[Congressional Record Volume 151, Number 43 (Wednesday, April 13, 2005)]
[House]
[Pages H1921-H1943]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                DEATH TAX REPEAL PERMANENCY ACT OF 2005

  Mr. HULSHOF. Mr. Speaker, pursuant to House Resolution 202, I call up 
the bill (H.R. 8) 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. Pursuant to House Resolution 202, the bill 
is considered read.
  The text of H.R. 8 is as follows:

                                 H.R. 8

       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 ``Death Tax Repeal Permanency 
     Act of 2005''.

     SEC. 2. ESTATE TAX REPEAL MADE PERMANENT.

       Section 901 of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001 shall not apply to title V of such 
     Act.

  The SPEAKER pro tempore. After 1 hour of debate on the bill, it shall 
be in order to consider the amendment in the nature of a substitute 
printed in House Report 109-35, if offered by the gentleman from North 
Dakota (Mr. Pomeroy) or his designee, which shall be considered read, 
shall be debatable for 1 hour, equally divided and controlled by the 
proponent and an opponent.
  The gentleman from Missouri (Mr. Hulshof) and the gentleman from 
California (Mr. Stark) each will control 30 minutes of debate on the 
bill.
  The Chair recognizes the gentleman from Missouri (Mr. Hulshof).


                             General Leave

  Mr. HULSHOF. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within

[[Page H1922]]

which to revise and extend their remarks and include extraneous 
material on H.R. 8.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Missouri?
  There was no objection.
  Mr. HULSHOF. Mr. Speaker, I yield myself 5 minutes.
  Mr. Speaker, I appreciate the fact that we are here today poised to 
pass H.R. 8, the Death Tax Repeal Permanency Act of 2005.
  On behalf of the lead Democratic sponsor, my colleague, the gentleman 
from Alabama (Mr. Cramer), as well as the over 200 bipartisan Members 
who have co-sponsored this bill, I am pleased that we are poised to 
pass in this body this commonsense legislation.
  I would like to talk about a couple of constituents, particularly a 
constituent named Howard Effert who is a resident of Columbia, 
Missouri, who in 1965 began a lumber yard business there in Columbia. 
He contributed $100, which was a very modest contribution, as he had 
three young children to provide for with a modest wage.
  He had the idea and a desire for a new venture even though many 
within the community felt this venture would be unsuccessful, but yet 
his partners helped him provide the financial assistance and of course 
some valuable mentoring to help him open the doors to this lumber 
business.
  Fast forward now 40 years. His two sons, Brad and Greg, are running 
the day-to-day operations of the business. Of course, they want this 
family business that has been in their family since its modest 
beginnings in 1965 to be able to be passed on pursuant to the American 
Dream, that is, to create a legacy, to help your children be better off 
than you were.
  Yet the Effert family today, Mr. Speaker, has to write a check for 
$1,000 a week, $52,036 to be precise, to purchase a term life insurance 
policy, the proceeds of which will be to pay the Federal Government on 
that inevitable day that Howard Effert passes from this world to the 
next.
  In 2001 we passed historic legislation that let all income tax payers 
keep a little bit more of what they earned, and this historic 
legislation included a repeal of the Federal death tax which was a top 
tax priority for a lot of small business and family farm groups. Thus 
under current law, the death tax is gradually phased out between now 
and 2010. This is accomplished by increasing the exemption from the 
tax. Currently it is $1.5 million shielded from this very confiscatory 
tax, and at the same time we chip away at that top rate, which was as 
high as 55 percent, and in fact, in a few isolated instances as high as 
60 percent tax. We now chip that away, and it is currently 47 percent.
  Unfortunately, as we know, the death tax does not stay dead and 
buried. As things now stand, it will rise from the grave in 2011, and 
it will revert to its form prior to 2001. Now, this quirk in the law 
can be directly attributed to the Senate's Byrd Rule, which applies to 
the consideration of reconciliation bills.
  As a matter of basic fairness, we must permanently repeal the death 
tax. The death of a family member quite simply should not be a taxable 
event. And if it was good policy when we enacted it in 2001, it remains 
a good idea today.
  Let me touch briefly on some policy rationales for finishing this 
unfinished work. The death tax is fundamentally unfair. By its very 
structure, the tax punishes thrift, savings, and hard work. Conversely, 
the tax forces taxpayers to engage in a host of economically 
inefficient activities to avoid the very punitive nature of the tax. 
Not only does this have a very real effect on taxpayers and their 
behavior but a negative impact on the economy.
  With a tax like the death tax, a family business or farm has no 
choice but to divert these precious resources, as in the case of the 
Effert family, to plan financially for the financial impact for the 
tax: money that could be used to expand the business, to purchase a 
forklift, to bring another person on the payroll, whatever is in the 
best interest of that business. Instead, this money is diverted in 
anticipation of this very punitive tax.
  Now, supporters of retaining the death tax will claim that perhaps 
redistribution of income promotes economic fairness and social 
responsibility. We will get to have that debate. I respectfully 
disagree. Instead of rewarding savings and investment, this tax 
actually rewards those who spend lavishly and leave no ongoing business 
interest or assets to the next generation.
  I am mindful of the bumper sticker that I saw recently traveling 
Missouri's highways on a big recreational vehicle that says ``I am 
spending my children's inheritance.''
  If you wanted to give some good estate tax advice to someone that has 
put together some assets to pass along, it would be simply to consume 
it. Yet as we talk about some sort of tax reform and perhaps a 
consumption tax, this tax actually focuses on non-consumption and on 
thrift and savings.
  For that and for a variety of reasons, we will have the opportunity, 
I hope, in a good debate, in a civil discourse. I think we should 
permanently repeal the death tax. We should enact H.R. 8.
  Mr. Speaker, I reserve the balance of my time.
  Mr. STARK. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I guess it becomes my job to point out that the 
Republicans are at it again. Another huge tax cut or break for the less 
than 1 percent of the richest Americans while they turn their back and 
cut Medicaid, refuse to recognize that Social Security is not in crisis 
but needs some adjustment, cut Head Start, cut programs for housing, 
cut programs for the environment, fail to provide the promised benefits 
to our 140,000 servicemen in Iraq, turn their back on all that is 
American to give a few dollars to the very richest of Americans.
  Now, not all Republicans are that way. I find that many of the 
Republicans who have actually worked for a living at some point in 
their lives, and not just either inherited money or been at the trough 
of the government, actually oppose this bill. Warren Buffett, the Gates 
family, people who have done quite well think that as I do it is a 
stupid bill and will do nothing for our free enterprise system. It will 
stifle creativity and leave us with a system where merit and ability 
mean nothing and heredity means everything.
  $300 billion over the next 10 years and perhaps another $700 billion 
over the decade following that are going to be frittered away to a very 
small number of Americans. With that we could end this talk about 
privatizing Social Security that President Bush is leading, and we 
could start shoring up the trust fund. We could get rid of the doughnut 
hole in the poorly constructed Medicare drug benefit. We could fulfill 
the promise that the President and the Republicans have ignored for 
funding No Child Left Behind. We could eliminate the proposed cuts to 
Medicaid which will hurt the poorest children in this country. And 
while we may help a few very rich children with an inheritance, we will 
cut hundreds of thousands of children's Medicaid benefits. That could 
be prevented.
  We could cover a large portion of the 45 million people who are 
without health insurance, I might add 8 million more than when 
President Bush took office. But Republicans obviously do not care about 
Social Security or Medicare or the uninsured or education or the 
children. They only care about tax cuts for the very richest among us.
  Now, if you eliminate this, you are only going to help probably less 
than a couple thousand people a year, and they will arguably have by 
2009 estates of over $7 million. Until now there has not been a family 
farmer or a small business who has been unable to pass the business on 
to the next generation.
  I might add to my friend from Missouri of his people in the lumber 
business, if their children cannot get the first $7 million handed to 
them and then get a 50 percent down payment on the balance of the 
business and be given 10 years at less than 6 percent to pay off the 
balance of that, they are probably too dumb and would lose the business 
in no time at all anyway.

