[Congressional Record Volume 148, Number 73 (Thursday, June 6, 2002)]
[House]
[Pages H3238-H3276]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 PERMANENT DEATH TAX REPEAL ACT OF 2002

  Mr. HASTINGS of Washington. Mr. Speaker, by direction of the 
Committee on Rules, I call up House Resolution 435 and ask for its 
immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 435

       Resolved, That upon the adoption of this resolution it 
     shall be in order to consider in the House the bill (H.R. 
     2143) to make the repeal of the estate tax permanent. The 
     bill shall be considered as read for amendment. The previous 
     question shall be considered as ordered on the bill and on 
     any amendment thereto to final passage without intervening 
     motion except: (1) one hour of debate on the bill equally 
     divided and controlled by the chairman and ranking minority 
     member of the Committee on Ways and Means; (2) the amendment 
     in the nature of a substitute printed in the report of the 
     Committee on Rules accompanying this resolution, if offered 
     by Representative Rangel of New York or his designee, which 
     shall be in order without intervention of any point of order, 
     shall be considered as read, and shall be separately 
     debatable for one hour equally divided and controlled by the 
     proponent and an opponent; and (3) one motion to recommit 
     with or without instructions.

  The SPEAKER pro tempore. The gentleman from Washington (Mr. Hastings) 
is recognized for 1 hour.
  Mr. HASTINGS of Washington. Mr. Speaker, for purposes of debate only, 
I yield the customary 30 minutes to the gentleman from Florida (Mr. 
Hastings); pending which I yield myself such time as I may consume. 
During consideration of this resolution, all time yielded is for the 
purposes of debate only.
  (Mr. HASTINGS of Washington asked and was given permission to revise 
and extend his remarks.)
  Mr. HASTINGS of Washington. Mr. Speaker, House Resolution 435 is a 
modified closed rule providing for the consideration of H.R. 2143, the 
Permanent Death Tax Repeal Act of 2001. The rule provides 1 hour of 
debate to be equally divided between the chairman and ranking minority 
member of the Committee on Ways and Means. The rule provides for 
consideration of the amendment in the nature of a substitute printed in 
the report of the Committee on Rules accompanying the resolution, if 
offered by the gentleman from New York (Mr. Rangel) or his designee, 
which shall be considered as read and shall be debatable for 1 hour 
equally divided by a proponent and an opponent.
  The rule waives all points of order against the substitute and 
provides for one motion to recommit with or without instructions.
  Mr. Speaker, when Congress passed the Economic Growth and Tax Relief 
Reconciliation Act of 2001, providing for the phaseout and eventual 
repeal of Federal death taxes on American families, an arcane rule 
applicable only in the other body required that these long overdue 
reforms be abandoned after 10 years, in 2011.
  The original version of the legislation, passed here in this Chamber, 
contained no such time limitation, and for good reason. That is because 
the ability of a family or business to plan for the future is seriously 
undermined whenever major uncertainty exists about the likely tax 
impact of important financial decisions. In truth, the net effect of 
the other body's decision to ``sunset `` the death tax repeal is to 
tell anyone planning to die 10 or more years from now that they might 
want to reconsider speeding things up. That

[[Page H3239]]

is not an attempt to be funny, Mr. Speaker, it is the cold hard truth.
  The issue of death tax repeal has been debated in this Chamber for 
decades, and the arguments are well known. Last year, when justice was 
finally done for America's farmers, small businessmen, death tax 
supporters found a loophole giving them one last chance to prevent 
America's hard-working families from passing on to their children what 
they have built up during their lifetimes. Today, Mr. Speaker, thanks 
to the author of this legislation, the gentleman from Florida (Mr. 
Weldon), we have a chance to close that unfair loophole once and for 
all.
  It will be said here today that we have no authority to bind future 
Congresses and, of course, that is correct. We do, however, have the 
authority and the responsibility to act on behalf of this Congress and 
the farmers, the families and the small business people we represent. 
We should do this, Mr. Speaker, loudly and clearly by adopting this 
rule and passing the underlying bill, H.R. 2143.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield myself 5\1/2\ minutes, 
and I would first like to thank the gentleman from Washington, on the 
basis of age the junior Mr. Hastings, for yielding me the time.
  Mr. Speaker, today, this body has the opportunity to send a message 
loud and clear to Republicans: Playing politics with Americans' lives 
is no longer an acceptable practice. When this body passed a $1.6 
trillion tax cut that disproportionately benefitted the wealthiest of 
Americans, it laid the foundation for the deterioration of our strong 
economy which previously had been capable of coping with even the most 
dire of circumstances.
  We were wrong when we passed the tax cut then, and we are wrong today 
in trying to make a huge portion of it permanent. This is fiscal 
mismanagement of the highest order and rank politics of the lowest 
kind. Go ahead and call me a modern day Robin Hood, looking out for all 
the human needs of all Americans, or just call me fiscally responsible; 
but repealing the sunset for the estate tax is the next phase in the 
majority's efforts to provide tax cuts to the wealthy at the expense of 
99 percent of this country who will not benefit by this legislation.
  Realize, Mr. Speaker, that less than one-half of 1 percent of all 
estates would be helped by a repeal of the estate tax. And even these 
estates would pay significantly less in taxes because of the lower 
rates and higher exemption that is already in place. Those who would 
benefit, and I impute no motive if this bill passes today, on present-
day income, President Bush's family stands to gain $5 million, Vice 
President Cheney's family stands to benefit anywhere from $9 to $40 
million, the former Enron chairman Kenneth Lay's family stands to 
benefit $59 million, and the families of the entire Bush cabinet 
together stand to gain as much as $332 million.
  According to the Wall Street Journal, not a paper that I frequently 
cite or that I am frequently cited in, the Republicans could make 
permanent any of the other tax cuts included in last year's tax bill 
and they would help more people and cost Social Security less than the 
total cost of repealing the estate tax.
  Mr. Speaker, if our economy was growing like it was before last 
year's obese, obtuse, and downright obnoxious tax cut, I would be the 
first one to support cutting taxes. But our economy is not growing. In 
fact, it is hurting. So I ask this: How can we possibly continue to 
fund a war on terrorism that may never end, ensure the solvency of 
Social Security, keep our schools from crumbling, provide adequate care 
coverage for all children, and cut taxes at the same time?
  The simple answer is that we cannot. It is just not fiscally 
possible. As a matter of fact, today President Bush will make an 
address to the Nation in which he will call for the establishment of 
the Homeland Office of Security as a Cabinet-level position. I 
advocated this in legislation as many as 8 months ago, but President 
Bush, in order to achieve this as I did when I advocated it, is going 
to require more resources.
  8.1 million Americans are unemployed, and more than 116,000 people 
lose their jobs every month, 9,000 in the last 2 days. Equally, 
displaced workers, as a result of September 11, still have no health 
care coverage, and the unemployment insurance coverage that Congress 
extended last year is once again about to expire. How about helping the 
unemployed?
  Other pressing needs? The uninsured. Currently 38.7 million-plus 
Americans, or more than 14 percent of all our total population, have 
zero access to health care. The majority of them are children and 
seniors, and more than two-thirds of them fall under the poverty line. 
How about helping the uninsured?
  Want more? What about a prescription drug plan for seniors? Last year 
Congress authorized $300 million for such a plan. However, it never 
delivered. How about helping seniors?
  Still not convinced? Do not even get me started on what we did not do 
for election reform.
  Mr. Speaker, we have got serious problems in this country that demand 
serious solutions. Tax cuts to the rich never have been and never will 
be the solution to our problems.
  Aiding the poor, the young, the elderly, the infirm should be the 
role and the responsibility of each political party. Rather, helping 
those who need help is a role of a responsible and decent government.
  If this body fails to recognize this guiding principle, then we are 
failing those that we are here to serve.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HASTINGS of Washington. Mr. Speaker, I am pleased to yield as 
much time as he may consume to the gentleman from California (Mr. 
Dreier), the chairman of the Committee on Rules.
  (Mr. DREIER asked and was given permission to revise and extend his 
remarks.)
  Mr. DREIER. Mr. Speaker, I rise in strong support of this rule and in 
strong support of this legislation. It is all about fairness. And I 
listened to my friend from Florida (Mr. Hastings) talk about the issue 
of job loss. Mr. Speaker, it is interesting to note that 70 percent of 
the family-owned businesses in this country don't make it to the second 
generation; 87 percent of the family-owned businesses do not make it to 
the third generation. And, Mr. Speaker, when you focus on the issue of 
job creation and economic growth, seeing small family-owned businesses 
fail in large part due to the very punitive death tax that exists in 
this country is one of the things that costs jobs. And as we talked 
about the very important need for a flow of revenues to deal with what 
the President will call for tonight, and that is the establishment of 
the Homeland Security position as a Cabinet-level post, we are going to 
need revenues for that, and that is why economic growth is so 
important.
  Mr. Speaker, it was preposterous when we saw the plan put into place 
for the phaseout of the death tax over a 10-year period require at the 
end a reversion to what is current law. What will that mean? That will 
mean that anyone today, any member of this body today who votes against 
making permanent repeal of the death tax, will be voting in favor of 
one of the largest tax increases in the history of this country. Why? 
Simply because when this measure does in fact phase out in 2011, we 
revert, as I said, to current law. That is wrong. And what is it doing? 
It is jeopardizing the ability of the American people to plan, to make 
long-term plans. People have said, gosh, let us wait for 5 years and 
see what the budget situation will be like at that point.
  Mr. Speaker, people engage in estate planning. People look towards 
the future. People plan for their children and their grandchildren, and 
that is why the idea of saying you have to live with this uncertainty 
over the next decade is a gross disservice to the American people who 
are out there working hard, trying to get this economy growing.
  Mr. Speaker, I believe that it is very important for us to take this 
step. It is very important for us to allow those who are creating jobs 
and creating opportunity for Americans to have the chance to plan. So I 
urge a yes vote for this very fair rule which does in fact provide a 
substitute for the Democrats and a motion to recommitting so they will 
have two bites of the apple, and at the end of the day I am convinced 
that

[[Page H3240]]

we should defeat their measure that is a substitute and, of course, the 
previous question, and overwhelmingly pass this very important and very 
fair proposal.

                              {time}  1200

  Mr. HASTINGS of Florida. Mr. Speaker, I yield myself 10 seconds.
  Mr. Speaker, I say to the gentleman from California (Mr. Dreier), the 
distinguished chairman of the Committee on Rules, that this measure 
affects less than one-half of 1 percent of all taxpayers.
  Mr. HASTINGS of Washington. Mr. Speaker, I yield 30 seconds to the 
gentleman from California (Mr. Dreier) to respond.
  Mr. DREIER. Mr. Speaker, when we talk about those who are directly 
impacted by repeal of the death tax, if we think about those men and 
women who are middle-income wage earners whose jobs are jeopardized 
because of a loss of estates because of that tax, they are the ones 
that are being hit most by this. And that is why to say that it is a 
very small portion is misleading.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield 4 minutes to the 
gentleman from North Dakota (Mr. Pomeroy).
  Mr. POMEROY. Mr. Speaker, I rise in opposition to the rule. The rule 
does allow our substitute, and I will speak about our substitute in a 
moment.
  Unfortunately, the pay-for feature of our substitute placed into the 
bill to avoid loss of revenue to the general fund was struck on a point 
of germaneness. Our preference would have been to have a rule that made 
in order the pay-for and waived objection on germaneness rule. Plain 
speak, they could have allowed our pay-fors had they wanted to. Why did 
they not want the pay-fors?
  The other side of the aisle did not want the pay-fors in this bill 
because they do not want this House to vote on disallowing U.S. 
corporations seeking tax shelters by relocating in the Bahamas or 
offshore in other tax havens across the world. The pay-for we sought 
would have disallowed those corporations moving offshore after 
September 11.
  We think it is pretty disgusting at a time when the country was 
rallying together in the wake of the terrorist attack, there were some 
in corporate tax planning departments trying to revoke the citizenship 
status of their corporation and redomicile offshore for purposes of 
getting that tax status. That is the vote we wanted. That is why we 
will be having the vote on the previous question, what the vote on the 
previous question will represent. Should we allow corporations to flee 
our shores for purpose of attaining citizenship in tax havens? We think 
not. We think that was a good pay-for for this measure.
  Let me talk about the substitute, and I commend the Committee on 
Rules for making the substitute in order. I would have preferred the 
pay-fors, and urge a vote against the rules because it did not allow 
the pay-fors. The substitute will allow an important discussion today. 
This is not about estate tax versus no estate tax. The issue before 
this body is reform of the estate tax now versus repeal next decade. 
Reform January 1, 2003, versus repeal in the year 2011, four Congresses 
from now.
  The substitute will bring the estate tax exclusion to $6 million for 
a couple. That means $6 million or below, no estate tax. It takes care 
of the estate tax problem for 99.7 percent of the families in this 
country. What does the majority proposal do about this group? Nothing. 
In the year 2003 under their proposal, an estate over $2 million per 
couple, it will be taxed. For us, 2003, if an estate below $6 million, 
no tax. It is immediate relief.
  Mr. Speaker, 2004, $6 million and below under the Democrat 
substitute, no tax; under the Republican bill, $3 million there is a 
tax. That is half the relief of ours. The year 2005, $6 million for the 
substitute, again half the relief under the Republican plan.
  Mr. Speaker, we are going to hear all afternoon about family farmers 
and small businesses. Make no mistake about it, it is the Democrat 
substitute that gives relief and gives relief now effective January 1, 
2003. Through the year 2008, our relief is better. Why should the 
majority plan leave that estate exposure at their lower levels for the 
next 6 years when the Democrat substitute brings it up to $6 million 
now?
  Our plan makes 99.7 percent of the families in this country have no 
estate worries whatsoever. Why not take the approach of reform today? 
Let us deal with this problem now and not go the repeal route later.
  Mr. HASTINGS of Washington. Mr. Speaker, I yield 2 minutes to the 
gentleman from Michigan (Mr. Knollenberg).
  Mr. KNOLLENBERG. Mr. Speaker, I thank the gentleman for yielding me 
this time.
  Mr. Speaker, I rise in very strong support of this rule. People do 
not choose when they die; but under the current law, they only have a 
1-year window of dying free from the estate tax.
  I know all Members believe that is not right. It cannot be right. We 
have to vote to make permanent repeal of the death tax included in last 
year's historic tax relief bill.
  It is the small businesses and family farms that must be sold to pay 
the estate tax. And even more people sell their assets before they die 
so the burden of the death tax is not left to their loved ones.
  Permanently repealing the death tax removes unfair double taxation on 
American families. Even with the repeal of the death tax, all assets 
transferred from one generation to the next would still be subject to 
capital gains tax when they are sold.
  Simply put, there is no need for the unfair death tax, and every 
single Member in this body should vote for its permanent repeal. Just 
look at the diverse organizations that are supporting the repeal: the 
National Black Chamber of Commerce; the Hispanic Business Roundtable; 
National Federation of Independent Businesses; National Association of 
Counties; National Indian Business Association; National Association of 
Women Business Owners; Black Women Enterprises; the Latino Coalition 
and there are many, many more.
  Mr. Speaker, let us make the death tax repeal permanent. I urge all 
Members to support the rule and the bill.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield 2 minutes to the 
gentleman from New Jersey (Mr. Pascrell).
  Mr. PASCRELL. Mr. Speaker, I rise today in support of the substitute 
being offered by the gentleman from North Dakota (Mr. Pomeroy) on 
behalf of the Democrats. This is not about a death tax; this is about 
pure greed. The ranking member mentioned Mr. Ken Lay of Enron because 
his estimated estate tax savings will be $59 million. The second in 
command, Jeffrey Skilling, he will get $55 million. This is about 
greed; that is what it is about. We are not backing off.
  This substitute raises the personal exemption for estate taxes to $3 
million per person, $6 million per couple. The gentleman from North 
Dakota (Mr. Pomeroy) just mentioned this will assist 99.7 percent of 
those who pay estate taxes. Who are those three-tenths of a percent 
that we left out? In other words, it will help small businesses and 
farmers without exploiting their circumstances to provide yet another 
perk for the very, very wealthiest of Americans. There is a reason we 
have to be responsible here. There is a reason we cannot simply usher 
through drastic tax cuts for the wealthy, and that reason is our 
national debt. In the 2 minutes that I will speak here, the national 
debt interest, the interest on that debt will rise $2 million, just the 
interest on the debt. These are wasted dollars paying interest on debt 
rather than paying down the debt. Who has become the party of 
austerity, I would like to know.
  These are wasted dollars, paying interest on debt rather than paying 
down the debt. Today the national debt is well over $6 trillion. 
Today's estate tax proposal would cut revenues by $55.8 billion in 
2012. The estimated impact of making the repeal permanent would total 
$109 billion.
  Mr. Speaker, this is pure greed. We cannot accept it. We must accept 
the Pomeroy substitute.
  Mr. HASTINGS of Washington. Mr. Speaker, I yield 4 minutes to the 
gentleman from Florida (Mr. Weldon), the author of this legislation.
  Mr. WELDON of Florida. Mr. Speaker, let me start out by first saying 
that this is a fair rule. It gives the minority

[[Page H3241]]

an opportunity for a substitute. I think they can also do a motion to 
recommit.
  I am certainly very pleased and honored that the Committee on Rules 
and our leadership has sought to bring this bill to the floor for a 
vote. We passed the tax relief package last year, and there was a 
provision in the bill that sunsetted all of the provisions in this 
bill. I think that was most unfortunate, but I understand the nature of 
the problem, although I do not support it over in the Senate. But the 
political realities of that body were such that this is what we ended 
up with.
  I think it is very unfortunate to have a sunset provision in any of 
the tax relief packages. I am hearing today from working-class families 
in my district, and in particular I spoke to a gentleman who works at 
Kennedy Space Center who just had a second baby. He discussed how the 
tax reductions, the increase in the child tax credit is really helping 
him and his family.
  The concern I had about the inheritance tax sunset was very, very 
specific in that I heard from people, indeed right after we passed that 
bill, I talked to a small businessman in my congressional district who 
told me he did not know what to do with his estate plan. Of course as 
we all know, we have this inheritance tax, and many, many Americans 
engage in very complicated estate planning to avoid paying the estate 
tax.
  I personally think that is very, very inefficient. I also think the 
death tax is immoral. If someone has worked all their life and paid 
their taxes, and been a small businessman creating jobs, and we in the 
Federal Government have been collecting Federal withholding and Social 
Security tax for years, to come along and tax the after-tax assets of 
those people, I think it is morally wrong.
  My good friend said what do I do with my estate planning? If I die in 
2010, it would be okay for me to eliminate my estate plan. I am paying 
all these lawyers and accountants. But if I die after 2011, the estate 
tax comes roaring back. I am going to just keep my complicated estate 
plan. This guy has 400 employees. He has created hundreds of jobs. We 
as a Nation are benefiting from his work. Millions of dollars are 
collected in taxes every year off him and the people who work in his 
business.
  Mr. Speaker, I felt very, very strongly. We specifically had to 
repeal, if the inheritance tax repeal was going to work properly as we 
intended, if we want to create jobs and enable small businesses to be 
passed from the person who started that small business to their sons or 
daughters, we needed to get rid of the sunset provision; and that is 
why I introduced the bill.
  Mr. Speaker, I want to say a few words about the Democratic 
substitute. I note today it is true if we pass the Democratic 
substitute we will cover the vast majority of people. But as we all 
know, with inflation in time we will no longer be covering the vast 
majority of people.
  The other concern I have about that is we create an environment where 
there is no tax on the first $3 million, but then like a 50 percent tax 
on every dollar after that which is a huge marginal rate. As we know, 
every person with an estate will do everything possible to develop an 
estate plan so that their estate is less than $3 million at the time of 
their death.
  In the short run it may solve the problem, but in the long run I 
think it is going to perpetuate the problem. It is really picking 
winners and losers. I do not think we should do that. I think the 
estate tax is immoral, and I applaud the Committee on Rules for 
bringing forth a fair rule.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield myself 10 seconds.
  Mr. Speaker, I say to the gentleman from Florida (Mr. Weldon) that 
the moral argument falls on deaf ears from this gentleman from Florida 
when we have hungry children, seniors and people that are infirm that 
are unable to proceed in life in a meaningful way.
  Mr. Speaker, I yield 2 minutes to the gentlewoman from California 
(Ms. Eshoo).

                              {time}  1215

  Ms. ESHOO. Mr. Speaker, I rise today in opposition to the rule and to 
speak on the choices that are before us. I think that they are really 
two very distinct choices and they are different. They both deal with 
the death tax, the estate tax, but they are different in terms of what 
they accomplish. My constituents have said to me over and over and over 
again that they support an elimination of the death tax when it comes 
to them. This is a debate about how to accomplish it. They want it to 
be immediate and they want it to be permanent. They want it to be fair. 
They understand that there are the Bill Gateses of the country that 
have benefited enormously from our system and our economy and our 
democracy. So there is a fairness to those huge, huge, huge sums of 
money that are passed down from one generation to another and that our 
country should be paid something.
  The Pomeroy legislation addresses permanency, fairness, fiscal 
responsibility and immediacy. For a married couple, $6 million. So if 
you have an estate of $6 million or less, you do not pay a dime in 
taxes. That resolves 99.7 percent of the problems and the irritations 
and the complaints that people have registered with us. It does not 
have any capital gains tax in it. My Republican friends, under their 
bill, your house increases, if you paid $50,000 and when you die your 
home is worth $1 million, you are going to pay a capital gains tax on 
that.
  So under the Pomeroy bill, families, family farms, businesses are all 
going to win and we are not going to have to pay over $1 trillion in 
the next decade out of our Federal budget. This makes eminent sense. It 
is fair. I urge my colleagues to vote for the Pomeroy bill. It is the 
best one to come down the pike.
  Mr. HASTINGS of Washington. Mr. Speaker, I am pleased to yield 3 
minutes to the gentleman from California (Mr. Cunningham).
  Mr. CUNNINGHAM. Mr. Speaker, I have a family in San Diego. They are 
not in my district. I called him a Hispanic American and he corrected 
me and said, ``I'm a Mexican American, Congressman.'' That gentleman 
has since passed away. When he immigrated to California over 60 years 
ago, his family bought a piece of dirt down along the border. It is 
rock. You still look at it today and it looks like rock and dirt and 
you cannot grow anything on it and it was basically worthless. But that 
family worked and saved to buy that piece of land. Like most urban 
sprawl areas, that land became very valuable. The gentleman died. They 
had six children. When the tax bill on that property came up, because 
he did not have money to hire lawyers and to set their estate and 
probate and all the different things that you can do today, they tried 
to split the land and sell half of it just because of the interest on 
the default for the tax, and it did not even cover the penalty. Then 
they had to sell the rest of it. So those six children ended up with 
nothing. This is a low-income Hispanic family that had some valuable 
property that they wanted to hang on to for the family, and the estate 
tax did away with it.
  I am from California, but I grew up in a little town in Shelbina, 
Missouri. Right there, farmers are having second and third jobs just to 
hang on to their property. The property, the farm, if they sold it, is 
probably worth a lot of money, but they sure do not make a lot of 
money. When that family member dies, that valuable property, the 
government wants to come in and tax it above 55 percent, and those 
families cannot afford to pay that tax so they have to sell it off, and 
all of that 200 years of work into a piece of land, the government 
takes it, and that is wrong.
  Does anybody know where the death tax reared its early head? Not to 
pay for a war but it was Karl Marx's and Engels' Communist Manifesto. 
Fact: Karl Marx knew that if you took property away from people and the 
benefits and things that they had, you could control the bourgeoise, 
the rich versus the poor, just as my colleagues, day after day, tax 
breaks for the rich, use class warfare every day. The Democrat 
socialists of America mantra is government control of health care, 
government control of education, government control of private 
property, the highest tax possible and higher socialized spending and 
cut military. That is in their agenda.
  That is what they are trying to do. They want higher taxes. They have 
never found a tax that they do not like. Yet they want to take private 
property

[[Page H3242]]

away from farmers and the rest of the people. I think that is wrong.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield myself 10 seconds.
  The Democratic substitute helps people right now. The Republican bill 
might help people 10 years from now. The chairman of the House 
Committee on Ways and Means admitted as much to the Committee on Rules 
Tuesday night.
  Mr. Speaker, I yield 2 minutes to the gentleman from Oregon (Mr. 
DeFazio).
  Mr. DeFAZIO. Mr. Speaker, we are here today because the Republicans 
say, well, there was a glitch in the estate tax repeal last year, some 
kind of a loophole. Well, guess what? The Republicans controlled the 
House, the Senate and the presidency, and they wrote the entire bill. 
The reason the estate tax is sunset was because even last year when 
they were projecting a $5.6 trillion surplus, they could not afford to 
finance the full repeal of the estate tax on the most wealthy families 
in America. And guess what? Now with a $300 billion deficit, the Social 
Security lockbox looted and no prospect except deficits for the future, 
they are saying, ``Oh, it was a glitch, it was a loophole, we couldn't 
anticipate it,'' and they want to pass a bill today that will go to 
3,000 families a year instead of 53 million Social Security recipients 
starting in the year 2010. Yes, families, those 3,000 whose estates are 
worth more than $6 million.
  There is an alternative. We have it before us, a fair, affordable and 
permanent alternative that would take care of every small business, 
family farm and family forestry operation that I know about. I am 
concerned about them. I do not want them to prematurely harvest the 
trees or break up the farms or sell the family business.
  The gentleman from California talked about the small businesses would 
lose their jobs because of the estate tax on estates over $6 million. 
Like perhaps Ken Lay's small business? He already cost thousands of 
people their jobs and he will get $59 million under their proposal. Ken 
Lay, the thief, gets $59 million more.
  Then, of course, the small businesses that are being run by Secretary 
O'Neill. He will get $51 million under this. I am not aware that he is 
running a small business. This is a huge windfall being taken directly 
from the broken-open Social Security lockbox and being transferred into 
the pockets of the most wealthy Americans.
  They say, ``Well, they've already paid taxes.'' No, Bill Gates has 
not paid taxes on his $50 billion fortune. It is unrealized capital 
gains. If he died today under this bill, there would never be any taxes 
paid on that $50 billion.
  What you are doing is not fair, it is not affordable, it loots Social 
Security. What we are offering is a fair alternative for family farms, 
small businesses and other individuals. $6 million is enough of an 
exemption.
  Mr. HASTINGS of Washington. Mr. Speaker, I am pleased to yield 2 
minutes to the gentleman from Georgia (Mr. Linder), a member of the 
Committee on Rules.
  Mr. LINDER. Mr. Speaker, there was a time in this country that if 
someone went into business in some of the urban areas, they would get a 
visit by someone from a crime family who would say something like this: 
``We'll let you go in business, and if you lose everything, it's your 
loss. But if you make profits, I want 35 percent of your profit every 
year. If you sell this business, we are going to take 20 percent of the 
sale price.''
  If the government found that out, they would arrest them, indict them 
and put them in jail. But even the Mafia would not come along and say, 
``If you die we are going to value your company and take half of it.'' 
That is exactly what the Federal Government is doing. The Mafia would 
realize if you kept that business moving to a new generation, it would 
generate more revenues, maintain more jobs and in the long run they 
would be better off.
  The death tax is a job-killer, but more than anything, it is immoral.
  Mr. HASTINGS of Florida. Mr. Speaker, I am pleased to yield 2 minutes 
to the gentleman from Georgia (Mr. Bishop).
  Mr. BISHOP. Mr. Speaker, I rise today to recognize the hard-working 
people of America who have played by the rules and have paid their fair 
share. Decent, law-abiding, tax-paying Americans are the backbone of 
this country, Mr. Speaker, and the salt of the earth. They are the 
farmers of southwest Georgia, the family business owners all across 
this country from the Atlantic to the Pacific. All across this land are 
Americans who have paid taxes their entire lives, only to face a final 
taxing event at death. They paid the taxes during their lifetimes and 
should not be charged again because they happen to die.
  The death tax represents all that is unfair and unjust about the tax 
structure in America because it undermines the life work and life 
savings of Americans who want only to pass on to their children and 
grandchildren the fruits of their labor and the realization of their 
American dream.
  In my State of Georgia, farmers, many of whom are widowed women and 
the children of deceased farmers, are faced with losing their family 
farms because of this harsh tax. Employees of small and medium-size 
family businesses, many of whom are minorities, are at risk of losing 
their jobs because their employers are forced to pay the unfair and 
exorbitant death taxes levied upon them. Funeral homes, newspaper 
publishers, radio station owners and garment manufactures are all 
affected, all across the demographic spectrum.
  Mr. Speaker, although reasonable minds can differ on this issue, I 
believe that the death tax is politically misguided, morally 
unjustifiable and downright un-American. Let us vote today to finally 
eliminate the death tax and return to the American people and their 
progeny the hard-earned fruits of their labor.
  Mr. HASTINGS of Washington. Mr. Speaker, I am pleased to yield 2 
minutes to the gentleman from Missouri (Mr. Blunt).
  Mr. BLUNT. Mr. Speaker, let me first associate myself with the 
remarks just made by my friend from Georgia. He is exactly right, as we 
both rise to support the bill later today, and I rise to support the 
rule right now. This is a tax that needs to be eliminated and this law 
needs to be taken totally off the books.
  We will hear today many other proposals of how we might change it 
here or change it there or set a new limit nonindexed for inflation at 
some time in the future. This law needs to be taken off the books. This 
tax was put on American families, American businesses, to pay for World 
War I in 1918. We won World War I. We paid for the war. All the bonds 
have long since been paid off, but this tax is still on the books. 
Leaving any portion of it in the law allows future Congresses to come 
back and once again ensure that more and more families have to see the 
undertaker and the IRS at the same time. It is unconscionable. It 
should not be what happens to families at the end of a productive 
career. It should not be what happens to the families that run the kind 
of businesses, run the kind of farms that the gentleman from Georgia 
just mentioned. These businesses have been built over years of labor. 
These farms have been put together over years of labor and hard work. 
Taxes have been paid on the money that came in. There is no reason for 
the Federal Government to come in one final time and make it impossible 
for a family business to continue to be a family business. There is no 
reason for us to continue to have a law on the books that was designed 
to pay for a war that has long since been over, has long since been 
paid for.
  This is the day we have a chance to send a specific message to the 
American people and to our friends in the other body that we want this 
tax eliminated.
  Mr. HASTINGS of Florida. I yield myself 30 seconds, Mr. Speaker. Let 
me see if I can set this thing straight. I represent an area that has 
50 percent of all of the winter vegetables grown. Not one single family 
farmer has indicated to me that this measure is going to benefit them 
in any way. I also represent the third highest number of small 
businesses in the United States of America who receive the first 
highest number of grants. Government investment is helpful in 
stimulating this economy. Enough of this foolishness.
  Mr. Speaker, I am pleased to yield 2 minutes to the gentleman from 
Vermont (Mr. Sanders).

