing on that side of the aisle, there will be
those who will join with us in a bipartisan way tomorrow, but there
will be others who say, ``Yes, this tax is unfair, but we cannot vote
to do this now;'' or, ``not this way;'' or maybe, ``There is a cheaper
way to do this,'' for political advantage or partisan embarrassment.
Mr. Speaker, I would simply say to the American people on the eve of
this historic debate, accept no cheap substitutions. Join with us to
put this death tax to death, because the power to tax has in this
instance for too many families, for too many farms and ranches and
small towns and essential businesses, become the destroyer of their
worlds and their vision and their very livelihoods.
Mr. THUNE. Mr. Speaker, I thank the gentleman from Arizona for
stating in very eloquent and concise terms really what this debate is
about, because on a fundamental level, inasmuch as we talk sometimes
about these issues in abstract terms, this really is another issue, and
we have discussed many of them as we have talked about the President's
agenda, that affects very real people in a very real and personal way.
As we move through trying to implement an agenda which, because of
these good economic times and because of the hard work of the American
people, has generated more money in the Federal Treasury than is
necessary to run the cost of government, the American people I believe,
and the President asked for it when he spoke right here behind us in
this Chamber, the American people want and deserve a refund.
I think that if we look at the marriage penalty, which in my State
affects 75,000 couples, if we talk about the per child tax credit which
we acted on last week, which affects 119,000 children in South Dakota
and their parents, it is about taking the dollars that are coming in
here that are more than are necessary to run the cost of government,
protecting and walling off Social Security, addressing the long-term
needs to reform Medicare, paying down the Federal debt in historic
levels, levels never before seen; certainly not seen in the last 40
years, when our colleagues on the other side ran this Chamber. I do not
know when the last time is when we have had substantial paydown of the
Federal debt.
But we have had an opportunity to allow the American people to keep
some of this surplus which is theirs in the first place. The President
has said it, it is the people's money. We need not forget that.
So whether it is the marriage penalty or the per child tax credit,
the death tax, reducing marginal rates, it is important that the
American people understand that they have overpaid the cost of
government, very simply, very fundamentally. When that happens, just in
the same way as when they go into the store to buy a pair of shoes and
they hand the clerk a $100 bill for an $80 pair of shoes, they don't
say, ``Keep the change.'' They have overpaid the cost of the Federal
government.
This is where the American people I think really need to be tuned
into this debate, because it is their money we are talking about. We
all know that if it stays here in Washington, it is going to get spent
on more and bigger government programs.
It all comes back to the basic question, somebody talked about
ideology earlier of who has the power: Does Washington, D.C. have the
power, or does the American family have the power?
We happen to believe as a matter of principle that when we have an
opportunity to allow the American people in this country to keep more
of their hard-earned dollars, they have more power and more control of
over their lives to make decisions that are in the best interests of
themselves also and their families and their communities. That really
is what this debate is all about.
Tomorrow is another chapter in that debate. We take up the death tax.
[[Page H1405]]
gain, I hope that we can successfully piece together a tax relief
package that incorporates principles that not only provide tax relief,
but tax reform and tax fairness to the American people.
The interesting thing about this is that our friends on the other
side, they will complain and holler, but they are coming along. They
have already agreed to more tax relief than this President vetoed last
year when we acted upon it.
They are now rolling out alternatives, all kinds of alternatives.
They may not like exactly the way we are doing it, but they understand
what the American people understand. That is that this is their money,
the Americans' money, and we need to make sure they are able to keep
it.
I appreciate the gentleman from Arizona joining us this evening, and
the gentleman from Missouri, for their thoughtful comments and
observations. I expect the gentleman will be engaged in that debate
tomorrow as it gets under way as a member of the Committee on Ways and
Means. We thank the gentleman for his efforts to lead the charge to
eliminate not only the death tax but a lot of the other inequities in
the Tax Code.
I would say to the gentleman from Missouri, again, I appreciate the
chance to conduct this discussion this evening. Hopefully we will get
the debate under way. The debate is joined.
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