                              {time}  1430

  So what the current law allows is so generous, and there have been 
absolutely no instances, not one, of a family farmer or family business 
being lost, decimated or put on the auction block because of the estate 
tax.
  In fact, 99.7 percent of all estates would be exempt from the estate 
tax if

[[Page H1923]]

we just extend the tax as it applies in 2009. They cannot show that it 
harms people. They can only show that gives billions, $300 to almost $1 
trillion over 20 years, to the very smallest, most select group of rich 
people in this country.
  It is indeed a follow on of the Republican mantra, give money to the 
rich, give it to them in huge amounts and cut back on education, cut 
back on health care, do not help the environment, cut back on support 
for our troops and cut back on improving America's infrastructure, all 
in the name of helping the few rich who may be contributors to the 
Republican party.
  I urge that my colleagues vote ``no'' on the final bill. I urge that 
my colleagues vote for the gentleman from North Dakota's (Mr. Pomeroy) 
who will offer a responsible substitute, which will at least keep the 
$300 billion from being squandered, and it will prevent this bill, 
which does nothing to help hardworking Americans or small businesses, 
and I hope we can bring some sanity back to the financial code and to 
the economic future of this country by not passing this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HULSHOF. Mr. Speaker, a lot of individuals have worked on H.R. 8, 
and I yield 2 minutes to the gentleman from California (Mr. Herger), 
one of those individuals.
  Mr. HERGER. Mr. Speaker, I thank the gentleman very much for the 
time.
  Mr. Speaker, I rise in strong support of legislation to bury the 
destructive death tax once and for all; and I might mention that my 
personal experiences, even with my own family and others, has been just 
the opposite of the gentleman who just spoke before.
  Nearly everywhere I go throughout my largely rural, agricultural 
district in northern California, I hear from businessmen and 
businesswomen and many farmers and ranchers who have had to liquidate 
and sell a family business or farm just to pay the Federal estate tax. 
This is simply wrong.
  Four years ago, I joined with President Bush and a majority of 
Representatives and Senators in an effort to enact into law historic 
tax relief legislation, including repeal of the death tax. 
Unfortunately, due to outdated Senate budget rules, the 2001 tax law 
will sunset on December 31, 2010. This has created an incredibly unfair 
and arbitrary situation.
  Consider that the heirs of those who pass away in 2010 will face no 
death tax whatsoever, while those whose families are unfortunate enough 
to pass away in 2011 or thereafter will face tax rates of up to 55 
percent on their assets, forcing many of them to have to sell. 
Certainly no one can reasonably argue that this is rational tax policy.
  Furthermore, the death tax extracts a high cost from American 
taxpayers. Studies have found that family businesses spend up to 
$125,000 on attorneys, accountants and financial experts to assist in 
estate planning. These dollars could otherwise be used to modernize 
equipment, expand their business or farms and create new jobs.
  Mr. Speaker, the death tax is, without question, one of the most 
destructive, counterproductive and unfair provisions of our Tax Code. 
Let us bury the death tax once and for all. Vote ``aye'' on this 
legislation.
  Mr. STARK. Mr. Speaker, I yield 3 minutes to the gentleman from 
Michigan (Mr. Levin).
  (Mr. LEVIN asked and was given permission to revise and extend his 
remarks.)
  Mr. LEVIN. Mr. Speaker, in a few words, this is fiscal madness. It is 
a death wish on the part of some of my colleagues about fiscal 
responsibility. What my colleagues are burying is fiscal 
responsibility.
  The national debt is now $4.6 trillion, $6.3 if we add in Social 
Security funds. As mentioned, this bill would add $290 billion in debt, 
and who would benefit? The very, very wealthy.
  One-third of the estate tax is paid by the wealthiest one of one 
thousand Americans. I think that is one-tenth of 1 percent. Not farmers 
or small business people. That is the lamest argument brought to this 
floor in recent memory.
  The Pomeroy amendment would totally take care of this, and what my 
majority colleagues' bill does, and it is interesting, they do not come 
here and say so, they would increase the taxes for thousands and 
thousands of Americans. These citizens would have to pay capital gains 
tax when they do not now do so. Why do my colleagues not come here and 
say this is a tax increase for thousands of Americans? They do not say 
that.
  What this is also, everybody should understand, is a further raid on 
Social Security funds. My colleagues have come here, some of them on 
the majority side, talking about Social Security and how we need to 
address the shortfall. For some of these same colleagues, private 
accounts do not even touch that, and then they come here and increase 
the shortfall.
  This is true fiscal madness. My colleagues will indulge in it again I 
guess, and I hope, once again, the Senate will come to our rescue.
  Mr. HULSHOF. Mr. Speaker, I yield myself 30 seconds.
  I am sure the gentleman from Michigan misspoke, and I am certain it 
was inadvertent. The bill, H.R. 8, actually does allow for a step up in 
basis of $3 million for a surviving spouse and another $1.3 million for 
surviving heirs.
  If the intent of the legislation, which it is, is to help family 
businesses be passed from one generation to the next and the surviving 
heirs choose not to farm or continue the family business, then they are 
the ones making the taxable decision to dispose of assets that would be 
subject to a 15 percent capital gains rate but certainly not the 45 
percent estate tax.
  Mr. Speaker, I yield 1 minute to the gentleman from Florida (Mr. 
Shaw).
  Mr. SHAW. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Listening to the debate that we have listened to from the other side, 
the sole argument seems to be that it only applies to a small amount of 
our population, the wealthiest among us. We know that, but I have yet 
to hear anybody to justify, to give us a good reason to say this is a 
good and fair tax and here is why.
  It seems to be that the argument is being centered around the 
punitive basis. Let us go after the rich guys. Let us go after them and 
do something.
  I am in favor of the Hulshof bill to repeal the death tax simply 
because it is the right thing to do. The death tax is wrong. To go in 
and tax almost half of someone's estate because they have accumulated a 
lot and to make death an incident of taxation is wrong. It is a wrong 
tax, and I cannot imagine anybody getting up and justifying it, other 
than the fact it is a revenue stream to the Federal Government, but it 
is the wrong one.
  Mr. STARK. Mr. Speaker, I yield myself enough time to remind the 
historians here that it was the Republicans in the 1800s who 
established the original inheritance tax to prevent a nobility class 
from forming, an idle nobility class, in this country.
  Mr. Speaker, I am happy to yield 4 minutes to the gentleman from 
Washington (Mr. McDermott).
  (Mr. McDERMOTT asked and was given permission to revise and extend 
his remarks.)
  Mr. McDERMOTT. Mr. Speaker, my colleague from Florida, I wish he 
would stay, because we are here today because the Republican majority 
would like to repeal the estate tax, but they have forgotten history.
  I am sure my colleague was not here, but I would like to remind him 
that it was a Republican, President Roosevelt, Teddy Roosevelt, who 
strongly supported an estate tax in the first place. Here is what he 
said. There is no argument for this.
  ``The man of great wealth,'' Teddy said, ``owes a particular 
obligation to the State because he derives special advantages from the 
mere existence of government.'' Wow, nicely said, and a Republican, 
too.
  That proves two things, that Republicans can sometimes speak 
eloquently, and sometimes they can even do something that is right.
  Though Republicans want to undo all the good for the sake of greed, 
please, America, do not be phonied up by this rhetoric that we hear on 
this bill. They will pitch some gibberish about how they are helping 
Americans. That is nonsense.
  We just came from the Committee on Ways and Means. The reason this 
place was in recess is because we were over there giving out $8 billion 
to oil companies. Those poor people, whose profits have quadrupled in 
the last 2 years,

[[Page H1924]]

that is what we did a little while ago. Now we come over here, and we 
are going to give more money away. Does that seem like it benefits real 
people? This is not about real people. This is about very, very, very 
rich people, and that is about as plainspoken as Teddy Roosevelt would 
have said it.
  Only 2 percent, at the most, pay any estate tax whatsoever. Three-
quarters of the money that comes in comes from people with estates over 
$2.5 million.
  If we repeal this, the rich get richer and America's deficit gets 
deeper and redder. We create an oligarchic class in this country from 
whom the money can never be taxed. If they can manipulate it around 
while they are alive, they can never have to pay a penny.
  The real losers in this are not only the American people. It is the 
American universities, the American churches, all those people who get 
money contributed by rich people because they do not want to pay the 
inheritance tax.
  Now my colleagues have taken away the encouragement. Why should they 
give anything away? Oh, well, because they have big hearts. They have 
big hearts we are told. Really? Then why are we out here with a bill 
like this which gives them the ability to keep every single dime?
  Now if you can give your kid $2 million and say, now, Johnny, here is 
two million bucks, I think that ought to kind of get you a start in the 
world. Does that not seem like enough? Well, to the Republicans, there 
is never enough; take as much as you can from everybody and keep it.
  Ronald Reagan put the sign of the cross on it. He said, are you 
better off today than you were 4 years ago? Never does anyone say on my 
colleagues' side, are we better off.
  We are in debt to the world. We borrowed from the Japanese last year 
our entire deficit, more than $400 billion, and the President wanders 
around the country saying, well, that is just paper. Those things in 
the Social Security trust fund, that is just paper. Do not pay any 
attention to that.
  If the Japanese stop buying dollars and they start buying Euros, and 
the Chinese start buying Euros and the Middle East buys Euros, where do 
my colleagues think we are going to borrow money and what kind of 
interest rate are we going to pay? This is a bad bill, it is bad 
policy, and it is bad ethics.
  Mr. HULSHOF. Mr. Speaker, I am pleased to yield 3 minutes to the 
gentleman from the great State of Missouri (Mr. Blunt) a colleague of 
mine, the majority whip.
  Mr. BLUNT. Mr. Speaker, I thank my good friend, the gentleman from 
Missouri (Mr. Hulshof), for yielding to me and for the great work he 
has done on this issue from the day we came to Congress 8 years ago. I 
rise in support of the bill that would repeal this tax.
  The House and Senate are already both on record for repealing the 
tax. We just did not repeal it permanently.