[[Page H3243]]

                              {time}  1230

  Mr. SANDERS. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, the American middle class is getting angry. At a time 
when the richest 1 percent of the population already owns more wealth 
than the bottom 95 percent, what we are seeing is the CEOs of large 
corporations who contribute huge sums of money into the political 
process giving themselves giant compensation packages worth hundreds of 
millions of dollars, and then they cut back on the wages and health 
benefits of their workers. These CEOs take tax breaks from the 
government, corporate welfare, and they move our jobs to China. They 
are setting up offshore accounts in Bermuda so they do not have to pay 
any taxes into our government. They are cooking their books through 
Arthur Andersen and others so they do not have to pay their fair share 
of taxes.
  What this whole bill is about is nothing more than absolute greed. 
The richest people in this country, who hold $25,000-a-plate fund-
raising dinners here in Washington, they are saying to Congressmen, 
``Give us huge tax breaks. We do not care about veterans, who now are 
wait-listed when they need to get into the VA health system. Forget 
about them. We need giant tax breaks.''
  Let us blow up Social Security. Let us forget about the elderly 
people, who cannot find doctors who will treat them through Medicare or 
Medicaid. Let us not worry about the middle class, who cannot afford 
college education because the Federal Government has not kept pace in 
financial aid in those programs.
  What we are looking about now is ugliness, is greed, is the richest 
people in this country, who already own so much of this Nation, saying 
to Congress, give us more, give us more, give us more. Forget about the 
middle class, forget about working families, forget about the poor.
  Mr. Speaker, I am strongly opposed to the Republican proposal.
  Mr. HASTINGS of Washington. Mr. Speaker, I yield 15 seconds to the 
gentleman from California (Mr. Cunningham).
  Mr. CUNNINGHAM. Mr. Speaker, I would tell you, I am a veteran, the 
gentleman that just spoke is not, and I would say that the gentleman's 
party over there in 1993 talked about decreasing the tax for the middle 
class. They could not help themselves. When they controlled the House, 
the White House and the Senate, they increased even the tax on the 
middle class.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield 10 seconds to the 
gentleman from Vermont (Mr. Sanders).
  Mr. SANDERS. Mr. Speaker, would my friend from California deny that 
today veterans all over the United States are being wait-listed, cannot 
get into the VA system because of lack of adequate funding for our 
veterans, and, at the same exact time, Congress gives huge tax breaks 
to the rich?
  Mr. HASTINGS of Florida. Mr. Speaker, I yield 2 minutes to my good 
friend, the gentleman from California (Mr. Sherman).
  Mr. SHERMAN. Mr. Speaker, I represent Malibu, California, and 
surrounding towns that are even better off. We pay the estate tax, and 
I am proud that my district would send me here to oppose this rule and 
to oppose this bill.
  America is under attack. Patriotism is not watching fireworks, it is 
sacrificing for your country. Our men and women in uniform are doing 
that, and it would seem to me that if we are going to ask for 
sacrifice, it should include asking the wealthiest one-half of 1 
percent of Americans to pay taxes, as they have even under Ronald 
Reagan. The generations that fought World War I and fought World War II 
were patriotic enough to pay this tax, and yet we are told our 
generation lacks that patriotism. I am here to say that is not true.
  But speaking of patriotism, what about these corporations that flee 
our shores, that tap into our markets and will not pay our taxes, that 
are Enroning the people of America and incorporating in the Cayman 
Islands? Vote against this rule, because it will not allow our 
colleague, the gentleman from North Dakota (Mr. Pomeroy), to include in 
his substitute provisions that would impose tax on those companies that 
are fleeing our shores.
  One of my colleagues from California stood in this well and said that 
the estate tax should be repealed because Karl Marx was in favor of an 
estate tax. What an interesting argument.
  Mr. Speaker, they, the Republicans, are getting ready. They are 
waiting for next year, because they will be down here on this floor 
pointing out that Karl Marx was in favor of social insurance and said 
so in his writings, and they will tell you that we must repeal Social 
Security to prove we are not Marxists. And they will have an additional 
argument. They will tell us we cannot afford Social Security because, 
after all, we just reduced our revenues by over $1 trillion over a 10-
year period by repealing the estate tax.
  Vote against the rule and against the bill.
  Mr. HASTINGS of Florida. Mr. Speaker, I am pleased to yield 2 minutes 
to the gentleman from Ohio (Mr. Kucinich).
  Mr. KUCINICH. Mr. Speaker, I am here to stand for our elderly, our 
sick, our poor, our workers, America's middle class, who do not benefit 
from a regressive tax system.
  The purpose of the estate tax is to mitigate the accumulation of 
wealth by family lineage. That makes for a fairer society in which 
future generations all start with more or less the same opportunities. 
Democracy needs an estate tax. By contrast, monarchies are 
characterized by not having estate taxes.
  The estate tax is the most progressive of any of the Federal taxes. 
According to the Internal Revenue Service, out of the approximately 2.3 
million deaths in 2000, only 1.9 percent of estates pay the estate tax. 
These numbers can be contrasted with the income tax, where about 70 
percent of families and single individuals owe tax.
  The concept of an estate tax goes far back into history. There is 
evidence of a 10 percent tax on transfers of property at death in 
ancient Egypt, as early as 700 B.C. Later the Greeks and Romans adopted 
estate death taxes.
  My good friend, the gentleman from California (Mr. Cunningham), will 
be glad to know that the perpetuation of large estates within the new 
monied royalty during the Industrial Revolution led, not Karl Marx, but 
a Republican President, Theodore Roosevelt, to call for a progressive 
tax on all beyond a certain amount, either given in life or devised or 
bequested upon death, to any individual, a tax so framed as to put it 
out of the power of the owner of one of these enormous fortunes to hand 
on more than a certain amount to any one individual.
  Without the estate tax, the tax burden is more squarely placed on 
middle and low income workers and their wages. The estate tax ensures 
that inherited wealth bears more tax burden than earned wages that are 
the result of work and effort. Estate taxes reduce the concentration of 
wealth and foster our democracy.
  Mr. Speaker, I offered an amendment to preserve the progressive tax 
system and to repeal all estate tax provisions in the Economic Growth 
and Tax Relief Reconciliation Act of 2001 so the money would go for a 
prescription drug benefit.
  Mr. HASTINGS of Florida. Mr. Speaker, I am pleased to yield 1 minute 
to the gentleman from New York (Mr. Engel).
  Mr. ENGEL. Mr. Speaker, I thank my friend for yielding me time.
  Mr. Speaker, let us call this bill for what it is. Unfortunately, it 
is another Republican raid on Social Security and Medicare. This bill 
will raid the Social Security and Medicare trust funds at the exact 
moment the baby-boomers begin to retire. When increased interest on the 
debt is factored in, this bill will cost nearly three-quarters of a 
trillion dollars in the decade after 2012, at the same time when Social 
Security must absorb a huge increase in retirees. In the year 2012 
alone, this bill will cost $56 billion, and the cost just keeps growing 
from there.
  This bill begins at the very top and takes a decade to bring relief 
to small businesses and family farms at the bottom. Most of the 
benefits of estate tax repeal go to the wealthiest 1 percent of people, 
a number that is now running at 23,000 estates per year. While this 
bill repeals the estate tax for the wealthiest first, it provides no 
immediate relief for small family-owned estates, which are the ones 
most in need.
  This bill is really a disaster. People need to pay their fair share. 
We need

[[Page H3244]]

not to take care of the wealthiest people, we need to take care of the 
people with the family farms and others. We ought not to be raiding 
Social Security and Medicare.
  I oppose the rule and I oppose the bill.
  Mr. HASTINGS of Florida. Mr. Speaker, I am pleased to yield 2 minutes 
to my good friend, the distinguished gentleman from Texas (Mr. Green).
  Mr. GREEN of Texas. Mr. Speaker, last year this Congress passed one 
of the largest tax increases in history. That was during the spring. 
What we have seen, though, is at that time they said, ``We have 
surpluses projected. We can afford it.''
  Well, first came the economic downturn, and then came September 11, 
and here we are a year later, the surpluses have evaporated, the 
Congressional Budget Office is projecting deficits as far as the eye 
can see, and we are at the bottom of the hole, but now we keep digging 
it with this bill today.
  But it seems people just do not realize that. If we permanently 
repeal the estate tax, it will cost as much as $1 trillion over 10 
years. To make matters worse, most of the $1 trillion will go only to 
the estates of one-half percent of all estates. So we are providing 
this tax cut not to people who are no longer with us, but to their 
estates.
  It seems to me it would be better to provide a tax cut to two-member 
working families out there that would be permanent, instead of worrying 
about the estate, which only affects a very small percentage of the 
people in the country.
  Why are we talking about passing a tax cut that will benefit the 
wealthiest 2 percent of Americans when we have deficits as far as the 
eye can see? What happened to our fiscal responsibility? We are already 
tapping the Social Security trust fund surplus every year for the next 
10 years, and my colleagues will say, oh, we are using it for defense 
and the anti-terrorism war.
  Well, that is just not true. It is because of the tax cuts that were 
passed last year and because now we are going to try to make them 
permanent.
  Again our fiscal responsibility is out the window. Unless we address 
the problem of revenue shortfalls, that invasion by the tax cut of the 
Social Security trust fund will get deeper and longer lasting. We 
should be putting our financial house in order and stopping the raid on 
Social Security, but here we are taking up another piece of legislation 
that further threatens the solvency of the Social Security program and 
the economic health of our Nation. That is so true.
  We have a projected $250 billion deficit next year. It is going to 
grow for the next 10 years. Yet we are providing a permanent tax cut? 
Where is the reason on this?
  Mr. HASTINGS of Florida. Mr. Speaker, I yield myself the balance of 
my time.
  The SPEAKER pro tempore (Mr. LaHood). The gentleman from Florida is 
recognized for 2 minutes.
  Mr. HASTINGS of Florida. Mr. Speaker, if the previous question is 
defeated, I will offer an amendment to this rule that makes in order 
the Corporate Patriot Enforcement Act, offered by the gentleman from 
Massachusetts (Mr. Neal) and the gentleman from Connecticut (Mr. 
Maloney), who have worked hard on this measure, which was stripped from 
the bill in the Committee on Rules. Their amendment would prevent 
corporations from fleeing overseas to avoid paying their rightful share 
of income tax.
  It is outrageous, Mr. Speaker, that we are allowing American 
companies to move offshore strictly for the purposes of avoiding their 
tax obligation. They are not moving their entire company to Bermuda, 
Mr. Speaker, they are just planting a post office box in the middle of 
some sunny desert isle and calling themselves an overseas company.
  But are they relying on the Bahamian navy to defend them if they are 
attacked? Of course not. Are they relying on Bermuda to build roads 
that bring business to their doors or for the police to keep their 
companies safe at night? Of course not. Those public services they want 
to keep right on enjoying courtesy of the United States taxpayer. Well, 
that is wrong, and the majority knows it, and all Americans know it.
  We are in a time of war, Mr. Speaker. That is a fact. And if we are 
going to give this huge tax break to one-half of 1 percent of all the 
estates, then the least that we can do is to ask of the beneficiaries 
of this tax break to fulfill their lawful corporate tax responsibility.
  All of the money to pay for this tax break, Mr. Speaker, $99 billion 
over 10 years, is coming out of the Social Security trust fund. The 
majority does not think it has to be paid for. Well, that is wrong, and 
we want to give the Republicans one last chance to do the right thing.
  By defeating the previous question, we can tell the tax evaders to 
come home and protect Social Security. We can make everyone in this 
country proud knowing that we are all pulling together to pay our fair 
share. I urge a no vote on the previous question.
  Mr. Speaker, I ask unanimous consent that the text of the amendment 
be printed in the Record immediately before the vote on the previous 
question.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Florida?
  There was no objection.

                              {time}  1245

  Mr. HASTINGS of Washington. Mr. Speaker, I yield myself such time as 
I may consume.
  Mr. Speaker, let me remind my colleagues that this is a fair rule. It 
allows for a Democrat substitute, and we can debate that, and if 
desired, we can vote on that substitute. It also allows for a motion to 
recommit. We can have a vote on that.
  But the fact is, this body has spoken on the issue of a death tax 
several times. It is time to make this death tax relief permanent. It 
is time to adopt this rule and defeat the previous question and the 
underlying remarks.
  Mr. Speaker, let me conclude that the previous question is an 
exercise in futility because the minority wants to offer an amendment 
that would otherwise be ruled out of order as nongermane. So the vote 
is without substance. The previous question vote itself is simply a 
procedural motion to close debate on this rule and proceed to a vote on 
its adoption. The vote has no substantive or policy implications 
whatsoever.
  Mr. Speaker, I include for the Record an explanation of the previous 
question.
  The material referred to is as follows:

               The Previous Question Vote: What It Means

       House Rule XIX (``Previous Question'') provides in part 
     that: ``There shall be a motion for the previous question, 
     which, being ordered, shall have the effect to cut off all 
     debate and bring the House to a direct vote on the immediate 
     question or questions on which it has been ordered.''
       In the case of a special rule or order of business 
     resolution reported from the House Rules Committee, providing 
     for the consideration of a specified legislative measure, the 
     previous question is moved following the one hour of debate 
     allowed for under House Rules.
       The vote on the previous question is simply a procedural 
     vote on whether to proceed to an immediate vote on adopting 
     the resolution that sets the ground rules for debate and 
     amendment on the legislation it would make in order. 
     Therefore, the vote on the previous question has no 
     substantive legislative or policy implications whatsoever.
  The material previously referred to by Mr. Hastings of Florida is as 
follows:

             H.R. 2143--Permanent Death Tax Repeal of 2001

       In the resolution strike ``and (3)'' and insert the 
     following:
       ``(3) the amendment printed in Sec. 2 of this resolution if 
     offered by Representative Rangel or a designee, which shall 
     be in order without intervention of any point of order, shall 
     be considered as read, and shall separately debatable for 30 
     minutes equally divided and controlled by the proponent and 
     an opponent; and (4)''
       Sec. 2.
       At the end of the bill, add the following title:

             TITLE--PROVISIONS CURBING ABUSIVE TAX SHELTERS

        Subtitle A--Clarification of Economic Substance Doctrine

     SEC. 201. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.

       (a) In General.--Section 7701 of the Internal Revenue Code 
     of 1986 is amended by redesignating subsection (m) as 
     subsection (n) and by inserting after subsection (l) the 
     following new subsection:
       ``(m) Clarification of Economic Substance Doctrine; Etc.--
       ``(1) General rules.--

[[Page H3245]]

       ``(A) In general.--In applying the economic substance 
     doctrine, the determination of whether a transaction has 
     economic substance shall be made as provided in this 
     paragraph.
       ``(B) Definition of economic substance.--For purposes of 
     subparagraph (A)--
       ``(i) In general.--A transaction has economic substance 
     only if--

       ``(I) the transaction changes in a meaningful way (apart 
     from Federal income tax effects) the taxpayer's economic 
     position, and
       ``(II) the taxpayer has a substantial nontax purpose for 
     entering into such transaction and the transaction is a 
     reasonable means of accomplishing such purpose.

       ``(ii) Special rule where taxpayer relies on profit 
     potential.--A transaction shall not be treated as having 
     economic substance by reason of having a potential for profit 
     unless--

       ``(I) the present value of the reasonably expected pre-tax 
     profit from the transaction is substantial in relation to the 
     present value of the expected net tax benefits that would be 
     allowed if the transaction were respected, and
       ``(II) the reasonably expected pre-tax profit from the 
     transaction exceeds a risk-free rate of return.

       ``(C) Treatment of fees and foreign taxes.--Fees and other 
     transaction expenses and foreign taxes shall be taken into 
     account as expenses in determining pre-tax profit under 
     subparagraph (B)(ii).
       ``(2) Special rules for transactions with tax-indifferent 
     parties.--
       ``(A) Special rules for financing transactions.--The form 
     of a transaction which is in substance the borrowing of money 
     or the acquisition of financial capital directly or 
     indirectly from a tax-indifferent party shall not be 
     respected if the present value of the deductions to be 
     claimed with respect to the transaction are substantially in 
     excess of the present value of the anticipated economic 
     returns of the person lending the money or providing the 
     financial capital. A public offering shall be treated as a 
     borrowing, or an acquisition of financial capital, from a 
     tax-indifferent party if it is reasonably expected that at 
     least 50 percent of the offering will be placed with tax-
     indifferent parties.
       ``(B) Artificial income shifting and basis adjustments.--
     The form of a transaction with a tax-indifferent party shall 
     not be respected if--
       ``(i) it results in an allocation of income or gain to the 
     tax-indifferent party in excess of such party's economic 
     income or gain, or
       ``(ii) it results in a basis adjustment or shifting of 
     basis on account of overstating the income or gain of the 
     tax-indifferent party.
       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Economic substance doctrine.--The term `economic 
     substance doctrine' means the common law doctrine under which 
     tax benefits under subtitle A with respect to a transaction 
     are not allowable if the transaction does not have economic 
     substance or lacks a business purpose.
       ``(B) Tax-indifferent party.--The term `tax-indifferent 
     party' means any person or entity not subject to tax imposed 
     by subtitle A. A person shall be treated as a tax-indifferent 
     party with respect to a transaction if the items taken into 
     account with respect to the transaction have no substantial 
     impact on such person's liability under subtitle A.
       ``(C) Exception for personal transactions of individuals.--
     In the case of an individual, this subsection shall apply 
     only to transactions entered into in connection with a trade 
     or business or an activity engaged in for the production of 
     income.
       ``(D) Treatment of lessors.--In applying subclause (I) of 
     paragraph (1)(B)(ii) to the lessor of tangible property 
     subject to a lease, the expected net tax benefits shall not 
     include the benefits of depreciation, or any tax credit, with 
     respect to the leased property and subclause (II) of 
     paragraph (1)(B)(ii) shall be disregarded in determining 
     whether any of such benefits are allowable.
       ``(4) Other common law doctrines not affected.--Except as 
     specifically provided in this subsection, the provisions of 
     this subsection shall not be construed as altering or 
     supplanting any other rule of law referred to in section 
     6662(i)(2), and the requirements of this subsection shall be 
     construed as being in addition to any such other rule of 
     law.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions after the date of the enactment 
     of this Act.

                         Subtitle B--Penalties

     SEC. 211. INCREASE IN PENALTY ON UNDERPAYMENTS RESULTING FROM 
                   FAILURE TO SATISFY CERTAIN COMMON LAW RULES.

       (a) In General.--Section 6662 of the Internal Revenue Code 
     of 1986 (relating to imposition of accuracy-related penalty) 
     is amended by adding at the end the following new subsection:
       ``(i) Increase in Penalty in Case of Failure To Satisfy 
     Certain Common Law Rules.--
       ``(1) In general.--To the extent that an underpayment is 
     attributable to a disallowance described in paragraph (2)--
       ``(A) subsection (a) shall be applied with respect to such 
     portion by substituting `40 percent' for `20 percent', and
       ``(B) subsection (d)(2)(B) and section 6664(c) shall not 
     apply.
       ``(2) Disallowances described.--A disallowance is described 
     in this subsection if such disallowance is on account of--
       ``(A) a lack of economic substance (within the meaning of 
     section 7701(m)(1)) for the transaction giving rise to the 
     claimed benefit or the transaction was not respected under 
     section 7701(m)(2),
       ``(B) a lack of business purpose for such transaction or 
     because the form of the transaction does not reflect its 
     substance, or
       ``(C) a failure to meet the requirements of any other 
     similar rule of law.
       ``(3) Increase in penalty not to apply if compliance with 
     disclosure requirements.--Paragraph (1)(A) shall not apply if 
     the taxpayer discloses to the Secretary (as such time and in 
     such manner as the Secretary shall prescribe) such 
     information as the Secretary shall prescribe with respect to 
     such transaction.''.
       (b) Modifications to Penalty on Substantial Understatement 
     of Income Tax.--
       (1) Modification of threshold.--Subparagraph (A) of section 
     6662(d)(1) of such Code is amended to read as follows:
       ``(A) In general.--For purposes of this section, there is a 
     substantial understatement of income tax for any taxable year 
     if the amount of the understatement for the taxable year 
     exceeds the lesser of--
       ``(i) $500,000, or
       ``(ii) the greater of 10 percent of the tax required to be 
     shown on the return for the taxable year or $5,000.''
       (2) Modification of penalty on tax shelters, etc.--Clauses 
     (i) and (ii) of section 6662(d)(2)(C) of such Code are 
     amended to read as follows:
       ``(i) In general.--Subparagraph (B) shall not apply to any 
     item attributable to a tax shelter.''
       ``(ii) Determination of understatements with respect to tax 
     shelters, etc.--In any case in which there are one or more 
     items attributable to a tax shelter, the amount of the 
     understatement under subparagraph (A) shall in no event be 
     less than the amount of understatement which would be 
     determined for the taxable year if all items shown on the 
     return which are not attributable to any tax shelter were 
     treated as being correct. A similar rule shall apply in cases 
     to which subsection (i) applies, whether or not the items are 
     attributable to a tax shelter.''
       (c) Treatment of Amended Returns.--Subsection (a) of 
     section 6664 of such Code is amended by adding at the end the 
     following new sentence: ``For purposes of this subsection, an 
     amended return shall be disregarded if such return is filed 
     on or after the date the taxpayer is first contacted by the 
     Secretary regarding the examination of the return.''

     SEC. 212. PENALTY ON PROMOTERS OF TAX AVOIDANCE STRATEGIES 
                   WHICH HAVE NO ECONOMIC SUBSTANCE, ETC.

       (a) Penalty.--
       (1) In general.--Section 6700 of the Internal Revenue Code 
     of 1986 (relating to promoting abusive tax shelters, etc.) is 
     amended by redesignating subsection (c) as subsection (d) and 
     by inserting after subsection (b) the following new 
     subsection:
       ``(c) Penalty on Substantial Promoters for Promoting Tax 
     Avoidance Strategies Which Have No Economic Substance, Etc.--
       ``(1) Imposition of penalty.--Any substantial promoter of a 
     tax avoidance strategy shall pay a penalty in the amount 
     determined under paragraph (2) with respect to such strategy 
     if such strategy (or any similar strategy promoted by such 
     promoter) fails to meet the requirements of any rule of law 
     referred to in section 6662(i)(2).
       ``(2) Amount of penalty.--The penalty under paragraph (1) 
     with respect to a promoter of a tax avoidance strategy is an 
     amount equal to 100 percent of the gross income derived (or 
     to be derived) by such promoter from such strategy.
       ``(3) Tax avoidance strategy.--For purposes of this 
     subsection, the term `tax avoidance strategy' means any 
     entity, plan, arrangement, or transaction a significant 
     purpose of the structure of which is the avoidance or evasion 
     of Federal income tax.
       ``(4) Substantial promoter.--For purposes of this 
     subsection--
       ``(A) In general.--The term `substantial promoter' means, 
     with respect to any tax avoidance strategy, any promoter if--
       ``(i) such promoter offers such strategy to more than 1 
     potential participant, and
       ``(ii) such promoter may receive fees in excess of $500,000 
     in the aggregate with respect to such strategy.
       ``(B) Aggregation rules.--For purposes of this paragraph--
       ``(i) Related persons.--A promoter and all persons related 
     to such promoter shall be treated as 1 person who is a 
     promoter.
       ``(ii) Similar strategies.--All similar tax avoidance 
     strategies of a promoter shall be treated as 1 tax avoidance 
     strategy.
       ``(C) Promoter.--The term `promoter' means any person who 
     participates in the promotion, offering, or sale of the tax 
     avoidance strategy.
       ``(D) Related person.--Persons are related if they bear a 
     relationship to each other which is described in section 
     267(b) or 707(b).
       ``(4) Coordination with subsection (a).--No penalty shall 
     be imposed by this subsection on any promoter with respect to 
     a tax avoidance strategy if a penalty is imposed under 
     subsection (a) on such promoter with respect to such 
     strategy.''
       (2) Conforming amendment.--Subsection (d) of section 6700 
     of such Code is amended--
       (A) by striking ``Penalty'' and inserting ``Penalties'', 
     and

[[Page H3246]]

       (B) by striking ``penalty'' the first place it appears in 
     the text and inserting ``penalties''.
       (b) Increase in Penalty on Promoting Abusive Tax 
     Shelters.--The first sentence of section 6700(a) of such Code 
     is amended by striking ``a penalty equal to'' and all that 
     follows and inserting ``a penalty equal to the greater of 
     $1,000 or 100 percent of the gross income derived (or to be 
     derived) by such person from such activity.''

     SEC. 213. MODIFICATIONS OF PENALTIES FOR AIDING AND ABETTING 
                   UNDERSTATEMENT OF TAX LIABILITY INVOLVING TAX 
                   SHELTERS.

       (a) Imposition of Penalty.--Section 6701(a) of the Internal 
     Revenue Code of 1986 (relating to imposition of penalty) is 
     amended to read as follows:
       ``(a) Imposition of Penalties.--
       ``(1) In general.--Any person--
       ``(A) who aids or assists in, procures, or advises with 
     respect to, the preparation or presentation of any portion of 
     a return, affidavit, claim, or other document,
       ``(B) who knows (or has reason to believe) that such 
     portion will be used in connection with any material matter 
     arising under the internal revenue laws, and
       ``(C) who knows that such portion (if so used) would result 
     in an understatement of the liability for tax of another 
     person,
     shall pay a penalty with respect to each such document in the 
     amount determined under subsection (b).
       ``(2) Certain tax shelters.--If--
       ``(A) any person--
       ``(i) aids or assists in, procures, or advises with respect 
     to the creation, organization, sale, implementation, 
     management, or reporting of a tax shelter (as defined in 
     section 6662(d)(2)(C)(iii)) or of any entity, plan, 
     arrangement, or transaction that fails to meet the 
     requirements of any rule of law referred to in section 
     6662(i)(2), and
       ``(ii) opines, advises, represents, or otherwise indicates 
     (directly or indirectly) that the taxpayer's tax treatment of 
     items attributable to such tax shelter or such entity, plan, 
     arrangement, or transaction and giving rise to an 
     understatement of tax liability would more likely than not 
     prevail or not give rise to a penalty,
       ``(B) such opinion, advice, representation, or indication 
     is unreasonable,
     then such person shall pay a penalty in the amount determined 
     under subsection (b). If a standard higher than the more 
     likely than not standard was used in any such opinion, 
     advice, representation, or indication, then subparagraph 
     (A)(ii) shall be applied as if such standard were substituted 
     for the more likely than not standard.''
       (b) Amount of Penalty.--Section 6701(b) of such Code 
     (relating to amount of penalty) is amended--
       (1) by inserting ``or (3)'' after ``paragraph (2)'' in 
     paragraph (1),
       (2) by striking ``subsection (a)'' each place it appears 
     and inserting ``subsection (a)(1)'', and
       (3) by redesignating paragraph (3) as paragraph (4) and by 
     adding after paragraph (2) the following:
       ``(3) Tax shelters.--In the case of--
       ``(A) a penalty imposed by subsection (a)(1) which involves 
     a return, affidavit, claim, or other document relating to a 
     tax shelter or an entity, plan, arrangement, or transaction 
     that fails to meet the requirements of any rule of law 
     referred to in section 6662(i)(2), and
       ``(B) any penalty imposed by subsection (a)(2),
     the amount of the penalty shall be equal to 100 percent of 
     the gross proceeds derived (or to be derived) by the person 
     in connection with the tax shelter or entity, plan, 
     arrangement, or transaction.''
       (c) Referral and Publication.--If a penalty is imposed 
     under section 6701(a)(2) of such Code (as added by subsection 
     (a)) on any person, the Secretary of the Treasury shall--
       (1) notify the Director of Practice of the Internal Revenue 
     Service and any appropriate State licensing authority of the 
     penalty and the circumstances under which it was imposed, and
       (2) publish the identity of the person and the fact the 
     penalty was imposed on the person.
       (d) Conforming Amendments.--
       (1) Section 6701(d) of such Code is amended by striking 
     ``Subsection (a)'' and inserting ``Subsection (a)(1)''.
       (2) Section 6701(e) of such Code is amended by striking 
     ``subsection (a)(1)'' and inserting ``subsection (a)(1)(A)''.
       (3) Section 6701(f) of such Code is amended by inserting 
     ``, tax shelter, or entity, plan, arrangement, or 
     transaction'' after ``document'' each place it appears.

     SEC. 214. FAILURE TO MAINTAIN LISTS.

       Section 6708(a) of the Internal Revenue Code of 1986 
     (relating to failure to maintain lists of investors in 
     potentially abusive tax shelters) is amended by adding at the 
     end the following: ``In the case of a tax shelter (as defined 
     in section 6662(d)(2)(C)(iii)) or entity, plan, arrangement, 
     or transaction that fails to meet the requirements of any 
     rule of law referred to in section 6662(i)(2), the penalty 
     shall be equal to 50 percent of the gross proceeds derived 
     (or to be derived) from each person with respect to which 
     there was a failure and the limitation of the preceding 
     sentence shall not apply.''

     SEC. 215. PENALTY FOR FAILING TO DISCLOSE REPORTABLE 
                   TRANSACTION.

       (a) In General.--Part I of subchapter B of chapter 68 of 
     the Internal Revenue Code of 1986 (relating to assessable 
     penalties) is amended by inserting after section 6707 the 
     following new section:

     ``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE TAX SHELTER 
                   INFORMATION WITH RETURN.

       ``(a) Imposition of Penalty.--Any person who fails to 
     include with its return of Federal income tax any information 
     required to be included under section 6011 with respect to a 
     reportable transaction shall pay a penalty in the amount 
     determined under subsection (b). No penalty shall be imposed 
     on any such failure if it is shown that such failure is due 
     to reasonable cause.
       ``(b) Amount of Penalty.--
       ``(1) In general.--The amount of the penalty under 
     subsection (a) shall be equal to the greater of--
       ``(A) 5 percent of any increase in Federal tax which 
     results from a difference between the taxpayer's treatment 
     (as shown on its return) of items attributable to the 
     reportable transaction to which the failure relates and the 
     proper tax treatment of such items, or
       ``(B) $100,000.

     For purposes of subparagraph (A), the last sentence of 
     section 6664(a) shall apply.
       ``(2) Listed transaction.--If the failure under subsection 
     (a) relates to a reportable transaction which is the same as, 
     or substantially similar to, a transaction specifically 
     identified by the Secretary as a tax avoidance transaction 
     for purposes of section 6011, paragraph (1)(A) shall be 
     applied by substituting `10 percent' for `5 percent'.
       ``(c) Reportable Transaction.--For purposes of this 
     section, the term `reportable transaction' means any 
     transaction with respect to which information is required 
     under section 6011 to be included with a taxpayer's return of 
     tax because, as determined under regulations prescribed under 
     section 6011, such transaction has characteristics which may 
     be indicative of a tax avoidance transaction.
       ``(d) Coordination With Other Penalties.--The penalty 
     imposed by this section is in addition to any penalty imposed 
     under section 6662.''
       (b) Conforming Amendment.--The table of sections for part I 
     of subchapter B of chapter 68 of such Code is amended by 
     inserting after the item relating to section 6707 the 
     following:

``Sec. 6707A. Penalty for failure to include tax shelter information on 
              return.''

     SEC. 216. REGISTRATION OF CERTAIN TAX SHELTERS WITHOUT 
                   CORPORATE PARTICIPANTS.

       Section 6111(d)(1)(A) of the Internal Revenue Code of 1986 
     (relating to certain confidential arrangements treated as tax 
     shelters) is amended by striking ``for a direct or indirect 
     participant which is a corporation''.

     SEC. 217. EFFECTIVE DATES.

       (a) In General.--Except as provided in subsections (b) and 
     (c), the amendments made by this subtitle shall apply to 
     transactions after the date of the enactment of this Act.
       (b) Section 211.--The amendments made by subsections (b) 
     and (c) of section 211 shall apply to taxable years ending 
     after the date of the enactment of this Act.
       (c) Section 212.--The amendments made by subsection (a) of 
     section 212 shall apply to any tax avoidance strategy (as 
     defined in section 6700(c) of the Internal Revenue Code of 
     1986, as amended by this subtitle) interests in which are 
     offered to potential participants after the date of the 
     enactment of this Act.
       (d) Section 216.--The amendment made by section 216 shall 
     apply to any tax shelter interest which is offered to 
     potential participants after the date of the enactment of 
     this Act.

 Subtitle C--Limitations on Importation or Transfer of Built-In Losses

     SEC. 221. LIMITATION ON IMPORTATION OF BUILT-IN LOSSES.

       (a) In General.--Section 362 of the Internal Revenue Code 
     of 1986 (relating to basis to corporations) is amended by 
     adding at the end the following new subsection:
       ``(e) Limitation on Importation of Built-in Losses.--
       ``(1) In general.--If in any transaction described in 
     subsection (a) or (b) there would (but for this subsection) 
     be an importation of a net built-in loss, the basis of each 
     property described in paragraph (2) which is acquired in such 
     transaction shall (notwithstanding subsections (a) and (b)) 
     be its fair market value immediately after such transaction.
       ``(2) Property described.--For purposes of paragraph (1), 
     property is described in this paragraph if--
       ``(A) gain or loss with respect to such property is not 
     subject to tax under this subtitle in the hands of the 
     transferor immediately before the transfer, and
       ``(B) gain or loss with respect to such property is subject 
     to such tax in the hands of the transferee immediately after 
     such transfer.

     In any case in which the transferor is a partnership, the 
     preceding sentence shall be applied by treating each partner 
     in such partnership as holding such partner's proportionate 
     share of the property of such partnership.
       ``(3) Importation of net built-in loss.--For purposes of 
     paragraph (1), there is an importation of a net built-in loss 
     in a transaction if the transferee's aggregate adjusted bases 
     of property described in paragraph (2) which is transferred 
     in such transaction would (but for this subsection) exceed 
     the fair market value of such property immediately after such 
     transaction.''

[[Page H3247]]

       (b) Comparable Treatment Where Liquidation.--Paragraph (1) 
     of section 334(b) of such Code (relating to liquidation of 
     subsidiary) is amended to read as follows:
       ``(1) In general.--If property is received by a corporate 
     distributee in a distribution in a complete liquidation to 
     which section 332 applies (or in a transfer described in 
     section 337(b)(1)), the basis of such property in the hands 
     of such distributee shall be the same as it would be in the 
     hands of the transferor; except that the basis of such 
     property in the hands of such distributee shall be the fair 
     market value of the property at the time of the 
     distribution--
       ``(A) in any case in which gain or loss is recognized by 
     the liquidating corporation with respect to such property, or
       ``(B) in any case in which the liquidating corporation is a 
     foreign corporation, the corporate distributee is a domestic 
     corporation, and the corporate distributee's aggregate 
     adjusted bases of property described in section 362(e)(2) 
     which is distributed in such liquidation would (but for this 
     subparagraph) exceed the fair market value of such property 
     immediately after such liquidation.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to transactions after the date of the enactment 
     of this Act.

     SEC. 222. DISALLOWANCE OF PARTNERSHIP LOSS TRANSFERS.

       (a) Treatment of Contributed Property With Built-In Loss.--
     Paragraph (1) of section 704(c) of the Internal Revenue Code 
     of 1986 is amended by striking ``and'' at the end of 
     subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting ``, and'', and by adding at 
     the end the following:
       ``(C) if any property so contributed has a built-in loss--
       ``(i) such built-in loss shall be taken into account only 
     in determining the amount of items allocated to the 
     contributing partner, and
       ``(ii) except as provided in regulations, in determining 
     the amount of items allocated to other partners, the basis of 
     the contributed property in the hands of the partnership 
     shall be treated as being equal to its fair market value 
     immediately after the contribution.

     For purposes of subparagraph (C), the term `built-in loss' 
     means the excess of the adjusted basis of the property over 
     its fair market value immediately after the contribution.''
       (b) Adjustment to Basis of Partnership Property on Transfer 
     of Partnership Interest If There Is Substantial Built-In 
     Loss.--
       (1) Adjustment required.--Subsection (a) of section 743 of 
     such Code (relating to optional adjustment to basis of 
     partnership property) is amended by inserting before the 
     period ``or unless the partnership has a substantial built-in 
     loss immediately after such transfer''.
       (2) Adjustment.--Subsection (b) of section 743 of such Code 
     is amended by inserting ``or with respect to which there is a 
     substantial built-in loss immediately after such transfer'' 
     after ``section 754 is in effect''.
       (3) Substantial built-in loss.--Section 743 of such Code is 
     amended by adding at the end the following new subsection:
       ``(d) Substantial Built-In Loss.--For purposes of this 
     section, a partnership has a substantial built-in loss with 
     respect to a transfer of an interest in a partnership if the 
     transferee partner's proportionate share of the adjusted 
     basis of the partnership property exceeds 110 percent of the 
     basis of such partner's interest in the partnership.''
       (4) Clerical amendments.--
       (A) The section heading for section 743 of such Code is 
     amended to read as follows:

     ``SEC. 743. ADJUSTMENT TO BASIS OF PARTNERSHIP PROPERTY WHERE 
                   SECTION 754 ELECTION OR SUBSTANTIAL BUILT-IN 
                   LOSS.''

