[Congressional Record Volume 148, Number 72 (Wednesday, June 5, 2002)]
[House]
[Pages H3208-H3214]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           REPEAL SUNSET PROVISION OF INHERITANCE TAX REPEAL

  The SPEAKER pro tempore (Mr. Shuster). Under the Speaker's announced 
policy of January 3, 2001, the gentleman from Florida (Mr. Weldon) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. WELDON of Florida. Mr. Speaker, I rise to address the body 
regarding the very, very critical issue of repealing the sunset 
provision of the inheritance tax repeal. As many Americans know, last 
year we passed a very, very important tax bill. It reduced taxes on 
working families, it reduced marginal tax rates, it increased the child 
tax credit, and it had many, many, very, very good provisions.
  Indeed, I have been hearing from constituents, particularly parents, 
in my congressional district about how the tax reductions, even though 
they are phased in and, for example, the child tax credit only went 
from $500 to $600 in the first year, are helping. They tell me, 
particularly parents, where one spouse works, typically the father, and 
the mother is home with small children, struggling with the burden of 
trying to raise a family, that these tax reductions are really helping 
them make ends meet.
  Naturally, of course, with the Nation in a recession, these tax 
reductions have been very helpful in blunting the severity of the 
recession. Many economists claim that if our tax reductions had not 
gone into place, this recession would have been much, much worse. We 
just heard from the gentlewoman from Ohio how State income taxes being 
down because of the decline in the economy are hurting education 
expenses. Imagine where we would be as a Nation if this recession was 
much, much worse. And I think the tax reductions have been very, very 
helpful in putting more money into the economy and, therefore, helping 
create jobs and in protecting jobs.
  But, Mr. Speaker, I rise tonight specifically to address one 
particular feature of that bill. In the other body there is a rule that 
says we cannot make any provisions of the Tax Code permanent unless we 
have 60 votes. So all of these tax reductions which are phased in over 
several years essentially sunset in 2011. This is an unfortunate 
feature, and I was disappointed that we were not able to get the 
necessary votes to make it permanent. Essentially, it is a tax increase 
that is hanging out there over the heads of the American people, 
somewhat like the Sword of Damocles.
  For most Americans, I do not think it affects behavior. I do not 
think people will not have a child because their child tax credit might 
decline from $1,000 to $500 per child in 2011. I do not think that 
because marginal rates could potentially go up in 2011 that people will 
change their behavior in the sense that they will not pursue personal 
gain or they will not pursue career enhancements. But the one feature I 
think that is the most pernicious in all of this is the impact on the 
inheritance tax. The inheritance tax affects behavior now.
  People, today, who are affected by the inheritance tax, engage in 
extensive planning to mitigate the severity of the inheritance tax on 
their business and on their family. This was driven home loud and clear 
to me when I called a constituent of mine who is an auto dealer. Bruce 
Deardorf is his name. Shortly after we passed the tax cuts of last 
year, I called Bruce and he said to me, I am glad you passed it, it is 
a great step; but, he said, I do not know what to do about my estate 
planning.
  Bruce is like hundreds of thousands, probably millions, of small 
businessmen all over the country. He started out really with nothing. 
He scrimped and saved and managed to save up $60,000 and used that as 
the downpayment, then took out a big loan to open his first auto 
dealership many, many years ago. He has been successful and was able to 
acquire a second, a third, and now a fourth auto dealership. He employs 
400 people. He has sent millions and millions of tax dollars to 
Washington, D.C., both from his personal withholding and all the jobs 
that he has created. All those 400 people of course pay Social Security 
tax.
  Now, this is not a story that is unique to my congressional district 
in central Florida; it is common all over the country. Really, the 
prosperity

[[Page H3209]]