                              {time}  1445

  By not repealing the tax permanently, we created an incredible 
situation for those people who would have an estate that was not 
taxable at all in 2010, but is highly taxable in 2011. The alternatives 
that the other side of the aisle have discovered during the hard work 
to achieve the goal of this bill are certainly a long way from where 
they were a few years ago. In fact, we have all heard about the impact 
on small businesses and family farms, but it bears repeating as we 
consider this legislation today.
  More than 70 percent of family businesses do not survive the second 
generation, and 87 percent do not make it to the third generation 
because of the estate tax. The idea that you give your son $2 million 
overlooks the vast numbers of family members in this country who 
actually are working side by side with their son or daughter. It is 
hard to tell who made the money and who did not, but on the day that 
the original member of the family passes away, suddenly the side-by-
side partner has a big problem.
  Family farms and businesses are among the hardest hit. In fact, $2 
million is quite a bit below the alternative that the gentleman will 
vote for and suggests that amount somehow would be okay to give in his 
vote, but not okay to give in his speech. Add in the value of farm 
equipment and business inventory, suddenly there is a lot more money 
than you thought you could accumulate.
  When we started this debate a few years ago, I saw some statistics 
that the highest percentage of estates paying at that time were estates 
that were only slightly above the estate tax amount, but I am sure none 
of the principals involved had any idea that they had accumulated over 
their lifetime an estate that would be taxed as a taxable estate.
  On Friday of this week, I am going to visit with Mark and Kim Larson 
who own a family farm right outside of Joplin in my district. Mark 
tells me he and his family spend a lot of money, money which would 
otherwise go into continuing to grow their family business, simply 
trying to comply with a Tax Code that says if somebody dies in 2010, 
your family deals with one set of circumstances; but if they die the 
next year, you are impacted by the return of the death tax.
  Medium-to-large farms like the Larsons' produce more than 80 percent 
of agricultural products in America. Let us put some certainty in the 
future for those kinds of families. Let us do the right thing and 
abolish this tax that penalizes savings and hard work.
  Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from 
Maryland (Mr. Cardin).
  Mr. CARDIN. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, I hope we will reject this bill. Let me give two reasons 
why: first, the cost. We talk about being fiscally responsible, we talk 
about trying to balance the Federal budget and say we have a problem 
with Social Security as far as long-term solvency of 75 years; but let 
me point out that the revenue loss of this bill equals the 75-year 
amount to provide long-term solvency for Social Security.
  What we do here is make choices. If we have a choice to provide for 
the long-term strength of Social Security or the passage of this bill, 
my vote is for the long-term solvency of Social Security.
  The second issue I would like to point out is the predictability of 
the current estate tax situation. It is not very predictable, and the 
passage of this bill will do nothing to assure people when they do 
their estate plans that they can rely upon the schedule Congress has 
passed.
  We have a chance with the Pomeroy substitute to bring certainty to 
estate taxes with a reasonable exemption of $3.5 million, $7 million 
per couple, and reducing permanently the tax by 10 percent. That is 
what people want when they do their estate planning. They want 
predictability.
  So if Members are fiscal conservatives and are concerned about the 
cost of this bill on our children and seniors and if Members want 
predictability in the estate tax, this legislation does not give it to 
us. This legislation should be rejected, and we should pass a bill that 
provides certainty with the estate tax. We will have that opportunity 
with the fiscally responsible substitute so we can deal with the budget 
problems of this country.
  We are borrowing way too much money for our children and 
grandchildren. They deserve better than that. They deserve a Congress 
that will be fiscally responsible, and the passage of this bill just 
does not do it. I urge my colleagues to reject this legislation.
  Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, among the many groups that support H.R. 8, including the 
National Federation of Independent Business, which is the voice of 
small business, there are many minority owners of small businesses that 
also support complete repeal.
  Mr. Speaker, I yield 2 minutes to the gentleman from Georgia (Mr. 
Bishop).
  Mr. BISHOP of Georgia. Mr. Speaker, I rise today to recognize the 
hard-working people of America who play 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 and the family business owners who 
provide the jobs that keep small rural communities alive and 
flourishing.
  All across this land are Americans who have paid their taxes all 
their lives, only to face a final taxing event at death. They paid 
their taxes during

[[Page H1925]]

their lifetimes and should not be charged again when they 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.
  In my State of Georgia, farmers, many of whom are widow women, are 
faced with losing their family farms because of this death tax. 
Employees of 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 on them. Funeral homes, weekly 
newspaper publishers, radio station owners, local dry cleaners, all are 
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. STARK. Mr. Speaker, I yield 3 minutes to the gentleman from 
Massachusetts (Mr. Neal).
  (Mr. NEAL of Massachusetts asked and was given permission to revise 
and extend his remarks.)
  Mr. NEAL of Massachusetts. Mr. Speaker, I thank the gentleman from 
California (Mr. Stark) for yielding me this time.
  Mr. Speaker, the gentleman from Florida said I want Members to give 
me a good reason why we should not repeal the estate tax. Let me give 
Members two good reasons: Afghanistan and Iraq.
  The idea that we would be borrowing the money to pay for Afghanistan 
and Iraq when by just leaving this tax in place we could pay for those 
incursions and maybe get the Humvees to those men and women who are 
defending us every single day, or maybe get bulletproof vests to them 
on time, borrowing the money.
  The slogan of the moderate Republican Party is this: we are rich, and 
we are not going to take it any more. It is day after day in this 
institution, borrow money, run up the debt, run up the deficits and 
then with a straight face say, we are going to repeal a tax that 
affects 1 percent of the American people, just 1 percent of the 
American people.
  They talk about industriousness and thrift and the work ethic. We see 
what happens to this money when it gets to the fourth and fifth 
generation of the same family: thrift is gone, the work ethic is gone. 
They quarrel about who is going to have enough money so they can enjoy 
the lavish ways of American life.
  When I hear people say, as they have said recently in this debate, 
well it is going to take care of the family farmer, they cannot find a 
farmer that is not taken care of in the legislation that is about to be 
proposed here. This legislation that they are proposing today cuts 
against the grain of what Thomas Payne reminded us in ``Common Sense.'' 
He was concerned about hereditary power, the idea that the same people 
would control the wealth of America with the same families that would 
get to go to the same schools so the same families would have the same 
doctors and lawyers and accountants so the rest of America might not 
have a chance to participate. Whatever happened to the Republican Party 
in America.
  Teddy Roosevelt said this was about thrift and hard work and honesty; 
they were blessed to be born in this country. That is what patriotism 
is. When we look at who enjoys the fruits of this money, the smallest 
number of American people, again the top 1 percent in America. 
Inherited wealth, that is not what America is based upon. We do not 
live in an aristocracy. Look what happened to Europe and the way they 
lag behind as they do. There is no sense in the House of Lords that you 
can advance yourself. Here in this House, the people's House, every 
walk of life is represented. Why do we just not establish a House of 
Lords after we get rid of the estate tax so then when we get rid of 
hereditary power, we will simply have the permanent state of 
aristocracy and privilege for the few.
  Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would remind the gentleman from Massachusetts (Mr. 
Neal) as he mentions Iraq and Afghanistan that the budgetary impact of 
H.R. 8 is really not felt until the year 2011 and beyond.
  Mr. Speaker, I yield 2 minutes to the gentlewoman from Florida (Ms. 
Harris).
  (Ms. HARRIS asked and was given permission to revise and extend her 
remarks.)
  Ms. HARRIS. Mr. Speaker, I rise in support of H.R. 8, which will 
finally free America's hard-working farmers and small business owners 
from the specter of the death tax.
  Benjamin Franklin said: ``In this world nothing is certain but death 
and taxes,'' but I doubt even the inventive Mr. Franklin imagined the 
taxation of death itself.
  Americans get taxed when they earn money. They get taxed again when 
they spend what is left, and government pursues them beyond the grave, 
devastating their relatives who must sell the family farm or liquidate 
the family business just to pay the taxes.
  The impact of the death tax extends far beyond the pain it inflicts 
upon grieving families. The death tax distorts economic decisions on a 
massive scale. It punishes thrift. It reduces savings and investment, 
and it diverts capital away from job creation to tax avoidance.
  The National Federation of Independent Businesses has estimated that 
the death tax will compel one-third of small business owners today to 
sell some or all of their business. The Center For the Study of 
Taxation found that 70 percent of all family businesses cannot survive 
the second generation and 87 percent do not make the third.
  All of this wasted money, energy and over 100,000 jobs lost per year 
and for what, a tax that the Joint Economic Committee says costs just 
as much to collect as it generates in revenue.
  Mr. Speaker, the opponents of H.R. 8 cannot provide any justification 
for the continued existence of this useless relic. It hurts the people 
it is intended to help, and it reduces stock in our economy by $497 
billion a year.
  I urge my colleagues to drive the final nail in this coffin so 6 
years from now Americans will not wake up to find that, like a vampire, 
this unfair tax has arisen from the dead to once again suck the blood 
from a lifetime of hard work and sacrifice.
  Mr. STARK. Mr. Speaker, I yield 4 minutes to the gentleman from 
Tennessee (Mr. Tanner).
  (Mr. TANNER asked and was given permission to revise and extend his 
remarks.)
  Mr. TANNER. Mr. Speaker, in 1997, Jennifer Dunn, a Republican from 
Washington, and I started this debate on the estate tax. At that time 
the country was in much different shape financially than it is today.
  At that time, we raised the issue for estate tax relief because I 
thought then it was punitive. It had nothing to do with the theory that 
the gentleman from Massachusetts (Mr. Neal) spoke so eloquently about, 
and that is to keep 3 percent or 1 percent of the people from owning 99 
percent of our country.