       (B) The table of sections for subpart C of part II of 
     subchapter K of chapter 1 of such Code is amended by striking 
     the item relating to section 743 and inserting the following 
     new item:

``Sec. 743. Adjustment to basis of partnership property where section 
              754 election or substantial built-in loss.''

       (c) Adjustment to Basis of Undistributed Partnership 
     Property if There Is Substantial Basis Reduction.--
       (1) Adjustment required.--Subsection (a) of section 734 of 
     such Code (relating to optional adjustment to basis of 
     undistributed partnership property) is amended by inserting 
     before the period ``or unless there is a substantial basis 
     reduction''.
       (2) Adjustment.--Subsection (b) of section 734 of such Code 
     is amended by inserting ``or unless there is a substantial 
     basis reduction'' after ``section 754 is in effect''.
       (3) Substantial basis reduction.--Section 734 of such Code 
     is amended by adding at the end the following new subsection:
       ``(d) Substantial Basis Reduction.--For purposes of this 
     section, there is a substantial basis reduction with respect 
     to a distribution if the sum of the amounts described in 
     subparagraphs (A) and (B) of subsection (b)(2) exceeds 10 
     percent of the aggregate adjusted basis of partnership 
     property immediately after the distribution.''
       (4) Clerical amendments.--
       (A) The section heading for section 734 of such Code is 
     amended to read as follows:

     ``SEC. 734. ADJUSTMENT TO BASIS OF UNDISTRIBUTED PARTNERSHIP 
                   PROPERTY WHERE SECTION 754 ELECTION OR 
                   SUBSTANTIAL BASIS REDUCTION.''

       (B) The table of sections for subpart B of part II of 
     subchapter K of chapter 1 of such Code is amended by striking 
     the item relating to section 734 and inserting the following 
     new item:

``Sec. 734. Adjustment to basis of undistributed partnership property 
              where section 754 election or substantial basis 
              reduction.''

       (d) Effective Dates.--
       (1) Subsection (a).--The amendment made by subsection (a) 
     shall apply to contributions made after the date of the 
     enactment of this Act.
       (2) Subsection (b).--The amendments made by subsection (a) 
     shall apply to transfers after the date of the enactment of 
     this Act.
       (3) Subsection (c).--The amendments made by subsection (a) 
     shall apply to distributions after the date of the enactment 
     of this Act.

Subtitle D--Prevention of Corporate Expatriation To Avoid United States 
                               Income Tax

     SEC. 231. PREVENTION OF CORPORATE EXPATRIATION TO AVOID 
                   UNITED STATES INCOME TAX.

       (a) In General.--Paragraph (4) of section 7701(a) of the 
     Internal Revenue Code of 1986 (defining domestic) is amended 
     to read as follows:
       ``(4) Domestic.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `domestic' when applied to a corporation or 
     partnership means created or organized in the United States 
     or under the law of the United States or of any State unless, 
     in the case of a partnership, the Secretary provides 
     otherwise by regulations.
       ``(B) Certain corporations treated as domestic.--
       ``(i) In general.--The acquiring corporation in a corporate 
     expatriation transaction shall be treated as a domestic 
     corporation.
       ``(ii) Corporate expatriation transaction.--For purposes of 
     this subparagraph, the term `corporate expatriation 
     transaction' means any transaction if--

       ``(I) a nominally foreign corporation (referred to in this 
     subparagraph as the `acquiring corporation') acquires, as a 
     result of such transaction, directly or indirectly 
     substantially all of the properties held directly or 
     indirectly by a domestic corporation, and
       ``(II) immediately after the transaction, more than 80 
     percent of the stock (by vote or value) of the acquiring 
     corporation is held by former shareholders of the domestic 
     corporation by reason of holding stock in the domestic 
     corporation.

       ``(iii) Lower stock ownership requirement in certain 
     cases.--Subclause (II) of clause (ii) shall be applied by 
     substituting `50 percent' for `80 percent' with respect to 
     any nominally foreign corporation if--

       ``(I) such corporation does not have substantial business 
     activities (when compared to the total business activities of 
     the expanded affiliated group) in the foreign country in 
     which or under the law of which the corporation is created or 
     organized, and
       ``(II) the stock of the corporation is publicly traded and 
     the principal market for the public trading of such stock is 
     in the United States.

       ``(iv) Partnership transactions.--The term `corporate 
     expatriation transaction' includes any transaction if--

       ``(I) a nominally foreign corporation (referred to in this 
     subparagraph as the `acquiring corporation') acquires, as a 
     result of such transaction, directly or indirectly properties 
     constituting a trade or business of a domestic partnership,
       ``(II) immediately after the transaction, more than 80 
     percent of the stock (by vote or value) of the acquiring 
     corporation is held by former partners of the domestic 
     partnership or related foreign partnerships (determined 
     without regard to stock of the acquiring corporation which is 
     sold in a public offering related to the transaction), and
       ``(III) the acquiring corporation meets the requirements of 
     subclauses (I) and (II) of clause (iii).

       ``(v) Special rules.--For purposes of this subparagraph--

       ``(I) a series of related transactions shall be treated as 
     1 transaction, and
       ``(II) stock held by members of the expanded affiliated 
     group which includes the acquiring corporation shall not be 
     taken into account in determining ownership.

       ``(vi) Other definitions.--For purposes of this 
     subparagraph--

       ``(I) Nominally foreign corporation.--The term `nominally 
     foreign corporation' means any corporation which would (but 
     for this subparagraph) be treated as a foreign corporation.
       ``(II) Expanded affiliated group.--The term `expanded 
     affiliated group' means an affiliated group (as defined in 
     section 1504(a) without regard to section 1504(b)).''

       (b) Effective Dates.--
       (1) In general.--The amendment made by this section shall 
     apply to corporate expatriation transactions completed after 
     September 11, 2001.
       (2) Special rule.--The amendment made by this section shall 
     also apply to corporate expatriation transactions completed 
     on or before September 11, 2001, but only with respect to 
     taxable years of the acquiring corporation beginning after 
     December 31, 2003.
       Amend the title so as to read: ``A bill to amend the 
     Internal Revenue Code of 1986 to

[[Page H3248]]

     restore the estate tax, to limit its applicability to estates 
     of over $3,000,000, and for other purposes.''

  Mr. HASTINGS of Washington. Mr. Speaker, I yield back the balance of 
my time, and I move the previous question on the resolution.
  The SPEAKER pro tempore (Mr. LaHood). The question is on ordering the 
previous question on the resolution.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. HASTINGS of Florida. Mr. Speaker, I object to the vote on the 
ground that a quorum is not present and make the point of order that a 
quorum is not present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  Pursuant to clause 9 of rule XX the Chair will reduce to 5 minutes 
the minimum time for electronic voting, if ordered, on adoption of the 
resolution.
  The vote was taken by electronic device, and there were--yeas 223, 
nays 201, not voting 10, as follows:

                             [Roll No. 215]

                               YEAS--223

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Bishop
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Boucher
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Carson (OK)
     Castle
     Chabot
     Coble
     Collins
     Cooksey
     Cox
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller, Dan
     Miller, Gary
     Miller, Jeff
     Moran (KS)
     Morella
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stump
     Sullivan
     Sununu
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                               NAYS--201

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boyd
     Brady (PA)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Harman
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lipinski
     Lofgren
     Lowey
     Luther
     Lynch
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Ross
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Schiff
     Scott
     Sherman
     Shows
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                             NOT VOTING--10

     Brown (FL)
     Chambliss
     Combest
     Gilchrest
     Houghton
     Lewis (GA)
     Napolitano
     Serrano
     Simpson
     Traficant

                              {time}  1309

  Mr. RUSH and Mr. CUMMINGS changed their vote from ``yea'' to ``nay.''
  Mr. TANCREDO changed his vote from ``nay'' to ``yea.''
  So the previous question was ordered.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. LaHood). The question is on the 
resolution.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. HASTINGS of Florida. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--yeas 227, 
nays 195, not voting 12, as follows:

                             [Roll No. 216]

                               YEAS--227

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Bishop
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Boucher
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Coble
     Collins
     Condit
     Cooksey
     Cox
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     Matheson
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller, Dan
     Miller, Gary
     Miller, Jeff
     Moran (KS)
     Morella
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Roemer
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skeen
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stump
     Sullivan
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey

[[Page H3249]]


     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                               NAYS--195

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Clay
     Clayton
     Clement
     Clyburn
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Ross
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sawyer
     Schakowsky
     Schiff
     Scott
     Sherman
     Shows
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                             NOT VOTING--12

     Carson (OK)
     Chambliss
     Combest
     Gilchrest
     Harman
     Houghton
     Lewis (GA)
     Lynch
     Sandlin
     Serrano
     Smith (MI)
     Traficant

                              {time}  1319

  Mr. ISRAEL changed his vote from ``yea'' to ``nay.''
  So the resolution was agreed to.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  Mr. THOMAS. Mr. Speaker, pursuant to House Resolution 435, I call up 
the bill (H.R. 2143) to make the repeal of the estate tax permanent, 
and ask for its immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore (Mr. Simpson). Pursuant to House Resolution 
435, the bill is considered read for amendment.
  The text of H.R. 2143 is as follows:

                               H.R. 2143

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Permanent Death Tax Repeal 
     Act of 2001''.

     SEC. 2. ESTATE TAX REPEAL MADE PERMANENT.

       (a) In General.--Section 901 of the Economic Growth and Tax 
     Relief Reconciliation Act of 2001 is amended--
       (1) in subsection (a) by striking ``shall not apply--'' and 
     all that follows and inserting ``(other than title V) shall 
     not apply to taxable, plan, or limitation years beginning 
     after December 31, 2010.'', and
       (2) in subsection (b) by striking ``, estates, gifts, and 
     transfers''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect as if included in section 901 of the 
     Economic Growth and Tax Relief Reconciliation Act of 2001.

  The SPEAKER pro tempore. After 1 hour of debate on the bill, it shall 
be in order to consider the amendment printed in House Report 107-494, 
if offered by the gentleman from New York (Mr. Rangel) or his designee, 
which shall be considered read and shall be debatable for 1 hour, 
equally divided and controlled by a proponent and an opponent.
  The gentleman from California (Mr. Thomas) and the gentleman from New 
York (Mr. Rangel) each will control 30 minutes of debate on the bill.
  The Chair recognizes the gentleman from California (Mr. Thomas).
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  Dying has been euphemistically called ``buying the farm,'' but for 
many Americans today, reality is that when they die, they have to sell 
the farm. The argument that two iron clad rules of life are death and 
taxes are currently linked in the law today in the most bizarre 
fashion, and that is, although we still have the certainty of death and 
taxes, the interrelated consequence of each is timed unfortunately to 
the question of when someone dies.
  How in the world have we gotten ourselves into this particular 
situation? The House has voted twice to repeal the death tax, not just 
for 10 years, permanent repeal. However, in dealing with the other 
body, given the arcane rules of the other body, we currently have the 
situation in which the death tax is reduced, then ended and then 
reinstated.
  Providing real tax relief today currently has a hook tomorrow, and 
one of the things we need to do is to make sure that we move the 
permanency of the estate tax repeal so that those who awaken on New 
Year's Day 2011 are not faced with a massive tax increase.
  Mr. Speaker, I reserve the balance of my time, and I yield the 
remainder of my time to the gentlewoman from Washington (Ms. Dunn) of 
the Committee on Ways and Means and ask unanimous consent that the 
gentlewoman control the remainder of my time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
  I want to thank the chairman of the committee for allowing us to 
adjourn the full committee hearing that really dealt with runaway 
corporations trying to avoid their legal tax liability and going to 
foreign countries. The chairman agreed that our full committee should 
be here on the floor to deal with this important piece of legislation, 
rather than have our full committee over there in a hearing room 
listening to testimony when we did not intend to legislate. It was not 
his fault that we had a conflict of a major bill in the committee and a 
major bill on the floor. So his acceptance of the motion to adjourn 
means a great deal to us on the Committee on Ways and Means, and I 
would like to thank him for it.
  As he said, yes, death and taxes are with us; but he omitted saying, 
but so was politics, because the only reason that this bill is on the 
floor is not just because this is an election year, but because we are 
nearing the election and who are the ones that make the campaign 
contributions? It is not those people who are the low-income people. It 
is not our old folks that are looking for prescription drugs, and it 
certainly is not our kids who are looking for a decent education.
  I would say that if anyone looked and found out who the beneficiaries 
would be, it would be less than 1 percent of the taxpayers of the 
United States of America, those who are blessed not only with high 
income and great estates, but those who are blessed with a whole lot of 
great Republican friends that would like to have them even extend 
benefits.
  Some of the Members of the House who have thought to do this at a 
time of war, to take a bill that is going to cost over the next 10 
years, including the debt service, close to $1 trillion, to do this 
without making permanent the 10 percent tax cut or the child credit, to 
do this when we do not even have a decent prescription drug bill is 
just immoral, indecent and obscene; but it is an election year. We 
should have expected that this would happen, and so we accept what the 
Republican leadership would want to do, and that is, to bring this to 
the floor at a time when our Nation is at war and certainly not 
demanding this.
  Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. 
Waxman), chairman-to-be, one of the outstanding members of the House. 
He is not on the Committee on Ways and Means, but I assure my 
colleagues that what he has to say should be of great benefit, not only 
to this august body,

[[Page H3250]]

but to the people of the United States of America who are dedicated to 
winning this war against terrorism, but not at the expense of our 
commitment to the people of the United States.
  Mr. WAXMAN. Mr. Speaker, I thank the gentleman very much for yielding 
the time to me.
  Last fall, the House passed legislation that contained a $254 million 
tax break for Enron, and the public was so amazed that some people 
refused to believe what this House had done. Well, guess what? Today we 
are trying to do it again.
  This legislation is even more generous to Enron executives than last 
year's retroactive repeal of the corporate alternative minimum tax. 
This bill would give tax breaks worth over $300 million to the estates 
of Enron executives. The same people that looted the company, deceived 
the public, cooked the books, and bankrupted thousands of employees are 
going to get hundreds of millions of dollars under today's legislation.
  This bill is not about protecting family farms and small businesses. 
They are all well protected by the gentleman from North Dakota's (Mr. 
Pomeroy) amendment. It is about doing favors for well-connected 
campaign contributors, like Enron CEO, Ken Lay.
  The repeal of the estate tax made no sense last year when we had 
surpluses; but now we are facing mounting deficits, and it is an insane 
policy. The people who will pay for this tax break for the super-rich 
are working families. No matter what the Republicans say, there is only 
one source of money for a tax break of this magnitude, the Social 
Security trust fund.
  Here is a picture, if I might show it to my colleagues, of one of the 
many major beneficiaries of this bill, Jeffrey Skilling. His estate 
will receive a $55 million tax break under this bill. As some analysts 
have calculated, this will be paid for by raiding the Social Security 
contributions of 30,000 American workers. No one can justify that 
policy.
  Enron executives are not the only ones who make out like bandits 
under this bill. So does the Bush Cabinet. At the same time that 
President Bush is calling on the Nation to make shared sacrifices, he 
is pushing legislation that would give his estate and the estates of 
the wealthiest members of his cabinet $100 million or more in tax 
breaks.

                              {time}  1330

  That is not a cabinet that reflects American diversity. That is a 
cabinet that reflects American millionaires, and this bill will give 
them even more money.
  Vice President Cheney's family alone will make up to $40 million if 
this bill passes.
  This is craziness. We are in a war, and we cannot afford to be giving 
money to the super rich at the expense of those who are working to pay 
for the costs of that tax break. And no one can justify giving Mr. 
Skilling a $55 million tax break or Mr. Cheney a $40 million one. In 
fact, the Republicans ought to be too ashamed to even try.
  Mr. DUNCAN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, we are here today to fulfill a pledge we made a year 
ago. The Congress succeeded last year in phasing out the death tax by 
2010. Unfortunately, due to a quirk in budget rules on the other side 
of the Capitol, it will snap back to life January 1, 2011. We believe 
this is unfair and that it is unacceptable. It is bad tax policy and it 
must be changed.
  It is important to recognize the lack of permanence has real 
consequences, Mr. Speaker, for small business owners and family farms. 
Without permanence, they will continue to have to spend thousands of 
dollars every single year to put together expensive estate plans and to 
purchase life insurance policies just to ensure that business can 
survive to the next generation.
  The sudden reappearance of the death tax in 2011 creates the 
ridiculous situation where a person who dies on December 31, 2010 would 
not be subject to death taxes, but if he had lived one more day his 
heirs would be forced to pay death taxes of up to 55 percent.
  The opponents of the repeal parade the same tired reasons for keeping 
the death tax. They say it only helps the super wealthy. Not true. 
According to the IRS, 85 percent of the estates that paid the tax in 
1999, our most recent figures, were valued at between $2.5 million, and 
many of these were small businesses. Any capital-rich, cash-poor 
business, like a trucking company, for example, or a hardware store or 
construction company or a family-owned newspaper, would undoubtedly be 
valued at more than $2.5 million.
  Why not simply provide a special exemption for small businesses and 
farms? We have already tried that, Mr. Speaker, and we have been shown 
that it does not work. The formula for applying the exemption is far 
too onerous and it is too complicated. It was so unworkable that the 
American Bar Association recommended that we repeal it because it was 
only taking into consideration between 1 and 3 percent of small 
businesses, small farms, and small estates. It did not work.
  More importantly, a carve-out of that sort of exemption affirms the 
flawed notion that it is fair to tax somebody at the end of their life 
because they were successful. These are assets that already have been 
taxed once, and many times more than that.
  Death tax repeal attracts support from both sides of the aisle and 
from a diverse group of interests. Conservation organizations, like the 
Nature Conservancy, support repeal because they are very worried about 
the forced sale of valuable property to developers. In one fell swoop a 
parcel of land that has been in the family for generations is sold 
simply to pay that death tax and must be paid in cash within 9 months 
of the death of the owner.
  Minority business groups, like the Black Chamber of Commerce and the 
Hispanic Business Roundtable support repeal because they understand it 
takes more than one generation to build a business that will be in the 
family. Why should the death tax stand in the way of their attempt to 
realize the American Dream?
  Women business owners support repeal. They are well aware of the 
threat the death tax poses to their hard work. According to one recent 
survey, 40 percent of women business owners claim that the death tax 
would force the sale of all or part of their businesses.
  Opponents also claim that repealing the death tax will entrench our 
Nation's wealthy elite. They maintain that the tax represents the best 
intentions of meritocracy, in which citizens begin life without 
financial advantages. But their populist sentiments are simply 
misguided.
  The death tax is an insult to hardworking Americans and it penalizes 
entrepreneurs for their successes. Mr. Speaker, we spend a huge amount 
of time and energy encouraging Americans to save for retirement, to 
save for the unexpected, to save for their children. We should not 
punish them at the end of their life for doing the right thing. The 
death tax has no moral, economic, or social justification and it should 
be repealed completely.
  Mr. Speaker, I reserve the balance of my time.
  Mr. MATSUI. Mr. Speaker, I ask unanimous consent to control the 
remainder of the time of the gentleman from New York (Mr. Rangel).
  The SPEAKER pro tempore (Mr. Simpson). Is there objection to the 
request of the gentleman from California?
  There was no objection.
  Mr. MATSUI. Mr. Speaker, I yield 3 minutes to the distinguished 
gentleman from the State of California (Mr. Stark), a member of the 
Committee on Ways and Means.
  (Mr. STARK asked and was given permission to revise and extend his 
remarks.)
  Mr. STARK. Mr. Speaker, let us understand and cut through all this 
nonsense about small businesses and small farms. Many of us in this 
Congress pay a lot of income tax. I do. I have been very fortunate. My 
children will perhaps inherit from me when I pass on money in the 
amounts that they may have to pay in an estate tax.
  But the fact is, and I am joined in this observation by the Buffet 
and the Gates families, who hardly can be called liberals, and who have 
a lot, lot more money than most of us in Congress, and they find it 
abhorrent that we should try and protect children and give children 
millions of dollars.
  Now, no one is in any danger of losing a business, because the Code 
currently, first of all, allows people with small businesses that are 
privately

[[Page H3251]]

held to pass those on at a deep discount, sometimes 30 and 40 percent 
off their value because they are illiquid. Secondly, it gives 15 years 
at very low interest rates, even less than 6 percent, for these 
beneficiaries to pay off any estate tax.
  So I have always said, and my children are getting a little sick of 
hearing me say it, that when I move on and they get a chance to inherit 
our family business, if they can get a business with about a 50 percent 
downpayment given to them free, and the other 50 percent that they only 
have to pay off over 15 years at less than 6 percent, if they cannot 
operate that business and make enough money to pay off their fair share 
of taxes, they are too dumb to get the business, and I did not do the 
right thing and their mother did not do the right thing in raising 
them.
  So it is a matter of fairness. This is an attempt by the Republicans 
to create a nobility, a group of people who have never earned anything 
in this country, as most of my Republican colleagues on the Committee 
on Ways and Means have not. None of them ever had a business. They have 
either worked at the public trough all their lives or inherited a 
business. So when we hear about free enterprise and passing on 
businesses, they are really talking about pandering to the very rich, 
who they hope will contribute to keep them in office.
  Let us get behind this. It is not to protect the family farms, it is 
not to protect the small businesses, it is there to protect a stream of 
campaign contributions from the very rich who will benefit most from 
this bill. I urge my colleagues to vote ``no.''
  Mr. DUNCAN. Mr. Speaker, I yield myself such time as I may consume to 
remind the gentleman from California that the death tax extracts $4 
billion from the State of California to the Federal Government, money 
that might be used to assist him in the problems in the State of 
California.
  Mr. Speaker, I yield 2 minutes to the gentleman from Florida (Mr. 
Weldon), who is the author of the bill we debate today.
  Mr. WELDON of Florida. Mr. Speaker, I thank the gentleman for 
yielding me this time.
  Colleagues, let us remember what this debate is really all about. 
There are a lot of people who want to reopen the whole issue of the 
inheritance tax, but we already passed a phaseout of the inheritance 
tax in this body last year. I think it was fairly overwhelming, the 
vote, and I think a lot of Democrats voted for phasing out the 
inheritance tax. Because of a quirk in the rules in the other body, the 
inheritance tax is phased out and then in 2011 it comes back.
  The reality is that for many people, small business owners in 
particular, and they are the group this tax most adversely affects, 
when they try to pass their small business to their heirs, 67 percent 
of them fail. And one of the biggest reasons they fail is because they 
get hit by this inheritance tax. They frequently have to lay off 
employees. And those people right now do not know what to do because 
the inheritance tax comes back in 2011. Many of them are maintaining 
elaborate estate plans specifically because of the feature in our bill.
  This really does affect jobs. Most of the job growth in my district 
over the last 7\1/2\ years has been from small businesses. And the only 
way to deal with this is to get rid of that sunset provision. That is 
why I introduced this bill. An economic analysis has been done on this, 
and getting rid of this feature can add up to $150 billion to our 
economy over the next 10 years. It can affect 200,000 jobs.
  I personally believe that if we leave these resources in the economy 
and create jobs out there, the Federal Government will actually take in 
more money, not less money, by getting rid of this very onerous tax.
  The other thing I want to say is that these people have already paid 
their taxes. They paid their taxes all of their lives, they created 
jobs, and the people in those companies paid the Federal withholding, 
paid the FICA tax, yet after they are dead we would tax them again. It 
is wrong.
  Mr. MATSUI. Mr. Speaker, I yield 3 minutes to the distinguished 
gentleman from the State of Washington (Mr. McDermott), a member of the 
Committee on Ways and Means.
  Mr. McDERMOTT. Mr. Speaker, the chairman asked how did we get here. 
Well, actually, we got here by people in this country who led it who 
said this is the proper policy that we have, to have an estate tax.
  Thomas Jefferson outlawed primogenitor and he did it in saying we are 
taking an axe to the foot of America's pseudoaristocracy. The decision 
was made in the very beginning that we did not want to have an 
aristocracy in this country.
  Now, Theodore Roosevelt, who signed this into law, and I remind 
everyone here he was a Republican, said, ``The man of great wealth owes 
a particular obligation to the State because he derives special 
advantages from the mere existence of government.''
  In this debate, in my State, Mr. Gates, Sr. spoke to the law school 
on this issue and he said this: ``One day a child was about to be born, 
and it was brought to God. And God said to the child, you are either 
going to be born in Zimbabwe or in the United States. You can choose. 
But when you die, I have many works and I need money. So if you go to 
the United States, you have to give half of it back when you die.'' Now 
what do you think the child would choose?
  We live in the best country in the world, with the most opportunity, 
with the most freedom. And we have that because we give people a 
continuing chance. We do not allow the accumulation of aristocracy and 
wealth that we have had in Europe and other parts of the world. It was 
a decision at the very beginning. We did not want a king, we did not 
want lords and nobles and earls and so forth that could keep their 
lands forever.
  That is why most of us are in this country, because we came from 
countries where we were serfs. Mine were Irish and they were German. 
Some were Polish, some were Italian, some were Japanese. All of them 
came here because of the opportunity. And when we start having an 
aristocracy that controls it all, we do real damage to America as we 
know it.
  Now, even more important is what will happen to the giving, the 
charitable giving in this country. Seattle University had a consultant 
look at this issue and he said that more than half of the giving to the 
Seattle University will dry up if we get rid of the inheritance tax. 
Now, everybody said, of course, these people are going to pile it all 
up and they will give more. Come on. Why would my colleagues be pushing 
to get hold of it all if you were going to give more? You can give more 
now and actually deal within your taxes, but they are not.
  This is a way of saying to everybody in this country we all have an 
opportunity. We all can do very well here. But when you die, you give 
back to the society that made it possible. Vote ``no'' on this bill.
  Mr. DUNCAN. Mr. Speaker, I yield myself such time as I may consume to 
remind my colleague and good friend from Washington State that it was, 
in fact, Woodrow Wilson, a Democrat president, who in 1916 signed the 
death tax into law, not Teddy Roosevelt.
  Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Sam 
Johnson), who is a very strong member of the House Committee on Ways 
and Means and who is very involved in this debate.
  (Mr. SAM JOHNSON of Texas asked and was given permission to revise 
and extend his remarks.)
  Mr. SAM JOHNSON of Texas. Mr. Speaker, only in our government are you 
given a certificate at birth, a license at marriage, and a bill at 
death. It is tax, tax, tax. It is the grim reaper every day.
  Death taxes can wipe out a lifetime of work. That is why this House 
should vote to end this unfair tax once and for all. Permanentize it.
  For many small businesses, death taxes are a death sentence. We have 
already voted to repeal the tax, and I want to empower small business 
owners to go on making their businesses successful instead of planning 
for their own demise. But unlike a villain in a bad movie, this tax 
brings back to life in a few years the grim reaper.

                              {time}  1345

  Tax, tax, tax. This House did not pick up the rules that prevented 
permanent repeal of the death tax. Today we will overwhelmingly pass 
permanent repeal. Many of our Democrat colleagues are arguing for 
something less

[[Page H3252]]

than full repeal. Class warfare does not work on this issue. Americans 
strive to be successful, and when they share the fruits of their labor 
with their children, Americans support full repeal of the death tax. 
They do not want a toll booth on the road to meet their maker. Mr. 
Speaker, just as you cannot be a little bit dead, the death tax cannot 
be a little bit gone. Imposing taxes on the value of a lifetime of work 
is just plain wrong, and we must end this unfair tax permanently.
  Mr. MATSUI. Mr. Speaker, I yield 3 minutes to the distinguished 
gentleman from the State of Maryland (Mr. Cardin), a member of the 
Committee on Ways and Means and the Subcommittee on Health.
  Mr. CARDIN. Mr. Speaker, I thank the gentleman from California for 
yielding me the time.
  Mr. Speaker, I rise in opposition to the legislation we are 
considering and in support of the Democratic substitute. Mr. Speaker, 
this is first a matter of fairness. Currently only 2 percent of estates 
are subject to estate taxes and of that only .3 percent to the family 
farms and family businesses. A very small number today are subjected to 
tax. Under the Democratic substitute 99.7 percent of all these estates 
will avoid any estate tax. This is not about family farms and family 
businesses. We all agree that they should be able to avoid the estate 
tax for a modest wealth upon death. What this is about is what Forbes 
Magazine said. The 400 richest families in America will avoid somewhere 
between 200 to $300 billion, that is billion dollars, in taxes under 
the bill. It is for the super-rich; it is not even for the rich.
  The second is affordability. When this legislation passed last year, 
we had a $5.6 trillion projected surplus. Mr. Speaker, we are now 
projecting large deficits. We are in a war effort. We cannot afford the 
extra hundred billion dollars that this legislation will cost. There is 
a better alternative. The Democratic substitute, about 5 percent of 
that cost.
  Yes, reform is needed. The Democratic substitute raises the unified 
credit to 3 million per individual, 6 million per family, takes care of 
the problems immediately, not 5 years from now or 10 years from now, 
but does it in a responsible, affordable and fair way.
  Mr. Speaker, this is a matter about priorities. What are the 
priorities of this Congress? When the estate tax repeal is fully 
implemented, it costs about $75 billion a year or $750 billion over the 
next decade. That is $750 billion. That is what our Congressional 
Budget Office says. We are going to be debating prescription medicines 
for our seniors. That costs about $750 billion if you want a good plan. 
What is more important, a permanent repeal of the estate tax or helping 
our seniors with prescription medicines? Helping people with wealth 
over $6 million or helping seniors try to deal with the costs of their 
prescription medicines? At the same time that the estate tax repeal 
comes into full effect, we need the money for the baby boomers in the 
Social Security system. What is more important, the repeal of the 
estate tax for estates over $6 million or preserving our Social 
Security system for America's future? Mr. Speaker, this is a matter of 
priority. We cannot have everything. We have to make hard choices. This 
is the wrong decision. I urge my colleagues to reject the bill.
  Ms. DUNN. Mr. Speaker, I remind the previous speaker, the gentleman 
from Maryland (Mr. Cardin), that the State of Maryland sent $582 
million to the Federal Government in payment that is not used in their 
own State.
  Mr. Speaker, I yield 2 minutes to the gentleman from the State of 
Arizona (Mr. Hayworth), a very effective member of the Committee on 
Ways and Means.
  Mr. HAYWORTH. Mr. Speaker, later today we will take a vote to make 
the death tax repeal permanent. It will be a bipartisan vote, despite 
some of the preceding rhetoric in the well of the House, and I do not 
want anyone to be deceived or misled.
  One of the leading proponents of permanent death tax repeal in my 
State happened to be the standard bearer for the Democratic Party in 
1994 for the office of Governor. He came to me and said, ``When are you 
going to repeal this death tax?'' The reason he did so was not because 
he fits into the realm of the super-rich. The reason he did so, he is 
an owner of grocery stores and he employs hundreds of Arizonians.
  Mr. Speaker, people of goodwill can have a fundamental disagreement. 
Either we can come to this floor and attempt to demonize and drive 
wedges and claim that it is always us versus them, or we can understand 
some simple facts: keeping businesses in business makes good sense for 
America. More than 70 percent of family businesses do not survive to 
the second generation. Eighty-seven percent do not make it to the third 
generation. Sixty percent of small business owners report that they 
would create new jobs over the coming year if estate taxes are 
eliminated. We move to do that.
  Now the question becomes are we willing to make this permanent to 
deal with the arcane rules from elsewhere on Capitol Hill to make this 
permanent for job creation. We all want to save Social Security. We 
want to have people paying payroll taxes. The best social program is a 
job. The best way to ensure that the backbone of America, small 
businesses, stay in business, is to ensure that family-owned businesses 
can continue to operate. That is why it is vital for all Americans, 
Republicans, Democrats, Libertarians, vegetarians, all Americans to 
have the chance to keep their business in the family. There should be 
no taxation without respiration. Let us keep business alive.
  Mr. MATSUI. Mr. Speaker, I yield 2 minutes to the gentleman from 
Michigan (Mr. Levin), a distinguished member of the Committee on Ways 
and Means.
  (Mr. LEVIN asked and was given permission to revise and extend his 
remarks.)
  Mr. LEVIN. Mr. Speaker, this really is not about farmers and small 
businesses. The Pomeroy substitute addresses 99 percent who would be 
excluded from estate taxes. This is not about class warfare unless it 
is warfare on behalf of 1 percent of the very wealthy against 99 
percent. It is not about a quirk in the bill last year. If we eliminate 
the sunset, essentially we are further sunsetting fiscal 
responsibility, a trillion dollars the second 10 years for a few 
thousand families.
  We are not just mortgaging the future, we are throwing it away. We 
are throwing away the chance to address Social Security needs, Medicare 
needs. In a few words, this is not about death taxes; it is about 
deficits, more deficits, and more, more deficits.
  There has been a reference here to supply-side economics. This is 
supply-side economics run amuck. Those who vote ``yes'' today will live 
to regret it, if not tomorrow, some years from now.
  Mr. Speaker, I urge a ``no'' vote on the final vote, and ``yes'' on 
the substitute.
  Ms. DUNN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I remind the gentleman from Michigan (Mr. Levin) that 
$711 million are taken from his State to give to the Federal Government 
as a result of the estate tax.
  Mr. Speaker, I yield 2 minutes to the gentleman from Georgia (Mr. 
Bishop).
  Mr. BISHOP. Mr. Speaker, I rise today again to recognize the hard-
working people of America who have played by the rules and have paid 
their fair share. Decent, law abiding, tax paying Americans are the 
backbone of this country, and they are the salt of the earth. They are 
the farmers of southwest Georgia, the family business owners across the 
country, from the Atlantic to the Pacific. All across this land are 
Americans who have paid taxes their entire lives, only to face the 
final taxing event at death. They paid their taxes during their 
lifetimes and should not be charged again because they happen to die.
  The death tax represents all that is unfair and unjust about the tax 
structure in America because it undermines the life work and the life 
savings of Americans who want only to pass on to their children and 
grandchildren the fruits of their labor and the realization of their 
American dream.
  And besides, it generates only 1.5 percent of our Nation's revenue. 
Farmers in my State of Georgia, many of whom are widowed women and the 
children of deceased farmers, are faced with losing their family farms 
because of this harsh tax. Employees of small and medium-sized family 
businesses, many of whom are minorities, are at risk of losing their 
jobs because their employers

[[Page H3253]]

are forced to pay the unfair, exorbitant death tax levied upon them. 
Funeral homes, newspaper publishers, radio station owners, garment 
manufacturers, grocery owners, and real estate owners are all affected, 
all across the demographic spectrum.
  Mr. Speaker, although reasonable minds may differ on this issue, I 
believe that the death tax is politically misguided, morally 
unjustifiable, and downright un-American. Let us vote today to finally 
eliminate the death tax and return to the American people and their 
progeny the hard-earned fruits of their labor.
  Mr. MATSUI. Mr. Speaker, I yield 3 minutes to the gentleman from 
Wisconsin (Mr. Kleczka), a member of the Committee on Ways and Means.
  Mr. KLECZKA. Mr. Speaker, let us put this debate into some 
perspective. First of all, we do not have a death tax in this country. 
Nowhere in the statute does it mention the word ``death tax.'' What we 
have and have had since 1916 is an inheritance tax paid to the 
government by the most wealthy.
  Why do we have it? Well, to fund this government. To fund the 
military, to fund the expensive farm programs we passed 2 weeks ago, we 
need revenue. What the country decided long before I was in Congress 
was a tax code like a three-3-legged stool. One leg will be the income 
tax for which everybody pays. Then we have another leg for the business 
people, which is a business, or corporate tax, and the third is an 
inheritance tax. And that was fair.
  What has happened since 1916, small businesses and farmers have 
flourished. Look just at the 1990s when the stock market went through 
the ceiling. The Gateses of the world were created.
  But now we are being told by my Republican friends that the country 
is going to hell in a handbasket unless we repeal this tax. How does it 
affect Americans? Currently, 2 percent of the American public will pay 
it. In the gallery before me are about 100 people. Under this tax, two 
people will pay it.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Simpson). The Chair would remind Members 
not to refer to people in the gallery.
  Mr. KLECZKA. Mr. Speaker, two people sitting in the gallery will pay 
it. Well, how about the 98 other bodies in the gallery?