that enables us to pay for all the features of our government, from 
defense to education programs to local taxes that are collected is 
generated by entrepreneurs and family farmers that are going out 
working every day and creating jobs and creating prosperity.
  And Bruce Deardorf said to me over the phone, I do not know what to 
do with the estate plan I have established. This feature of the bill, 
this sunset provision, which basically repeals the inheritance tax by 
2010 and then brings it back in 2011, makes it impossible for me to 
retire all the estate planning that I have generated, and I am going to 
have to keep it all in place.
  This is very, very inefficient. Most of the estate planning, granted, 
generates work for estate planners, accountants, and lawyers; but it is 
not in the productive side of our economy. And, indeed, I think this is 
an inefficiency that we have burdened our economy with. So I believe 
very, very strongly that we need to make the repeal of the inheritance 
tax permanent. It is impossible for people to plan, and I think it is 
the right thing to do.
  Now, I supported the bill that we passed last month that made all of 
the sunset provisions on all the features of the tax bill go away. If 
we cannot get that enacted into law, I think minimally we need to enact 
this provision.
  Mr. Speaker, I would like to now recognize my colleague, the 
gentleman from South Carolina (Mr. Brown). I understand that the 
gentleman wanted to speak to this issue on the inheritance tax repeal, 
and so I yield to the gentleman.
  Mr. BROWN of South Carolina. Mr. Speaker, I thank the gentleman from 
Florida for yielding; and I rise in support of making the death tax 
relief permanent and, quite frankly, with much puzzlement that we 
really need to debate this on the House floor today.
  On the one hand, it is simply a matter of fairness. The taxes being 
wrenched from the families is money that has already been taxed before. 
As an issue of morality, it is hard enough for a family to lose a loved 
one without having to endure the additional grief and burden that the 
Federal Government delivers to them. Too often business owners are 
forced to sell their businesses, and family farms are broken up so 
families can come up with the cash they need to pay the death tax.
  Moreover, as a practical matter, when people are planning their 
estates, it creates tremendous uncertainty when one does not know 
whether or not the death tax will resurrect itself within 10 years. 
Surely the Congress would never tell the American people that it is 
much more economic to die in the year 2010 than in the year 2011. But 
if nothing is done to make this relief permanent and the death tax is 
allowed to rise again, that is the sad reality of the policy we have 
created.
  We must be decisive on this issue and continue the good work we did 
in enacting the President's tax cuts. Not acting to make this relief 
permanent would be a dereliction of duty to the constituents we 
represent.
  Mr. Speaker, I would hope that the Congress would do the right thing 
and make this death tax relief permanent.
  Mr. WELDON of Florida. Mr. Speaker, I thank the gentleman from South 
Carolina for his very important input; and I believe the gentleman's 
colleague, the gentleman from South Carolina (Mr. Wilson), also would 
like to add to the gentleman's statement on this very important issue; 
and so I yield to the gentleman.
  Mr. WILSON of South Carolina. Mr. Speaker, it is a real honor for me 
to be here with my colleague, the gentleman from Florida (Mr. Weldon), 
and an honor to be here with my colleague, the gentleman South Carolina 
(Mr. Brown). I was very honored to serve with him in the General 
Assembly of South Carolina. He served as the chairman of the Committee 
on Ways and Means in the House of Representatives, which was one of the 
highest positions of our State, and we are just very fortunate that he 
was elected 2 years ago to serve here in Congress. Those of us from 
South Carolina are proud of the gentleman from South Carolina (Mr. 
Brown).
  I am very happy and honored to have been elected more recently. I ran 
in the primary last October. I was elected on December 18; and, in 
fact, I am the second most recent Member of Congress. I am number 434 
out of 435. And with that distinction, the point I want to make is that 
I also have the most recent experience, some of us would call it real-
life experience, of being with the public in a private position in my 
job. And I was very proud of my employment as an attorney. I served as 
a real estate attorney, and I was a probate attorney until December 18 
last year when I was elected to Congress.
  My experience in civilian life of being a real estate attorney, 
probate attorney, is that I heard so much about death taxes and that is 
why I want to commend my colleague, the gentleman from Florida, for his 
leadership in working to eliminate death taxes in the United States. 
This needs to be done. Because I know firsthand how this has chilled 
the value of real estate, it has chilled development, it has chilled 
home building, and it has had a negative effect for businesses, 
particularly small businesses in our country.
  Additionally, I know that it has created confusion for those of us 
who work in preparing wills and assisting people in preparation of 
wills. But the ultimate confusion has been a law which will provide, as 
the gentleman correctly indicated, a tax increase. That tax increase 
will take place on January 1, 2011, when it just kicks in. So what we 
have is an indeterminate law, in effect, which is the worst kind.
  I know from being recently in campaigns, talking with people, meeting 
with people in their businesses, in their homes, on the street, at 
meetings, that this is a key issue. And I want to commend the gentleman 
for bringing this up, and I really look forward to the vote tomorrow.
  I also had the experience of looking back at the debate involving a 
wonderful colleague, the gentleman from Arizona (Mr. Hayworth), who 
spoke on this last year. And I want to commend the membership for 
passing the tax cuts last year. It was a year ago, on June 6, 2001, 
when the reforms were put in place to eliminate the death taxes and 
reduce other taxes.
  The way this tax cut would work that was passed provides that there 
would be a phase-out of the death taxes over the next 9 years, and then 
it would completely disappear in the 10th year. However, the sunset 
provision that the gentleman explained provides that after December 31, 
2010, on the very next day, the taxes would be fully put back into 
place, a tax increase, as the gentleman has said correctly. So persons 
would almost have to plan, which cannot be done, and we do not want it 
to be done, to pass away on December 31, 2010. It is not only just 
illogical, it is immoral.
  In other words, unless we want to make the tax elimination permanent, 
we need to vote positively tomorrow, and I look forward to doing so. 
What we have is a situation where if people did pass away prior to 
December 31, 2010, they would not pay a death tax. But if they live 1 
day more, to January 1, 2011, they would pay a tax, possibly equal to 
60 percent of all their assets.
  I believe that the death tax is possibly the most ethically 
disgraceful tax which is levied by the Federal Government; and then, in 
fact, most States also have adopted this tax through tax conformity.