                              {time}  1500

  We did not want to be like England where whoever got control of the 
land and money, and 1,450 still had it 26 generations later and people 
who were hardworking could not break through that ceiling because of 
the nobility that was enshrined in their tax code. That is why we have 
an estate tax.
  But we raised that issue, and I voted for the bill that is being 
proposed today, but I can no longer vote for it. Let me tell you why. 
It is because, as I look in the faces of these young people, you are 
looking at a House, a Senate and an administration that has embarked 
since 2001 on the most radical, irresponsible financial riverboat 
gamble that this country has ever seen. There has been no political 
American leadership that has ever done what this group of people who 
currently hold the power of government here in Washington have done to 
this country.
  Since April of 2001, in your name and mine, this government has 
borrowed $1.2 trillion in hard money. What that means to us is that we 
have transferred, at only 4 percent interest, $50

[[Page H1926]]

billion a year from programs like Social Security, like health care, 
like armor for our troops, from veterans, to health care, to education, 
all the things that will give the citizens of this country a chance, an 
opportunity to be whatever it is their God-given talents give them, we 
have transferred $50 billion a year from that to interest. And you know 
what is worse? Eighty-four percent of this $1.2 trillion has been 
borrowed from overseas. We are now sending more money overseas. Eighty-
four percent of this interest check is going overseas.
  Let me tell you something scary. A former official of the People's 
Bank of China, the country's central bank and now an economist in Hong 
Kong, was recently quoted as saying that the U.S. dollar is now at the 
mercy of Asian governments. Do you know what we are doing? We are 
mortgaging our country to foreign interests who do not see the world as 
we see it. It has got to stop, and it has got to stop sometime, and I 
for one am saying I want to stop it now.
  In your name, we are borrowing at the rate of $13,300 a second. This 
is staggering, mind numbing. $48 million an hour. Since this debate 
started, in our names we have borrowed $48 million and given the bill 
to those little children sitting up there. $1 billion a day.
  Do you know how much $1 billion is? If you take thousand-dollar bills 
and stack them up like that, to get to a million dollars it is a foot 
high; to get to a billion dollars, it is as high as the Empire State 
Building; and to get to a trillion dollars, which is what has been 
borrowed in the last 46 months in your name, it is a thousand times as 
high as the Empire State Building, one thousand dollar bills like this.
  We are facing a financial Armageddon. What we have done has created a 
financial vulnerability vis-a-vis the rest of world that is every bit 
as big a security interest as anything else we are going to face in the 
future. I just hope that someday soon that some sense will come to this 
place about how we are handling or mishandling your money.
  Mr. HULSHOF. Mr. Speaker, I certainly respect my friend from 
Tennessee and I trust he will bring that passion to the floor when we 
have our discussion on our spending bills.
  Mr. Speaker, I am pleased to yield 2 minutes to the gentleman from 
Texas (Mr. McCaul), a newly elected Member.
  Mr. McCAUL of Texas. Mr. Speaker, today I rise in support of 
permanently repealing the death tax. I would like to thank the 
gentleman from Missouri for his leadership on this issue and his good 
timing, for in 2 days the tax man cometh. As I look at these young 
people in the gallery today, I say to them, this bill is about you. It 
is about the youth in this country. For too long, the Federal 
Government has been taxing working Americans, not once, not twice, but 
three times, on their hard-earned money. When they earn it, the 
government takes an income tax. When they spend it, the government 
takes a sales tax. And finally, even when they die, the government 
takes a tax from the grave.
  In addition to being bad policy, the death tax is morally wrong. It 
confiscates private property and is an unbearable cost to small 
businesses, ranchers and farmers, which is precisely why the Farm 
Bureau supports this bill.
  I could tell you many stories about families that were forced to 
borrow large sums of money or sell off or parcel out their farms or 
businesses, dividing their families. I could tell you about the 
Berdolls from Austin, Texas, in my district who, after paying off a 30-
year mortgage, spent 20 more years paying this unfair tax burden. They 
literally paid for their farm twice.
  The names may change, but the story is the same. It is time we 
removed this financial burden from the backs of those pursuing the 
American dream. We must guarantee that people do not have to suffer the 
same hardships as the Berdolls.
  I urge my colleagues to support this important measure.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. LaHood). Members should not address 
persons in the gallery, and the Chair would remind all persons in the 
gallery that they are here as guests of the House and that any 
manifestation of approval or disapproval of proceedings or other 
audible conversation is in violation of the rules.
  Mr. STARK. Mr. Speaker, I yield 4 minutes to the gentleman from Texas 
(Mr. Doggett).
  Mr. DOGGETT. Mr. Speaker, I rise in opposition to this latest 
Republican assault on Social Security and on fiscal sanity. At a time 
of apparently unending war and the largest budget deficits in American 
history, our Republican colleagues are intent on solving a crisis that 
does not exist.
  As the President wastes millions of our taxpayer dollars 
crisscrossing this country to declare that there is no Social Security 
trust fund and questioning the full faith and credit of the Federal 
Government, his Republican allies here seem intent on actually making 
his dire and inaccurate statements a self-fulfilling prophecy. Today, 
what they propose is to borrow from the Social Security trust fund and 
to borrow from the Medicare trust fund in order to give more tax breaks 
to the richest one-tenth of 1 percent of the people in this country.
  That is borrowing from Social Security for purposes that have nothing 
to do with the Social Security system because they think some rich 
folks in this country do not have wallets that are fat enough. It is 
taking from the hard-working employees and employers who are paying 
their Social Security money and transferring that wealth over to the 
richest one-tenth of 1 percent.
  They call it the death tax? I think that is a good name. If they keep 
pursuing bills like this, it will be the death of Social Security and 
Medicare, as sure as I am standing here. Like most Democrats, I have 
voted not once but a number of times to repeal the estate tax for most 
Americans and to see that it is done right away, now, not postponing it 
for years as the Republicans propose to do.
  There is another Democratic substitute coming out today that is going 
to exempt 99.7 percent of all estates from this tax, and only cover the 
richest .3 percent of the wealthiest estates in this country. That 
means you are not going to have a small business in East Austin or West 
McAllen or a family farm in Karnes County that is covered if they are 
even covered now, which the vast majority of them are not.
  Why do they keep talking about family farms since it is irrelevant to 
this debate? They keep talking about the guy in the pickup who is 
working extra hours to try to make ends meet. They keep talking about 
the little family business that with good reason wants to be able to 
pass that enterprise on to the next generation of that hard-working 
family.
  The reason they talk about those folks is that Steve Forbes's family 
is not quite as sympathetic. The family of Enrons Ken Lay, not quite as 
sympathetic. They cannot defend transferring money from the Social 
Security and Medicare trust fund to Ken Lay's family, to Steve Forbes's 
family, to Ross Perot's family, because it is totally indefensible. 
Their goal is to ensure that the richest of the rich are rewarded, as 
if they have not rewarded them enough for the last few years that they 
have controlled this Congress.
  Social Security is not in crisis today, nor is Medicare, but if you 
keep passing bills that drain $750 billion from the Treasury at the 
very time more people are retiring, you will have a crisis. It was back 
almost a century ago when a Republican, a fellow named Teddy Roosevelt, 
said that ``inherited economic power is as inconsistent with the ideals 
of this generation as inherited political power was inconsistent with 
the ideals of the generation which established our government.'' It is 
still inconsistent. Would that we had even one Teddy Roosevelt 
Republican today to put a stop to this nonsense.
  Mr. HULSHOF. Mr. Speaker, I yield myself such time as he may consume 
to the gentleman from Alabama (Mr. Cramer), my cosponsor of H.R. 8.
  Mr. CRAMER. I thank my friend from Missouri for yielding me this 
time.
  Mr. Speaker, I think a number of important points have been made 
today, but I rise today in strong support of this bill and in 
opposition to the estate tax. Some of the previous speakers on this 
side of the aisle have made reference to the fact that a number of us 
on the Democratic side have worked