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore. The gentleman is again reminded not to refer 
to people in the gallery.
  Mr. KLECZKA. Mr. Speaker, the fact of the matter is, 98 percent of 
those who might be in the gallery will pay the additional income taxes 
to make up for this loss.
  Where are we as a country? Two years ago we were awash in surplus, 
and we were told by my Republican friends that as far as the eye can 
see, we will have surpluses. These same folks have tax-cutted this 
country back into a deficit. This year we are looking at a $300 billion 
deficit.

                              {time}  1400

  As we all know, this country is on a war footing, a war on terrorism. 
We just passed a bill last week for $29 billion for the military and 
other homeland security items. Is now the time to repeal the tax paid 
by the 2 percent wealthiest of this country? Should they not help us 
with the war effort?
  They are the beneficiaries. Not you. The Cabinet of the current 
administration will see a windfall of millions of dollars if we take 
this bad action today.
  I ask my colleagues to defeat this measure. Quit kidding the American 
people and saying that this applies to everyone. The fact is 2 percent.
  Ms. DUNN. Mr. Speaker, I remind the gentleman from Wisconsin that his 
State sends $380 million to Washington, D.C.
  Mr. Speaker, I yield 4 minutes to the gentleman from California (Mr. 
Cox), a strong proponent of the repeal of the death tax over a period 
of years.
  Mr. COX. Mr. Speaker, I have been waiting for this day since 1993 
when I first introduced the bill to repeal the death tax. The following 
year by 1994, we had some 29 sponsors, over 100 sponsors in the next 
Congress, over 200 sponsors in the following Congress. Due to the 
efforts of the chairman of the Committee on Ways and Means, the 
gentlewoman from Washington (Ms. Dunn), the gentleman from Tennessee 
(Mr. Tanner), that bill was eventually signed into law.
  Four times this House has voted to repeal the death tax. And for good 
reason. By the way, I refer to it as the death tax because that is in 
fact what it is called in the Internal Revenue Code. For example, in 
section 2014 and section 2015, you will see the words, unlike the 
comments of the preceding speaker, death tax. That is the proper name 
for this code because it is a tax that applies on death. Its purpose 
when it originally was put into place was to confiscate the wealth of 
the super rich. Much of the discussion today has been focused on the 
nobility of that cause, confiscating the wealth of the super rich. But 
we have now a century of experience and we know that it does not 
succeed, or come close to succeeding, in that effort. It does not break 
up concentrations of wealth. To the contrary, it is the engine for 
concentrations of wealth.
  Ask yourself: How could it be after a century of experience with a 
tax such as this designed to break up great concentrations of wealth 
that the great-grandchildren of John D. Rockefeller could be themselves 
so wealthy, but the wealth of John D. Rockefeller is well known to all 
of us who work in this Congress, as is the wealth of Joe Kennedy, the 
wealth of a lot of people who are no longer with us, because the super 
rich can afford the lawyers, the trusts, the bollix accounting schemes 
that are needed to avoid this ultimately elective tax. For the super 
rich, they do not pay it.
  Who does pay it? Those people who work in businesses that are too 
small to have enough cash to do the expensive tax planning. The 
compliance cost associated with this tax, according to the Joint 
Economic Committee, may be more than enough to eclipse all the revenue 
that it raises. So most of the figures that we are hearing about how 
much money this might bring to Washington are looking at only half the 
story. You have got to look at how much it costs us to squeeze that 
blood out of the turnip. Even more to the point, look who supports 
repeal of the death tax. The National Black Chamber of Commerce, the 
Black Women Enterprises, Hispanic Business Round Table, Latino 
Coalition. This is not a coalition of the super rich. To the contrary, 
this is working America.
  The tax that you pay when you lose your job because the owner dies 
without an adequate estate plan is 100 percent. The low wage worker in 
a nonpublic company pays 100 percent when his or her job is liquidated. 
And most of the estates where there are significant collections for the 
Federal Government are thrown into litigation because there is always 
an argument about what the estate is worth. Therefore, it is an 
inordinately expensive tax to collect. Over 80 pages of the Internal 
Revenue Code have been repealed with our repeal of the death tax. It is 
the biggest blow we have struck for tax simplification thus far.
  But now we have to make it permanent. I mentioned that this House has 
voted four times for repeal. I mentioned the President has signed it 
into law. But as a result of an anomaly in Senate rules, nothing that 
this House voted for, our repeal, which takes full effect 7 years from 
now, is undone after only 12 months. So if 7 years from now you or a 
member of your family or the owner of your business dies on December 
31, there is no burdensome estate tax to deal with, no death tax forms 
to fill out. If the same person, you or the same person, dies the 
following morning, then 55 percent is the rate that applies. The full 
burden of the death tax, even before the stepdown in rates that will 
have taken place over the next 7 years, is revisited.
  That is why the New York Times referred to the current situation as 
the Throw Momma From the Train Act because only in 2010 is there actual 
repeal and the full tax comes back the following year. Only if you 
support this anomaly that imposes compliance costs on everyone in 
America should you vote against permanency.
  I say vote ``yes'' on making death tax repeal permanent. It is time 
to throw the death tax from the train.
  Mr. MATSUI. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished 
gentleman from South Carolina (Mr. Spratt), the ranking Democrat on the 
Committee on the Budget.
  Mr. SPRATT. Mr. Speaker, we all know the circumstances last year when 
we voted to repeal temporarily the estate tax. OMB was predicting a 
surplus

[[Page H3254]]

of $5.6 trillion over the next 10 years. Today that surplus is gone, 
vanished, thanks to tax cuts, terrorists and recession, and 
overestimation of the surplus in the first place.
  This year we expect a budget in deficit by $314 billion, excluding 
Social Security. Over the next 10 years we expect that deficit to be 
$2.6 trillion. We will consume all of the Social Security surplus and 
all of the Medicare surplus if that is true.
  Even last year, estate tax repeal had to be shoehorned into the 
budget to hold the tax cut to no more than $1.3 trillion. That is why 
there was a repeal one year, reinstatement the next year. Even this 
year those who favor repeal do not favor it until 2010, 2011. They are 
putting it off. And they are understating the cost because the near-
term cost seems low, but look at this chart and you will see what the 
long-term cost is. The long-term revenue loss in the second decade of 
this century resulting from the repeal of the estate tax will be $1.1 
trillion.
  How much is $1.1 trillion? That is one-third of the cost, 40 percent 
of the cost of making Social Security solvent. That is enough to pay 
for a robust, full-fledged Medicare prescription drug package. That is 
the opportunity cost of what we are doing.
  Last year you needed a shoehorn to get it into the budget. This year 
you will need a shovel. What you will do is dig a hole in the budget 
that is deeper than ever. You will put us back in structural deficit 
like never before.
  This is ill-advised. Vote for the substitute. Exonerate those small 
businesses by voting for the substitute from any kind of estate tax and 
keep the budget intact.
  Ms. DUNN. Mr. Speaker, I remind the gentleman who just completed his 
talk from South Carolina that $231 million goes from his State that 
could be used to cover health care coverage for small businesses.
  Mr. Speaker, I yield 2 minutes to the gentleman from Nebraska (Mr. 
Osborne).
  Mr. OSBORNE. Mr. Speaker, we hear over and over again how the repeal 
of the death tax is another tax break for the exceptionally wealthy. 
This does not reflect my personal experience. I have been privileged to 
know a few very wealthy people and at no time have I ever heard from 
any of those people any discussion about the death tax. The reason for 
this is that nearly all of them have foundations, they have trusts, 
they have offshore investments, and none of them will leave money to 
the government in the form of inheritance tax.
  The segment of the population that is affected most by the death tax 
consists of those individuals who have a single fixed asset that has 
appreciated significantly over time. In my district, which is largely 
rural, many small businesses, ranches and farms fit in this category. 
The farmer who bought land at $100 an acre 40 years ago that is worth 
$2,500 an acre today and the rancher who purchased grazing land at $20 
an acre 50 years ago that is currently valued at $300 an acre would be 
examples. Nearly all of the profits from those farms and ranches have 
been put back into the property. Most farmers and ranchers are land-
rich but cash-poor.
  Yesterday I spoke with a cattle feeder who bought cattle from 100 
ranch families in the Sandhills of Nebraska. I asked him what his 
number one concern was. He said that it was the death tax. He said that 
six of those 100 ranches were sold last year because the heirs could 
not pay the death tax. Most of those farms and ranches are sold to 
wealthy absentee landlords.
  Ted Turner is currently the largest landowner in Nebraska. Ted 
Turner's property will not be subject to inheritance tax upon his 
death. This process takes wealth and population from rural areas. 
Currently the death tax nets slightly more than 1 percent of total 
government tax revenue, yet it costs almost one-third of every dollar 
recovered just to collect the tax. The net effect to the economy is 
negative when one considers lost jobs, lost productivity and loss of 
local control of businesses, farms and ranches.
  I urge permanent repeal of the death tax.
  Mr. MATSUI. Mr. Speaker, I yield 1 minute to the gentleman from North 
Dakota (Mr. Pomeroy), a member of the Committee on Ways and Means.
  Mr. POMEROY. Mr. Speaker, life is full of choices. The choice before 
us involves repeal of the estate tax versus the choice of maintaining 
full benefit payments to the Social Security program.
  There will be 78 million Americans that will turn 65 sometime in the 
next decade. At that point in time, their draw on Social Security will 
be profound. You can see Social Security revenues dropping dramatically 
as these 78 million leave the workforce. That same decade, however, if 
the majority plan passes, the costs explode on the lost revenue due to 
the estate tax. This X-marks-the-spot on this chart foretells fiscal 
disaster resulting in Social Security benefit cuts and payroll tax 
increases on our children.
  We cannot just think about this in today's terms. We have to look 
long term. The long term is a fiscal catastrophe for our country, a tax 
obligation to our children and beneficiary cuts for Social Security 
recipients if we take the action urged by the majority.
  Ms. DUNN. Mr. Speaker, I yield 3 minutes to the gentleman from 
Georgia (Mr. Collins).
  Mr. COLLINS. I thank the gentlewoman for yielding me this time.
  Mr. Speaker, it always interests me when I see people talk about the 
fact that we are going to have a lower income, a lower revenue based on 
certain tax policy that leaves money within the economy. What I keep 
wondering and hoping to hear, though, is how we are going to reduce the 
outgo. This town is not known for cutting spending, but that is the 
number one problem in this town is the appropriations, not the 
taxation.
  Mr. Speaker, even during an economic slowdown, our Nation still has 
one of the most vibrant economies in the world. We have the highest GDP 
of any Nation and the engine of this economy is small and medium-sized 
family-owned businesses. These businesses employ more than half of the 
workers in this country, generate more than 50 percent of the GDP and 
are responsible for more than 30 percent of our exports. These small 
and medium-sized businesses are the driving force of America's economic 
power.
  Yet throughout our excessive and complex tax system, we place every 
conceivable obstacle in their path toward success. In many cases, 
despite the best efforts of our government to hinder these economic 
drivers, they somehow manage through sweat, blood, tears and grit to 
succeed. However, there is a troubling statistic about these 
businesses, Mr. Speaker. Less than one-third of them survive after they 
are inherited by the second generation, and less than 15 percent make 
it into the third generation.
  Mr. Speaker, can you guess the number one reason for the failure of 
these businesses? It is lack of capital. You can further guess that the 
main controlling factor that leads to the lack of capital is the death 
tax.
  Mr. Speaker, most of the wealth in this Nation has been generated 
since World War II. Between now and the year 2040, it is estimated that 
American family-owned businesses will transfer more than $10 trillion 
of assets to their heirs. It was a wise decision for the President and 
this Congress to repeal this horrendous tax burden.

                              {time}  1415

  The only problem with the repeal is that it will sunset in the year 
2011. This makes it impossible for businesses to plan for the 
transition of ownership from one family member to another.
  In order for the temporary repeal to be effective, the owner would 
have to die in the year 2010. As a small businessman for 39 years, I 
have seen some pretty good business plans. But I have never seen one 
that had a vision in it that the owner must die at a certain time and 
date.
  I urge my colleagues to support this measure and support the small 
and medium-sized businesses for which this Nation is the envy of by the 
rest of the industrialized world.
  Mr. MATSUI. Mr. Speaker, I yield 1 minute to the distinguished 
gentleman from the State of California (Mr. Farr), a Member of the 
Committee on Appropriations.
  (Mr. FARR of California asked and was given permission to revise and 
extend his remarks.)
  Mr. FARR of California. Mr. Speaker, I thank the gentleman for 
yielding me time.

[[Page H3255]]

  Mr. Speaker, I think the debate here is one where the Republicans are 
trying to make it sound good, but if you implement the law, it feels 
really bad. Let me explain. The law that they implemented trickles down 
the inheritance tax until the year 2010, and then it sunsets and comes 
all the way back. So any of you who are trying to plan an estate, you 
have no idea what you are going to have to pay, particularly unless 
somebody dies in the year 2010.
  Now they come in and say, well, let us just make it permanent. What 
they want to make permanent is obviously a very bad law, because the 
one thing they do not do is they do not step up the basis, and if you 
do not step up the basis, then the people who inherit that property 
when they have to sell it have to pay a humongous capital gains tax.
  There is a better provision here, and it is the Pomeroy provision, 
and I hope everybody and the Republicans listen to it, because it does 
a better job. It makes it more effective. You will have a better repeal 
next year, in the year 2003, than you do under the Republican proposal, 
and it does have a step-up basis. It is so tax-smart that the tax 
attorneys will tell you that the Pomeroy substitute is better law. It 
is better law for tax planners, it is better law for people who have to 
pay inheritance tax, and it is better for those who have to inherit.
  Ms. DUNN. Mr. Speaker, I will remind the gentleman from California 
that $4 billion goes from the State of California as a result of the 
death tax, dollars that could be used by small business people to 
increase employment.
  Mr. Speaker, I yield 2 minutes to the gentlewoman from Wyoming (Mrs. 
Cubin).
  Mrs. CUBIN. Mr. Speaker, I thank the gentlewoman for yielding me 
time.
  Mr. Speaker, I stand in very strong support of repealing permanently 
the death tax. I personally know ranchers and farmers in my great State 
of Wyoming who have had to liquidate, had to sell their property, in 
order to pay the death taxes on their property. These are sometimes 
fifth-generation families, where they have done nothing but ranch or 
farm for five generations, and that is all they ever wanted to do. 
Sometimes they will sell half of their ranch, but they still end up 
having to sell the whole thing, because they cannot make a living with 
only half of the property.
  We are not talking about wealthy people here. We are talking about 
small businessmen. We are talking about people who feed this country. 
We simply cannot afford to have our food supply controlled by big 
insurance companies who are able to afford to buy the ranches in the 
first place and then pay taxes on them, insurance companies, people 
like Ted Turner.
  We need to have middle class, hard-working farmers and ranchers that 
love the land, on the land, working the land. Unless we repeal the 
death tax, that concept will not survive in the United States of 
America.
  According to the National Federation of Independent Businesses, one-
third of small business owners will have to outright sell or liquidate 
their businesses to pay the death tax. Half of those will have to lay 
off 30 or more people. So it is not just farmers and ranchers that 
suffer from having to pay these exorbitant death taxes, it is small 
businesses all across this country.
  We all know small businesses are the backbone of this country, and we 
need to protect them. We need to allow them to expand their businesses 
and create more jobs, instead of paying the money to the government to 
be spent on other things.
  Mr. MATSUI. Mr. Speaker, I yield 3 minutes to the distinguished 
gentleman from the State of Texas (Mr. Doggett), a member of the 
Committee on Ways and Means.
  Mr. DOGGETT. Mr. Speaker, only one percent of all the estates in this 
country are assessed any estate tax. I have already voted to repeal the 
tax for most of those who are subject to it, and to do so immediately, 
not seven or ten years from now. But this vote today is a vote that is 
only the latest variation of the one-note symphony that is the 
Republican call for more and more tax breaks, each and every week, for 
the economic elite.
  This bill is a key part of a $4 trillion package of tax breaks for 
the privileged few that they would saddle the rest of this country with 
paying for. This vote is more than a decision about the legacy of the 
heirs of Steve Forbes, Ken Lay and Ross Perot; it is a vote on the 
legacy for the future of America.
  Today we are concerned with the Republican leaderships decision to, 
once again, never find a tax break for the wealthy that it does not 
like. They will indeed leave a lasting legacy. Yes, the heirs of Steve 
Forbes will get a windfall, but all the other children of America, they 
will get something also, a growing mountain of public debt, an 
undermined Social Security system, and a bleaker economic future.
  Our children will inherit a shrinking pool of Federal funds to meet 
the expanding security needs our Nation now faces; and our children 
will be forced to pay higher taxes tomorrow because some were unwilling 
to pay their fair share today. While the Republican leadership is so 
greatly concerned about the legacy of the top one percent, I ask, what 
about the other 99 percent of America's children? What about their 
future and the fate of our country?
  It was a Republican, Teddy Roosevelt, in 1906 who was among the first 
proponents of the tax that they propose to repeal today. He feared the 
power of an economic aristocracy that we see dominating America today. 
He feared ``inherited economic power'' and said that it was as 
inconsistent with the ideals of this generation in America as inherited 
political power was inconsistent with the ideals of the generation 
which established our government.
  That concern is still true today. Would that we only had on this 
floor joining us one Teddy Roosevelt Republican who would stand up, in 
a bipartisan way, and express that concern about the future of American 
democracy and the future of our ability to meet our needs.
  I will have to give them credit for one thing, that they call this 
the ``death tax,'' because if they are successful today, and if they 
are successful in implementing this entire $4 trillion tax package for 
the privileged elite of this country, it will be the death of Social 
Security and Medicare as we have known them for decades and upon which 
so many Americans vitally depend, because there is absolutely no way 
that we can fulfill our obligations under Social Security and Medicare 
and give the privileged elite of America a $4 trillion tax break.
  Ms. DUNN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Wisconsin (Mr. Ryan), one of the newer members of the Committee on Ways 
and Means.
  Mr. RYAN of Wisconsin. Mr. Speaker, I thank the gentlewoman for 
yielding me time and for her leadership on eliminating the death tax. 
The gentlewoman from Washington (Ms. Dunn) has been a tireless leader 
in this effort.
  What we are hearing today from the other side are two emotions: Fear 
and envy. Every issue that seems to come to the floor these days, they 
try to tap into the emotions of fear and envy, using bogus statistics 
like a $4 trillion tax cut, using these emotional attributes that the 
super rich are going to get away with murder.
  Mr. Speaker, the super rich are going to stay rich even with the 
death tax in place. What happens with the death tax is we lose jobs in 
America. The greatest killer of the transfer of businesses from one 
generation to the next is the death tax.
  Take into consideration what is going to happen on New Year's Day 
2011 after New Year's Eve 2010 if this bill is not passed. On New 
Year's Eve, the estate tax on a small business or a family farm in 
value of $3 million will be zero. On New Year's Day, the next day, in 
2011, that farmer, that small business person who may happen to pass 
away at 12:01 a.m. rather than 11:59 p.m. will have an $800,000 tax 
bill.
  This is a killer of jobs. This is a killer of small businesses. More 
than 70 percent of family businesses do not survive the second 
generation, Mr. Speaker; 87 percent do not make it to the third 
generation. Sixty percent of small business owners report that they 
would create new jobs over the coming year if the estate taxes were 
eliminated.
  This is about fairness, this is about doing the right thing, and it 
is about making sure that when you die, you do not visit the undertaker 
and the IRS

[[Page H3256]]

agent on the same day. This is an issue about fairness. This is an 
issue about jobs. We are trying to appeal to the emotions of hope and 
opportunity and fairness on this side of the aisle, not the emotions of 
fear, envy and hyperbole.
  Mr. MATSUI. Mr. Speaker, I yield 15 seconds to the distinguished 
gentlewoman from Florida (Mrs. Thurman), a member of the Committee on 
Ways and Means.
  Mrs. THURMAN. Mr. Speaker, I just want to point out to the gentleman 
from Wisconsin that for 1999 tax returns under the IRS statistics of 
income, there would have been 790 people who ended up paying the estate 
tax. Under the Pomeroy-Thurman amendment, there would be 50. By the 
way, that would be January 1, 2003, not 2010.
  Mr. MATSUI. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Ohio (Ms. Kaptur), a member of the Committee on Appropriations.
  Ms. KAPTUR. Mr. Speaker, this chart shows how much money Republicans 
have already raided from the Social Security trust fund this year. Was 
the trust fund not supposed to be in a lockbox and off limits to 
tampering? Well, they have raided it to the tune of over $207 billion 
as of the first week of this June.
  In 1935, not one single Republican on the Committee on Ways and Means 
voted for the original Social Security Act. They have always had a 
problem believing in it.
  Now they are raiding Social Security to pay for their tax cuts for 
the super rich, both living and dead! So long as they do, I will be 
here on this floor clocking their raid from the Social Security Trust 
Fund with this Debt Clock. I will be here to tell the truth to the 
American people. And that truth is that Democrats will fight to save 
your Social Security. For us, it is a compact of trust between 
generations for all Americans, senior citizens and disabled, not just 
the super rich.
  Ms. DUNN. Mr. Speaker, I reserve the balance of my time.
  Mr. MATSUI. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from the State of Indiana (Mr. Roemer), a member of the 
Committee on Education and the Workforce.
  (Mr. ROEMER asked and was given permission to revise and extend his 
remarks.)
  Mr. ROEMER. Mr. Speaker, I rise in strong support of repealing the 
death tax. I think that we need to make sure that the hard-working 
Americans in this country get tax relief. They work hard, they sweat 
hard, and they need to pass on money back to their families and their 
children.
  But the question today is do you repeal the death tax for the person 
that has made $500 million or $50 billion, or do you repeal it for 
everybody that has made up to $6 million, as the Democratic substitute 
does, for that hard-working family in my State of Indiana who has saved 
money year after year for their children and want to pass on $500,000 
to their kids? We do not tax a penny of that for the farmer in Indiana 
that has seen their acreage grow in value and their farm grow to $5 
million in value. We do not tax a penny of that. For the small business 
person who has grown their grocery store to $4 million in value, we do 
not tax a penny of that.

                              {time}  1430

  But now it comes down to what Theodore Roosevelt talked about in 1906 
when he spoke of a progressive inheritance tax on ``fortunes swollen 
beyond all healthy limits,'' and he talked about the Vanderbilts or 
Rockefellers at 60 and $100 million dollars. Now we have families at 
$10 billion. Should they not have to pay any kind of tax when passing 
on their inheritance to their children when somebody out there working 
every day and making $50,000 a year has to pay a 15 percent rate on 
their taxes?
  Mr. Speaker, let us make sure that we are fair in the American 
tradition, that we are fair when we are at war, that we are fair when 
States and the Federal Government have huge deficits in our tax 
structure.
  Mr. MATSUI. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, I would just have to say in conclusion here on general 
debate that if the Pomeroy-Thurman bill, which will be offered as a 
Democratic substitute, became law, it would actually create a situation 
where only 10,000 estates in the entire country, 10,000 estates of 260 
million people, would be taxed. So we are basically talking about, in 
the Republican bill, 10,000 individuals or 10,000 estates that we are 
talking about. That is what the tragedy of this debate is.
  I have frankly never, in my entire 23 years in this institution, seen 
a larger transfer of wealth than on the floor of the House of 
Representatives today. The reason for this is we have no surplus. The 
$5.6 trillion surplus is zero. It is gone. It is totally eliminated. As 
a result of that, whatever we use to pay for this estate tax repeal 
will come out of the payroll taxes of the average American, the 6.2 
percent payroll tax that every American pays.
  We calculated this. In order to pay $103 billion a year, which it is 
over a 10-year period once it is fully in effect, the estate tax 
relief, we are talking about 55 million Americans that are making 
$30,000 a year, 55 million Americans, their FICA tax that they think is 
going into the Social Security trust fund, that money is actually going 
to pay some of the richest Americans and their estates in this country. 
It is a huge transfer of wealth that we are talking about. It is 
unconscionable.
  Mr. Speaker, it would be my hope that my colleagues on both sides of 
the aisle would see this for what it is: a transfer of wealth from the 
middle class, from the suburban Americans, to the very wealthiest of 
Americans.
  Mr. Speaker, I urge a ``no'' vote on this and a vote in favor of the 
Pomeroy-Thurman substitute.
  Ms. DUNN. Mr. Speaker, I yield the remainder of our time to the 
gentleman from Oklahoma (Mr. Watts), our conference chairman.
  Mr. WATTS of Oklahoma. Mr. Speaker, I appreciate the gentlewoman from 
Washington yielding me time.
  Mr. Speaker, this has almost been a hilarious debate. What I have 
heard here over the last hour or so, the debate that I heard, is that 
it is okay to be unfair to certain people. If we have the death tax 
that is going to affect 2 percent of the people and we have 1,000 
people that are affected by the death tax, we are only going to be 
unfair to 20, so it should not be any big deal. It is okay for the 
government to be unfair to someone, as long as it is certain people 
that we are being unfair with.
  I do not think the government should make those kinds of decisions. I 
am somewhat baffled by that, that we would say, let us just be unfair 
to these few people right here. Why should we repeal the death tax? 
This is about fairness. It is about being fair with the American 
taxpayers.
  I want Members to look at the diverse group of organizations 
supporting permanent appeal: the National Black Chamber of Commerce. 
Why does the National Black Chamber of Commerce support repealing the 
death tax? Because in the black community, it takes sometimes three to 
four generations to create wealth, and then the owner of that business, 
the owner of that farm, dies and then they lose the farm. They lose the 
business.
  The Hispanic Business Roundtable, the National Federation of 
Independent Businesses, the National Indian Business Association, the 
National Association of Counties, the Latino Coalition, the National 
Association of Women Business Owners. Why do they support repealing 
this unfair tax? Because they do not think that we should live 50 
years, 55 years, get taxed, then die and then get taxed again. They 
think it is unfair.
  Repeal the death tax. The economic advantages of doing this: it adds 
as much as $150 billion over the next 10 years to the economy. That is 
$15 billion per year. That creates a lot of jobs, and it puts money 
back into the economy. It adds as many as 200,000 jobs per year. It 
increases household savings due to lower prices by $800 to $3,000 per 
year in savings.
  We need to repeal this tax. There is double-dipping going on right 
now. Under the current system, under the death tax, we are taxed once 
and then again we die and are taxed again. That is double-dipping.
  As I have heard my colleague, the gentlewoman from Washington (Ms. 
Dunn), say, she has said her friends on the Democratic side, they are 
concerned about helping the rich, helping Bill Gates. Mr. Speaker, if 
Bill Gates dies, and she might have mentioned to us, reminded us of 
this today, if Bill Gates dies, this is not going to help Bill Gates 
because he is dead.

[[Page H3257]]

  It is the American way to say hopefully some day we can leave 
something for our kids and grandkids. If one owns one McDonald's 
franchise or 50, it is not the government's money, it is our money. Let 
us repeal this unfair death tax. Let us put it to rest and bury it once 
and for all. Vote ``yes'' on this legislation.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise to oppose the adoption 
of H.R. 2143. At a time when the country's economic power is waning and 
the deficit is burgeoning the country does not need a major loss of 
revenue. The Budget Committee staff now estimates that this year's 
deficit, excluding the Social Security trust fund surplus, will be $314 
billion. Over the next 10 years, deficit, excluding the Social Security 
trust fund surplus, will be $314 billion. Over the next 10 years, the 
non-Social Security deficit will total $2.6 trillion.
  Examining this chart on the cost of the repeal of the estate tax, one 
can see the sharp rise in loss revenue. In 2010 the revenue loss takes 
a vertical rise to over $55 billion in 2012, the first year in which 
the estate tax repeal would have full effect. The budget is on a course 
that will consume both the entire Social Security surplus and the 
entire Medicare surplus between now and 2012. The revenue impact of 
making the estate tax repeal permanent would total $109 billion over 
2003-2012, and then soar to $1.033 trillion over the following decade.
  The Center on Budget and Policy Priorities conducted an analysis of 
the estate tax repeal. Only 2 percent of the estate in the United 
States are subject to an estate tax. Of the estates subject to the tax 
very few include family-owned farms or businesses. The Democratic 
alternative to the Republican estate tax repeal extension bill offers 
immediate and permanent estate tax relief beginning on January 1, 2003, 
by increasing the exemption to $3 million for individuals and to $6 
million for couples. Full repeal of the estate tax would be effective 
for people who die in calendar year 2009 and years after that. 
Moreover, the cost of repealing the state tax will not be fully felt 
until after the 10-year period covered by the revenue estimate by the 
Republican repeal.
  Under the current provisions of the Federal estate tax, estate taxes 
levied by States generally do not impose any additional burden on 
estates. Repeal of the estate tax would provide massive benefits solely 
to the wealthiest and highest-income taxpayers in America. 
Subsequently, the Federal revenue loss would be about $60 billion a 
year when the repeal is fully in effect a decade from now and States 
around the country would lose another $9 billion in estate tax 
revenues.
  The estate tax is an integral part of our tax system. If it is 
repealed, large amounts of income, unrealized capital gains income of 
very high-income taxpayers, would never be taxed at all. Repealing the 
state tax would open up new loopholes that would encourage many new 
schemes for income tax avoidance. Research suggests that repeal of the 
estate tax would cause a significant decline in charitable giving. In 
short, there is little reason to repeal the estate tax, and many 
reasons to retain it. The economy will eventually crumble due to the 
overwhelming debt the Nation will incur due to the repeal of the estate 
tax. Say no to H.R. 2143.
  Mr. JONES of North Carolina. Mr. Speaker, there is a saying that only 
in America can an individual be given a certificate at birth, a license 
at marriage, and a bill at death. Americans should not have to visit 
the undertaker and the IRS on the same day.
  Unfortunately, small businesses and family farms, like those in 
eastern North Carolina, are particularly vulnerable to the death tax. 
At the time of their death, Americans are taxed on the value of their 
property, often at rates as high as 55 percent.
  Mr. Speaker, this places a tremendous burden on families who are 
already grieving the loss of a loved one. While small businesses and 
family farms are typically rich in assets, they often do not have the 
liquid resources to settle this size of bill with the Federal 
Government.
  Too often, they are forced to sell some or all of their land or 
business, which often serves as their family's livelihood. Over the 
years, the death tax has devastated family-owned businesses throughout 
our Nation's towns and cities. Today, less than half of family 
businesses are able to survive the death of a founder.
  What could be more un-American? Under current law, 70 percent of 
family businesses do not survive the second generation and 87 percent 
do not make it to the third generation. The death tax discourages 
savings and investment, and punishes those Americans who work hard 
throughout their lives to pass on something to their children.
  Mr. Speaker, the estate tax does not serve as a significant source of 
revenue for the Federal Government. The Treasury Department reported 
that in 1998, the estate and gift tax raised only $24.6 billion, which 
amounts to only 1.3 percent of total Federal revenues.
  In addition, economic studies conducted by former Secretary of the 
Treasury Lawrence Summers show that for every dollar in transfer taxes 
taken at death, $33 in capital formation is lost from the economy. 
Despite its little value to the government, the death tax undermines 
the idea that hard work and fiscal responsibility will be rewarded.
  Thankfully, this Congress provided a phase-out of the estate tax 
beginning in 2002 by eliminating the 5 percent surtax and the rates in 
excess of 50 percent and increases the exemption to $1 million. Today, 
we need to take steps to ensure this phase-out is permanent and does 
not sunset in 2011. If H.R. 2143 is not signed into law, the death tax 
will reappear, almost overnight on New Year's Eve, 2011.
  Mr. Speaker, this Congress has done an admirable job of guaranteeing 
tax relief for every working American. Let's pass this bill now and 
finish the job we started when we took back the people's House in 1995.
  Mr. UDALL of Colorado. Mr. Speaker, I support reform of the estate 
tax--that is why I voted for the substitute.
  But I do not support repeal of the estate tax--and so I cannot vote 
for this bill as it stands.
  For me, this is not a partisan issue. Instead, it is an issue of 
reasonableness, fairness, and fiscal responsibility.
  While I did not vote for last year's bill that included changes in 
the estate tax, there were parts of that bill that I think should be 
made permanent. That is why I am cosponsoring the bill to make 
permanent the elimination of the ``marriage penalty'' and why this week 
I voted to make permanent the provisions of last year's bill related to 
the adoption credit and the exclusion from tax of restitution to 
Holocaust survivors.
  And, as I said, I support reform of the estate tax. I definitely 
think we should act to make it easier for people to pass their 
estates--including lands and businesses--on to future generations. This 
is important for the whole country, of course, but it is particular 
important for Coloradans who want to keep ranch lands in open, 
undeveloped condition by reducing the pressure to sell them to pay 
estate taxes.
  Since I have been in Congress, I have been working toward that goal. 
I am convinced that it is something that can be achieved--but it should 
be done in a reasonable, fiscally responsible way and in a way that 
deserves broad bipartisan support.
  That means it should be done in a better way than by enacting this 
bill, and the substitute would have done that.
  That alternative would have provided real, effective relief without 
the excesses of the Republican bill. It would have raised the estate 
tax's special exclusion to $3 million for each and every person's 
estate--meaning to $6 million for a couple--and would have done so 
immediately.
  So, under that alternative, a married couple--including but not 
limited to the owners of a ranch or small business--with an estate 
worth up to $6 million could pass it on intact with no estate tax 
whatsoever.
  And since under the alternative that permanent change would take 
effect on January 1 of next year--not in 2011, like the bill before 
us--it clearly would be much more helpful to everyone who might be 
affected by the estate tax.
  At the same time, the alternative was much more fiscally responsible. 
It would not run the same risks of weakening our ability to do what is 
needed to maintain and strengthen Social Security and Medicare, provide 
a prescription drug benefit for seniors, invest in our schools and 
communities, and pay down the public debt.
  The tax bill signed into law last year included complete repeal of 
the estate tax for only one year, 2010, but contains language that 
sunsets all of the tax cuts, including changes in the estate tax after 
2001. This bill would exempt repeal of the estate tax from the general 
sunset provisions. It would reduce federal revenues by $109 billion 
between 2002 and 2012, $99 billion in lost revenue and $10 billion in 
interest charges, and more than $1.2 trillion in the decade between 
2013 and 2022--the time when the baby boomers will be retiring.
  But, as we all know, the budget outlook has changed dramatically 
since last year. In the last year, $4 trillion of surpluses projected 
over the next 10 years have disappeared--because of the combination of 
the recession, the cost of fighting terrorism and paying for homeland 
defense, and the enactment of last year's tax legislation. And now the 
proposal is to make the budgetary outlook even more difficult, making 
it that much harder to meet our national commitments--all in order to 
provide a tax break for less than 0.4 percent of all estates. I do not 
think this is responsible, and I cannot support it.
  And, as if that were not bad enough, this bill does nothing to 
correct one of the worst aspects of the estate-tax provisions in last 
year's bill--the hidden tax increases on estates whose value has 
increased by more than $1.3