                              {time}  1715

  So this can really be beneficial. Not only what we are doing on the 
Federal level; the impact will be to eliminate death taxes at the 
Federal and State level. You have tax on assets already taxed. We need 
to vote tomorrow to permanently eliminate the death tax.
  Another definition of the death tax would be taxes on the property 
owned at the date of death. When someone dies, the surviving family, 
not the deceased, and there is some debate, we can call it an 
inheritance tax, but the general term is death tax. The surviving 
family pays a tax up to 60 percent on all assets currently over 
$675,000.
  When we hear about $675,000, I know from personal experience working 
with people who are of average means, they do not realize that their 
homes have appreciated substantially. They could immediately be put 
into a taxable situation. Many people do not realize that insurance is 
included within the estate and provides immediately for taxes to be 
assessed.
  For the past 20 years, as a member of the Army National Guard, I have 
been

[[Page H3210]]

traveling all over South Carolina with legal counseling teams assisting 
people in preparing wills and powers of attorney in the event that they 
were mobilized. Person after person has had property that has 
appreciated. It is real estate which was formerly in rural areas, and 
is now in resort areas. This could result in people having to cut 
timber early, which would be negative. Timber has been a phenomenal 
resource which appreciates in value so quickly that immediately people 
who are of average means become taxed upon the death of a loved one.
  I think that another point that needs to be made is that the Federal 
death tax was enacted in 1916 to provide for funds to fight World War 
I. We heard a few minutes ago that it needs to be reformed and not 
eliminated. I will say that reform is simply a code word for keeping 
the door open for abuse.
  The best way to handle any tax is to eliminate the tax. It may sound 
good that we would reform it and it would apply to a very tiny 
percentage, but we all know that that is leaving it alive so that in 
the future it could be increased and they could come back and have it 
on the books and simply say this is a technical amendment, we 
understand what that means, and suddenly we have taxes which are 
increased in all directions.
  The real question on this is in regard to grandparents. They should 
be encouraged to save for their children and for their grandchildren. 
To me this is an assault on grandparents who have worked hard all their 
lives. They want to provide for their families and want to pass it on. 
Tomorrow I will be looking forward to voting on this for the 
grandparents of America.
  The bottom line, a good question, is that normally government will 
tax gains. That is assets that are appreciating by gains. But why does 
the government have a right to tax the ultimate loss, which is 
someone's life?
  Mr. WELDON of Florida. Mr. Speaker, I thank the gentleman for the 
leadership he is providing on this issue. I want to just underscore 
that this is also a jobs issue. This poster I have here says it quite 
clearly. More than 70 percent of family businesses do not survive to 
the second generation. I was talking earlier about an auto dealer in my 
district. He has created his dealership and three others, and 70 
percent of family businesses passed from the founder to the children do 
not survive. Eighty-seven percent did not make it to the third 
generation.
  Mr. Speaker, why is that? One of the principal reasons is the 
inheritance tax. When businesses go under, it means a loss of jobs. 
Sixty percent of small business owners report that they would create 
new jobs over the coming year if the estate tax were permanently 
repealed. Why is that? It is directly related to what I was talking 
about earlier.
  My friend has estate planning in order to mitigate his death tax when 
he tries to pass his business on to his son. If he did not have to do 
that, to employ those kinds of vehicles, he would have more money, and 
most of his money is tied up in his business, what would he probably 
do? He would probably sow it back into the business and create more 
jobs, which generates more taxpayers.
  The theme of the evening is the permanent repeal of the inheritance 
tax or death tax. Before we go on with that and before I recognize the 
gentleman from Arizona (Mr. Hayworth), and I deeply respect his 
leadership on the Committee on Ways and Means. The gentleman has been 
instrumental in bringing this permanent repeal to the floor of the 
House, but I know that the gentleman from California (Mr. Cunningham) 
wanted to speak to some of the education issues that were brought up 
earlier this evening.
  Mr. Speaker, I yield to the gentleman from California (Mr. 
Cunningham) to speak to this issue.
  Mr. CUNNINGHAM. Mr. Speaker, I thank the gentleman for letting me go 
out of order to speak on education. I would tell the gentleman I grew 
up in Missouri, and many of the folks who pass away, they try to pass 
down their farms, and they have to sell off the farm that they have had 
in their family for 200 years because they cannot afford to pay the 
taxes on it, up to 55 percent.
  Mr. Speaker, this is the silly season. It is election time. We hear 
tax breaks for the rich. We hear the Republicans are cutting education. 
The White House is cutting education. Do not let the facts get in the 
way of the truth. The gentlewoman from Ohio (Ms. Kaptur) just spoke, 
and I would like to address some of the things that the gentlewoman 
said.
  I was in the committee hearing with the gentlewoman when Secretary 
Paige came and she made the same accusations. The Secretary, point by 
point, refuted every single claim that the gentlewoman from Ohio was 
making that we are cutting education, or that the President's budget 
cuts education.
  We here on the House floor had a very bipartisan H.R. 1 vote. The 
President's primary concern is that no child is left behind. My wife is 
a special assistant to the Secretary for Education for Management, a 
position that the Clinton administration totally did away with and 
caused a lot of the fraud, waste and abuse. The Secretary told the 
gentlewoman from Ohio (Ms. Kaptur) point by point where the gentlewoman 
is wrong. The Democrats have a number for education, an increased 
number for education. No matter what it is, the Democrats will add to 
that number. They claim to be the great fiscal responsibility party; 
but when we look, every single budget, except for defense, they want to 
increase it out here beyond the budget and actually take money out of 
Social Security.
  We came up with an increase in education. We increased Pell Grants. 
We increased money for IDEA. The maximum amount that my colleagues on 
the other side of the aisle ever funded IDEA for was 6 percent. We 
quadrupled that.
  Pell Grants, all the way down the line, we have increased dollars. 
And something else that the President did and now that the Department 
of Education is in Republican hands, what they are doing, they are 
driving the money to the local school districts so that the parents, 
the teachers, and the administrators can control those dollars instead 
of the bureaucrats that the Democrats want to control the money. They 
want more money in an election cycle so they can pass it down and have 
bigger bureaucracies. We want to get it down to the classrooms.
  The President is also making sure that there is accountability with 
those dollars. My wife sits on the management team over there in the 
Department of Education. Do Members realize under the Clinton 
administration the folks that worked over there had over $400,000 on 
their credit cards? There were over 40 of them that charged houses and 
furniture and personal items on their credit cards. There is one lady 
still working with her job. The department may be afraid to go after 
her, but I am going to go after her donkey, and she is not going to 
have that job after I am through with her. It is fraud, waste and 
abuse.
  Mr. WELDON of Florida. Mr. Speaker, did I hear the gentleman 
correctly to say that there are employees at the Department of 
Education that have used government credit cards to charge personal 
items?
  Mr. CUNNINGHAM. Personal items, furniture, housing equipment, 
personal items, movies, all kinds of things. One of them still is 
working over there, and I am going to make sure that she is not working 
there in the future.
  But the bottom line is the President is not cutting education. Tax 
breaks for the rich, we will hear over and over. Again, do not let the 
facts get away with the truth. Alan Greenspan said the Democrats tried 
to go after the President for the recession and the economy. Guess 
what, tax relief helped stop that. That is not the Republicans talking, 
that is OMB, that is Alan Greenspan, our economist.
  All Democrats want is an item for the election, and they cannot do 
it. They tried to get the President on Enron, and it did not work. They 
said he should have helped with Enron on the other end. That did not 
work. The majority leader in the Senate went after the President on the 
war, and that did not work. They are trying everything they can in this 
election year to have leverage and make an issue.
  Mr. Speaker, we are not cutting education. The Secretary pointed out 
to the gentlewoman from Ohio point by point that her statements were 
false.
  I would like to thank the gentleman. I ran over here because I serve 
on that committee, and it is upsetting in an