[[Page H1927]]

over this issue since actually the early nineties. I know the 
gentleman's predecessor Jennifer Dunn and I and a number of people from 
this side of the aisle had worked hard together to look for a 
commonsense way that we could end this burden which, in my opinion, is 
an extreme burden on the small business community and on the farm 
community.
  I do not know about the other speakers, but when I go back to my 
district and I am mixing and mingling with the folks where they eat 
breakfast or where they have dinner or where they gather, it is my farm 
families that bring this issue up. In north Alabama where I come from, 
we have some of the most productive farm families of any district in 
the country. For generations, they have struggled and used tax lawyers 
and tax strategies to try to find a way to effectively pass that farm 
on to the next generation that we want to continue engaging in that 
farm business. But they are overwhelmed by this issue.
  In 2001, we did a good step, not a great step but a good step. We 
passed some temporary relief. But the reality is that if we do not 
permanently repeal the death tax, you have almost got to time your 
death for the benefit of your family. That is outrageous. So let us 
make sure that we bury this issue once and for all.
  According to the Congressional Research Service, estates that 
included farm or business assets represented 42.5 percent of the 30,000 
plus taxable estate tax returns filed in 2003. It is not fair to say 
that this is just a rich person's issue, that the estate tax only 
affects the wealthy, because, according to that same Congressional 
Research Service, estates over $5 million accounted for only 6.8 
percent of taxable estates.
  In this day and time, assets are accumulated in a different way than 
they were 20 years ago, 25 years ago, 30 years ago or even more than 
that. For the benefit of those farmers, for those small manufacturers, 
for the local car dealers, the independent car dealers, the realtors, 
the funeral directors, the grocers, the family restaurant owners, the 
florists, the convenience store owners and many others, let us end this 
unfair tax burden.
  I urge the Members to support this.
  Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from 
Massachusetts (Mr. Tierney).
  (Mr. TIERNEY asked and was given permission to revise and extend his 
remarks.)
  Mr. TIERNEY. Mr. Speaker, I rise to register my opposition to the 
total repeal of the estate tax. If we want to talk about values, as so 
many people did in the last couple of months leading up to this, let us 
talk about the value of supporting one's family and supporting one's 
community. Let us talk about the values of responsibility and fairness. 
They dictate that everybody pay his or her or its corporate fair share.
  Millionaires and multinational corporations benefit the most from our 
taxes. We talk about what our taxes go for. There are dues that belong 
to society. Eighty percent of court cases are commercial in nature. 
Businesses, mostly large ones. Air traffic controllers, paid for by our 
taxes, they mostly support business travel back and forth. Our Coast 
Guard, our Navy protecting our shipping lanes, bridges and highways, 
making products safe to go back and forth as well as people. The 
Securities and Exchange Commission is our tax money trying to make 
large corporations behave and treat each other well instead of cheating 
each other. Sometimes it actually works.

                              {time}  1515

  The fact of the matter is that this bill absolves the top three-
tenths of 1 percent from their responsibility to pay their fair share. 
And I say the top three-tenths of 1 percent because the Democratic 
alternative would exclude the first $3.5 million, or $7 million for a 
couple. So much for the argument of small farms and small businesses. 
They would not pay a dime on the first $7 million and only pay a 
portion of anything above that.
  The fact of the matter is that most of the money that is going to be 
taxed on that top three-tenths of 1 percent was not earned money. That 
is money they got from tax-free investments. It is money they got by 
appreciation, just the value of that property increasing over time. 
They did not earn it. To compensate for what these members of our 
society will not be paying as their fair share, small businesses, the 
people that go out and create payrolls, will have to pay more. The 
families that go out and work every day for a living, they will have to 
pay more than their fair share.
  And all the while this is going on, we are not even paying America's 
bills. This tax is going to be $290 billion off the top at a time when 
our debt is larger than it has ever been. We are running annual 
deficits that are at historic proportions. No family and no small 
business would ever operate this way.
  Mr. Speaker, let me just close by saying they are robbing us of 
opportunity and prosperity and community by attacking our education and 
our health, our clean water, and our clean air. All of this because 
they want to give America's princes and princesses a little break at 
the top three-tenths of 1 percent. Let us let everybody pay their fair 
share.
  Mr. HULSHOF. Mr. Speaker, I yield 2 minutes to the gentleman from 
Missouri (Mr. Akin).
  (Mr. AKIN asked and was given permission to revise and extend his 
remarks.)
  Mr. AKIN. Mr. Speaker, about 50 percent of Americans or so are 
employed in small businesses, and obviously if something is employing 
almost half of Americans that are working, that should be a priority. 
And one can imagine my surprise the other day to find out about a guy 
who drove up to a bank in an old Ford, about a 15-year-old Ford pickup 
truck, with rust holes in the floor. He went into that bank and he took 
out a loan for $2 million. And the head of the bank was inquiring of 
the guy that is the accountant that handles our books that I have to do 
as a Congressman. He said, Why in the world did this guy have to take a 
$2 million loan out? And it particularly seemed out of place with this 
guy with his old rusty holes in his pickup truck.
  He said, His father just died and they have to pay the estate tax on 
the farm.
  I had heard stories like that before, but there it was right in front 
of me.
  So what this bill is seeking to do is to try to make it possible that 
we do not destroy farms and small businesses that employ close to half 
the people that have jobs in our country; and that seems to be only 
reasonable. And yet I am hearing the Democrats saying over here that 
they are all upset because we have already taxed a dollar the first 
time the guy earns it; then we are going to tax him again on sales tax 
and other things he buys, and now it is not fair to tax a dollar the 
third time it comes around.
  It just seems to me we do not want to destroy the businesses and 
farms. What we want to do is make those jobs available, and we want to 
get rid of this death tax. Just dying should not be a reason for taxes.
  Mr. STARK. Mr. Speaker, I reserve the balance of my time.
  Mr. HULSHOF. Mr. Speaker, I yield 2 minutes to the gentleman from 
Ohio (Mr. Turner).
  Mr. TURNER. Mr. Speaker, I am cosponsor of the Death Tax Repeal 
Permanency Act of 2005 because this tax is an unfair burden on American 
families. The death tax puts many small businesses, those run 
predominantly by families, at a great financial disadvantage.
  According to the Small Business Administration, in 2001 in the 
Dayton, Ohio, metro area, which is in my district, nearly 62,000 people 
worked for businesses that employ less than 20 people.
  Three of my constituents, Jenell Ross; her mother, Norma; and her 
brother Rob, run a small business, Ross Motor Cars in Centerville, 
Ohio. When Jenell's father unexpectedly passed away in 1997, the Ross 
family received a tax bill for nearly half the value of their family 
business. I would like to tell their story in Jenell Ross's words. She 
says, ``30 years ago my father took the chance of a lifetime. 
Determined to achieve the American Dream, he invested everything he had 
into Ross Motor Cars. Like a lot of people, my father thought he would 
live forever.
  ``He didn't.
  ``When he died unexpectedly in 1997, the overwhelming responsibility 
of keeping the family business afloat fell squarely'' to us. We could 
never have

[[Page H1928]]

prepared ourselves for the shock of receiving a tax bill nearly half 
the value of the dealership, where nearly 90 percent'' of the assets 
were ``tied up in nonliquid assets such as inventory, equipment, 
buildings, and land.
  ``Does the death tax impact family-run small businesses? Yes. My 
family is still experiencing its devastating effects firsthand,'' 
nearly 8 years later.
  It is time to repeal the death tax once and for all, and I urge my 
fellow constituents and Members to support the bill.
  Mr. HULSHOF. Mr. Speaker, I yield 2 minutes to the gentleman from 
Virginia (Mr. Goode).
  Mr. GOODE. Mr. Speaker, I want to commend the gentleman from Missouri 
(Mr. Hulshof), the gentleman from Alabama (Mr. Cramer), the gentleman 
from California (Mr. Cox), and all those who have worked so hard to get 
rid of this onerous burden on a number of American citizens. The 
Federal death tax is a job killer.
  I represent the Fifth District of Virginia. We have a number of 
counties and jurisdictions that focus on manufacturing. Many of our 
smaller manufacturers have had to sell out to larger manufacturers; and 
as a result, we have double-digit unemployment in a number of 
jurisdictions that used to be the home to small manufacturers. A factor 
in their selling out was the Federal death tax because they would not 
have the cash to pay when death knocked on the door. If we pass this 
bill, we will help the job situation in those types of jurisdictions in 
the United States.
  I hear the other side say that this is a bonanza and a budget breaker 
because we will not be getting the revenue from the Federal death tax. 
Let me tell the Members under the current law the really rich in this 
country trust and foundation themselves out of the Federal estate tax. 
I believe that Mr. Gates, the owner of Microsoft, is a proponent of 
keeping the Federal death tax. He has got a father that is in charge of 
his foundation. But many small farmers and average business persons are 
not able to have the cash to set up the trusts and the foundations that 
will get themselves out of the Federal estate tax. And I predict that 
if we pass this bill, the incentive to set up those trusts and 
foundations that avoid taxes will not be there and in the long run the 
Treasury of the United States will benefit because we will still get 
the capital gains tax when the assets are sold.
  Mr. HULSHOF. Mr. Speaker, I reserve the balance of my time.
  Mr. STARK. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. Sherman).
  Mr. SHERMAN. Mr. Speaker, this bill shows the courage to boldly go 
where none have gone before, to levels of public debt and levels of 
trade deficits that no nation has ever tried, higher than any have 
dared.
  We have a dollar that is dependent upon our fiscal markets, a trade 
deficit that grows every year; and the result of this bill and its twin 
cousins and related Siamese twins, the other parts of the Republican 
tax and spend or borrow and spend policy, will be a declining dollar 
and a declining economy or a dollar that crashes and an economy that 
crashes. And this courage is all summoned up on behalf of the one 
quarter of 1 percent of American families it is designed to help.
  We require the men and women in uniform to risk the ultimate 
sacrifice; and from our richest families, we say zero sacrifice under 
the estate tax. Shame.
  Mr. STARK. Mr. Speaker, I yield the balance of my time to the 
gentlewoman from California (Ms. Pelosi).
  Ms. PELOSI. Mr. Speaker, I thank the gentleman for his leadership and 
his recognition on this very important legislation that is before us 
today. I am very proud of the work of the gentleman from North Dakota 
(Mr. Pomeroy), our Member of Congress, a very distinguished member of 
the Committee on Ways and Means, for his initiative and leadership in 
presenting to the Congress today an alternative that makes sense to the 
American people, that is fair to America's families.
  The gentleman from North Dakota (Mr. Pomeroy) speaks with authority 
on the issues that impact rural America, small business, and America's 
families and certainly America's family farms. He has their interests 
at heart. He knows firsthand what their challenges are. That is what 
makes his proposal so wise, and we all appreciate his leadership.
  Mr. Speaker, in the 20th century, in the early part of the 20th 
century, our country made a decision to honor our American value of 
fairness by moving forward toward a progressive system of taxation. But 
under 10 years of Republican rule, this Congress has consistently 
passed legislation that has moved away from a progressive Tax Code. 
Republican tax policies have rewarded wealth over work. In its analysis 
of the President's budget, the nonpartisan Congressional Budget Office 
found that the tax rate on wage income is nearly twice the rate of 
capital income, unearned income. And now today Republicans have come to 
the floor with an estate tax bill continuing their harmful approach.
  The Republican estate tax bill again rewards extreme wealth. The 
Republican approach would hurt more people than it helps by increasing 
taxes and administrative burdens on more than 71,000 estates. And it 
comes at a staggering cost of nearly $1 trillion over 10 years once it 
takes full effect.
  Democrats want to be fair to all Americans, and we support being able 
to pass a better life on to our children and our grandchildren. But we 
cannot support putting the luxuries of the super-rich before the needs 
of America's families. The difference between the Democratic and 
Republican bills is that Democrats take a more responsible, indeed, a 
responsible approach that gives immediate tax relief to small 
businesses and farmers across the country.
  The Pomeroy substitute would provide relief to 99.7 percent of 
estates in America, 99.7 percent; and .3 percent of estates would not 
be covered under the bill. That is a small percentage, but a huge 
amount of money being deprived from the National Treasury. The savings 
achieved by pursuing the more fair and targeted approach put forth by 
the gentleman from North Dakota (Mr. Pomeroy) would cover about one 
half of the long-term shortfall facing Social Security.
  Think of it: if we pass the gentleman from North Dakota's (Mr. 
Pomeroy) bill, the savings would cover one half of the shortfall in 
Social Security down the road. It would strengthen Social Security for 
generations to come. That is the choice we are facing today. Do we want 
to put the wealthiest .3 percent of estate holders ahead of millions of 
American workers who have earned their Social Security benefits with a 
lifetime of work? Do we want to continue reckless Republican tax 
policies or return to a fair system of taxation?
  This is a remarkable choice before us, and I hope that the American 
people can avail themselves of the information to understand what is at 
stake here. Basically, it all comes back to our deficit, to our budget, 
and whether we have fiscal soundness in our budget or not. What the 
Republicans are proposing is saying to average working families in 
America every day they go to work, and every paycheck money is taken 
from their paycheck for Social Security. What the Republicans are doing 
today is putting their hand into that pot and saying we are taking that 
money and we are going to subsidize the super-rich in our country, the 
largest, wealthiest estates in our country, .3 percent.