[[Page H3258]]

million, beginning in 2010, due to the capital gains tax.
  Currently, once an asset, such as a farm or business, has gone 
through an estate, whether any estate tax is paid or not, the value to 
the heirs is ``stepped up'' for future capital gains tax calculations. 
However, last year's bill--now enacted into law--provides for replacing 
this with a ``carryover basis'' system in which the original value is 
the basis when heirs dispose of inherited assets. That means they will 
have to comply with new record keeping requirements, and most small 
businesses will end up paying more in taxes. That cries out for reform, 
but this bill does not provide it.
  Mr. Speaker, I am very disappointed with the evident determination of 
the Republican leadership to insist on bringing this bill forward. Just 
as they did last year, they have rejected any attempt to shape a bill 
that could be supported by all Members.
  Since I was first elected, I have sought to work with our colleagues 
on both sides of the aisle on this issue to achieve realistic and 
responsible reform of the estate tax. But this bill does not meet that 
test, and I cannot support it.
  Mr. MOORE. Mr. Speaker, I rise in opposition to H.R. 2143, Permanent 
Death Tax Repeal Act and the Democratic substitute.
  I have long been a supporter of providing estate tax relief to 
American families, small business owners, and farmers who have worked 
their entire lives to transfer a portion of their estates upon their 
death. I have also been an advocate, however, for ensuring that we 
transfer to our children and grandchildren a healthy economy and a 
government that maintains its commitment to Social Security and 
Medicare.
  In the last Congress, I voted to repeal the estate tax and later 
voted to override President Clinton's veto of that legislation, Again, 
in the 107th Congress, I voted to repeal the estate tax as a stand-
alone measure and later voted for President Bush's $1.35 trillion tax 
cut, which contained a provision to phase out and ultimately repeal the 
estate tax.
  When I voted for the president's tax bill last year, I did so with 
his assurance that we would have the money to pay for it without 
dipping into the Social Security surplus. Unfortunately, due to the 
recession and the war on terrorism, the budget surpluses projected last 
year did not materialize and we are now borrowing money from Social 
Security Trust Funds to pay for even our most basis needs, including 
the war on terrorism.
  While I agree that we should fix provisions of last year's tax cut to 
increase certainty in the Tax Code that will help people plan for their 
financial future, we should also make sure that we are not borrowing 
money--particularly from the Social Security trust funds--to pay for 
these cuts while we are simultaneously trying to enhance our national 
security needs. We should also ensure that we aren't raising other 
taxes to pay for provisions that are, quite frankly, political in 
nature and have nothing to do with ensuring that the estate tax burden 
is reduced on our small businesses and farms.
  For example, Mr. Speaker, the underlying bill contains a hidden tax 
on all decedents. By fully repealing the estate tax, this bill would 
have the effect of repealing a provision in the Code, referred to as 
the ``step up in basis,'' that protects heirs from paying capital gains 
on estates.
  Anyone who has ever sold a ``capital'' assets, such as real estate, 
stocks, bonds, mutual funds, know that cost basis in what the gain or 
loss on the sales price is measured against. Generally speaking, cost 
basis is the purchase price of property subject to certain adjustments 
upward or downward. For example, if property was purchased in 1950 at a 
cost of $10,000 and sold in 2001 at $100,000, an individual would have 
a taxable capital gain of $90,000. The step-up basis interacts with 
estates such that when this property passes by reason of death, the 
heir inherits the asset with a new cost basis equivalent to the market 
value of the asset on the date of the benefactor's death. Taking the 
example above, if the property were transferred in 2001 at a value of 
$100,000 and the heir sold the property in 2006 for $120,000, the heir 
would only have a taxable capital gains of $20,000 instead of $110,000.
  Should this bill become law, an owner of farmland, stocks, mutual 
funds, or even a personal residence would have lost the opportunity to 
pass the asset to the next generation without passing along the owner's 
cost basis, thus reducing the future capital gains bill that will have 
to be paid when the heirs sell the asset. In short, this amounts to a 
tax increase on all estates due simply to the increased cost basis of 
the estate.
  Furthermore, I will also oppose the Democratic substitute to this 
bill. While I believe that the relief provided in this substitute--
relief that is substantial and immediate--is important, like the 
majority plan the Democratic substitute also has a negative budgetary 
effect.
  The Democratic substitute, in an effort to seek out ways to pay for 
its provisions, would raise taxes on some individuals by reinstating 
the 5 percent surcharge on highly-valued estates that I voted to repeal 
last year. That's not fair.
  Mr. Speaker, the best alternative here today is to support the motion 
to recommit, which states that we should not fund the permanent repeal 
of the estate tax with Social Security surplus dollars. The motion to 
recommit will allow the estate tax repeal to take effect--which will 
not become an issue for over nine years--if we are able to afford it 
without deficit spending and using Social Security surplus dollars.
  Again I have supported previous efforts to provide estate tax relief 
because, in the past, we have been able to afford it. I am concerned, 
however, that the total costs of these bills will continue to drive our 
nation into debt, and reduce our ability to deal with the long-term 
challenges facing Social Security and Medicare. Until we deal with the 
long term financial problems facing Social Security, we need to be very 
careful about any tax or spending bills that would place a greater 
burden on the budget in the next decade, effectively transferring these 
costs and burdens to our children and grandchildren.
  Ms. KILPATRICK. Mr. Speaker, I rise today in opposition to H.R. 2143, 
which would permanently repeal the estate tax in FY 2011. The bill, if 
passed, will prove to be fiscally irresponsible in the short-and long-
term. In reference to the short-term irresponsibility, the bill would 
immediately bring more wealth to the wealthy. This particular tax is 
one of the only ways for the Federal Government to tax on accumulated 
wealth. Each year, it raises a large sum of money for the government 
without affecting 98 percent of its citizens--only the wealthiest 2 
percent are taxed. By eliminating the estate tax, we not only fill the 
pockets of the wealthy, but we take away the portion of federal revenue 
that readily assists the government in funding other efforts, such as 
the war on terrorism, education, Social Security, and Medicare.
  My colleagues on the other side of the aisle claim that we need to 
immediately help the small businesses and farmers sustain their 
livelihoods by eliminating the estate tax. Well, Mr. Speaker, contrary 
to the majority's belief, the repeal of the estate tax is not needed to 
protect the small businesses and farms. A Treasury Department study 
found that estates, which comprised of small businesses or farms, paid 
less than 1 percent of estate taxes in total. Additionally, the estate 
tax currently offers breaks for estates with small businesses and 
farms. Modifying the estate tax can help the small number of estates 
that will possibly be affected by the estate tax, but repealing it 
would only do harm.
  The long-term effects of the estate tax repeal are disastrous. 
Permanent repeal would cost the Federal Government over $50 billion of 
revenue in 2012 alone. This can be a huge blow for our economy in years 
to come, especially considering the estimated 75 million baby boomers 
that are due to retire in 2011 and 2012. Social Security, Medicare, and 
Medicaid will be negatively affected by a repeal and working Americans 
will be expected to pay for it with an increased tax burden.
  H.R. 2143 is not a good bill for our Nation in the short-term or 
long-term. However, the Democratic substitute offered by my esteemed 
colleagues, Representative Pomeroy and Representative Thurman, is more 
fitting considering America's state and the future fiscal status. The 
substitute would increase the tax credit to $3 million for individuals 
and $6 million for couples starting immediately in January 1, 2003. By 
raising the tax credit level to that amount, 00.6 percent of the small 
businesses and farms will be exempt for the estate tax starting in 
January 2003. The substitute will also freeze the maximum estate tax at 
50 percent, the current rate, and reinstates the 5-percent surtax for 
the estates that soar past a total value of $10 million. One of the 
most important aspects of this bill is that it will only cost $5.3 
billion in 2012, a grave difference from the majority's bill.
  While we attempt to rectify tax burdens, we need to be on alert of 
the short-term and long-term consequences of our actions. To be extreme 
in our attempts to fix the estate tax without thinking it through 
intelligently can ultimately draw the blueprint for our nation's 
demise. I cannot be a part of that effort. For that reason, Mr. 
Speaker, I am standing in strong opposition to the passage of H.R. 2143 
and in full support of the Democratic substitute.
  Mr. BLUMENAUER. Mr. Speaker, this Congress should delay any further 
tax cuts until we establish a budget that allows us to recognize 
current fiscal realities while we: ensure our security at home and 
abroad; meet our domestic priorities; and fulfill our Social Security 
and Medicare commitments.
  That said, this is a frustrating process for me. I have advocated 
reform of the estate tax since, as a state legislator, I worked with 
the late Representative Mary Rieke to fix Oregon's

[[Page H3259]]

tax. There is no reason we cannot reform the existing system to be more 
equitable and protect closely held businesses.
  Again, the Republican leadership chose to play politics rather than 
make the system better. Instead of adopting immediate and much greater 
permanent relief now, the choice was to make most people pay more tax 
for 9 years, be subject to a capital gains tax and onerous 
recordkeeping, and trust that the ever-larger deficit doesn't unravel 
the whole program.
  I voted for the Democratic substitute, which would have given more 
relief, sooner to 99.6 percent of estates.
  I hope that we will someday stop playing politics to fashion a 
bipartisan solution that works and is fiscally responsible.
  Mrs. JONES of Ohio. Mr. Speaker, I rise today in support of the 
Democratic substitute to reform the estate tax. I say ``reform'' as 
opposed to ``repeal'' because there is a difference in the two ideas. 
The Democratic substitute would help individuals and small businesses 
in a variety of ways while still preserving the Social Security Trust 
Funds.
  The Democratic substitute would increase the estate tax exclusion to 
$3 million, effective January 2003. The substitute would also place 
limits on corporations to prevent incorporations in tax havens that 
avoid taxation. It would also place limits on corporate tax shelters.
  Last year's tax cut lowered the top estate tax rate to 45 percent by 
2007, increased the estate tax exemption to $3.5 million--$7 million 
for a couple--by 2009 and repealed the estate tax altogether in 2010. 
Like the other tax provisions, the estate tax repeal is set to expire 
at the end of 2010. At that time, the estate tax reverts to what it was 
before, with an exemption of $1 million and a top rate of 55 percent.
  In the past year, budget projections have deteriorated. The 
Congressional Budget Office has estimated that the projected budget 
surplus for the years 2002 through 2011 has declined by 3.9 trillion 
dollars over the past year. Outside Social Security, the budget is 
estimated to be at a deficit through 2009.
  The most significant effect of eliminating rather than reforming the 
estate tax would come in the years beyond the current ten-year budget 
window, when the baby boom generation begins to retire and the Social 
Security and Medicare systems come under increasing pressure. Permanent 
repeal would lose approximately $740 billion in revenue.
  What does this mean for the Treasury?
  Well, there is something out of balance. Recently, the Administration 
sought to reduce the availability of student loans at the same time as 
it is seeking estate tax reductions for the highest-level millionaires 
. . . at the same time that the ranks of people without health 
insurance are growing . . . at the same time that seniors are without a 
prescription drug benefit.
  Repealing the estate tax in its entirety makes it impossible to 
strengthen Social Security without raising other taxes. Fewer than 5000 
of the wealthiest people, with estates valued at more than $6 million 
will be helped--at the expense of 53 million who will need to rely on 
Social Security benefits in 2011 and later.
  In comparison, the Democratic substitute would lower or eliminate 
estate taxes for 99.7 percent for all Americans beginning in January 
2003. No individuals with estates worth less than $3 million or $6 
million for a couple will pay any estate tax under the Democratic 
substitute. 99 percent of farms would pay no estate tax. Unlike the 
Republican bill, the Democratic substitute repeals the capital gains 
tax on increases in the value of property.
  In short, the Democratic reform of the estate tax would benefit 99.6 
percent of decedents. This is a better choice for Americans, and it is 
a fairer reform by far.
  I urge my colleagues to reject the underlying bill, and vote for the 
much fairer Democratic substitute.
  Mr. SMITH of Washington. Mr. Speaker, fiscal responsibility must be a 
guiding principle of our government. My constituents have told me again 
and again that government must live within its means and balance the 
budget. I agree and have consistently fought for more fiscal 
discipline.
  That is why I am voting against permanent repeal of the estate tax. I 
have always supported estate tax cuts--I authored legislation to 
completely eliminate the estate tax for all family farms and 
businesses, and have consistently voted to cut and even eliminate it 
altogether in years past.
  However, this vote today is simply another step down the path of 
fiscal irresponsibility. In the past year and a half, our economy has 
been in recession and was further damaged by the terrorist attacks 
surrounding September 11. Instead of responding with tough choices and 
fiscal discipline, however, Congress and the Administration have 
responded by passing a $15 billion airline bailout bill, a $30 billion 
supplemental appropriations bill, a very wasteful and bloated farm 
bill, and a tax cut that will cost $2 trillion over the next ten years. 
Even though I voted against these things, the truth is that they have 
all been signed into law by the President or will be very soon, and so 
their fiscal impact is now a reality and must be taken into account.
  There has been no serious effort by Congressional Leaders or the 
White House to design and implement a bipartisan balanced budget plan. 
The result has been a staggering reversal from the once-large budget 
surplus projections to large budget deficit projections. Budget 
deficits mean we use Social Security and Medicare revenues from other 
programs, putting us in a terrible position to deal with the 
entitlement crises that are coming in a decade due to demographic 
changes and the escalating costs of health care. We are falling further 
and further into debt, and interest payments on that debt will eat up 
an increasingly large share of taxpayer dollars--currently about 12 
cents of each tax dollar.
  We're moving in the wrong direction, and I cannot vote for 
legislation that will have such a large fiscal impact on our budget 
without a corresponding plan to return to fiscal discipline and get our 
budget balanced again within the next few years. Let me be clear: if 
the permanent repeal of the estate tax were part of a long-term 
balanced budget strategy, I would support it. Unfortunately, in this 
context, it is one more example of Congress and the Administration's 
lack of fiscal responsibility, and I cannot support it at this time.
  Mr. STARK. Mr. Speaker, I rise today in strong opposition to H.R. 
2143, a bill to make repeal of the estate tax permanent. House 
Republicans need to wake up to reality. Our budget is in deficit, our 
security is in shambles, and our people, specifically our seniors and 
the poor, are suffering. Facing these astronomical problems, what do 
the Republicans want to do? Give more money to the rich! It's truly 
astonishing. The Republicans are so beholden to the wealthy that they 
either don't see or are willing to ignore the real problems our country 
faces. I say to my Republican colleagues, wake up! The rich are doing 
just fine. They don't need any more government handouts.
  There are several more important priorities where we could invest 
this money. I'd like to concentrate on just one: America's seniors.
  Today's bill sends the message to our seniors that a Medicare 
prescription drug benefit isn't nearly as important as securing tax-
free estates for the wealthiest one percent of taxpayers. There are 40 
million Medicare beneficiaries--virtually all of whom need help with 
their prescription drug costs. In contrast, repeal of the estate tax 
will only help the wealthiest one percent of descendants, or around 
23,000 estates per year. At a time when we have scarce Federal 
resources, are we going to help 40 million elderly and disabled 
individuals who depend on Medicare or are we going to help the richest 
families in our Nation who are affiliated with those 23,000 estates? My 
priority is to help the 40 million seniors.
  A May 2002 poll by NPR, Kaiser Family Foundation, and the Kennedy 
School of Government found that 64% of people would support rolling 
back the tax cut that Congress passed last year to provide a Medicare 
prescription drug benefit for seniors. Only 25% opposed this idea. I'm 
certain most of these people would also oppose spending $56 billion 
more per year on a small handful of wealthy taxpayers.
  This bill is another Republican gift to the rich people who fill 
their campaign coffers. Meanwhile, the seniors, the poor, and the 
uninsured are left out in the cold. I urge my colleagues to vote no on 
H.R. 2143. It's time to get our priorities straight.
  Ms. LEE. Mr. Speaker, I rise today in strong opposition to yet 
another irresponsible tax bill, which raids Social Security and 
Medicare. The cost of the phaseout and ultimate repeal of the estate 
tax is much more than billions of future tax dollars. The purpose of 
the estate tax is to mitigate the accumulation of wealth by family 
lineage. Democracy needs an estate tax to make a fairer society in 
which future generations all start with more or less the same 
opportunities. Most of the benefits of estate tax repeal go to the 
wealthiest one percent of descendants, with only 1.9% of estates 
actually paying the estate tax, according to the Internal Revenue 
Services. Can we really afford a $60 billion a year gift to multi-
millionaires?
  At the expense of this ``gift'' is Social Security, Medicare, 
Education, and Homeland Security. By making tax cuts permanent, H.R. 
2143 would reduce revenues by about $4 trillion, resulting in ``raids'' 
on the Social Security trust fund and taking away resources for a 
Medicare prescription drug benefit. This new bill clearly ignores 
budget reality, just like its predecessor H.R. 586.
  Taxing dead multi-millionaires is eminently more fair than taxing the 
not-so-rich living. The intergenerational transfer of wealth is 
projected to reach between $41 trillion and $136 trillion, and the 
estate tax should remain in place as an increasingly significant 
progressive source of revenue in the coming decades.

[[Page H3260]]

  Permanent repeal of the estate tax has significant long-term cost, 
yet would benefit only a few, very large estates. Without the estate 
tax, the tax burden is more squarely placed on middle and low income 
workers. Estate tax reform offers a more sustainable approach than 
repeal. I urge Congress to explore the possibility of linking estate 
tax revenue to the Social Security trust fund. Congress should then 
reject the notion of wholesale repeal because it is simply another tax 
bill that benefits only the wealthiest of this country.
  Mr. BEREUTER. Mr. Speaker, as stated on the record many times, this 
Member continues his strong opposition to the total elimination of the 
estate tax on the super-rich. The reasons for this Member's opposition 
to this terrible idea have been publicly explained on numerous 
occasions, including past statements in the Congressional Record.
  This Member has every expectation that this legislation is going 
nowhere in the other body. Furthermore, on March 18, 2002, this Member 
noted in his statement on the House Floor for H.R. 536 that he had 
every reasonable assurance in this unpredictable place that eventually 
there would be a straight up-and-down vote specifically on the total 
elimination of the inheritance tax. This Member further noted that at 
that time that he will most assuredly vote ``no'' on the total repeal 
of the inheritance tax. Therefore, this Member rises today to express 
his strong opposition to H.R. 2143, which would make permanent the 
repeal of the Federal estate tax.
  It must also be noted, however, that this Member is strongly in favor 
of substantially raising the estate tax exemption level and reducing 
the rate of taxation on all levels of taxable estates, and that he has 
introduced legislation, H.R. 42, to this effect. This Member believes 
that the only way to ensure that his Nebraska and all American small 
business, farm and ranch families and individuals benefit from estate 
tax reform is to dramatically and immediately increase the Federal 
inheritance tax exemption level, such as provided in H.R. 42.
  This Member's bill (H.R. 42) would provide immediate, essential 
Federal estate tax relief by immediately increasing the Federal estate 
tax exclusion of $10 million effective upon enactment. (With some 
estate planning, a married couple could double the value of this 
exclusion to $20 million. As a comparison, under the current law for 
year 2001, the estate tax exclusion is only $675,000.) In addition, 
H.R. 42 would adjust this $10 million exclusion for inflation 
thereafter. The legislation would decrease the highest Federal estate 
tax rate from 55% to 39.6% effective upon enactment, as 39.6% is 
currently the highest Federal income tax rate. Under the bill, the 
value of an estate over $10 million would be taxed at the 30.6% rate. 
Under current law, the 55% estate tax bracket begins for estates over 
$3 million. Finally, H.R. 42 would continue to apply the stepped-up 
capital gains basis to the estate, which is provided in current law. In 
fact, this Member has said on many is provided in current law. In fact, 
this Member has said on many occasions that he would be willing to 
raise the estate tax exclusion level to $15 million.
  Since this Member believes that H.R. 42 or similar legislation is the 
only responsible way to provide true estate tax reduction for our 
nation's small business, farm and ranch families, this Member must use 
this opportunity to reiterate the following reasons for his opposition 
to the total elimination of the Federal estate tax. First, to totally 
eliminate the estate tax on billionaires and mega-millionaires would be 
very much contrary to the national interest. Second, the elimination of 
the estate tax also would have a very negative impact upon the 
continuance of very large charitable contributions for colleges and 
universities and other worthy institutions in our country. Finally, and 
fortunately, this Member believes that actually it will never be 
eliminated in the year 2010.
  At this point it should be noted that under the previously enacted 
estate tax legislation (e.g., the Economic Growth and Tax Relief 
Reconciliation Act), beginning in 2011, the ``stepped-up basis'' is 
eliminated (with two exceptions) such that the value of inherited 
assets would be ``carried-over'' from the deceased. Therefore, as noted 
previously by this Member, the Economic Growth and Tax Relief 
Reconciliation Act could result in unfortunate tax consequences for 
some heirs as the heirs would have to pay capital gains taxes on any 
increase in the value of the property from the time the asset was 
acquired by the deceased until it was sold by the heirs--resulting in a 
higher capital gain and larger tax liability for the heirs than under 
the current ``stepped-up'' basis law. Unfortunately, the bill before us 
today (H.R. 2143) apparently would also make the stepped-up basis 
elimination permanent resulting in a continuation of the problems just 
noted by this Member--higher capital gains and larger tax liability for 
heirs.
  In closing, Mr. Speaker, while this Member is strongly supportive of 
legislation to substantially raise the estate tax exemption level and 
to reduce the rate of taxation on all levels of taxable estates, and as 
such introduced legislation to this effect (H.R. 42), this Member 
cannot in good conscience support the total elimination of the 
inheritance tax on the super-rich.
  Mr. FORBES. Mr. Speaker, I rise in strong support of H.R. 2143, the 
Permanent Death Tax Repeal Act of 2001. There are two things certain in 
life: death and taxes. With estate taxes, Washington has figured out a 
way to marry these two certainties. fortunately, last year President 
Bush singed into law the Economic growth and Tax Relief Reconciliation 
Act of 2001, which represents the largest tax cut in twenty years. The 
new tax law reduces marginal rates across the board, provides for 
marriage penalty relief, expands the child tax credit, increases 
contribution limits for IRAs and 401(k) plans, and repeals the death 
tax.
  Unfortunately, because of the other body's acrane rules, the Economic 
Growth and Tax Relief Reconciliation Act will sunset in 2011. This is 
because under the Byrd Rule a point of order may be raised in the 
Senate against any tax reduction contained in a reconciliation bill 
that reduces taxes beyond the window of the reconciliation bill, in 
this case ten years. The point of order can only be waived with the 
vote of 60 Senators.
  Congress should not allow the Estate Tax to rear its ugly head again 
because of the Senate's bureaucratic rules. The sunset provision of the 
tax relief package defies the original intent of the legislation and 
makes it virtually impossible for people and small businesses to plan 
ahead from a tax standpoint. Taxpayers should not pay the consequences 
ten years from now because of an esoteric Senate rule.
  I also support this legislation because the Estate Tax is bad policy. 
Families should be allowed to keep more of what they have earned 
throughout their lives. There is no other tax more offensive than that 
levied on the deceased and their families. Not only is it a double 
taxation, but also its very name is a misnomer. Rather than failing on 
``estates,'' its most egregious effects are on small businesses and 
farms, which have been built over generations, only to be destroyed 
upon an individual's death in order to pay federal taxes. Clearly, this 
oppressive tax should be eliminated.
  America has a strong and rich tradition of entrepreneurship and self-
reliance. The Estate Tax, however, insults our values by forcing 
families to destroy a lifetimes work to feed the largess of the 
government. Rather, Congress should support policies that encourage the 
generational transfer of wealth. We should see that family farms and 
business are kept in business, not taxed out of existence because of 
the government. In the end, Mr. Speaker, the bottom line is that 
families should never have to visit a funeral parlor and the IRS in the 
same week.
  Mr. Speaker, I urge my colleges to support H.R. 2143 and finally put 
an end to this misguided tax.
  Ms. BROWN of Florida. Mr. Speaker, today is another sad example of 
why it matters who is in charge. We see today what the priorities are 
for this house leadership. For Republicans, the answer to every problem 
we have in this nation, and we have plenty, is tax cuts. The military 
and Coast Guard are underfunded, tax cuts. Seniors can't afford to buy 
the drugs they need, tax cuts. Veterans are being denied health care 
and benefits, tax cuts. Children are taking classes in trailers, tax 
cuts. Thousands of voters losing their right to be heard, tax cuts. 
We're struggling to find money to fight the war on terrorism, protect 
U.S. soil, rebuild New York, and keep peace in the Middle East. And the 
most important thing on the agenda for the Republicans is tax cuts for 
their country club friends that fund their campaigns.
  The full repeal of the estate tax does nothing for the vast majority 
of Americans, and similar to most republican tax cuts, the lion's share 
of the benefits go to the super rich. If we have to deal with another 
tax cut, lets make it fair and immediate. The Democratic substitute 
will increase exemptions for small businesses and family farms, without 
jeopardizing the money we need to protect all our citizens from harm.
  Mr. ADERHOLT. Mr. Speaker, last June, I had the privilege of 
attending the ceremony at which President Bush signed last year's 
historic tax cuts into law. This was quite an event, because it marked 
the enactment of the largest tax relief package in the last two 
decades.
  It was also an accomplishment because it reversed the backwards way 
that Washington often views tax dollars as belonging to federal 
government bureaucrats, not to working family farmers and small 
business people. This backwards view is particularly stressful to 
families when a family member has passed away.
  When someone who has paid taxes all of his life passes away, the 
death tax will still force surviving family members to pay up to 50 
percent on the value of property of the deceased for tax year 2002. 
Fifty percent, even though the deceased spent a lifetime paying taxes 
on that very property. This is double taxation. With this high rate of 
taxation, families

[[Page H3261]]

can be forced from their houses, off of their farms, and out of their 
businesses.
  Thanks to last year's tax cut, the death tax will be gradually phased 
out by tax year 2010. However, because of a procedural rule in the 
other body, the death tax will come back to life in tax year 2011. To 
keep the death tax in the grave where it belongs, I am pleased to serve 
as an original cosponsor of H.R. 2143, the Permanent Death Tax Repeal 
Act, sponsored by Rep. Dave Weldon of Florida, and urge my colleagues 
to support this important legislation.
  Mr. ETHERIDGE. Mr. Speaker, I rise today to voice my reluctant 
opposition to H.R. 2143. Mr. Speaker, I own a small farm and at one 
time was a small business owner. Therefore, I am fully aware of how 
estate taxes make it harder for parents to leave a legacy to their 
children, whether it is in the form of money, land, or a business.
  Throughout my service in Congress, I have been a strong supporter of 
estate tax relief for family farmers and small business owners. The 
first bill I introduced as a Member of Congress was a bill to raise the 
inheritance tax exemption from $600,000 to $1.5 million and indexed it 
to inflation for the first time. When a similar provision was included 
in the Taxpayer Relief Act of 1997, I introduced another proposal to 
provide further estate tax relief for those who inherit family owned 
farms and small businesses, by providing an estate tax exemption of $4 
million. Last year, I even voted for H.R. 8, the Death Tax Elimination 
Act of 2001, to repeal the estate tax entirely by 2010.
  When I supported H.R. 8, our country was expecting continuing budget 
surpluses for years to come. However, the unfortunate reality of our 
situation is that we have witnessed--in just one year--the most 
dramatic fiscal reversal in the history of our nation. Last year's 
projected budget surpluses have disappeared, and our nation is now 
drowning in red ink with ever-growing budget deficits and increasing 
federal debt.
  Certainly, the severe economic downturn and the cowardly terrorist 
attack our nation experienced contributed to our country's dire fiscal 
position. However, the primary culprit is the risky, irresponsible tax 
scheme the Republican Congress enacted last year; the same plan that 
provided for only a one-year repeal of the estate tax. According to the 
Administration's own budget figures, that tax scheme is responsible for 
the nearly two trillion dollars in new debt the country faces within 
the next 10 years.
  As my record shows, I support providing estate tax relief, but not at 
the expense of our senior citizens who benefit from Social Security and 
Medicare. The only way to pay for this bill before us is by taking more 
money out of the Social Security and Medicare Trust Funds and replacing 
it with more IOUs. Making the repeal permanent at this time will 
compound the fiscal mistakes Congress made last year and make it nearly 
impossible for us to ensure that Social Security and Medicare will 
still be available when the baby boom generation retires.
  In addition, instead of truly eliminating the inheritance tax, the 
bill imposes new capital gains taxes and record-keeping requirements on 
individuals acquiring inherited property. This bill requires the 
increased value of estates to be tracked over time so that capital 
gains taxes can be paid. This will place enormous capital gains taxes 
and record-keeping burdens on the heirs of estates that may be decades 
old.
  We need is to come together and chart a new path toward fiscal 
responsibility. That is why I am supporting the Democratic substitute 
authored by Rep. Pomeroy. This substitute provides an estate tax 
exemption of $3 million for individuals and $6 million for couples 
beginning January 1, 2003. This plan will exempt 99.7% of estates from 
the estate tax and cost less than half than a full repeal. In addition, 
the substitute repeals the Republican capital gains provisions that 
impose new burdens upon heirs.
  Working together, we can move toward balanced budgets and away from 
bigger budget deficits; pay down the national debt; save Social 
Security and Medicare funds for older Americans and not for other 
purposes; maintain America's leadership in science and technology; 
invest in education, health care and other initiatives that enable 
people to make the most of their lives; and provide for a permanent 
estate tax repeal. Passing H.R. 2143 at this time is inconsistent with 
these goals and fiscal responsibility; therefore, I oppose the bill and 
will wait for the day that fiscal sanity returns to Congress.
  Mr. SANDLIN. Mr. Speaker, I rise today in support of this 
legislation.
  The elimination of the Estate Tax has been a priority of mine since I 
first got elected to Congress.
  In 1997, as a Freshman Congressman, one of the first pieces of 
legislation I introduced was a bill to eliminate the estate tax. In 
every Congress since then I have reintroduced this legislation and I am 
committed to legislation to permanently end the estate tax.
  All over Northeast Texas I have heard horror stories from many family 
members who have been forced to sell all or part of their family 
business or family farm just to pay the estate taxes. Family-operated 
farms, ranches and businesses are the backbone of the Northeast Texas 
economy and the estate tax threatens their continued existence. 
Currently, only about 30 percent of family businesses make it beyond 
one generation and that isn't what America is all about.
  In 1997, I also supported the Taxpayer Relief Act, which increased 
the unified credit--the general estate tax exemption allowed under most 
circumstances--from $600,000 to $1 million over 10 years between 1998 
and 2008. It also included a new exemption for family-owned farms and 
small businesses, ensuring that the total amount exempt from tax 
credits for these family-owned businesses would total $1.3 million. 
That was a good first step toward the American dream of building a 
business and passing it on to future generations. But, we still needed 
to do more.
  Last year, on April 4, 2001, I voted for legislation that would phase 
out the estate, gift, and generation-skipping taxes over the next 10 
years. However, as we all know, the version that was signed into law--
as part of the overall tax cut package--re-establishes the estate tax 
in 2011. This is simply not acceptable to me or to the family business-
owners and family-farmers who are hurt by the estate tax. I believe we 
have made great strides over the last 7 years to help family businesses 
and farms escape from the burden of the estate tax. However, the sunset 
is a setback for true, long-term relief.
  Earlier this year, on April 15, a day when all Americans are focused 
on the taxes they pay, I introduced legislation to permanently repeal 
the estate tax. I wanted to signal the need to do more.
  Today, I am pleased that we have the opportunity to vote once again 
on permanent repeal--making sure that the estate tax will not rear its 
ugly head again in 2011.
  I believe, that no matter what, we must make the estate tax repeal 
permanent and that doing so is good for economic growth and is good for 
the American dream.
  I urge my colleagues to support this important legislation and I 
yield back the balance of my time.
  Mr. BALDACCI. Mr. Speaker, I rise today in opposition to H.R. 2143, 
the Estate Tax Repeal Act, and in support of the substitute amendment.
  Mr. Speaker, no one wants to see family farms and businesses 
jeopardized by the estate tax. I am a small business owner myself, and 
I share the desire of many hard-working Americans who want to build 
prosperous businesses and farms, and then pass them on to their 
children in the knowledge that they will be secure.
  However, this vote is not about saving family farms and businesses--
if that were the issue, it would be easy enough for this House to 
protect them. The substitute bill before us today creates a high 
exemption that would protect almost every farm and business in America. 
Instead, this vote is a choice between enacting a generous exemption 
that safeguards family businesses, and enacting an outright repeal that 
gives a tax break to those with the highest incomes.
  This makes a real difference to people. In my home state of Maine, 
only about 1 percent of estates would fall above the $3 million 
exemption. In high revenue years like 1999, the top 10 estates alone 
accounted for $30.6 million in state revenue. This is equal to the 
entire budget for the Maine Department of Public Safety. It is also 
equal to all of the growth in state medical care payments to providers 
in the state of Maine. If we were to pass an outright repeal of the 
estate tax, Maine would lose this desperately needed income, and would 
be forced to cut such vital services.
  I do not believe it is worth trading our public safety activities, 
especially in the midst of a fight against terrorism, to give a tax cut 
to the top 10 estates in Maine. I do not believe it is worth cutting 
medical care in hospitals to give a tax cut to the top 10 estates in 
Maine.
  Mr. Speaker, many states are currently facing the budget crises that 
is affecting my home state. Our Federal Government is now facing 
deficits as far as the eye can see. Why endanger our priorities in 
health, security, and education when a much better alternative is right 
her before us? Voting for the substitute will protect family farms and 
businesses, but preserve our fiscal stability and our ability to fund 
some of our most important needs.
  I urge my colleagues to support the substitute, and to vote against 
H.R. 2143.
  Ms. McCARTHY of Missouri. Mr. Speaker, I rise today to express my 
strong support for the Democrat substitute which provides immediate, 
permanent estate tax reform, but in opposition to H.R. 2341. Small 
businesses and farm owners should not be penalized for their success, 
nor should they need to worry about their ability to pass the family 
business on to