[[Page H3211]]

election year to make false claims that the President is doing 
something when he is not. We may not be adding as much as the 
gentlewoman wants, but we are staying within the budget.
  Mr. WELDON of Florida. Mr. Speaker, that is precisely the issue at 
hand. Many Democrats want to increase it 10 percent, and we put through 
an increase of 5 percent or 4 percent, and they call that a cut. 
Indeed, we saw that for years and years and years in this body. I know 
the gentleman from Arizona (Mr. Hayworth) got elected with me in 1994. 
That was one of the things in 1994 that I campaigned on. For years 
politicians in Washington would increase something by 5 percent, but 
the bureaucrats at the agency would say that they needed a 10 percent 
funding increase.
  Mr. CUNNINGHAM. If the gentleman would yield, not only was the money 
increased, but the accountability was not there. The Department of 
Education had $50 million in student loans that they could not account 
for. Their books were unauditable. The Democrats and their group at the 
Department of Education, $12 million in direct student loans went to 
the wrong students, and so they then had to give another $12 million 
up. We are shoring that up. We are not only increasing the money for 
education, we are making sure that it gets down to the children, and 
that the parents have control of it.
  Mr. WELDON of Florida. Mr. Speaker, I thank the gentleman for the 
critical leadership he is providing on education. Educating our 
children is perhaps one of the most important issues that we perform 
here in Washington, although I believe that is really a priority for 
parents and local school districts, although we need to do everything 
that we can to try to help.
  The issue of the evening is the very important debate we will be 
having tomorrow. Tomorrow the House of Representatives will take up a 
piece of legislation that I introduced last year. It is to make the 
repeal of the estate tax permanent. It is H.R. 2143. It would not have 
been possible to get this piece of legislation moved to the floor if we 
did not have the support of a lot of people. Obviously the leadership 
of the Speaker of the House of Representatives, the majority leader, 
and all of our leadership team. Critical as well was the chairman of 
the Committee on Ways and Means, and on that committee one of the 
people actively pushing to bring this bill to the floor was the 
gentleman from Arizona (Mr. Hayworth). I now yield to the gentleman.
  Mr. HAYWORTH. Mr. Speaker, I thank the gentleman for allowing us to 
share this time. I thank the gentleman from California (Mr. Cunningham) 
who again talked about education and the importance, yes, of dollars, 
but also the importance of accountability. It is very interesting the 
differences we see. My son is now 8 years of age, and I remember when 
he came home from school at 7, and he was talking about the concept of 
infinity.