                              {time}  1530

  Mind you, the gentleman from North Dakota (Mr. Pomeroy) has covered 
99.7 percent, which is most, of course, 99.7 percent of the people in 
America. So anyone listening to this is not, odds are, affected in any 
positive way by what the Republicans are proposing. In fact, they will 
be hurt because of what it does to Social Security and what it does in 
terms of capital gains for over 71,000 families in America.
  So I think the choice should be clear, to choose to reward work. We 
respect wealth. The creation of wealth is important to our economy. But 
that does not mean we take money from working families to give more 
money to the wealthiest families in America. And this at the same time 
as the tax cuts that the administration has proposed to make permanent, 
that would give people making over $1 million a year over $125,000 in 
tax cuts.
  Who are we here to represent? This is the reverse Robin Hood. We are 
taking money from the middle class and we

[[Page H1929]]

are giving it to the super rich, and not only the super rich but the 
super, super, super rich.
  So let us come down and vote for America's workers, let us come down 
in favor of America's families, and let us recognize that everybody, 
the wealthiest as well as those not so wealthy, everyone in America 
benefits when we have fairness in our Tax Code, where we have balance 
in our budget in terms of our values and in terms of our fiscal 
responsibility.
  I urge our colleagues to support the very responsible Pomeroy 
resolution and vote no on the irresponsible and reckless Republican 
proposal.
  Mr. HULSHOF. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, I appreciate in large measure the tone of the debate. 
What I would say to the gentlewoman who just spoke and to others who 
raised the red herring of Social Security is to remind folks, first of 
all, the Federal receipts from the Federal death tax represent less 
than 1.5 percent of all revenues, first of all; and, secondly, that 
none of the income tax money generated from the estate tax goes to 
Social Security for the trust funds, and eliminating the tax in no way 
will affect or impact current Social Security benefits. Not one bit.
  Now, I do want to respond. I heard, I think, the gentleman from 
Massachusetts earlier say that really there has been no policy 
justification for keeping this tax, other than we need the money. In 
fact, I think one gentleman said something, from Massachusetts, about 
we need to pay our fair share.
  Well, let me just ask you to consider your day. When you woke up this 
morning, if you hit the snooze button on your electric alarm clock, you 
are paying an electric tax. When you jumped into the shower this 
morning, you paid a water tax. If you saw the gentleman from North 
Dakota (Mr. Pomeroy) and I on C-SPAN debating this issue this morning, 
you are paying a cable TV tax. When you drove to work this morning, you 
are paying a gasoline tax. If you stopped for a cup of coffee, you paid 
a sales tax. If you used the telephone at all today, you are paying a 
telephone tax. And, of course, when you are at work, your wages are 
subject to a payroll tax that does go into Social Security, payroll 
taxes that do pay for Medicare, not to mention your income taxes. If 
you drive home to your home and you are lucky enough and fortunate 
enough to own a home, you are probably paying a local property tax.
  When you kiss your spouse good night, you think that is free. No, 
leave it to the Federal Government to continue to have this thing 
called the marriage tax.
  And, yes, if you scrape and invest and save and you build a family 
business, have the audacity to pursue the American dream, the Federal 
Government is there with its hand out saying give us 45 percent of the 
value of your family business.
  Now I have heard from my colleagues on the other side who say that 
family farms are not affected. Well, then let me tell you a very quick 
personal story, a story of a farm family in Missouri, a young married 
couple who in 1956 left Portageville, Missouri, in the district of the 
gentlewoman from Missouri (Mrs. Emerson), with $1,000 in their pocket, 
and that was going to be the stake that they had. It happened that the 
woman was an expectant mother with her first child and, as it turned 
out, her only child.
  That married couple happened to be my parents, and over the last 2\1/
2\ years I have had the unfortunate reality that obviously death is 
inevitable, and I have had the unfortunate experience in our family of 
having both my father pass away in late 2002 and my mother one year 
ago.
  I do not mind sharing with you, a 514 acre farm, a modest life 
insurance policy, the house that I grew up in, a combine, three 
tractors and some irrigation equipment, and that is it. And I am 
sitting across the mahogany desk from our long-time family accountant 
with the adding machine with a tape on it, and he is plugging in an 
arbitrary value for these assets that my parents invested their soul 
into. And I am breaking out into a cold sweat wondering whether or not 
this business that they built and wanted to pass on is going to fall 
above an arbitrary line or below an arbitrary line that we in Congress 
have set.
  Now we did not have to pay the tax, but 14 days ago I had the 
requirement of filling out the form and paying the $2,000 accountant 
fee; and, again, I do not quarrel with that. But, Mr. Speaker, the 
death of a family member should not be a taxable event, period.
  Mr. Speaker, I urge my colleagues to vote for H.R. 8.
  Mr. HASTERT. Mr. Speaker, we come to the floor today to address an 
issue of tax fairness. You see, no matter what kind of spin our friends 
on the other side of the aisle try to use--the death tax simply isn't 
fair. It's an unfair burden that the government has placed on families 
and small business owners. I've called it a cancer--because it's slowly 
destroying family farms and businesses across the nation.
  Many of our small family businesses are wrapped up in a loved one's 
estate. And when family members are left with a huge tax bill, it hits 
them hard. I've heard countless stories from families who have had to 
sell off a chunk of the family farm just to handle their tax burden. 
Our friends on the other side of the aisle say that this is too costly 
and it's bad for the budget. I say it's too costly not to act.
  This tax is destroying small businesses. And we all know they're the 
real job creators in our economy. What kind of nation have we become 
when a small family farmer can't afford to pass the business on to his 
children?
  Look at the facts.
  70 percent of family businesses do not survive the second generation,
  87 percent do not make it to the third generation.
  Many of these businesses are going belly-up because of the Death Tax.
  We all realize that the government must have revenues, and that taxes 
are a necessary evil. But this tax isn't necessary; it's just evil--
because it takes away the American Dream from too many American 
families.
  It's time we give families a real chance at the American Dream.
  We need to tell the IRS to stop lurking around a grieving family's 
pockets. Death is not a taxable event.
  It's time we let the Death Tax die.
  Mr. REYNOLDS. Mr. Speaker, the issue before us today is certainly not 
a new on new one. During the past three Congresses, the House has voted 
repeatedly in a bipartisan fashion to eliminate the death tax. And 
today, once again, we have the opportunity to bury the death tax once 
and for all.
  The death tax punishes savings, thrift, and hard work among American 
families. Small businesses and farmers, in particular, are unfairly 
penalized for their blood, sweat and tears--paying taxes on already-
taxed assets. Instead of investing money on productive measures such as 
creating new jobs or purchasing new equipment, businesses and farms are 
forced to divert their earnings to tax accountants and lawyers just to 
prepare their estates. All too often, those families are literally 
forced to sell the family farm or business just to payoff their death 
taxes.
  Equally disturbing is the fact that the death tax actually raises 
relatively little revenue for the federal government. In fact, some 
studies have found that it may actually cost the government and 
taxpayers more in administrative and compliance costs than it raises in 
revenue.
  Mr. Speaker, my rural and suburban district in western New York is 
home to countless small businesses and family farms. They're owned by 
hard-working families who pay their taxes, create jobs and contribute 
not only to the quality of life in their communities, but to this 
nation's rich heritage.
  Is it so much to ask that they be able to pass on the fruits of their 
labor--their small business or their family farm--to their children? 
Must Uncle Sam continue to play the Grim Reaper? The fact is that they 
paid their taxes in life--on every acre sown, on every product sold, 
and on every dollar earned. They shouldn't be taxed in death, too.
  Mr. Speaker, it's time to bury the death tax once and for all. I 
commend Congressman Hulshof for introducing this crucial legislation 
and Chairman Thomas for his continued leadership on this issue.
  Mr. MACK. Mr. Speaker, I rise today to express my strong support of 
the Death Tax Repeal Permanency Act of 2005. As a cosponsor of this 
important legislation, I think it is absurd for the federal government 
to continue punishing the families through double-taxation. Rather than 
taxing people when they die, we should be encouraging families to save 
for the future through hard-work and sound financial planning.
  The Death Tax is one of the most burdensome and counterproductive of 
all taxes. Small businesses create two-thirds of all jobs in the United 
States, and 40 percent of GDP in the United States is generated by 
small businesses. When the owner of a small family business passes 
away, this tax causes families and small business owners severe 
financial hardship, often to the point that the business must be 
liquidated.