[[Page H3262]]

future generations, and the substitute addresses these concerns. I 
continue to oppose complete repeal as proposed in the measure before us 
because it disproportionately benefits a small number of extremely 
wealthy individuals and runs our Nation's budget into deeper deficits.
  In its current form, the estate tax affects less than 2 percent of 
the wealthiest Americans. As of January 1, 2003, the substitute will 
immediately increase the estate tax exclusion to $3 million for a 
single person and $6 million for a married couple. The substitute 
permanently exempts 99.7 percent of Americans, leaving the tax burden 
entirely on the wealthiest 0.3 percent of estates. This substitute 
updates our most progressive tax to affect even fewer families. I 
continue my support for immediate, permanent estate tax reform, unlike 
the Republican bill, which will not provide relief until 2011.
  The Democratic substitute offsets the cost of the estate tax 
increase, but the Republican bill to totally repeal the estate tax, 
which costs more than $50 billion per year, comes at the cost of a 
prescription drug benefit, our children's education, and paying down 
the debt. I have worked too hard balancing budgets during my 25 years 
of public service to permit such irresponsible fiscal policy to 
prevail.
  Totally repealing the estate tax is contrary to the wishes of two 
Republican Presidents, Teddy Roosevelt and William Howard Taft, who put 
this tax in place. In 1907, Theodore Roosevelt said the following 
regarding this progressive tax, ``Such a tax would be one of the 
methods by which we should try to preserve a measurable quality of 
opportunity for the people of the generation growing to manhood.'' 
During his Inaugural Address in 1909, William Howard Taft said, ``New 
kinds of taxation must be adopted, and among these I recommend a 
graduated inheritance tax as correct in principle and as certain and 
easy of collection.'' Historically, the richest in our society are the 
ones who pay the majority of the estate tax, and the original 
justification for this progressive tax is still applicable today, but 
reform is needed as our economy and times change.
  Rick Mos is a small business owner in Kansas City, and he has 
concerns about the future. His company, High Life Sales Company, is a 
beer distributor in my district. He supports the reform that has 
already taken place to raise the exemptions and decrease the tax rates, 
and he supports permanent reform. He does not, however, support 
permanent repeal. He told me that if it were not for the estate tax, 
the wealthiest Americans would lose a necessary incentive to create 
charitable foundations which help all of our communities. Two of the 
largest charitable foundations in my district, the Kauffman foundation 
and the Hall foundation, have donated millions of dollars to the Kansas 
City community, including the construction of a state-of-the-art 
concert hall which is scheduled to be completed in 2007. Would there be 
as much money available if the estate tax was repealed? It is unlikely. 
Ewing Kaufman and Joyce Hall were great philanthropists, but they were 
also businessmen, and they recognized the tax benefits of giving to 
charity under the estate tax. Voting for H.R. 2341 repeals this 
charitable incentive.
  Mr. Mos supports the Democratic substitute, but not a total repeal. 
We are hearing a lot of Members today talk about small business owners 
and farmers, but how many of you have spoken to small business owners 
in your district? I am sure you will find many constituents with the 
same beliefs as Mr. Mos.
  Many of our Nation's billionaires have bonded together to form an 
organization called Responsible Wealth. Warren Buffet, one of the 
group's founders, argues that repealing the estate tax would be 
equivalent to ``choosing the 2020 Olympic team by picking the eldest 
sons of the gold medal winners in the 2000 Olympics.''
  Let's do what is responsible for America and permanently reform the 
estate tax but not repeal it.
  Mr. DINGELL. Mr. Speaker, I rise in opposition to a bald political 
move by my Republican colleagues.
  Just a month and a half ago, on April 18, this body voted to make 
last year's tax cut permanent. Though I voted against it, it passed by 
a vote of 229-198. Why are we taking a piecemeal approach and voting on 
it again?
  I would ask the Republican Leadership the same thing I asked when we 
voted on H. Con. Res. 312, on February 6. For those of you who don't 
remember, that was a bill that ``expressed the sense of Congress that 
the tax cut should not be repealed.'' Have we no real work to do?
  Just over a year ago, this body voted on the President's tax cut. 
This tax cut, you'll remember, benefited only the wealthiest Americans. 
In order to cook the books and give tax breaks to their fat-cat 
buddies, my Republican colleagues put a 10-year sunset on that tax cut.
  That brings us up to April 18, when this body voted to make the 
President's irresponsible tax cut permanent.
  Yet here we are, we have no prescription drug benefit for our 
seniors, there are people earning a measly $5.15 an hour and we still 
don't have a patient protection bill. We do, however, have the time to 
debate and discuss whether or not we should make each aspect of that 
foolish tax cut permanent--even though we have already done so.
  Mr. Speaker, I keep hoping that one day my colleagues on the other 
side of the aisle will cease to amaze me. But they never do. There is 
not a problem or crisis that they cannot address with a simple tax cut. 
And I would note that it is all the more appealing to my Republican 
colleagues if it benefits the wealthy.
  I will not waste time here talking about the fact that we cannot pay 
for this tax cut, that further tax cuts will only serve to put us 
deeper in debt, and that we have other priorities that need to be dealt 
with. I have said it all before. I would simply ask my colleagues to 
vote against this redundant farce. Take this opportunity to send a 
message that there really are other things we should be doing. Vote no 
on this bill.
  The SPEAKER pro tempore (Mr. Simpson). All time for general debate on 
the bill has expired.


     Amendment in the Nature of a Substitute Offered by Mr. Pomeroy

  Mr. POMEROY. Mr. Speaker, I offer an amendment in the nature of a 
substitute.
  The SPEAKER pro tempore. The Clerk will designate the amendment in 
the nature of a substitute.
  The text of the amendment in the nature of a substitute is as 
follows:

       Amendment in the nature of a substitute offered by Mr. 
     Pomeroy:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. RESTORATION OF ESTATE TAX; REPEAL OF CARRYOVER 
                   BASIS.

       (a) In General.--Subtitles A and E of title V of the 
     Economic Growth and Tax Relief Reconciliation Act of 2001, 
     and the amendments made by such subtitles, are hereby 
     repealed; and the Internal Revenue Code of 1986 shall be 
     applied as if such subtitles, and amendments, had never been 
     enacted.
       (b) Sunset Not To Apply.--
       (1) Subsection (a) of section 901 of the Economic Growth 
     and Tax Relief Reconciliation Act of 2001 is amended by 
     striking ``this Act'' and all that follows and inserting 
     ``this Act (other than title V) shall not apply to taxable, 
     plan, or limitation years beginning after December 31, 
     2010.''.
       (2) Subsection (b) of such section 901 is amended by 
     striking ``, estates, gifts, and transfers''.
       (c) Conforming Amendments.--Subsections (d) and (e) of 
     section 511 of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001, and the amendments made by such 
     subsections, are hereby repealed; and the Internal Revenue 
     Code of 1986 shall be applied as if such subsections, and 
     amendments, had never been enacted.

     SEC. 2. MODIFICATIONS TO ESTATE TAX.

       (a) Increase in Exclusion Equivalent of Unified Credit to 
     $3,000,000.--
       (1) In general.--Subsection (c) of section 2010 of the 
     Internal Revenue Code of 1986 (relating to applicable credit 
     amount) is amended by striking all that follows ``the 
     applicable exclusion amount'' and inserting ``. For purposes 
     of the preceding sentence, the applicable exclusion amount is 
     $3,000,000.''.
       (2) Earlier termination of section 2057.--Subsection (f) of 
     section 2057 of such Code is amended by striking ``December 
     31, 2003'' and inserting ``December 31, 2002''.
       (b) Maximum Estate Tax Rate To Remain at 50 Percent; 
     Restoration of Phaseout of Graduated Rates and Unified 
     Credit.--Paragraph (2) of section 2001(c) of such Code is 
     amended to read as follows:
       ``(2) Phaseout of graduated rates and unified credit.--The 
     tentative tax determined under paragraph (1) shall be 
     increased by an amount equal to 5 percent of so much of the 
     amount (with respect to which the tentative tax is to be 
     computed) as exceeds $10,000,000. The amount of the increase 
     under the preceding sentence shall not exceed the sum of the 
     applicable credit amount under section 2010(c) and 
     $224,200.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2002.

     SEC. 3. VALUATION RULES FOR CERTAIN TRANSFERS OF NONBUSINESS 
                   ASSETS; LIMITATION ON MINORITY DISCOUNTS.

       (a) In General.--Section 2031 of the Internal Revenue Code 
     of 1986 (relating to definition of gross estate) is amended 
     by redesignating subsection (d) as subsection (f) and by 
     inserting after subsection (c) the following new subsections:
       ``(d) Valuation Rules for Certain Transfers of Nonbusiness 
     Assets.--For purposes of this chapter and chapter 12--
       ``(1) In general.--In the case of the transfer of any 
     interest in an entity other than an interest which is 
     actively traded (within the meaning of section 1092)--
       ``(A) the value of any nonbusiness assets held by the 
     entity shall be determined as if the transferor had 
     transferred such assets directly to the transferee (and no 
     valuation discount shall be allowed with respect to such 
     nonbusiness assets), and

[[Page H3263]]

       ``(B) the nonbusiness assets shall not be taken into 
     account in determining the value of the interest in the 
     entity.
       ``(2) Nonbusiness assets.--For purposes of this 
     subsection--
       ``(A) In general.--The term `nonbusiness asset' means any 
     asset which is not used in the active conduct of 1 or more 
     trades or businesses.
       ``(B) Exception for certain passive assets.--Except as 
     provided in subparagraph (C), a passive asset shall not be 
     treated for purposes of subparagraph (A) as used in the 
     active conduct of a trade or business unless--
       ``(i) the asset is property described in paragraph (1) or 
     (4) of section 1221(a) or is a hedge with respect to such 
     property, or
       ``(ii) the asset is real property used in the active 
     conduct of 1 or more real property trades or businesses 
     (within the meaning of section 469(c)(7)(C)) in which the 
     transferor materially participates and with respect to which 
     the transferor meets the requirements of section 
     469(c)(7)(B)(ii).

     For purposes of clause (ii), material participation shall be 
     determined under the rules of section 469(h), except that 
     section 469(h)(3) shall be applied without regard to the 
     limitation to farming activity.
       ``(C) Exception for working capital.--Any asset (including 
     a passive asset) which is held as a part of the reasonably 
     required working capital needs of a trade or business shall 
     be treated as used in the active conduct of a trade or 
     business.
       ``(3) Passive asset.--For purposes of this subsection, the 
     term `passive asset' means any--
       ``(A) cash or cash equivalents,
       ``(B) except to the extent provided by the Secretary, stock 
     in a corporation or any other equity, profits, or capital 
     interest in any entity,
       ``(C) evidence of indebtedness, option, forward or futures 
     contract, notional principal contract, or derivative,
       ``(D) asset described in clause (iii), (iv), or (v) of 
     section 351(e)(1)(B),
       ``(E) annuity,
       ``(F) real property used in 1 or more real property trades 
     or businesses (as defined in section 469(c)(7)(C)),
       ``(G) asset (other than a patent, trademark, or copyright) 
     which produces royalty income,
       ``(H) commodity,
       ``(I) collectible (within the meaning of section 401(m)), 
     or
       ``(J) any other asset specified in regulations prescribed 
     by the Secretary.
       ``(4) Look-thru rules.--
       ``(A) In general.--If a nonbusiness asset of an entity 
     consists of a 10-percent interest in any other entity, this 
     subsection shall be applied by disregarding the 10-percent 
     interest and by treating the entity as holding directly its 
     ratable share of the assets of the other entity. This 
     subparagraph shall be applied successively to any 10-percent 
     interest of such other entity in any other entity.
       ``(B) 10-percent interest.--The term `10-percent interest' 
     means--
       ``(i) in the case of an interest in a corporation, 
     ownership of at least 10 percent (by vote or value) of the 
     stock in such corporation,
       ``(ii) in the case of an interest in a partnership, 
     ownership of at least 10 percent of the capital or profits 
     interest in the partnership, and
       ``(iii) in any other case, ownership of at least 10 percent 
     of the beneficial interests in the entity.
       ``(5) Coordination with subsection (b).--Subsection (b) 
     shall apply after the application of this subsection.
       ``(e) Limitation on Minority Discounts.--For purposes of 
     this chapter and chapter 12, in the case of the transfer of 
     any interest in an entity other than an interest which is 
     actively traded (within the meaning of section 1092), no 
     discount shall be allowed by reason of the fact that the 
     transferee does not have control of such entity if the 
     transferee and members of the family (as defined in section 
     2032A(e)(2)) of the transferee have control of such entity.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to transfers after the date of the enactment of 
     this Act.

  The SPEAKER pro tempore. Pursuant to House Resolution 435, the 
gentleman from North Dakota (Mr. Pomeroy) and a Member opposed each 
will control 20 minutes.
  The Chair recognizes the gentleman from North Dakota (Mr. Pomeroy).
  Mr. POMEROY. Mr. Speaker, I yield myself 2 minutes.
  Mr. Speaker, I think about a farm family, a farm couple, say in their 
eighties. Say they have an estate of $5 million. Listening to the 
debate today, they must be thinking, thank goodness for the majority, 
thank goodness they are helping us.
  In reality, let us make it very, very clear, the majority bill does 
nothing until the year 2011. It does not change a thing. If they had a 
choice to make, eliminating the estate tax for more people now or wait 
until later and then repeal it, they took the latter route. We will 
show Members that reform now is very, very important to so many of the 
people they have been talking about all afternoon.
  Let us compare how the bills contrast. We would establish an estate 
tax exclusion: no estate tax for couples with $6 million in assets 
beginning January 1. They would leave the law for estate taxes at $2 
million. If one is above $2 million, they are going to have tax, under 
their proposal. How about 2004? They take it to $3 million; but we are 
at $6 million, way more meaningful relief for that farm family. The 
same in 2005, the same in 2006, the same in 2007 and 2008.
  Through the balance of the decade, the substitute that we have put 
before the Members gives meaningful estate tax relief now. In their 
bill, there will be four different Congresses convening between now and 
the implementation date of their bill. We cannot tell events in 2011. 
We cannot bind events in 2011. We can do something now.
  Mr. Speaker, this substitute will make the estate tax go away for 
99.7 percent of all Americans. That is the family farmers, the small 
businesses. Those are the people we have heard so much from from the 
majority. It is $6 million for a couple and no estate tax beginning in 
January under our substitute. This is the approach we advance and want 
Members' consideration for.
  Mr. Speaker, I reserve the balance of my time.
  The SPEAKER pro tempore. Does the gentleman from California (Mr. 
Thomas) claim time in opposition to the amendment?
  Mr. THOMAS. Mr. Speaker, I rise in opposition to the amendment.
  The SPEAKER pro tempore. The gentleman from California is recognized 
for 30 minutes.
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I am old enough to recall a period of time in which 
records were first 78 rpm, and then we got the smaller ones when the 
kids' rock 'n roll began to come in, the old 45s. What was usually done 
was that there was on one side of the record the hit song, and then on 
the other side, what came to be known as the flip side. Rarely did we 
get a 45 record that had two really good songs on both sides, and there 
were some folks who made a living by living on the flip side.
  So we have had the debate about getting rid of the death tax, 
repealing the death tax permanently. That is the hit side. The flip 
side of that record is what we are now debating. I do not care how many 
numbers on a chart are presented, I do not care how someone is going to 
tell us we are going to be okay for a while. The name of the song on 
the flip side is: we are reinstating a permanent death tax. The hit 
side is repeal, the flip side is that we want to retain a death tax. 
That is one of the reasons they talked about the hit side and the flip 
side.
  Here in terms of this particular debate, all we have to say is, do 
what most of the kids did when they had their 45s: play the hit side, 
not the flip side. Oppose the substitute and support the underlying 
bill.
  Mr. Speaker, I yield the balance of my time to the gentlewoman from 
Washington (Ms. Dunn), and I ask unanimous consent that she control the 
balance of the time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the substitute effective January 1, 2003, repeals the 
estate tax for 99.7 percent of the people in this country: those 
couples with estates of $6 million and below. The majority would leave 
those couples without effective relief, their implementation date being 
2011, the effect of their bill.
  Mr. Speaker, I yield 3 minutes to the gentlewoman from Florida (Mrs. 
Thurman), the cosponsor of the substitute.
  Mrs. THURMAN. Mr. Speaker, I thank the gentleman from North Dakota 
for yielding time to me, and I think he has done a wonderful job in 
protecting the values of the people of this country.
  Mr. Speaker, I rise in strong support of the Pomeroy-Thurman 
substitute and in opposition to H.R. 2143. Mr. Speaker, in 1999 I urged 
the House to pass a sensible bill that would remove estate tax from 
small businesses and family farmers. If the House had adopted my 
suggestion, we would not be offering this substitute today, and people 
that had died and had to paid the death tax would not be paying it 
today.

[[Page H3264]]

  This substitute creates an immediate $6 million exemption for 
couples. The majority bill is only $2 million per couple. Think about 
that. Members should ask their neighbors and coworkers if they have $6 
million, or if they know anybody who does. I am not talking about a 
$500,000 estate or $1,000,000, but $6 million.
  In 1999, for example, there were 3,300 people nationwide that had 
estate values at more than $5 million, 412 estates in Florida. If we 
adopt this substitute, even fewer Americans will be touched by the 
estate tax.
  Mr. Speaker, this bill is not about small business relief, it is the 
answer to Bill Gates, Sr.'s question: How high a price is America 
willing to pay in order to give a handful of millionaires and 
billionaires a tax break?
  Each week I meet with individuals who tell me their needs. It may be 
farmers who need water to fight an ongoing drought; it may be utility 
contractors who need money for water and sewer programs. I have heard 
their pleas and would like to help them; but guess what, my hands are 
tied because there are no Federal funds left.
  Ask the mother of a child from Jacksonville with juvenile diabetes if 
she wants a permanent estate tax repeal or more health research or 
health care for her child.
  Ask the family from Broward County, Florida, that I talked to outside 
of my office a few weeks ago. They explained the problems from the lack 
of funding for a rare childhood disease of their daughters. Most of 
this House is on record in support of additional health research 
funding. Where do Members think this money comes from?
  Ask our parents or grandparents about a real Medicare prescription 
drug plan. Without funds, they will be forced to choose between food 
and medicine. This bill, and others like it, reduces even further 
revenue that could fund these and other programs. With the substitute, 
at least we may be able to have some money to help fund some of these 
programs.
  Mr. Speaker, one final point about the difference between what the 
majority talks about in their speeches and what they put in their 
bills. Why do we have to wait until 2010 to get the benefit of the 
estate tax repeal? The substitute, on the other hand, repeals the tax 
for 99.7 percent of the people as of January 1, 2003.

                              {time}  1445

  If we want to help small businesses, support the substitute; but if 
we want to increase future deficits, oppose the substitute. If we want 
to help family farmers, support the substitute. If we want to increase 
the national debt, then do not. If we want to provide some money for 
Medicare, health research, homeland security, and defense, support the 
substitute. If we want to further limit our ability to meet people's 
needs, then do not.
  Ms. DUNN. Mr. Speaker, I yield myself such time as I may consume.
  The Democrat substitute is a short-term fix, and it is really a scam. 
It is masquerading as real tax relief. As I listen to the gentlewoman 
talk about the incidents in her State of Florida, it occurs to me that 
the numbers tell a different story. They are complaining about our not 
having enough money to spend on certain programs, many of which I think 
are very worthy and many of which we are spending money on. But in the 
Democrat substitute over the first 5 years, they are spending $22 
billion compared to the $9.2 billion that we spend in ours. They are 
actually raiding the coffers to a much greater extent themselves.
  Mr. Speaker, their bill does not address rates. After the $3 million 
credit, the family is forced to pay taxes starting at a 50 percent rate 
on every dollar over the credit. It does not start at 1 percent. It 
starts at 50. For businesses valued at $6 million, this means a tax 
bill approaching $1.5 million.
  Under the substitute, the United States will still have the second 
highest death tax rates in the world after Japan, behind bastions of 
free market capitalism like France and Sweden.
  Secondly, every attempt to provide the death tax relief has been a 
failure. We all know what happens when a tax is left on the books. It 
simply grows back. It grows back in this case with a vengeance. 
Inflation alone can subtract 30 percent of the value away from the 
exemption that the substitute requires. If we do not pull the death tax 
out by the roots, there is no guarantee that the exemption will not be 
reduced totally by a future Congress.
  The Pomeroy substitute also sets an arbitrary limit on the size of a 
protected business. It essentially tells businesses to be successful 
but not too successful. Unless the $3 million exemption were adjusted 
for inflation, as I said, within 10 years inflation could decrease its 
value by 30 percent.
  The Pomeroy substitute will actually cost over twice as much in the 
next 5 years as immediate repeal. I think this alone is a very 
important way to view this substitute because it is being sold as 
something that will allow us to take care of the involvement of the 
cost of that bill in a more effective way and it certainly is not true.
  Finally, and perhaps most importantly of all, the substitute affirms 
the flawed notion that it is fair and reasonable to tax people at the 
end of their lives. Instead of rewarding them for saving or building a 
business, being successful, we punish them by assessing on them a very 
burdensome and unfair tax.
  I urge my colleagues to reject the substitute, eliminate the death 
tax once and for all. We can do that by our vote today in the House of 
Representatives.
  Mr. Speaker, I yield 2 minutes to the gentleman from Ohio (Mr. 
Portman), a valued member of the Committee on Ways and Means.
  Mr. PORTMAN. Mr. Speaker, I thank the gentlewoman for yielding me 
time and I appreciate her leadership on this issue.
  We have had an interesting debate here on the floor this afternoon. 
It started out as a debate about whether there should be a gifted 
estate tax or not. And the other side of the aisle said it is important 
that we soak the rich and we do not want to let people get off. Our 
side was saying the estate tax does not make any sense, and now we are 
hearing from the other side of the aisle that actually we do believe 
that there ought to be less of an estate tax, actually, and, in fact, 
ours costs more over the next 5 years than yours does and that is 
somehow good. So we are hearing very different arguments coming from 
the other side of the aisle.
  I guess what I would say is we have a fundamental decision to make 
here. Is this death tax a good thing or not? And what we are saying is: 
No, it is not. And there are a lot of reasons for that.
  One is the fact that it does hurt the economy. It is not the rich 
person who ends up getting the benefit of the death tax. That person is 
gone. That person is dead. It is the people who are left behind. It is 
the heirs but, more importantly, it is the employees of these small 
businesses, these family farms, who then do not have a job because they 
no longer have a business.
  Now, let me tell you, if you look at some of the data on this, it is 
amazing. This is 1.4 percent of total revenues to the Federal 
Government, extremely complex. There are thousands of valuation cases 
at the Department of Justice today, so it is an extremely expensive 
system to administer, and it has this effect of allowing for so many 
businesses not to succeed.
  We know that over half of minority businesses today, based on a 
Kennesaw State College study, are unable to grow, or fail because of 
the legal and accounting costs of the death tax. Even those folks who 
end up not being hit by the death tax have to go through the legal and 
accounting and the costs associated with it. This chart shows that it 
harms women business owners particularly because many of them are small 
business owners. They spend an average of $1,000 a month just paying to 
plan for the death tax. Instead of that money going into planning, into 
lawyers and financial planners, it could be used to provide health 
benefits, to provide pensions for their employees.
  This is really a fundamental, philosophical divide we have. Should 
there be a death tax or not. We say the death tax is inefficient. It is 
a terrible way for the Federal Government to get revenue. It ought to 
be ended. It is also bad for the economy. You all want to continue it. 
I think that is the question we have before us today.
  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I am very astounded the other side would suggest that 
the cost of our package is more than their package. The 10-year figure 
makes it very

[[Page H3265]]

clear. The cost of our package is $5 billion. And we had that offset, 
although the offset was not allowed under the rule, but $5 billion. The 
cost of their package over the 10 years, $99 billion. When they talk 
about a 5-year cost figure, that is not but half the story. The full 
story is the 10-year figure, $99 billion for the majority, $5 billion 
for ours, and that does not exclude the next 10 years where theirs 
balloons to over a trillion dollars if you count death service. 
Whatever merit there may be to their arguments, and frankly they are 
pretty thin, it certainly has nothing to do about cost. Their package 
is, over the long run, is infinitely more expensive than ours.
  Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Los 
Angeles, California (Mr. Becerra).
  Mr. BECERRA. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, I think my friend and colleague, the gentleman from Ohio 
(Mr. Portman), has said it well. We do have to put everything in 
context and we have to understand what we are talking about. Right now 
is should we have cut the estate tax, a tax that of the 270 million 
Americans will benefit about 33,000 Americans and that estate of those 
Americans. So that is slightly under 2 percent. It is about a percent 
and a half of all Americans get taxed under the estate tax. And this 
bill, which is predicted to cost $100 billion over 10 years, if you 
take it out to those 10 years, when it is fully phased in, the cost is 
about $100 billion per year. So over the second decade you are looking 
at about a trillion dollars when you factor in the interest that we 
have to pay for that. Of about $100 billion a year, a trillion dollars 
over a decade in costs.
  So let us put that in context. Today, unlike a year ago when we were 
being told we would have surpluses in our budget as far as the eye can 
see, today we have a budget deficit of something around $100 billion. 
Today what are we doing to pay that $100 billion that we do not have so 
we can have the government operating? We are using this. The government 
credit card. Where are we getting the money to pay the cost of that 
credit card and the interest on that government credit card? The Social 
Security trust fund and the Medicare trust fund.
  What is that trust fund money supposed to be used for? For those who 
are retiring so they can get Social Security and Medicare. What happens 
when you use the Social Security trust fund monies and the Medicare 
trust fund monies for things other than Social Security and Medicare? 
You have got to find money in the future to pay the cost of Social 
Security retirement and Medicare benefits that you no longer have.
  What else happens? In the future you will have to cut things like 
education, health care, housing because you do not have the money any 
more. So let us put everything in perspective here. When we talk about 
the estate tax cut and we talk about kids and seniors on Social 
Security and seniors needing prescription drug coverage which they do 
not have right now under Medicare, what is their priority? Do you want 
to pay down the debt? The President said last year we could pass our 
tax cut of last year and still pay down the debt.
  Well, today we not only cannot pay down the debt nor the interest on 
that debt, but it is going to grow. And so I look at our budget for 
education, which this year is about $51 billion. We are going to spend 
more on giving 30,000 of the wealthiest Americans a tax cut than giving 
the 45 million kids in our public schools any additional money in 
education. That is not a priority in my book. And that is why you 
should support the Pomeroy substitute because what the Pomeroy 
substitute says is help the family farm, help the small business. We 
can do that and still make sure everyone has shared sacrifice. Vote for 
the substitute and vote against the bill.
  Ms. DUNN. Mr. Speaker, how much time is remaining?
  The SPEAKER pro tempore (Mr. Simpson). The gentlewoman from 
Washington (Ms. Dunn) has 23 minutes remaining. The gentleman from 
North Dakota (Mr. Pomeroy) has 21 minutes remaining.
  Ms. DUNN. Mr. Speaker, I yield 3 minutes to the gentleman from 
Georgia (Mr. Kingston).
  Mr. KINGSTON. Mr. Speaker, I thank the gentlewoman for yielding me 
time.
  The Democrats today keep talking about cost. But things do not cost 
you money when it is not yours. This money belongs to the taxpayer, the 
wage earners who made the money. That is who this is going to cost. It 
is not going to cost the government anything. This is confiscating less 
money from the taxpayers. That is what our bill does today. The 
Democrats talk about making theirs permanent. We wanted to make ours 
permanent now, not 10 years from now. It was your parliamentary 
procedures in the other body that caused us to expire this in 10 years 
or make it happen in 10 years. We want it effective now.
  The Democrats talk about their plan. Well, when they had the House 
and the majority in the Senate and the White House, did they do any 
estate tax relief? Of course not.
  The Democrats talk about Social Security and Medicare. Well, when you 
do not have anything to offer, you bring out the tried and true, let us 
talk about Social Security and Medicare and scare the folks back home, 
and every time you hear that you know the Dems do not have a plan.
  In fact, the Democrat issue of fairness is like this. Imagine you 
have two Democrat friends and you are walking down the street with them 
and you have $15 in your pocket and they do not have any. Well, they 
say it is lunch time. You have $15. We do not have any. Let us have a 
vote to see who pays for lunch. So the two of them vote. I pay for 
lunch with my $15 and that is fairness in their definition.
  You might think that is absurd, but I can promise you this. Let us 
say there were 10 people walking down the street, nine had no money and 
the tenth had all the money. Under their definition of fairness, that 
tenth person must have done something wrong because he has money. 
Therefore, let us vote the money out of his pocket and put it in ours. 
That is the Democrat vision of fairness.
  If you want to talk about fairness, come with me to Moultrie, 
Georgia, talk to a friend of mine who is in the small loan business. He 
inherited this from his dad, he and his brother. And they paid estates 
taxes on it about 20 years ago. They have built it up to 16 different 
locations. They have about 100 employees, take real good care of their 
employees. In fact, they own a condominium in Ferdanina Island, 
Florida. They let the employees use it all year long. It is one of the 
benefits of working with a good company that takes care of things. This 
guy has a daughter at the University of Georgia.
  Now, I asked him will she get in the family business? He said, I do 
not know. Because after 16 different locations, the Federal Government 
makes it so hard for us to continue to grow it might not be worth our 
while to expand any more.
  So one of the great problems of having estate tax is that it cripples 
business from future growth and doing things today. I believe we should 
bury the estate tax, not just for my friend in Moultrie, Georgia, for 
farmers all over Georgia. This bill is supported by the National Black 
Chamber of Commerce, the Hispanic Business Roundtable, the National 
Federation of Independent Businesses, and many, many other commonsense 
associations support it.
  Mr. Speaker, I hope that we will support the Republican plan and vote 
no on the Democrat substitute. And I thank my friend, the gentleman 
from Mississippi (Mr. Taylor), for listening so attentively.
  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would observe that we would provide relief to the 
gentleman's farmer constituents to the tune of $6 million next year for 
a farm couple, no estate tax if they are below that. Under their 
legislation, there will be estate tax consequences if they are over $2 
million.
  The time to address estate tax is to do it now. And our bill, 
effective on January 1, makes the estate tax go away for 99.7 percent 
of all Americans, those with estates of $6 million and others. I cannot 
understand why, if the problems are so severe as we are hearing from 
the other side, they do nothing under their legislation until the year 
2011.
  Mr. Speaker, I yield 2 minutes to the gentleman from Mississippi (Mr. 
Taylor).

[[Page H3266]]

  Mr. TAYLOR of Mississippi. Mr. Speaker, there is something that has 
not been mentioned much today. There is something we cannot run away 
from. Two weeks ago today this body, in mostly a party-line vote, voted 
to raise the debt limit by $750 billion. Now that is a thousand time a 
thousand time a thousand times 750.
  My buddy, and I do say buddy, the gentleman from Oklahoma (Mr. 
Watts), a couple minutes ago said, hopefully we can leave something for 
our kids and grandkids.
  Well, that is what we are leaving them, $6,019,332,312,247.55 of 
debt.