                              {time}  1730

  And he said, You know, Dad, you will never reach it because you can 
always add more to it. And indeed it seems, sadly sometimes, along 
partisan lines the notion is whatever figure is arrived at, oh, no, we 
can always spend more. The key of course is not just the right 
allocation of resources. It also of course is accountability. And, Mr. 
Speaker, now it is time to become accountable to the American family, 
to family-owned businesses, to ranches and farms and so many different 
concerns where the scourge of the death tax has come like a thief in 
the night, not only death robbing people of their lives but the death 
tax robbing families of their future.
  Our good friend who sadly is departing this Chamber, the gentleman 
from Colorado (Mr. Schaffer), once borrowed Patrick Henry's admonition. 
Said my good friend, ``No taxation without respiration,'' and I think 
that is evocative not only of history but something very practical. It 
was one of our great founders, Ben Franklin, gifted in so many 
different ways, almost with the incredible prescience to see what would 
come in this constitutional Republic, but even Dr. Franklin with his 
incredible foresight never predicted that the constitutional Republic 
he helped to found would tax people upon their death. Remember his days 
as a humorist writing in ``Poor Richard's Almanac,'' he said: ``There 
are only two certainties in life, death and taxes.''
  But even Dr. Franklin did not foresee that this Republic would one 
day tax a person upon the event of his death and of course realty does 
not affect that person but that person's family. And lest anyone think 
this is a partisan issue, Mr. Speaker, we would thank those across the 
aisle who have joined with us to understand how this unfair tax should 
be eliminated; and we should point out for those, Mr. Speaker, who 
wonder why we are returning to this, it is because my colleague from 
Florida very capably pointed out that a rule difference, and again I am 
not directing this at the other body, but a rule difference did not 
allow for the implementation on a permanent basis of this particular 
repeal.
  And so we have the curious situation, while we made a profound move 
to repeal the death tax, to roll it back, as my friend from South 
Carolina outlined, as my friend from Florida recognizes, we have almost 
an absurd situation now where if one is going to die, he had better do 
it in the year 2010 to realize the complete benefit of repeal of the 
death tax. For if we do nothing, whoom, here it is back again in the 
year 2011. That is why I salute my friend from Florida bringing forward 
this notion, serving as a catalyst to make this repeal permanent.
  And again lest anyone think this is a partisan concern, I would point 
out that the one-time standard bearer of the Democratic Party in the 
State of Arizona for the office of Governor back in 1994 approached me 
2 years ago saying ``Congressman, you have got to get rid of this death 
tax.'' Why? Whatever political disagreements we had in other areas, the 
gentleman correctly understood his business, his livelihood, of family-
owned enterprise, of grocery stores, the capital involved in that 
business, the fact that so much of the assets are tied up in bricks and 
mortar and quite literally in the groceries on the shelves, and unless 
the death tax is repealed, then a business that had been in his family 
would be in danger of having to be sold off to pay the taxman.
  It is even more pronounced in the rural communities I have been 
honored to represent for the better part of a decade, with farmers and 
ranchers and so many small businesses owned by families but especially 
when we come to the whole notion of agriculture and farms and ranches 
and how quite literally so many families are land rich and cash poor. 
So much of their assets are tied up in real estate, tied up in farm 
machinery, tied up in those very tangible assets; and so often we have 
a situation where, to satisfy this tax bill, people were forced to 
liquidate their assets, to sell off the family farm, to sell off the 
family business to satisfy the tax needs of Uncle Sam.
  While we are thinking about this, Mr. Speaker, something else we 
should point out, over the years it has become painfully apparent that 
the American people do not rely on this death tax. Indeed, as we look 
back over the last few years, the death tax on an annual basis only 
accounts for about 1 percent of the revenue that comes in to the 
Federal Government. Yet three-quarters of that 1 percent is spent 
pursuing the families of the farmers and ranchers who pass away, the 
families of the people who created these small businesses, to have them 
pay a bill that for them is insurmountable, it seems, but in the scheme 
of things only accounts for about 1 percent of the revenue that comes 
in to the Federal Government on an annual basis.
  No, Mr. Speaker, we can be smarter. This House in a bipartisan way 
took that important step toward that great day with eventual repeal of 
the death tax, but we need to make it permanent. Permanency is 
important, for if we fail to do that, you will have the absurdity of in 
2010 seeing it completely repealed but in 2011 the Grim Reaper comes 
back with a vengeance. I know none of us here advocate state-sponsored 
euthanasia; yet that is the absurdity we would have if we failed to 
move to enact permanent death tax relief.

  Mr. Speaker, lest you think this is exclusively the domain of family-
owned businesses, farmers and ranchers, certainly it is important and 
perhaps it is more pronounced there, but I would tell you the story of 
a lady I encountered in Tucson, Arizona. Down on a visit there to that 
part of our State, a lady came up and spoke of her father's experience. 
Here was a man who