[[Page H1930]]

  It is offensive that the government taxes someone all their life then 
taxes them one last time when they die. Families should never have to 
visit the IRS and the funeral home on the same day. A permanent repeal 
is good for small businesses, family farmers, and the next generation 
of entrepreneurs.
  Mr. Speaker, I urge my colleagues to vote for the repeal of the Death 
Tax.
  Mr. BOUSTANY. Mr. Speaker, I strongly support H.R. 8, the Death Tax 
Repeal Permanency Act of 2005, and encourage my colleagues to pass this 
important legislation. This vital legislation will permanently repeal 
the estate tax, a tax that is unjust, inefficient, and harmful to small 
businesses, the backbone of our economy. Repeal of the Death Tax will 
create a system that is more equitable and more productive for our 
economy.
  The Death Tax is a burden on our economy that costs the country 
between 170,000 and 250,000 jobs every year. In Louisiana, our family-
owned farms have been faced with decreasing profitability and in many 
instances the Death Tax is an additional burden that they cannot carry; 
this tax is a leading cause of the dissolution for thousands of family-
run businesses across the country. It also diverts resources from 
investment in capital, slowing research and development at a time when 
our country is facing growing competition around the world. We cannot 
afford to continue discouraging productivity and innovation.
  Furthermore, the death tax is inefficient. Since the 1930's, revenue 
from the tax has fallen steadily as a percentage of total federal 
revenue. Compliance costs each year can be almost as high as the tax 
itself, around $22 billion in 2003; thus every dollar raised by the 
death tax is $2 that could have been invested in capital and new jobs.
  The economic damage ofthe Death Tax is reason enough for its repeal, 
but it is also fundamentally unjust. The rate of taxation is as high as 
47%, and this is in addition to the taxes that were already paid on the 
assets subject to this tax. The Death Tax also discourages hard work 
and savings and instead encourages large-scale consumption. At a time 
when we should and need to be encouraging individuals to save for their 
future, we cannot continue to send this mixed message.
  By repealing the Death Tax we will create a tax policy that is more 
efficient, more equitable and more productive for our economy. I urge 
Congress to act today to permanently repeal the Death Tax and ensure 
that our future generations will be able to carry on the heritage of 
our forefathers.
  Mr. CANTOR. Mr. Speaker, I rise today in support of the permanent 
repeal of the death tax. To put it simply, the death tax is just wrong. 
It is wrong to encourage people to work hard all their life, only to 
have the government reap the benefits when they die. It is wrong to 
levy hefty taxes against families of thriving small business owners 
just because their parents were successful. It is wrong to stifle 
economic growth by forcing small businesses to close because of an 
overbearing tax bill delivered by a greedy Uncle Sam.
  Mr. Speaker, our Republican majority stands firmly against double 
taxation on working families. Taxes have already been paid on the 
assets subject to additional taxation under the death tax. I am 
confident that Americans are far better equipped than politicians to 
decide how to best spend their hard earned money. It is time for 
Congress to let important fiscal decisions to be made where they should 
be, at the kitchen table, not at the tax table.
  Let's repeal this unjust tax and empower American working families 
who know best how to make the right decisions for themselves.
  Mr. SHAYS. Mr. Speaker, I rise in support of H.R. 8, the Death Tax 
Repeal Permanency Act, although the base bill does not address the 
estate tax in the manner I believe to be most prudent.
  In 2003, Congressman Doug Bereuter and I introduced the Estate Tax 
Relief Act, which would increase the estate tax exclusion to $10 
million and lower the top rate to the level as the top income tax rate 
(currently 35 percent). I think this is a much better solution than 
total repeal.
  Because estate and gift taxes have had devastating effects on small 
businesses--many of which are forced to liquidate assets simply to pay 
taxes ranging from 35 to 55 percent of the value of the business--I 
think we need to provide significant relief in this area. My 
preference, however, is to reduce estate taxes without entirely 
eliminating them.
  In the last Congress, I voted for today's base bill because if it is 
not enacted the estate tax, which is being phased-out over a period 
between 2001 and 2010, will return in 2011 with an exemption of just 
$675,000 and a top rate of 55 percent.
  While my first choice would be to significantly increase the 
exclusion and lower the top rate, I believe full repeal is preferable 
to the return of this onerous tax.
  Mr. BOEHLERT. Mr. Speaker, I rise in strong support of H.R. 8, 
legislation that would permanently repeal the Death Tax, a tax that 
haunts millions of small business owners and farmers nationwide. The 
last thing the federal government should be doing is taking more money 
from small business owners and farmers, and curtailing further economic 
growth. They are the backbone that drives our economy forward. I 
commend Mr. Hulshof for his leadership on this issue and praise his 
vision to continue lowering the federal tax burden.
  Throughout my twenty-two years in Congress, I have proudly voted for 
every major tax cut initiative considered by the House. Cutting taxes 
is one of my highest priorities. I remain convinced that letting 
Americans keep more of what they earn will help stimulate the economy 
and create more jobs. People will not hide this much-needed relief 
under their mattress or store it in their closet; instead they will 
purchase necessary goods and services. An increased demand for these 
goods and services will require more employees; therefore, providing 
incentives for businesses to hire more workers--putting unemployed 
Americans back on the job and providing a framework for long-term 
economic growth.
  The key to growing our economy is simple--allow Americans to keep 
more of their own money to spend, save, and invest. My favorite four-
letter word--don't worry, it's a four letter word that can be used in 
polite company--is JOBS. Permanently repealing the death tax will 
create new jobs across the nation.
  Cutting taxes is not unprecedented. Since 2001, Congress has 
repeatedly passed legislation, which I'm proud to say I voted for, to 
lower the federal tax burden. For example, we voted to extend relief 
from the marriage penalty tax, a burdensome tax on married couples for 
doing nothing more than saying ``I do.'' We also voted to extend the 
Alternative Minimum Tax reforms (AMT), which is the right step toward 
making sure the AMT applies only to those people it was designed to 
cover, not working families just trying to make ends meet. We also 
supported a measure to extend the 10% bracket to lower taxes for hard 
working, low-income families. Finally, we voted to extend the $1,000 
child tax credit.
  It only makes sense to take the next step and permanently repeal the 
Death Tax. I urge my colleagues to join me in supporting H.R. 8, and 
put an end to this unfair, unjust, and inefficient burden on our 
economy.
  Mr. HONDA. Mr. Speaker, I rise in opposition to H.R. 8, legislation 
that unwisely imperils our Nation's financial security in order to 
advance the interests of an elite few.
  Since my election to Congress, I have consistently advocated for 
reasonable estate tax reform. Estate tax reform is extremely important 
for all the people in the 15th District of California. High real estate 
values and generous stock option packages have pushed many estates over 
exemption limits. As a result, too many of my Santa Clara County 
constituents have been burdened by an estate tax that was originally 
written to affect only the very wealthiest Americans. The estate tax 
needs to be modified to protect hardworking Americans and their heirs.
  In keeping with this spirit, I intend to support a Democratic 
alternative to H.R. 8 that will benefit almost all Americans. Offered 
by Representative Earl Pomeroy, the Democratic substitute will increase 
the estate tax exemption to $3 million for individuals and $6 million 
for married couples effective January 1, 2006 with a scheduled increase 
in 2009. Under this plan, 99.7 percent of all estates would have no 
estate tax liability.
  The Republican majority has put forward a more expensive plan to 
benefit the three-tenths of one percent not covered by the Democratic 
substitute. Their plan comes at a significant cost. Once fully in 
effect, H.R. 8 will cost $1 trillion over 10 years. This astronomical 
price tag will exacerbate record Federal deficits and undermine our 
Nation's ability to strengthen key Federal priorities, including Social 
Security, Medicare, education programs and veterans health care.
  H.R. 8 may also harm more taxpayers than it would help. Current 
income tax law provides for a ``step-up'' in the basis of an inherited 
asset to its fair market value at the time of decedent's death. When 
the heir sells the asset, the capital gain for income tax purposes is 
measured by the difference between the heir's selling price and the 
stepped-up basis of the asset. H.R. 8 repeals the step-up basis and 
substitutes carryover basis rules in which the capital gain would be 
measured by the difference between heir's selling price and the asset's 
cost at the time when the decedent acquired it. As a result, all 
estates with gross assets over $1.3 million would face reporting 
requirements and tax liabilities potentially more burdensome than under 
current law.
  While I am deeply concerned with the problems surrounding the estate 
tax, and believe that substantial, long-term reform is needed, 
permanent repeal for all estates is not necessary to resolve these 
issues. Given our nation's challenges, I cannot support the 
Republican's fiscally irresponsible approach to this issue. I urge my 
colleagues to oppose H.R. 8.