                              {time}  1500

  In my daughter's lifetime, she is 23 years old, we have added $5 
trillion to that debt.
  What particularly troubles me is coming from all of my Republican 
opponents who keep telling me I am from a wealthy family, I am not 
going to pay any estate tax. So I have a bit of trouble. In order to 
give truly very, very wealthy families a tax break, you are sticking my 
kids with the bill. It is that simple. Because not only do we owe this 
money and not only have you run up the debt by $363 billion in the past 
12 months, guys, you control the House, you control the Senate, you 
control the tax bill, and you control the spending bill. That is how 
much debt you have run up in 1 year, and you are sticking my kids with 
the bills. And until they pay off that bill, they are going to squander 
a billion dollars a day on interest, and your answer to all of this is 
to stick them with more bills. That is not fiscal responsibility.
  I liked you guys so much better when you were for a balanced budget. 
But in the 6 years, the past 6 years, the whole time the gentleman from 
Illinois (Speaker Hastert) has been Speaker, you have not scheduled one 
vote on a balanced budget amendment. We found enough time to debate the 
Nutria Eradication Act. We cannot find time to talk about a balanced 
budget. Quit sticking my kids with your bills.
  Ms. DUNN. Mr. Speaker, I yield 3 minutes to the gentleman from Texas 
(Mr. DeLay), the majority whip of our Congress.
  Mr. DeLAY. Mr. Speaker, I appreciate the gentlewoman from Washington 
(Ms. Dunn) for yielding time to me.
  Mr. Speaker, only Democrats believe that cutting taxes is a spending 
program, that cutting taxes increase the debt. What increases the debt 
is government spending more than it takes in. That is what increases 
the debt. Spending increases the debt.
  Mr. Speaker, the Members really face a clear choice today. It is very 
basic. Will they stand with the taxpayer, or will they empower the tax 
collector? Will they stand with mom and pop businesses and American 
farmers, or will they assist those seeking to confiscate their hard-
earned assets? In short, will they revive the death tax, or will they 
repeal it? They just cannot help themselves.
  The gentleman from North Dakota (Mr. Pomeroy) was talking about we 
covered 99.7 percent. They cannot repeal a tax. It is just not in their 
nature to repeal the tax. If you are doing 99.7, which I disagree with, 
then why not the other .3 percent and be fair and repeal the tax? They 
just cannot. Do you know why? Because they want to use it sometime in 
the future to take money from American farmers, money from American 
businesses, put it in the government's pocket so that they can spend.
  I hope the voters really watch the vote that is taken here today. The 
Republican Party agrees with the vast majority of the Americans who 
believe that the death tax is the most evil tax on the books. Polls 
show it; the American people understand it. Unfortunately, the voters 
understand this issue far better than some Members of Congress.
  Let us place things in their proper perspective. A farmer or a small 
businesswoman works their whole life, builds a business, nurtures a 
small farm; and the whole time that they do that, they pay taxes, year 
after year, decade after decade; but that is still not enough for some 
of those who support this tax. As the hard-working American passes on, 
the death tax and its awful terms require that the IRS must confiscate 
over half of the value of their business and their farm. That is 
fundamentally wrong, and it is fundamentally unfair even for the .3 
percent that they want to continue to tax.
  It remains to be seen how many Members will exercise sound judgment 
by rejecting class warfare and voting against this substitute. But let 
us be clear about exactly what this substitute does. The substitute is 
a tax increase, plain and simple. The substitute reverses the current 
law phase-down in the death tax rate and instead increases and 
maintains the rate at a whopping 50 percent.
  The substitute does not even index the exclusion. In plain English 
that means small businesses and farms that think they are okay today 
may later find out that the death tax reaches back and grabs them down 
the road; and most importantly, the substitute brings back this evil 
tax, while the underlying bill abolishes it once and for all.
  Let us drive a stake through the heart of the death tax. Let us end 
it for all time. Do the right thing, support the underlying bill and 
strike down this substitute.
  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.
  I think the majority whip has posed an important question: Why have 
we structured it as we have? We believe it is more important to get 
relief out now, and under the substitute if someone is $6 million and 
below for a couple, no estate tax beginning next year.
  The majority whip has just spoke for a proposition that will leave 
the estate tax on estates over $2 million next year and will not match 
the substitute by way of providing estate tax relief until late in the 
decade. Their bill does nothing until the year 2011. That is too long 
to wait. Meaningful reform now. Make estate tax go away for 99.7 
percent of the people in this country.
  Mr. Speaker, I yield 3 minutes to the gentleman from Maryland (Mr. 
Hoyer).
  Mr. HOYER. Mr. Speaker, I thank the gentleman for yielding me the 
time.
  Mr. Speaker, if the American people ever wondered how so-called 
compassionate conservatives define shared sacrifice, I hope they are 
watching the debate today. With our Nation battling the evil of 
terrorism, both at home and abroad, with the Federal Government on 
course to run a deficit outside of Social Security of $314 billion and 
with the Republican Party plundering our Social Security surpluses in 
direct violation of its own pledge not to do so, now, now is the time 
our friends in the GOP believe to bestow billions upon billions of 
dollars on a few thousand Americans.
  This is not about all Americans. This is about the wealthiest 
Americans, the billionaires in our country, by permanently repealing 
the estate tax, a reaffirmation of their leave-no-heir-behind 
philosophy.
  Yet we cannot get a vote on increasing the minimum wage. Yet 
congressional Republicans just passed welfare legislation that would 
force mothers of young children to double their work week. Yet 
congressional Republicans drag their feet on extending unemployment 
benefits for thousands of Americans who lost their jobs after September 
11, and at the very same time, they try to give Enron and a handful of 
other corporations billions of dollars out of the Federal Treasury.
  The plight of the wealthy has always been the top of the GOP agenda; 
and with today's vote, the Republican Party reality ought to rename 
itself the ``free lunch'' party.
  The whip said that he is against taxes, this is an evil tax. The whip 
believes every tax is evil. The fact of the matter is if someone wants 
to buy an aircraft carrier, if they want to buy a school lunch for a 
poor child, if they want to have a Head Start seat for a child who 
needs a hand up, then we need to pay for it in this generation. That is 
what the gentleman from Mississippi (Mr. Taylor) was talking about.
  It feigns support for fiscal responsibility, but it then enacts a 
budget-busting tax program. It claims that it supports education, but 
then shortchanges programs with the bipartisan No Child Left Behind Act 
by $90 billion, and it pretends to support Social Security, but then 
brings this bill to the floor, a bill that would cost $109 billion 
between 2003 and 2012 and more than $1 trillion in the decade after 
2012, precisely when the baby boomers retire in full force.

[[Page H3267]]

  Mr. Speaker, I urge my colleagues to support this substitute. It is 
fiscally responsible. It is good policy, and it exempts 99.7 percent of 
the American public from the estate tax. It is a good bill.
  Ms. DUNN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Montana (Mr. Rehberg).
  Mr. REHBERG. Mr. Speaker, I am here today to urge this Congress to 
set right a terrible wrong in the Tax Code. There is a basic principle 
in the American criminal justice system that protects our citizens from 
being charged with the same crime twice. It is unfortunate that our Tax 
Code does not provide the same protections for families trying to leave 
a better future for their children and their grandchildren.
  The real tragedy of this debate today is that it has been waged 
between lawyers and professors, and I stand before my colleagues today 
as a small businessman; and I say to my colleagues, when is enough 
enough? They get us on the income tax; they get us on the capital gains 
tax. Do they have to get us again on the death of a loved one?
  As a fifth-generation Montana rancher on the same ranch, my own 
family was forced to deal with the terrible unfairness of the death 
tax. I had to sell my home that was built by my great grandfather and 
sell a third of my ranch just to pay the down payment on my colleagues' 
beloved estate tax; and after selling my home, I spent the next 18 
years paying off the rest of the estate tax burden, and let me tell my 
colleagues, this is not some academic or some legal debate today.
  Eliminating the death tax is about fairness. It is about equality. It 
is about preserving a lifetime of work. This bill is too late to give 
me back my home. I just do not want to see it happen to one more 
American family.
  It is unfortunate, but our opponents, the opponents of permanently 
eliminating the death tax, are back to their old tricks of class 
warfare. This is not a time for political games or false innuendo 
designed to pit one American taxpayer against another. The death tax is 
nothing more than a final desperate grab by the United States 
Government to get into the pockets of American taxpayers.
  During the last 10 years, the death tax has cost Montana families 
$200 million in lost opportunity. This money should have been spent to 
upgrade family farms, to expand small businesses, to plan for 
retirement, or pay for my child's college education. Instead, it was 
sent to Washington, D.C., to feed the Federal bureaucracy. Do the right 
thing, kill this amendment.
  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.
  I know my friend from Montana is very sincere in his arguments, but 
his proposition gives not one nickel of additional relief to his 
constituents until the year 2011. If it is too late now, certainly we 
ought to move something in place more quickly than that.
  Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. 
Turner).
  Mr. TURNER. Mr. Speaker, the Democratic substitute offered by the 
gentleman from North Dakota (Mr. Pomeroy) today gives more tax relief 
to more families immediately than the Republican bill.
  The contrast between the Republican bill and the Democratic 
substitute is stark. The Republicans choose to help the wealthiest 
families in America while leaving the families with small businesses 
and family farms paying the estate tax for the next 7 years.
  The substitute being offered today provides $3 million in exclusion 
from the estate tax, $6 million for a couple. Unfortunately, families 
across this country will have to wait until 2009 to get similar relief 
from the Republican bill.
  Let us look at the facts. Every year between now and 2009, 
Republicans are willing to let over 50,000 modestly wealthy families 
continue to pay in estate tax while giving the wealthiest 300 families 
an average of $10 million in tax relief. The Republicans have chosen to 
benefit the super-rich instead of helping 50,000 families who would be 
immediately taken off the estate tax rolls by the Democratic 
substitute.
  It should be no surprise to discover that under the Republican bill a 
new capital gains tax is imposed on over 18,000 American families every 
year by the elimination of the so-called stepped-up basis in values for 
estates above $1.3 million. Imagine the surprise of a family who 
inherits a $4 million family farm or business from their father, when 
they learn that under the Republican bill, when they sell that family 
farm or business, they are going to have to pay a capital gains tax on 
the difference between what they sell it for and what the original cost 
of that farm or ranch was to their father.
  I thought the Republicans were against increasing taxes. Today, they 
have increased the capital gains tax. The Democratic substitute does 
not do that.

                              {time}  1515

  Ms. DUNN. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from 
the State of Missouri (Mr. Hulshof), a very valued member of the 
Committee on Ways and Means.
  Mr. HULSHOF. Mr. Speaker, I thank the gentlewoman for yielding me 
this time, and what I would say to my friend who just spoke is that if 
the idea is to make it easier to pass the family business to the next 
generation, then we should get rid of the death tax. And if then those 
surviving heirs wish to dispose of that family farm or business, then 
maybe they will be subject to the capital gains tax.
  I would like to pose a rhetorical question to my friend, the 
gentleman from North Dakota (Mr. Pomeroy), and I will set up the 
hypothetical like this.
  Howard Eiffert, in my hometown of Columbia, Missouri, began the Boone 
County Lumber Business back in 1965. He has two sons, Brad and Greg. 
They employ about 31 people in Columbia with good paying jobs. 
Everybody there works very hard to make sure the business is 
successful.
  Under the gentleman's substitute, will the heirs of Mr. Eiffert have 
to pay the death tax?
  Mr. POMEROY. Mr. Speaker, will the gentleman yield?
  Mr. HULSHOF. I yield to the gentleman from North Dakota.
  Mr. POMEROY. Mr. Speaker, I appreciate the gentleman's question, 
though I thought it was a rhetorical question.
  I really do not have many facts on this circumstance, but if the 
estate is below $6 million for the gentleman and his wife, there would 
be no tax.
  Mr. HULSHOF. Reclaiming my time, Mr. Speaker, I offered the question 
in good faith, and I think the answer is the best the gentleman could 
give me, because the answer is he does not know. And I do not know. In 
fact, I would suggest that the Eiffert family at this point does not 
know.
  They do not know what the value of the estate will be when the 
founder of that company dies, whether it is going to be under $6 
million or over $6 million. So we cannot determine at this point 
whether or not these numbers the gentleman is throwing around, whether 
this small family business in Columbia, Missouri, is going to be helped 
by the gentleman's substitute or not.
  The larger point I hope to make is this: As long as we maintain a 
Federal estate tax, we still are going to have to have resources 
committed to Federal estate plans. In fact, there is a lot of concern 
about loss of manufacturing in this country, especially from my friends 
on the other side. The National Association of Manufacturers says that 
the average small manufacturer in America spends $52,000 a year to 
avoid the death tax.
  To me, there is a simple question here today: Should the death of a 
family member be a taxable event? Period. My answer is, Mr. Speaker, a 
simple one: A resounding no.
  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume 
to observe that there could not be more uncertainty than having a 2011 
effective date, which is what the Republican legislation has. There are 
four sessions of Congress to meet between now and then, and the estate 
tax levels under the Republican plan will be at $2 million, $3 million, 
$4 million, and moving around.
  We move it to $6 million. No estate tax if you are below $6 million, 
effective January 1 of 2003. It could not be more clear.
  Mr. Speaker, I yield 2 minutes to the gentlewoman from Ohio (Mrs. 
Jones).
  Mrs. JONES of Ohio. Mr. Speaker, I rise in support of the Democratic 
substitute. An earlier speaker said he came here as a small 
businessman. I am a lawyer, and I am proud to be a

[[Page H3268]]

lawyer, and I stand up for all trial lawyers across this country. What 
I would have suggested to him, because he is over here saying it is the 
lawyers that have caused the dilemma with the estate tax, I would 
suggest to him get a good lawyer and let that lawyer do some tax 
planning for himself and his family.
  Let me also say at this juncture the Republicans are saying to us to 
put a stake in the heart of the death tax. But what they want to do, 
they want to put the stake right like this and hold it for 10 years 
where it gets rusted. The Democrats are saying we are going to put the 
stake in it right now, right here. They are saying kill the death tax. 
But when? It is 2002 now and they want us to wait until 2011.
  I stand here wholly in support of this legislation. And it seems that 
the Republican Party wants to say they are the best to support business 
in these United States. Strong Democrats support business. And we so 
strongly support business, all the business folks out there listening, 
hear us, we so strongly support you that we want to get rid of the 
estate tax right now.
  We want to get rid of the estate tax, except for a little portion. 
And the reason we want to hold on to that little portion is because 
that little portion equals $740 billion. That is why we want to hold on 
to it, so that in future times we can afford to maybe do a prescription 
drug benefit. We can afford maybe pretty soon to put a little more 
money in education. We can afford pretty soon to look at the whole 
health care piece and decide what is wrong.
  I say to my colleagues, let us put a stake in the death tax, but let 
us not hold off for 10 years. Let us do it now.
  Ms. DUNN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Oklahoma (Mr. Watkins), a member of the Committee on Ways and Means.
  Mr. WATKINS of Oklahoma. Mr. Speaker, I thank the gentlewoman for 
yielding me this time, and I stand in support of the committee bill and 
against the substitute.
  I am going home this year, after 20 years of service in this body; 14 
years I served on the Democrat side and 6 years now on the Republican 
side. And let me say that during those 20 years I probably sponsored or 
cosponsored the elimination of the death tax, or the estate tax a lot 
of people like to call it, probably every year.
  I am also probably one of the biggest backers of a balanced budget, 
and I am proud that in the last 6 years we balanced the budget and we 
have paid off $450 million of the debt. Now, I hated to see the 
downturn in the economic indicators a couple of years ago when it 
started in, and we have now had a downturn in the economy, which makes 
it tough. But that does not justify us not eliminating this double 
taxation.
  This is double taxation. Taxes are paid as an estate is put together, 
as a business gets put together, and ranches are put together. Taxes 
are paid. And when you end up dying, your estate has to pay it or your 
children. That is wrong.
  Let me share a couple of calls I have had over the years that I still 
recall very much. One was a neighbor, a cattleman, a rancher, a robust, 
tough guy. His father and he worked together and put together this 
large ranching operation. The son called me and wanted to meet, and I 
said, yes, we will meet the next morning for coffee. We met. Very 
emotional. He looked at me and he said, ``Wes, why do I have to sell 
the place that my dad and all of us put together to pay taxes?''
  It is wrong. And it cannot just be a little wrong, it cannot be just 
a little sin. It is wrong. Same for industry. A small industry was put 
together, a family operation. They worked side by side, the family. The 
parents died and they are going to have to sell it.
  Let us do what is right. Doing what is right is to stop the double 
taxation. Let us be for the committee bill and against the substitute.
  Mr. POMEROY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Stenholm).
  (Mr. STENHOLM asked and was given permission to revise and extend his 
remarks.)
  Mr. STENHOLM. Mr. Speaker, I rise in strong support of the Pomeroy-
Thurman substitute, which would increase the exemption for all small 
business estates immediately upon enactment to $6 million.
  I cannot believe there is anyone who believes that that is not better 
than the base bill today, that gives the rhetoric of ending the death 
tax when everyone knows there will be at least three Congresses that 
will be in session before we get to 2010.
  My strongest opposition to the base bill today is in the fiscal area. 
I do not understand how my friends on this side of the aisle can 
constantly and consistently come to this floor and totally ignore the 
fiscal condition of our country today. In spite of my friend from 
Oklahoma saying the debt has come down, the debt has gone up. The 
administration is asking that we borrow $750 billion, and that is just 
the beginning. And my colleagues know it.
  It is important for us to start speaking honestly. There is so much 
my friends over here say about the death tax that I agree with that 
that is why I support the substitute. I would rather we not be debating 
this today, because today it is fiscally irresponsible. We are at war. 
We ought to be dealing with making sure we do not increase the 
additional debt on those young men and women over there fighting. But, 
instead, we have an argument here that is pure political rhetoric that 
will give a political issue so that we can say ``he said,'' ``you 
said.''
  I want to make it very clear: I support immediately exempting all 
estates of $6 million and less from ever having to worry about the 
death tax again. And I have yet to meet the first farmer, the first 
rancher, the small businessman or woman, the first independent oil 
producer that says, when they understand what we are offering, that 
would not take that. A bird in the hand is worth two in the bush. It 
really is.
  But, instead, we are sitting here arguing about repeal. Instead, we 
are going to deny small businessmen and women who are unfortunate 
enough to die in the next 6 months or 9 months, they are going to be 
unfortunate and have to pay that onerous tax that I happen to agree 
with my colleagues we should be eliminating.
  Ms. DUNN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Illinois (Mr. Manzullo), the chairman of the Committee on Small 
Business.
  Mr. MANZULLO. Mr. Speaker, we hear statements today that it only 
applies to 10,000, it only applies to 33,000 people. Do my colleagues 
know how many farmers are left in this country? Not too many. This 
applies to most of them.
  One of them is Gary Hall of Ogle County, Illinois. Gary's dad died in 
1997, and he wrote us a letter. He said, ``My dad worked very, very 
hard to get where he was financially when he passed away last November. 
He struggled raising his family of a wife, four daughters, and a son by 
trying to work on the farm, getting them to work there, getting 
interested in 4H, buying old machinery and fixing it up.''
  When he died, the government came in and asked for $2.7 million in 
taxes. He says, ``Why does the government deserve to squander or blow 
dad's hard work away? Why can't you leave your estate to your children 
or family to continue to farm the land? Why do we have to remortgage 
farms that were paid off years ago by our parents, and then have our 
children do the same? We do not want to sell any of dad's farms. We 
want to keep them in his name and pass the farming operation down to 
many future generations.''
  For all the great conservationists we have here in the Congress, do 
they not realize one of the greatest incentives for plowing up farmland 
and putting in a subdivision is to pay the death tax? I mean the green 
thing to do is to not tax someone's estate when they die. Farmers are 
forced to sell the land. I was there. I practiced law in the country 
for 22 years. I was there when the gavel went down by the auctioneer 
and half a family farm was sold just to pay taxes. I wish my colleagues 
could have seen the looks in those kids' eyes. It is unbelievable.
  That is what this is about. It is about the Gary Halls of America.
  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume 
to note that the U.S. Department of Agriculture has statistics that 
show 99 percent of all farms in this country have assets of less than 
$5 million. They would all be taken care of under the substitute 
effective January 1 of 2003.

[[Page H3269]]

  Mr. Speaker, how much time remains?
  The SPEAKER pro tempore (Mr. Simpson). The gentleman from North 
Dakota (Mr. Pomeroy) has 8 minutes remaining and the gentlewoman from 
Washington (Ms. Dunn) has 8\1/2\ minutes remaining.
  Mr. POMEROY. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman 
from Massachusetts (Mr. Neal).
  Mr. NEAL. Mr. Speaker, today we debate the Republican proposal to 
permanently repeal the estate tax, yet another bill that favors the 
wealthiest of the wealthy at a time when America is faced with 
increasing deficits.
  Can we do more for the rich than we are going to do this afternoon 
when they pass this legislation?
  This is a recipe for fiscal meltdown. According to the Joint 
Committee on Taxation, permanent repeal would result in a $740 billion 
loss to the Treasury, when we instead should be supporting Social 
Security, fixing Medicare, spending some money on defense and spending 
some money on education and the environment.
  Mr. Speaker, today is the 58th anniversary of D-Day, the World War II 
allied invasion of Europe in which thousands of American troops 
sacrificed their lives for freedom. Americans are once again 
sacrificing right now, even as we take on this debate. But what is our 
answer? We are going to dole out more tax cuts to billionaires, who, by 
the way, were not even asking for it, and asking hard-working middle 
income taxpayers to pick up the difference.
  If they had not thrown procedural roadblocks in our way, we could 
have used $4 billion from tax savings from the corporate expatriate 
bill the gentleman from Connecticut (Mr. Maloney) and I have, and we 
could have used it to immediately pay for the estate tax exclusion 
offered by Mr. Pomeroy.
  What is the new campaign slogan in this institution, ``I'm rich and 
I'm not going to take it any more''?

                              {time}  1530

  Mr. Speaker, can we do more for the wealthy than we do here day in 
and day out? This party used to be the party of Teddy Roosevelt. This 
used to be a party that did more for the environment and stood for 
fairness in American life. Now it is day after day, what more can I do 
for the wealthy. Well, it will be done without my help today.
  Ms. DUNN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Oklahoma (Mr. Sullivan).
  Mr. SULLIVAN. Mr. Speaker, I would like to voice my voice for the 
Permanent Death Tax Repeal Act and against the Democrat substitute.
  Last spring, Congress passed the Economic Growth and Tax Relief 
Reconciliation Act of 2001. This act provided $1.35 trillion in tax 
relief over the next 10 years. The death tax passed last year will be 
phased out over the next 9 years and will disappear completely in the 
10th year. This means after December 31, 2010, the death tax will 
return in full, beginning January 1, 2011.
  In other words, if this bill is not enacted, families who lose a 
loved one on December 31, 2010, will pay no death tax; but families who 
lose a loved one on the next day will pay a massive death tax, as high 
as 60 percent in some cases. The death tax is perhaps the most morally 
reprehensible tax levied by the Federal Government.
  The death tax is the number one reason small business and minority-
owned businesses and family farms are broken up and sold to large 
corporations, destroying thousands of jobs in the process. The Democrat 
substitute amendment would establish a fixed $3 million exemption 
equivalent that is not indexed for inflation. The relative value of the 
exemption equivalent will decrease over time as a result of inflation 
and more families will be subjected to the effects of the death tax. 
The substitute amendment eliminates the benefits of the graduated 
estate tax rates. The entire estate above the $3 million exemption 
equivalent will be taxed at 50 percent. That does not appear to sound 
like sound tax policy. We must vote down the Democrat substitute, pass 
the permanent death repeal, and guarantee the relief that we promised 
last spring.
  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the substitute makes the estate tax go away for the 
small businesses and farmers with assets below $6 million for couples 
effective January 1, 2003. The proposal by the Republican Party does 
nothing until 2011.
  Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman from Texas 
(Ms. Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I am from Texas, and I want to 
announce that family farms are taken care of with the Pomeroy 
substitute.
  First of all, I think we should understand the distinction. We are 
talking about reform of the estate tax. We are talking about uplifting 
the American people. Members over here are talking about deeper and 
deeper in debt, and forever closing the door for providing this Nation 
with the ability to fight terrorism around the world.
  Let me suggest that with the repeal of the estate tax we will be 
losing $55 billion in 2012. But, really, what is more important, what 
is more shocking is only 2 percent of Americans pay estate taxes. 
Listen to what we are talking about, America. We are talking about 
providing Americans with immediate protection of $6 million by January 
2003. Immediate protection.
  We are talking about protecting small businesses, our neighbors and 
friends, our family farms. We are talking about protecting Americans. 
While those who want to stand in the storehouse of wealth and dig and 
dig and dig so that Medicare can tumble, so that Social Security can 
tumble, we want reform, not elimination. They want to totally repeal 
the estate tax so we are undermined and, therefore, the money we are 
spending in Afghanistan, which is $1 billion a month helping us fight 
the war against terrorism in Afghanistan. It is not going to end soon.
  Yet the other side of the aisle says there is money to repeal the 
estate tax for the wealthy and the big of mind and not of heart. Let us 
support the Pomeroy substitute, which believes in reform and puts money 
on the table of family farms and small businesses.
  Ms. DUNN. Mr. Speaker, I yield myself 30 seconds.
  Mr. Speaker, I think it is very tragic we are hearing this number of 
2 percent of people who die, have estates that are taxed under the 
death tax. That does not take into consideration the numbers of small 
businesses that are sold and the dollars that are taken out of this 
economy to pay for CPAs and estate tax planners and to purchase life 
insurance policies. We do not see the results of those figures in the 2 
percent number which came from I do not know where many years ago.
  Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Colorado 
(Mr. Hefley).
  Mr. HEFLEY. Mr. Speaker, responding to the gentlewoman, a recent 
study has shown that death tax repeal would not increase the deficit. A 
1999 study showed that it decreased the economic growth that would come 
from repeal of the death tax, and would lead to Federal revenue gains 
within 7 years of the death tax repeal.
  In the long run, the economic activity would increase the income, not 
decrease it. But the death tax affects real live hard-working people. I 
have some friends in Colorado Springs who started out 60 years ago or 
so with one little lumberyard. Over the years, three generations have 
built that one little lumberyard, started with nothing, built that one 
lumberyard into a multi-lumberyard system throughout southern Colorado. 
It was a home-grown business which was very successful. Recently, they 
sold it even though the children of the owners worked in the business 
and wanted to continue to work in the business, but they sold it 
because they could not afford the death tax that they would have to pay 
in the future.
  Colorado is a State mostly of small farms, ranches, and small 
businesses. The heirs should not have to sell the business of the farm 
in order to pay the tax.
  The $6 billion in the substitute, these people were successful. 
Members say we are helping the rich here, but by gosh, they earned it. 
It is their money. They paid taxes on it. It is wrong to tax them again 
when they die, or to make them sellout in order to pay the taxes when 
the heirs inherit the money.
  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.

[[Page H3270]]

  Mr. Speaker, the gentleman speaks passionately about his 
constituents, but the reality is under the proposition the gentleman 
stands for, estates over $2 million will be taxed next year. Under our 
substitute, no estate tax for couples with assets $6 million and under.
  Mr. Speaker, I yield 2 minutes to the gentlewoman from California 
(Ms. Pelosi), the minority whip.
  Ms. PELOSI. Mr. Speaker, I thank the gentleman for yielding me this 
time and for his leadership for this important alternative that is 
being presented on the floor today, the Pomeroy-Thurman substitute. I 
also thank the gentleman for his championship on issues that are of 
concern to America's farmers. Every day he is here, he fights for them. 
Every day he is here, we learn from him about how to help America's 
farmers; and that is what he does in this Pomeroy-Thurman substitute.
  I rise in support of the substitute and commend the gentleman from 
North Dakota (Mr. Pomeroy) and the gentlewoman from Florida (Mrs. 
Thurman).
  Mr. Speaker, we take this bill up at a time when our young men and 
women are abroad defending our Nation against further terrorist 
attacks; yet the Republican leadership is undermining our security at 
home by passing yet another irresponsible tax bill. Make no mistake 
about it, the bill undermines our Nation's security. It will rob us of 
the resources we need to defend our country. It will rob us of the 
money we need to protect Social Security.
  The bill does not even repeal the estate tax until 2011, and it will 
actually increase capital gains tax on the various estates that they 
claim to help by eliminating the stepped-up basis consideration. Their 
bill costs more than $1 trillion, and it will raid the Medicare and 
Social Security trust funds at the exact moment the baby boomers begin 
to retire.
  In contrast, our Democratic estate tax relief bill offers real 
reform, and it brings much greater and more relief to family farmers 
and small businesses than theirs. Beginning January 1, 2003, the 
exemption from estate tax would jump to $6 million per couple, an 
exemption of $6 million per couple in the Pomeroy-Thurman substitute. 
Americans with $6 million who die pay no taxes. If Members are worried 
about people above that level, we are talking about half a percent of 
the American people. Those estates will get hit with higher capital 
gains taxes than they do under the Republican bill.
  It is very simple. If an estate is less than $6 million, that person 
would definitely want the Democratic bill. You will pay no estate tax 
effective January 1, 2003.
  Mr. Speaker, I will submit the rest of my statement for the Record. I 
urge Members to do the right thing by 99.7 percent of the American 
people and vote for the Pomeroy-Thurman substitute.
  Ms. DUNN. Mr. Speaker, I yield 1 minute to the gentleman from Indiana 
(Mr. Pence).
  Mr. PENCE. Mr. Speaker, I rise in strong opposition to the 
substitute. Mr. Speaker, there is really no substitute for the truth. A 
year ago with overwhelming support among the American people, this 
Congress sent to the President's desk a tax cut. We will celebrate the 
anniversary of the signing tomorrow.
  In that tax cut we advertised to the American people that we repealed 
death taxes; and when virtually every Member of this institution went 
home, some constituent thanked them for ending death taxes.
  But hopefully, many, as I did, were honest with their constituents 
and said, Well, not entirely. We actually only repealed it until some 
magic day in the year 2011 when it springs back to life because of an 
arcane rule in the Senate.
  We must reject the substitute today on behalf of small businesses and 
family farms. We ought to do no less today than what we told the 
American people we were doing, repealing and ending death taxes once 
and for all.
  Mr. POMEROY. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, there is a fundamental difference between the relief 
proposed by the substitute and the relief proposed in the underlying 
bill. We bring relief to American families effective January 1, 2003. 
There is nothing by way of effect from the underlying bill until the 
year 2011, several Congresses away.
  This majority who says do not trust government would ask those 
looking for estate tax relief to trust the next three sessions of 
Congress before they would get relief under their proposal. American 
families deserve to know with clarity where estate tax commitments 
begin, and we would set that obligation at $6 million per couple, 
making the estate tax effectively repealed for 99.7 percent of our 
families.
  There is a cost difference as well. Over the next 10 years, theirs 
cost $99 billion. In the deficit situation, we know that that requires 
Social Security revenues to be diverted to fund other functions of 
government. The cost under our bill is $5 billion, and it would have 
been zero if they would have left the offsets in that we initially 
sought.
  But the dramatic problem under their bill is the next decade, because 
the costs explode thereafter. Just at the time baby boomers retire and 
the Social Security taxes drop precipitously, the cost of their bill 
explodes.
  There is only one conclusion we can draw from this chart, and that is 
this X represents a financial catastrophe that will befall our country 
leading to higher payroll taxes for our children and benefit cuts for 
Social Security recipients. There is a better way, and that way is the 
substitute, which provides relief now on the estate tax hit.