[[Page H3212]]

worked hard, indeed, in a career that very seldom do we see anymore 
with the modern marketing techniques, but he was a milkman. He worked 
for a dairy. He came back from World War II and worked hard delivering 
milk every day, not exactly a highbrow occupation. Certainly there is 
dignity in every form of work, but very few people would think about 
that gentleman as being a captain of industry or someone with vast 
financial resources, but what that gentleman did was incredibly 
exemplary and so symptomatic of the American experience. The money he 
made, he was able to save judiciously. He made some wise investments 
coming home from World War II, getting involved, working as a milkman. 
His hard work and wise investments paid off in an estate that was worth 
millions of dollars.
  But there is just one catch here. As wise as he was with investments, 
he did not understand that, oh, gee, you have got to work on estate 
planning. He did not seek out a team of lawyers to sit down and make 
all the proper machinations to change the situation to save the funds. 
And so when he contracted a terminal illness, only then in the twilight 
of his days did he realize, despite such an exemplary life, hard work, 
thrift, industry, doing the right thing for his family, only then did 
he come to the shocking realization that somehow, despite that hard 
work and industry, his planning had been incomplete.
  His daughter told me the story how her father called her in and her 
sibling in and not only the challenge and the pain of a terminal 
illness but the realization that he was leaving them in essence with a 
gigantic tax bill to pay because of this death tax.
  Mr. Speaker, if you work hard and play by the rules, must we all be 
captains of high finance? I understand a modicum of estate planning. I 
understand the importance of insurance. Certainly having moved from 
broadcasting, into that profession before coming into public life, I 
understand the importance of life insurance and financial planning, but 
must we ask everyone to deal with the machinations and brain power and 
inner workings of complicated financial measures? No, it should be 
simple and this should be repealed permanently because it is wrong.
  Mr. WELDON of Florida. Mr. Speaker, the story the gentleman told was 
very, very moving. Before I yield to my good friend from the great 
State of Nebraska, I want to tell another real-life story. I think it 
is so important when we make things like this understandable from real-
life experiences.
  I want to talk about a florist in Kissimmee, Florida. His name is 
Danny Sexton. A lot of people on the east coast have passed through 
Kissimmee because it is right outside Disney World. Danny started out 
with a floral shop. His uncle had been established in the floral 
business in Kissimmee for many years, had a much bigger shop; he had 
about 20 employees and his uncle died, and Danny was the sole heir. 
Danny inherited his uncle's floral shop.
  Danny, like so many small businessmen, employed just a small number 
of people, five or six people. He had been involved in his community 
for years, giving to the United Way and other charitable programs. He 
really knew nothing about the death tax. Suddenly he found himself in 
charge of not only his floral shop, but his uncle's floral shop, which 
had been established many years earlier, was much bigger, had a lot of 
commercial accounts and he inherited all these employees. Lo and 
behold, he discovered that he was going to have to pay a tax bill, and 
the death tax was $160,000. But what was the real shocker, what was the 
real corker in all this is that you do not just take the floral shop 
and just give it to Danny, you have got to do a lot of other things. 
Lawyers got involved. There were $60,000 in lawyers' fees, there was 
$14,000 of accountants fees, there was a $15,000 bill for just 
miscellaneous expenses. And then this one here I thought was really 
kind of interesting, an IRS fee. I think that was to appraise the value 
of this floral business.

  If anybody knows, if you run something like a floral shop, the 
margins are kind of tight and he had to go out and borrow $253,000 to 
be able to pay for all of this. It was a real burden on him. He ended 
up having to lay off, I think, two or three of the employees in the 
shop. He additionally had to ask a number of the employees that he 
retained to take a cut in salary. Indeed, it was so bad for him 
initially that they went the whole summer in the office without the air 
conditioner. The air conditioner broke. If any of you have ever spent a 
summer in Florida, you know it is very humid. It is not only hot, it is 
very humid. And they had to totally cut off charitable contributions 
and helping out the Boy Scouts and the United Way when they would come 
around and they would have a special banquet or an event.
  Danny is pulling out of this. I know he is going to be okay. But this 
is really what it is all about. Danny's uncle had employed 20 people 
for years. Danny's uncle had paid a lot of money to the Federal 
Government in personal, Federal withholding, in the FICA tax. What is 
even more so is that all the employees who worked for him were also 
paying their taxes, their Social Security, their Medicare tax year 
after year after year. The Federal Government had actually gotten 
probably millions of dollars of revenue off of the enterprise that had 
been created by his uncle. And then for him to die and then for the 
Federal Government to come along and say, No, you've got to give us 
some more, I think, is taxing that is immoral. It is immoral to tax 
after you have taxed.
  Mr. Speaker, I yield to my good friend from Nebraska, another Member 
whom I believe has played a critical role in helping us bring this 
issue to the floor of the House making the repeal of the inheritance 
tax permanent law, because until you do that, you are not going to 
affect really all the estate planning that has to go on to prevent 
people from being burdened with this tax on their death.

                              {time}  1745

  Mr. TERRY. I thank the gentleman from Florida for yielding.
  Mr. Speaker, our good friend from Arizona here, he has been a great 
leader, like the gentleman from Florida has, on this important issue. 
It is important to a lot of people in Nebraska now.
  Before I talk about some of the stories that I have heard as I have 
gone around and talked to businesses in Omaha, small businesses, 
family-owned businesses, and share our similar experiences, the 
gentleman from Arizona mentioned that in the totality of our budget, 
the revenue that is received from the death tax is less than 1 percent, 
but yet there are a lot of our colleagues here that just fight to keep 
that money in.
  I think it exemplifies why all three of us ran for this office and 
why we fight to come back every year, is to stop that type of 
mentality, which is ``we need more money, more money, more money.'' So 
when we try and reduce spending here by reducing taxation, because it 
is the only principle here, that budgets fill the money that we have, 
that if we tax more, we will spend more, but if we tax less, we will 
spend less, it is a simple proposition.
  So of the greater taxing policies of the Nation, I think it is 
important that we realize the simple premise that the more money we 
take in from people, the more we are going to spend. So I appreciate 
the gentleman bringing up that important point.
  Now, why? We have all said in our own words why it is bad policy. Why 
is the death tax bad policy? Well, think about the very principles that 
this country was founded on, the principles of independence and freedom 
and entrepreneurship, where people worked hard to build their little 
businesses, and some worked day and night, day and night, seven days a 
week, and they were able to build it up and build it up, and maybe even 
the next generation of family members were able to help build it up as 
well. I mean, that is the American spirit, is working hard and 
realizing, you realizing, the rewards of your work.
  So, what is the policy? The U.S. Government comes, and many States, 
by the way, have followed suit, and said, you know, because of our 
spending habits and our need for more revenues, upon the death and the 
transfer we are going to confiscate, and I use that word, confiscate a 
portion of what you have worked hard to build up in your lifetime.
  I would say to the gentlemen, I believe that people should keep the 
rewards. Yes, we have to pay our taxes,

[[Page H3213]]

but, my gosh, just taking up to 55 percent of somebody's wealth that 
they have built up through hard work, through the American dream, and 
just taking it for our spending needs, is absolutely wrong.
  Mr. HAYWORTH. If the gentleman from Florida will yield, I just wanted 
to point out again that observation that our friend from Florida made. 
There is a situation at work here that is so myopic, it is almost to be 
penny wise and pound foolish. Because, as was pointed out in the case 
of Mr. Sexton and the flower shop, 20 employees, payroll taxes, people 
paying their income taxes, though this was a considerable hardship, the 
money devoted to handle all the details and red tape and the death tax 
itself in the long term, did it not cost the government more revenue?
  You see, here is the difference. And I appreciate the concept that my 
friend from Nebraska brings forward about taxing more, spending more; 
taxing less, spending less. But there is something else at work here 
that we have to understand about the reduction of the tax bill. When 
the American people have more money to put to work, when the death tax 
is repealed and more people are at work, guess what? Revenues to the 
Federal Government will actually increase, because more money is being 
put to work. It is called the principle of growth.
  So we have to be very careful here, and that is the myopia; in 
addition to the unfairness and injustice, lack of justice, injustice of 
the death tax, is that really in the long term it actually costs 
revenue. It is inefficient, as well as immoral.
  Mr. TERRY. Mr. Speaker, I appreciate that. I have just become so 
focused. As the gentleman from Florida (Mr. Weldon) said, the morality 
of just confiscating one's work product for the sake of having 
revenues, we leave out the economic component of in essence taking away 
a business.
  We hear speakers, and we are going to hear them tomorrow when the 
bill comes up, that say that this is not real; that people do not 
really have to sell their businesses to meet the death tax; that it is 
a phony argument.
  Well, I want to read an article from the Omaha World-Herald from 
December 11, 2001. So it is not like we have to go back to the archives 
of years past to come up with an article that is relevant to our 
discussion today. But it is about a ranch in western Nebraska, of which 
kind of the theme of it was Ted Turner buying another ranch in 
Nebraska.