                              {time}  1545

  Look at the comparison in terms of relief offered under our 
substitute compared to the majority: $6 million and below, no estate 
tax under our bill; their bill, $2 million. Our bill, $6 million and 
thereafter. In 2004, $3 million. You have an estate tax problem. In 
2005, $3 million. You have an estate tax problem. In 2008, $4 million. 
You have an estate tax problem, under their bill.
  All day we have heard from the majority about farms, small 
businesses. You would think that help was on the way from their 
legislation, but there is nothing their legislation does until the year 
2011 to bring relief to those they spoke so passionately for. We need 
to pass the substitute to get that help out there, get that help out 
there now, make estate tax go away for families with $6 million and 
below. That takes care of 99.7 percent of the families in this country, 
and we just think it is fundamentally wrong to hold up estate tax 
relief for 99.7 percent because they want to take care of just the 
wealthiest few beyond that.
  Mr. Speaker, I, in conclusion, strongly urge passage of the 
substitute and defeat of the underlying legislation in the event the 
substitute does not prevail.
  Ms. DUNN. Mr. Speaker, to close debate, I am proud to yield the 
balance of my time to the gentleman from Texas (Mr. Armey), the 
majority leader of the United States House of Representatives.
  The SPEAKER pro tempore (Mr. Simpson). The gentleman from Texas is 
recognized for 3\1/2\ minutes.
  Mr. ARMEY. Mr. Speaker, I thank the gentlewoman for yielding time, 
and I thank the gentlewoman for her continued work in this area.
  Mr. Speaker, the gentlewoman from Washington would be the first to 
tell you that the reason so many of us remain so committed to the end 
of the death tax is that we think it is wrong. We think murder is 
wrong. We think stealing is wrong. We think robbery is wrong. And we do 
not think it is wrong for 99 percent of the population; we think it is 
wrong for 100 percent of the population.
  We are not content to say, Let's correct this wrong for most of the 
people and leave others behind. We are saying, Let's correct this wrong 
for everybody. It is wrong to steal a family's legacy. The Federal 
Government of the United States should not be the world's largest and 
most aggressive grave robber. It is time to end this practice.
  Let us take a look at what this means. Mr. Speaker, I grew up in a 
small rural agricultural community. I know a little bit about what we 
call the small family farm. Mr. Speaker, let us talk for a moment about 
a small family farm that has $4 million worth of assets. That seems 
like a lot on the surface of it, but let me just say that $4 million 
worth of assets represents, in this case, the family's business and the 
family's home. I do not know how large

[[Page H3271]]

a farm a small family farm worth $4 million would be in the gentleman 
from North Dakota's home State; but I do know that down in Texas, we 
would think of that as a mighty fine little old spread, not something 
big, but something that a family might be able to make a living off of. 
$4 million.
  What do the facts tell us? The small family farm with assets valued 
at $4 million will generate about $35,000 a year income. That family is 
not getting rich, Mr. Speaker. And throughout all the years that that 
family lives off that farm, farms that land and makes that meager 
living of $35,000-a-year income, that family will pay about $4,200 a 
year in taxes. And nobody, nobody, would characterize that family as 
among the Nation's richest people. In fact, there are some Members of 
this Congress that would even vote additional Federal support for that 
family, and have done so. Certainly they would not think of them as 
rich people.
  We are told as children in America, we should not harm people. We are 
also told to not add insult to injury. Let me say that should the 
patron of this family that has worked so hard to raise his children on 
this modest farm, on his $35,000-a-year income, should he die, he would 
be done the harm of having his property expropriated before it could be 
turned over to his children to the tune of $1,400,000. That is harm.
  But on top of that, he would be afflicted with additional insult. 
Because on the day that that poor, hard-working small family farmer in 
America, laboring as he did all those years to raise his children on 
that mere $35,000-a-year annual income, on the day he died, there would 
be some in this body that would declare him as being wealthy and 
undeserving and meritorious of having his property expropriated. On 
that day, he would be insulted. He would say, as Tevye wished in 
``Fiddler on the Roof,'' Today I am a rich man. The government just 
made me such. The government declared me rich so they could steal my 
property from my children.
  Mr. Speaker, that is wrong. This is a good government. It should be a 
just government. It should be a government that knows the goodness of 
the American people and has the decency to respect it. It should be a 
government that does not steal a hard-working family's legacy from that 
family's children. There is down in Texas a great country western song, 
and it celebrates the fact that daddy won't sell the farm. We enjoy 
that song. There is a lot of toe-tapping that goes on. But it breaks 
our heart because we know that in point of fact when daddy dies, the 
farm will be sold so daddy's children can pay tribute to an unfair and 
undeserving government.
  It is time, Mr. Speaker, to end that. Let us dare to honor our 
Nation's children as they are honored by our Nation's parents as they 
build a legacy of success and give that at the time of their death to 
the people who truly deserve it, the children they love so much. Mr. 
Speaker, we have a lot of resources on which we can draw here in 
Washington. It might be that it would do us well to use those resources 
more prudently so we could save ourselves the embarrassment of stealing 
another man's legacy.
  Mr. LEACH. Mr. Speaker, I favor reform of the estate tax to protect 
family farmers and small businesses, but I have grave qualms about its 
elimination for super-sized estates. What is credible is an increase in 
the estate tax exemption to $5 or 10 million. What is undue and unfair 
is the elimination of the tax on huge estates.
  From a legislative perspective, the circumstance is clear cut. The 
House has the option of passing an approach which the Senate will 
ignore or it can pass a credible reform which has a chance of becoming 
law and taking effect this year.
  The Democratic alternative to the House Republican position is not 
sufficiently progressive, but passage of the $3 million exemption it 
calls for would be a significant improvement on the current 
circumstance and holds the prospect of immediate compromise with the 
Senate at a somewhat higher level. The problem with current law, which 
the bill before the House today would make permanent, is that it 
provides for a sudden elimination of all estate taxes in the year 2012, 
but because of its graduated provisions does not allow for the estate 
tax exemption to reach $3 million until 8 years from now.
  The American market system works best as a meritocracy. What will be 
created with the elimination of estate taxes on super-sized estates is 
a monied oligarchy. This is neither good for our economy nor our 
democracy.
  Mr. KIND. Mr. Speaker, I rise today in strong support for making 
estate tax relief permanent so that family-owned farms and family-owned 
businesses can be passed down from generation to generation. Further, I 
support tax relief that helps spur small business investment and job 
growth.
  Family-owned businesses should not be punished for being successful 
or for having their owners pass away. Fundamentally, the United States 
is the land of opportunity, encouraging free enterprise and rewarding 
entrepreneurs. The estate tax should be modified to protect family-
owned businesses and family farms from the threat of having to be sold 
just to pay the tax.
  Therefore, I am supporting the substitute being offered by my good 
friend Mr. Pomeroy. His legislation will immediately help the small 
businesses and family farms by increasing the estate tax exemption to 
$3 million for individuals and $6 million for couples. This will ensure 
that estates that are $6 million or less for a couple or $3 million for 
an individual will pay no estate taxes beginning January 1 of 2003. 
This is a meaningful exemption that picks up all but a few taxable 
estates. In fact, only 0.36 percent of estates remaining will be 
required to pay the tax.
  At a time of national crisis that calls for shared sacrifice, the 
leadership wants to make the repeal of the estate tax, that benefits 
less than one percent of taxpayers, permanent in 2012. This will drain 
more than one trillion dollars from the budget just as the Baby Boom's 
retirement reaches full force; making the estate tax repeal permanent 
alone would cost 40 percent of the amount needed to make Social 
Security financially sound for the next 75 years.
  Last year we passed a budget that boasted a ten-year unified surplus 
totaling $5.6 trillion, which included repeal of the estate tax until 
2011. The leadership claimed that an expensive tax cut plan and other 
costly initiatives were eminently affordable and there would be enough 
of the budget surplus to eliminate most or all of the national debt. 
Thus Congress passed a tax cut costing over $1.3 trillion. 
Unfortunately, since then, the budget surplus has disappeared, due to 
the war on terrorism, increased homeland security, and the large tax 
cut. This year's deficit will be nearly $314 billion and over the next 
ten years, the non-Social Security deficit will total $2.6 trillion.
  After decades of deficit spending, it is our responsibility to reduce 
the debt future generations will inherit. We must give them the 
capability and flexibility to meet whatever problems or needs they 
face. I cannot, in good faith, support legislation that will put our 
country further into deficit spending with a tax cut that will hurt our 
future generations for the unforeseeable future, including my two 
little boys.
  Tax relief, however, is a bipartisan issue. I am cosponsor of H.R. 
1210, the Family-Owned Business Survival Act. This bill would repeal 
the limitations on the estate tax deduction for family-owned business 
interests. My colleagues on both sides of the aisle recognize the need 
for providing estate tax relief, but this bill is not the result of 
bipartisanship. The tax cut passed last year has already derailed the 
opportunity we had to reduce our large national debt and prepare for 
our future obligations to our aging population and children's futures. 
Making this repeal permanent will only further exasperate our nation's 
poor fiscal health.
  Mr. Speaker, now is not the time for leadership to pursue its own 
individual agenda to score political points in an election year. This 
is purely a symbolic vote timed as millions of Americans begin to 
consider the candidates in the fall elections.
  I urge my colleagues to oppose this fiscally irresponsible tax cut 
and support the Pomeroy alternative. Unlike the leadership's bill, the 
alternative will give immediate relief to our family business and 
family farmers and will cost less than one-half of H.R. 2143. We must 
shore up Social Security and Medicare and reduce the national debt 
before passing such an expensive tax cut that we cannot afford. I did 
not come to Congress to saddle my two boys with a debt burden they did 
not create.
  Mr. PASTOR. Mr. Speaker, I rise today in support of the Substitute 
Amendment offered by Mr. Pomeroy and in opposition to the base bill, 
H.R. 2143.
  Let me make it perfectly clear. I support an adjustment to the Estate 
Tax, but I believe we should address this tax in a responsible and 
meaningful manner. If you are a supporter of H.R. 2143, there is no 
reason for having this debate or this vote at this time. H.R. 2143 is 
an effort to fix a problem that does not happen, if it happens at all, 
for nine years. But the Substitute will provide immediate relief.
  Earlier in this Congress, I supported a proposal which would have 
immediate and lasting benefit for family owned small businesses and 
family owned farms. The Substitute is a similar proposal, and if we are 
interested in helping

[[Page H3272]]

people, people who have just lost their loved ones and are facing the 
responsibility of paying an estate tax, we should pass the Substitute.
  The Substitute would immediately eliminate the Estate Tax for all but 
one percent of the estates in the country. It does so by increasing the 
estate tax exclusion to $6 million effective on January 1, 2003. Under 
current law and H.R. 2143 this does not occur until sometime in 2009. 
If we really want to have an impact on people who are facing an estate 
tax that could cause them to lose their family business or family farm, 
we should do something to help them right now.
  My other concern with H.R. 2143 is that we face a much different 
fiscal world than we did when the so-called Economic Growth and Tax 
Relief Reconciliation Act was passed last year. Before this $1.35 
trillion tax cut passed and was signed by the President, there was a 
projected ten year budget surplus of more than $5 trillion. Now, after 
the tax cuts, the economic slowdown, and the terrorist attacks of 
September 11, it is estimated that we will have a deficit of more than 
$100 billion just this year. And there are budget deficits stacked up 
in the out years as far as the eye can see.
  This bill, H.R. 2143, will cost $55.8 billion in Fiscal Year 2012 
alone, its first year of full implementation. And during the following 
decade, its negative economic impact to the Federal budget will be more 
than $1 trillion. It does nothing to relieve the family farmer or the 
family businessman until then. So if you have a small or medium size 
business or a family farm, you should do your best to postpone dying 
until 2012.
  Nevertheless, even with these budget concerns, I believe it is 
important to give some immediate hope and relief to the hard working 
small businessman and his survivors. That is why I urge my colleagues 
to support the Substitute Amendment offered by Mr. Pomeroy.
  MR. DELAHUNT. Mr. Speaker, two years ago, I was one of the few 
Democrats to join with my friends across the aisle to support 
legislation to repeal the federal estate tax. I did so because I 
believed that this tax burdens small business and family farms to 
unfairly that it puts our overall economy at risk. I still believe 
that. And that is why I will today vote in support of the Democratic 
substitute.
  The estate tax is wrong. At a time when small firms are already 
buffeted by all kinds of economic uncertainties, the last thing they 
need is more trouble from federal tax policy. When we debated this 
question in 2000, I supported the majority bill because, overall, it 
was better than existing law. The committee bill before us today does 
not meet that standard.
  At the very moment we are struggling with mounting deficits and the 
growing cost of national security, we're asked to lock in--
permamently--changes in the tax code that will cost the Treasury 
billions.
  As one who voted to repeal the estate tax, I think I'm entitled to 
wonder aloud: ``what's the urgency?'' The effective date of the bill is 
nine years away. Who knows what might happen between now and then? At 
the very least, can we win the war on terrorism first?
  As one who voted for estate tax repeal, I think I'm entitled to ask: 
what constituency was this debate concocted to impress? Because it's 
clear to me that this measure hurts many of the same people its 
proponents claim to be helping. Under this bill, many Americans would 
never reap the promised benefits, even upon its full and permanent 
repeal in ten years.
  Because for all the talk about tax relief, this bill actually raises 
taxes. Sure, it eliminates the estate tax. But not before changing the 
rules to cost the middle class, and the upper middle class, a lot more 
in capital gains taxes.
  Here's why. Traditionally, inherited property was assessed at its 
value at the time of death--so-called ``stepped-up basis''. That 
changed in the Republican ``reforms'' of 2001. Now, it's assessed at 
its value at the time of its original purchase. The bill before us now 
seeks to make that change permanent.
  For most Americans with assets to pass on to their kids, eliminating 
``stepped up'' basis is a killer.
  Take my own congressional district. If you bought a home in 1970 in 
Duxbury or Chatham, chances are pretty good that it's gone up--maybe 
tripled or quadrupled in value--in the years since. The Republicans 
will tell you that you can go ahead and pass your home on to your 
children without worrying about the estate tax. But they probably won't 
tell you that instead your kids will probably owe a boatload in capital 
gains taxes. The same goes for stocks, bonds and other assets.
  There's no rational reason for this, and the Democratic substitute 
would restore stepped-up basis. While offering relief to 99.6 percent 
of Americans now subject to the estate tax.
  Mr. Speaker, I showed last year that I am willing to swim against the 
tide to get a good bill passed. Regrettably, this year's committee 
proposal is not that bill. I urge my colleagues to join with me instead 
in supporting the Pomeroy substitute.
  Mr. KLECZKA. Mr. Speaker, last year, the estate tax provisions 
enacted in the $1.35 trillion Bush tax cut would gradually increase the 
value of estates that are exempt from taxation, until completely 
repeating the estate tax for one year only, 2010, after which the 
exemption would return to $1 million. At that time, these provisions 
were projected to cost nearly $80 billion over the first ten years.
  The proponents of this misguided tax cut were confident back then 
that we would be awash in surpluses as far as the eye can see. But the 
bill before us today, H.R. 2143, seems to ignore our current budget 
situation; it would go ahead and permanently repeal the estate tax 
starting in 2011, even though the nearly $4 trillion in projected 
future surpluses has evaporated since the Bush tax cut was enacted.
  The House Budget Committee's Democratic staff now estimates that this 
year's deficit alone, excluding Social Security Trust Fund surpluses, 
will be a whopping $314 billion. At this rate, over the next ten years, 
deficits could add up to a total of $2.6 trillion. I am told by many of 
those who are supporting this bill, that we are on a war footing, with 
many additional national expenses as a result.
  Passing H.R. 2143 would not only squander the opportunities we now 
have to redirect our nation's fiscal course, but it would further 
exacerbate the financial predicament that we currently find ourselves 
in. Instead of reducing the level of future deficits, permanently 
repealing the estate tax would decrease future revenues by 
approximately $740 billion over a ten-year period, FY 2013 to FY 2022.
  If the increased interest payments on the additional debt incurred 
because of this repeal are included, the effect on the budget is about 
$1 trillion taken away right at the time that Baby Boomers will start 
retiring and become eligible to receive Social Security and Medicare 
benefits.
  Furthermore, the estate tax only impacts a very small number of 
people in the United States, or the wealthiest 2 percent. By reading 
the advertisements of groups who are feverishly lobbing for its repeal, 
one could easily get the impression that millions of people are 
stripped of their lifetime earnings upon death. In reality, this just 
isn't the case. In my home state of Wisconsin in 1998, there were a 
total of 45,000 deaths. Out of all those estates, only 828 paid an 
estate tax.
  Many within this small group of wealthy Americans have actually been 
the first to come forward in defense of the estate tax. Last year, an 
organization called ``Responsible Wealth'' circulated a petition in 
support of reforming, but not eliminating, the tax. More than 1,100 
business leaders and investors who will pay estate taxes in the future 
signed this petition, including George Soros, Ted Turner, and David 
Rockefeller Jr., along with hundreds of small-business owners who 
wealth totals between $1 million and $10 million.
  Their approach toward this issue, reform rather than repeal, is a 
more sensible alternative. By raising the estate tax exemption to $3 
million for individuals and $6 million for couples, the Democratic 
substitute would exempt 99.7 percent of all estates in America from the 
estate tax. Further, this exemption increase would go into effect on 
January 1, 2003, providing more immediate tax relief to family farms, 
small businesses, and homeowners than the Republican bill before us 
today.
  The Democratic substitute also includes offsets, in order to help 
reduce the total cost of the proposal. Even without these offsets, the 
Democratic alternative would still cost less than one-half the cost of 
the Republican base bill.
  Clearly, we owe it to our constituents to act in a fiscally 
responsible manner, and the Republican proposal to completely repeal 
the estate tax fails to meet this test.
  Mr. ALLEN. Mr. Speaker, I rise in opposition to this bill.
  The time has come for substantial estate tax relief.
  We should increase the lifetime exclusion, reduce the tax rates and 
make special additional provisions for small businesses.
  But we should not repeal the tax, because the world has changed. 
Surpluses have been transformed into deficits. The baby boom generation 
continues its relentless march toward qualifying for Social Security 
and Medicare. The threat of terrorism requires significant resources 
for defense and homeland security. Repeal would be irresponsible 
budgeting.
  Today, we should be considering legislation to reform the estate tax.
  We should reform the estate tax to reflect the extraordinary 
contributions family-owned businesses and farms make to our local 
communities.
  In my state of Maine, small businesses are vital to the well-being of 
our communities. Those who own family farms and businesses often spend 
too much time and too much money in an effort to keep their farms and 
businesses intact for the next generation.
  Full, immediate, and permanent repeal for family-owned small 
businesses would be wise policy.

[[Page H3273]]

  Full, immediate, and permanent repeal for small businesses would let 
small businesses in Maine, like Brown Goldsmiths & Company, Lucas Tree, 
O'Donal's Nursery, and Hancock Lumber, keep their businesses in family 
hands.
  Family owned businesses like these are often significant community 
employers. They contribute to our quality of life in ways that large 
publically held corporations can never match. Farms passed from one 
generation to another are less likely to be subdivided for residential 
development and, therefore, less likely to contribute to suburban and 
rural sprawl.
  For these reasons, I urge my colleagues to support the Pomeroy and 
Thurman substitute. This amendment offers immediate and permanent 
estate tax relief beginning on January 1, 2003, by increasing the 
exemption to $3 million for individuals and to $6 million for couples. 
passage of this amendment would provide full relief to all but 0.3 
percent of estates, and the increased exemption would reduce the tax 
even on these estates.
  However, full repeal of the estate tax would represent a bonanza for 
a relative handful of wealthy individuals and jeopardize our ability to 
fund vital national priorities.
  Last year, betting on a then projected $5.6 trillion in surpluses, 
the Republican controlled Congress passed a bloated tax cut that 
primarily benefits the top one percent of taxpayers. But the majority's 
repeal of the estate tax was itself repealed in 2001, in order to mask 
its devastating long term impact on the federal budget.
  Today, the Republican controlled House wants to make permanent the 
repeal of the estate tax, even though repeal would erect a barrier to 
full funding of special education, a real Medicare prescription drug 
benefit, strengthening Social Security and even meaningful tax relief 
for middle and lower income Americans.
  In Maine in 1999, about 200 estates would have benefitted by repeal 
of the estate tax. Yet all 1.2 million people in Maine will pay the 
price of repeal of this progressive tax with higher interest payments 
on the national debt and cuts in vital programs and services.
  Debate over the estate tax is really about priorities.
  Reform is about making fairness a top priority. It provides relief to 
those who need it.
  Repeal is about making favoritism a top priority. It widens the 
growing disparity in incomes in this country.
  Reform allows for the funding of top priorities. Repeal shortchanges 
important priorities.
  President Theodore Roosevelt, in arguing for an estate tax, said, 
``The really big fortune, the swollen fortune, by the mere fact of its 
size acquires qualities which differentiate it in kind as well as in 
degree from what is possessed by men of relative small means.''
  Today, some Americans have fortunes beyond the imagination of 
Theodore Roosevelt. Others cannot afford their prescription medicines. 
Many find the doors of higher education closed to them because of the 
cost of attendance. Approximately 40 million Americans have no health 
insurance. In these circumstances, repealing the estate tax for multi-
millionaires is both irresponsible and unethical.
  I urge my colleagues to vote against this bill and to vote for the 
Pomeroy/Thurman substitute.
  Mr. UDALL of New Mexico. Mr. Speaker, I rise in support of the 
Pomeroy-Thurman alternative to the Republican Estate Tax Repeal 
extension. The alternative, crafted by the gentleman from North Dakota 
and the gentle lady from Florida, offers immediate and permanent estate 
tax relief beginning January 1, 2003 by increasing the exemption to $3 
million for individuals and to $6 million for couples. It is a balanced 
plan that will protect the few small business owners and farmers that 
are ever subject to this tax.
  In this time of deficits and pressing national needs like homeland 
security, Social Security and Medicare, should we be directing a costly 
tax cut only toward our wealthiest citizens? Under current law, estates 
of up to 43.5 million for any individual or $7 million for a couple 
will be exempt from any estate tax when reform is fully implemented in 
2009. According to current estimates, only 22 estates in my home state 
of New Mexico would be subject to this progressive tax by 2009. The 
average worth of those estates is $18.6 million.
  It is completely unacceptable in a time of war to pass a permanent 
tax break for the nation's wealthiest Americans. In every other war in 
American history taxes have been raised to help the effort. Tragically, 
the House leadership and the Bush administration appear to be charting 
precisely the opposite course.
  And, what about the nation's other needs? Where will the money come 
from to improve education, provide prescription drug coverage, and 
strengthen national defense? Where will the money come from to pay down 
our long-term national debt? We've got to save and invest now to 
strengthen the economy for the future, keep Social Security and 
Medicare solvent, and prevent far more difficult choices down the road.
  Of all the urgent problems and commitments facing the nation right 
now, the sunset of last year's repeal of the estate tax nine years from 
now should not be at the top of the list. A far more responsible use of 
our time would be to begin to recognize new realities and craft a 
bipartisan budget plan to return to the long-term surpluses that were 
so hastily squandered last year.
  I urge my colleagues to join with me and vote no on permanent estate 
tax repeal, and yes for responsible reform.
  The SPEAKER pro tempore. All time for debate on the amendment has 
expired.
  Pursuant to House Resolution 435, the previous question is ordered on 
the bill and on the amendment in the nature of a substitute offered by 
the gentleman from North Dakota (Mr. Pomeroy).
  The question is on the amendment in the nature of a substitute 
offered by the gentleman from North Dakota (Mr. Pomeroy).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. POMEROY. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  The vote was taken by electronic device, and there were--yeas 197, 
nays 231, not voting 7, as follows:

                             [Roll No. 217]

                               YEAS--197

     Ackerman
     Allen
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett
     Becerra
     Bentsen
     Bereuter
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boyd
     Brady (PA)
     Brown (FL)
     Buyer
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Castle
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Hall (TX)
     Harman
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Latham
     Leach
     Levin
     Lipinski
     Lofgren
     Lowey
     Lucas (KY)
     Luther
     Lynch
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Mink
     Moran (VA)
     Morella
     Nadler
     Napolitano
     Neal
     Oberstar
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Ross
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schiff
     Scott
     Sherman
     Shows
     Skelton
     Slaughter
     Snyder
     Solis
     Spratt
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NAYS--231

     Abercrombie
     Aderholt
     Akin
     Andrews
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Bartlett
     Barton
     Bass
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Boucher
     Brady (TX)
     Brown (OH)
     Brown (SC)
     Bryant
     Burr
     Burton
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Chabot
     Chambliss
     Coble
     Collins
     Cooksey
     Cox
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Doggett
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas

[[Page H3274]]


     Gibbons
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hansen
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     Kucinich
     LaHood
     LaTourette
     Lee
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (OK)
     Manzullo
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller, Dan
     Miller, Gary
     Miller, George
     Miller, Jeff
     Mollohan
     Moore
     Moran (KS)
     Murtha
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Obey
     Olver
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schaffer
     Schakowsky
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Souder
     Stark
     Stearns
     Stump
     Sullivan
     Sununu
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Waters
     Watkins (OK)
     Watson (CA)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--7

     Combest
     Emerson
     Gilchrest
     Lewis (GA)
     Roukema
     Serrano
     Traficant

                              {time}  1615

  Mr. JONES of North Carolina, Mrs. JO ANN DAVIS of Virginia, Mr. 
WELLER, Mr. McINNIS, Ms. WATERS, and Messrs. SMITH of Washington, 
OLVER, and STARK changed their vote from ``yea'' to ``nay.''
  Mr. JOHN changed his vote from ``nay'' to ``yea.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  Stated against:
  Mr. BUYER. Mr. Speaker, on rollcall No. 217. I inadvertently voted 
``yea.'' I meant to vote ``no.'' I have been a strong supporter of 
eliminating the death tax.
  The SPEAKER pro tempore (Mr. Simpson). The question is on the 
engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


               Motion to Recommit Offered by Mr. Stenholm

  Mr. STENHOLM. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore. Is the gentleman from Texas opposed to the 
bill?
  Mr. STENHOLM. In its current form, I am.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. Stenholm moves to recommit the bill H.R. 2143 to the 
     Committee on Ways and Means with instructions to report the 
     same back to the House forthwith with the following 
     amendment:
       At the end of the bill, add the following new section:

     SEC. 3. TAX REDUCTIONS CONTINGENT ON NOT RAIDING SOCIAL 
                   SECURITY FUNDS.

       (a) In General.--No provision of this Act shall take effect 
     unless, before January 1, 2003, the Director of the Office of 
     Management and Budget certifies that the social security 
     trust funds will not be raided (or the size of a raid on such 
     funds increased) by reason of this Act during any year of the 
     10-year budget estimating period unless such raiding is 
     thereafter offset under this Act so that there is no net raid 
     of such funds during such 10-year period. For purposes of the 
     preceding sentence, such funds shall be treated as raided 
     during any year for which there is a deficit in the non-
     social security portion of the Federal budget.
       (b) Section May Not Be Waived.--The provisions of this 
     section shall apply notwithstanding any other provision of 
     law hereafter enacted which does not specifically refer to 
     this section.

  Mr. STENHOLM (during the reading). Mr. Speaker, I ask unanimous 
consent that the motion to recommit be considered as read and printed 
in the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Stenholm) is recognized for 5 minutes in support of his 
motion.
  Mr. STENHOLM. Mr. Speaker, I yield myself 2\1/2\ minutes.
  Mr. Speaker, I want the children of small business men and women to 
be able to inherit the family business that their parents worked to 
build. I want the children of farmers and ranchers to be able to 
inherit the farms and ranches that their family has farmed and ranched 
for years. That is why I voted for the Pomeroy-Thurman substitute, 
which would repeal the estate tax for virtually all small businesses 
and family farms immediately.
  However, I also want our children and grandchildren to inherit a 
strong economy and a Federal Government that can meet its commitments 
for Social Security and Medicare, and I definitely do not want them to 
inherit a massive national debt and legacy of deficit spending. I do 
not understand the philosophy of folks who do not have a problem with 
leaving our children and grandchildren with a large debt just so we can 
have a tax cut or more spending today.
  Just 2 weeks ago, the majority leadership tried to slip through a 
$750 billion increase in the debt limit, and completely ignored those 
of us who said that we ought to sit down and figure out how to get our 
budget back in order before we approve another $750 billion in debt. 
Instead of figuring out how we are going to stop the tide of red ink 
and stop spending Social Security surplus dollars, the majority 
leadership today has brought to the floor legislation that will add 
another $100 billion in debt borrowed from the Social Security trust 
fund.
  This motion to recommit is very simple and very straightforward and 
reflects a principle that every Member of this body has solemnly vowed 
to protect, in fact, has voted on numerous times. The motion to 
recommit simply states that we should not fund the permanent repeal of 
the estate tax with Social Security surplus dollars. The motion to 
recommit will allow the estate tax repeal to take effect if we are able 
to afford it without using Social Security surplus dollars.
  The cost of this bill in the second 10 years should give pause to 
everyone who is concerned about the challenges facing the Social 
Security system in the next decade: $1 trillion. Until we deal with the 
long-term financial problems facing Social Security, we need to be very 
careful about any tax or spending bills that would place a greater 
burden on the budget in the next decade when we baby-boomers begin to 
retire.
  If Members believe that repeal of the estate tax is more important 
than reducing the national debt and protecting the integrity of the 
Medicare and Social Security trust funds, vote against this motion to 
recommit. However, if Members agree with the principle that reducing 
the national debt and protecting Social Security and Medicare is more 
important than any new spending or tax cuts, then vote for this motion 
to recommit.
  Mr. Speaker, I yield the balance of my time to the gentlewoman from 
Florida (Mrs. Thurman).
  Mrs. THURMAN. Mr. Speaker, I thank the gentleman from Texas for 
yielding time to me.
  Mr. Speaker, I strongly support this motion to recommit. We know that 
we cannot pass this bill without invading the trust funds and breaking 
the promises made to the American people. We have been down this road 
before. Last year, the press reported on a Republican memo that said, 
we are possibly already into the Medicare trust fund and are also very 
close to touching the Social Security surplus in fiscal year 2003. That 
statement was true last year; it is more true today.
  Do Members not realize that we are in a war on terrorism? Yet the 
majority insists on bringing up bills that reduce revenues needed for 
the fight and for our domestic needs. Where are the funds for the 
education bill? How many children are Members leaving behind so a few 
millionaires can move forward? What happens to Social Security reform, 
or a Medicare prescription drug benefit? The answer is, nothing, 
because we do not have any money left for them.
  All of these are important priorities, but not as important as the 
promise we

[[Page H3275]]

made to protect the trust funds. Virtually every Member on this floor 
has voted at one time or another to protect the trust funds. That is 
the promise they made to the American people.
  If Members reject this motion, then they should go home and explain 
to their constituents that what they were told would be there for them 
will not be there. If Members break their promises and raid the trust 
funds, then tell our children and seniors to look out for themselves.
  If Members want to keep our promises to all Americans, then support 
this motion to recommit. Otherwise, tell them that H.R. 2143 is just 
the latest answer to the question raised by William H. Gates, Sr.: How 
high a price is America willing to pay in order to give a handful of 
millionaires and billionaires a tax break?
  Please support the motion to recommit.
  Mr. THOMAS. Mr. Speaker, I rise in opposition to the motion to 
recommit.
  The SPEAKER pro tempore. The gentleman is recognized for 5 minutes.
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, in terms of that honest, pleading appeal, I am going to 
just try to put a couple of tests in place to see how real it was.
  If this motion to recommit is so critical to the future of the Social 
Security trust fund, why was it not in the Pomeroy substitute? 190 
Democrats less than a half an hour ago voted to raid the Social 
Security trust fund. The Pomeroy substitute spends more than $22 
billion over the next 5 years. It violates the budget, and it runs us 
into deficit spending, and it violates this motion to recommit.
  So if Members are so concerned, why was this not part of the Pomeroy 
substitute? The answer is, they want to complain about it but they do 
not want to be responsible for it.
  Less than a week ago we had many Democrats on the floor wringing 
their hands over the constitutional crisis; that if we sent the 
executive branch the superwaiver in the welfare bill, that we would be 
ceding constitutional authority to the executive, constitutional 
authority that we should cling to our chests very, very hard because we 
do not want to give up this constitutional right.
  Did Members read this? It says, ``The director of Office of 
Management and Budget will certify.'' It is the executive branch that 
will tell us if this institution, with its constitutional powers, is in 
violation, and it is the OMB that will correct it. I find it ironic 
that within a week, they take a position which was an absolute 
constitutional prerogative and throw it in here as the way in which we 
are going to control the process.
  I guess the thing that gets me the most is 190 Democrats just voted 
to violate this motion to recommit; and, without a second thought, they 
offer this motion to recommit. That kind of tells us about how sincere 
these Members are.


                         Parliamentary Inquiry

  Mr. STENHOLM. Parliamentary inquiry, Mr. Speaker.
  The SPEAKER pro tempore. The gentleman will state it.
  Mr. STENHOLM. Mr. Speaker, is it not correct that under the rules of 
the House that we are operating under today that we did attempt to have 
a pay-for?
  And I would also state to my friends on the other side that I would 
have offered this amendment to the Pomeroy amendment.
  The SPEAKER pro tempore. The gentleman is not stating a proper 
parliamentary inquiry.
  Without objection, the previous question is ordered on the motion to 
recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.


                             Recorded Vote

  Mr. STENHOLM. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to 5 minutes the minimum time for any electronic vote on 
the question of passage.
  The vote was taken by electronic device, and there were--ayes 205, 
noes 223, not voting 7, as follows:

                             [Roll No. 218]

                               AYES--205

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Harman
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Leach
     Lee
     Levin
     Lipinski
     Lofgren
     Lowey
     Luther
     Lynch
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Ross
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Schiff
     Scott
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NOES--223

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Chambliss
     Coble
     Collins
     Cooksey
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller, Dan
     Miller, Gary
     Miller, Jeff
     Moran (KS)
     Morella
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shows
     Shuster
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stump
     Sullivan
     Sununu
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)

[[Page H3276]]


     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--7

     Combest
     Emerson
     Gilchrest
     Lewis (GA)
     Roukema
     Serrano
     Traficant

                              {time}  1645

  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. Simpson). The question is on passage of 
the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. GEORGE MILLER of California. Mr. Speaker, I demand a recorded 
vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 256, 
noes 171, not voting 8, as follows:

                             [Roll No. 219]

                               AYES--256

     Abercrombie
     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Bartlett
     Barton
     Bass
     Berkley
     Berry
     Biggert
     Bilirakis
     Bishop
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Boswell
     Boucher
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Capps
     Carson (OK)
     Castle
     Chabot
     Chambliss
     Clay
     Clement
     Coble
     Collins
     Condit
     Cooksey
     Costello
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Dooley
     Doolittle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Ehrlich
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Ford
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gillmor
     Gilman
     Goode
     Goodlatte
     Gordon
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Harman
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hinojosa
     Hobson
     Hoekstra
     Holt
     Hooley
     Horn
     Hostettler
     Hulshof
     Hunter
     Hyde
     Isakson
     Israel
     Issa
     Istook
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Lampson
     Larsen (WA)
     Latham
     LaTourette
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Maloney (CT)
     Manzullo
     Matheson
     McCarthy (NY)
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     Mica
     Miller, Dan
     Miller, Gary
     Miller, Jeff
     Moran (KS)
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Royce
     Ryan (WI)
     Ryun (KS)
     Sandlin
     Saxton
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shows
     Shuster
     Simmons
     Simpson
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stump
     Sullivan
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                               NOES--171

     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barrett
     Becerra
     Bentsen
     Bereuter
     Berman
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Cardin
     Carson (IN)
     Clayton
     Clyburn
     Conyers
     Coyne
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Doyle
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Frank
     Frost
     Gephardt
     Gonzalez
     Green (TX)
     Gutierrez
     Hall (OH)
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hoeffel
     Holden
     Honda
     Houghton
     Hoyer
     Inslee
     Jackson (IL)
     Jackson-Lee (TX)
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Langevin
     Lantos
     Larson (CT)
     Leach
     Lee
     Levin
     Lipinski
     Lofgren
     Lowey
     Luther
     Lynch
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCollum
     McDermott
     McGovern
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Mollohan
     Moore
     Moran (VA)
     Morella
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sawyer
     Schakowsky
     Schiff
     Scott
     Sherman
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tauscher
     Taylor (MS)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                             NOT VOTING--8

     Capuano
     Combest
     Emerson
     Gilchrest
     Lewis (GA)
     Roukema
     Serrano
     Traficant

                              {time}  1655

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________