  Let me just read some highlights from this article in the Omaha 
World-Herald, and I will give them their copyright credits here. It is 
talking about media mogul Ted Turner added another 12,300 acres of 
Cherry County grazing land to his bison ranching empire. The purchase 
was to be finalized on Monday. It gives Turner about 234,000 acres in 
three counties in Nebraska, making him the largest private landowner in 
Nebraska, as he is in the United States, owning about 1.75 million 
acres in New Mexico, Montana, South Dakota and Nebraska.
  The Coble family, I am going to get to and read this verbatim from 
the Omaha World-Herald article, Bill Coble of Leewood, Kansas, a 
grandson of the Cobles, said that the death in August of Doris Coble 
precipitated the sale. It was necessary to pay off the inheritance 
taxes, Bill Coble said. The only way you can make it work is with an 
added amount of life insurance and to work the ranch yourself, Coble 
said. The purchase ends a 100-year Sand Hills operation of the Coble 
family. A 100-year tradition of the Coble family gone, because when the 
operator, Doris Coble, the last of the parents, died, the grandson 
could not take over the property. He had to sell it to pay off the 
inheritance taxes. This is a family that did not purchase the millions 
of dollars of life insurance policy to protect itself. My family buys 
life insurance to protect our family. Here you buy life insurance to 
pay your taxes. That is wrong.
  Mr. WELDON of Florida. Mr. Speaker, reclaiming my time, I am glad the 
gentleman brought this up, because I wanted to get at some of the 
arguments we are going to hear on the floor tomorrow from the 
opposition. What the gentleman was just talking about, I think, segues 
very nicely into that.
  They are going to put forward an alternative proposal. The 
inheritance tax repeal we passed last year phases in over 8 or 9 years, 
and then the reason why we have got this bill on the floor tomorrow is 
in the 10th year it just comes back in its full force.
  What the minority will put forward is the notion we should just have 
a $3 million exemption and we could enact that immediately. They may 
point to the farmers and the ranchers and say if we just had this $3 
million exemption, the Coble family that the gentleman cited is a good 
example, they would be covered, and they could pass the ranch on. Danny 
Sexton would not have encountered the problem he had. He could have 
inherited the floral shop from his uncle.
  The problem with that is that if your asset is worth more than $3 
million, then everything over $3 million gets taxed at something like a 
50 percent tax rate. We have inflation, and these farms and ranches 
that they say now are valued at less than $3 million, what are they 
going to be worth 10 years from now, what are they going to be worth 15 
years from now?
  It obviously picks winners and losers, and that is the main gripe 
that I have. It is basically saying, well, if you have created a small 
business and it is only worth $3 million or less, then we will not tax 
you. But if you have been really successful, or if you have farmland 
in, say, Napa, California, where it is valued at incredible prices, no, 
we are going to tax you. I just think that is totally wrong.
  Let me also point out, 60 percent of the top black-owned businesses 
today in America are valued at over $2 million. That means in another 5 
or 7 years, those assets are going to be worth probably over $3 
million, and, boom, they are going to get hit by the inheritance tax.
  Another point is a point that I think the gentleman from Arizona (Mr. 
Hayworth) was alluding to earlier, that they look at making the 
inheritance tax repeal permanent and they say we are going to lose $99 
billion. That does not take into consideration at all the fact that if 
you leave that money in the economy, you are going to put more money in 
the economy and it is going to create jobs and it is going to create 
wealth and that we would be able to then tax that.

  Indeed, it is estimated by economic analysts that the inheritance tax 
actually costs, and this is what the gentleman said earlier, I believe, 
it actually costs us, because it takes money out of the economy, money 
that would be flowing around the economy; it forces people to sell 
small businesses; it forces small business owners to take out a loan to 
pay the inheritance tax; and then their small business does not operate 
sufficiently.
  I yield to the gentleman from Arizona. I think we have about 5 
minutes left.
  Mr. HAYWORTH. Mindful of that as a broadcaster, the old time clock on 
the wall, it is important for us to pass permanent repeal, no matter 
the siren song of seduction saying ``let us set a temporary level that 
will accommodate some folks.'' Maybe this is a fundamental 
philosophical difference.
  When you get in the realm of targeted tax cuts, you are asking this 
Federal Government to pick winners and losers, and you do nothing for 
the business owners, the grocery store owners, the farm machinery 
dealership owners, the automobile dealership owners, who have 
significant capital sunk into that business, who literally are asset-
rich and cash-poor. You exacerbate the problem. Our purpose is not to 
set American against American, not to get wrapped up in the I believe 
ultimately misguided notion of class warfare, but to allow everyone to 
succeed.
  There is one other note undergirding all of this. It is especially 
pronounced in Arizona, where one of our local newspapers is concerned 
about the price of sprawl at an acre an hour. Why do you think farms 
are being sold off? To satisfy the death tax. Gone is a lot of our 
agricultural land. That is a real problem in States like Arizona and 
Florida and across the country. That is another reason to make this 
repeal permanent.
  Mr. WELDON of Florida. I thank the gentleman for his input on this 
special order. I yield to the gentleman from Nebraska for the last 
word.
  Mr. TERRY. Well, I will let the gentleman have the last word, and 
thank him for bringing this to the floor. One

[[Page H3214]]

of the other points, though, I want to make with that is the cost of 
the machinery. When we talk about our farms and ranches, we have a 
plant that manufactures farm equipment. The price of some of that 
equipment coming out is several hundred thousand dollars.
  Mr. WELDON of Florida. Like a combine.
  Mr. TERRY. $200,000 to $300,000, and even more if you go to some of 
the other equipment. A small family-owned printing company that I 
toured last summer when I was home, one printer runs hundreds of 
thousands of dollars, half a million dollars for a printer. So when you 
talk about what level do you set this, if you do not eliminate it, and 
picking the winners and losers, you fail to recognize that they are 
eking out a small living with very expensive equipment, but yet we tax 
on the value of that equipment, not the living that a father and mother 
and maybe a son and a daughter can make off of that. That is why it 
remains fundamentally unfair.
  Mr. WELDON of Florida. Mr. Speaker, reclaiming my time, I thank both 
of my colleagues for their input on this very important issue.
  Let me just close with one very important point. We will also hear 
that making the inheritance tax repeal permanent will hurt donations to 
charity.

                              {time}  1800

  The assumption there in that argument is that people are only giving 
to charity so they do not have to give it to the Federal Government.
  I just think that is not true. If we look at what happened after the 
Reagan tax cuts in the 1980s, giving to charity skyrocketed. I think 
wealthy people are motivated by the best intentions when they give. If 
they do not have to give as much money at death, I think they will give 
even more money to charity, and that America's charities will benefit 
from the permanent repeal of the inheritance tax.

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