[[Page H1931]]

  Mr. NEUGEBAUER. Mr. Speaker, I rise today as a cosponsor of H.R. 8 to 
express my strong support for this important legislation to permanently 
repeal the estate or ``Death'' tax.
  The estate tax is one of the most unpopular, destructive taxes 
collected by the Federal Government. It forces many small businesses 
and farms to dissolve, undermines incentives for work, savings, and 
investment, and leads to unnecessary development of environmentally 
sensitive land. By permanently repealing the estate tax, we would be 
eliminating a cruel tax that devalues the hard work and confiscates the 
savings of some of our most productive citizens.
  As we all know, the estate tax is scheduled to be totally repealed on 
January 1, 2010; unfortunately, this repeal will sunset on December 31, 
2010. At that point, unless the Congress acts, the estate tax will 
revert to the 2001 level. As no one I know can accurately guess which 
year they might pass on to the hereafter, only one year of complete 
relief of the estate tax is not only cynical--it's bad policy. The 
uncertainty of not knowing whether or not the death tax will really be 
repealed, makes it difficult for American taxpayers to make plans for 
their futures, their spouses' futures, and the futures of their 
children. Additionally, the tax increase that would result if Congress 
fails to act would be entirely unfair to many of our constituents.
  On the one hand, I am pleased that the House is once again taking 
action today to rid our Tax Code of this punitive measure. But we've 
done this several times in the past and each time it has gotten bogged 
down in the other body. Let's hope we don't have to meet again to do 
what should have been done years ago. Let's do the right thing today. 
Let's finally and irrevocably repeal the death tax.
  Ms. FOXX. Mr. Speaker, today I voice my strong support for the Death 
Tax Repeal Permanency Act of 2005.
  It is imperative we pass this very important legislation. The Death 
Tax is an unreasonable and unfair burden on thousands of American 
families, small businesses, and family farms.
  The Death Tax is the largest threat to the vitality of family-owned 
businesses and farms because most of their owners have the entire value 
of their business or farm in their estate. The Federal Government 
currently receives nearly half of an estate when the owner passes. As a 
result, more than two-thirds of family businesses do not survive the 
second generation and nearly 90 percent do not make it to the third 
generation. So much for the American dream. Rather than encouraging 
people to build their own livelihoods, the Death Tax discourages hard 
work and savings.
  According to the Heritage Foundation, the Death Tax costs our country 
up to 250,000 jobs each year. By permanently abolishing this tax, we 
could add more than 100,000 jobs per year.
  As my colleague, Representative Sam Johnson of Texas, said: Americans 
receive a birth certificate when they are born, a marriage license when 
they are wed, and a tax bill when they die. This is a disgrace. I 
encourage my colleagues to vote ``yes'' for the Death Tax Repeal 
Permanency Act of 2005.
  Mr. JEFFERSON. Mr. Speaker, Benjamin Franklin noted over 200 years 
ago that ``in this world nothing can be said to be certain, except 
death and taxes.'' Unfortunately, the convergence of these two 
inescapable events, in the form of the Federal estate tax, results in a 
number of destructive outcomes in terms of slower economic growth, 
reduced social mobility, and wasted productive activity. Moreover, the 
costs imposed by the estate tax far outweigh any benefits that the tax 
might produce. For these reasons, among others, I urge my colleagues to 
join with me in support of permanent repeal of the Federal estate tax.
  The estate tax has been enacted four times in our Nation's history--
each time in response to the exigent financial straits deriving from 
war. In three of those instances (1797-1802,1862-70, and 1898-1902), 
the estate tax was repealed shortly thereafter. Most recently, the 
estate tax was reintroduced during World War I (1916) and has existed 
ever since. What was meant to bring short-term budgetary relief has 
become a permanent burden on America's farmers, small business owners 
and families.
  Some observers might believe that the estate tax is free from serious 
controversy. For example, it is often claimed that the tax only falls 
on the ``rich'' and thus serves to reduce income inequality. Other 
supporters of the estate tax point to the $22 billion in tax revenues 
for 2003, or to the incentive for charitable bequests. Nonetheless, 
there are many reasons to question the value of taxing the accumulated 
savings of productive, entrepreneurial citizens. Not the least of these 
reasons is the widely-held belief that families who work hard and 
accumulate savings should not be punished for sound budgeting. 
Additionally, it is unclear whether the estate tax raises any revenue 
at all, since most if not all of its receipts are offset by losses 
under the income tax.
  The freedom to attain prosperity and accumulate wealth is the basis 
of the ``American dream.'' We are taught that through hard work we can 
achieve that dream and, God willing, pass it on to our children. 
Unfortunately, for many the estate tax turns that dream into a 
nightmare. The current tax treatment of a person's life accumulations 
is so onerous that when one dies, the children are often forced to turn 
over half of their inheritance to the Federal Government. The estate 
tax, which is imposed at an alarming 45 to 47 percent rate, is higher 
than in any other industrialized nation in the world except Japan. 
Thus, many families must watch their loved one's legacy being snatched 
away by the Federal Government at an agonizing time. This is tragically 
wrong and nullifies the hard work of those who have passed on.
  In the minority community there are numerous examples of the 
injurious effects of the estate tax. The Chicago Daily Defender--the 
oldest African American-owned daily newspaper in the United States--is 
a good example of the unique problem presented for minority families. 
It was forced into bankruptcy due to financial burdens imposed by the 
estate tax. But, beyond that, the questions were--was the Chicago 
Defender family forced to sell, could a minority owner be found to 
purchase it, or would it become a white-owned asset, reducing the 
overall wealth of the African American community?
  On a smaller scale, another potential victim, a storeowner named 
Leonard L. Harris who is a first generation owner of Chatham Food 
Center on the South Side of Chicago is frightened that all the work and 
value he has put into his business will be for naught because it will 
be stripped from his two sons. According to Mr. Harris, ``My focus has 
been putting my earnings back into growing the business. For this 
reason, cash resources to pay federal estate taxes, based on the way 
valuation is made, would force my family to sell the store in order to 
pay the IRS within 9 months of my death. Our yearly earnings would not 
cover the payment of such a high tax. I should know. I started my 
career as a CPA.'' These two stories are not isolated.
  According to the Life Insurance Marketing Research Association, less 
than half of all family-owned businesses survive the death of a founder 
and only about 5 percent survive to the third generation.
  Another recent study found the following:
  Eight out of ten minority business owners questioned believe the 
Federal estate tax is unfair.
  Only one minority business owner in three has been able to take any 
steps whatsoever to prepare for the ramifications of the estate tax.
  One in four believes that his or her heirs will be forced to sell off 
at least part of their businesses to pay the estate tax liability.
  Fully half the respondents already know a minority-owned business 
that has had trouble paying the tax, including some that have been 
forced to liquidate.
  Those few minority-owned businesses that have been able to take steps 
to reduce their estate tax liability complain that it has detracted 
from their ability to meet business objectives by channeling time, 
energy and resources away from productive endeavors.
  Many of my colleagues who are proponents of the estate tax contend 
that the tax adds progressivity to the Tax Code and provides needed tax 
revenue. They argue that the estate tax falls on wealthier and higher 
income individuals and increases the total tax paid by this segment of 
the population relative to their income. This helps offset the 
regressivity of payroll taxes and excise taxes, which fall more heavily 
on low-income groups relative to their income. They also argue that 
increasing the unified credit to $4, $5, $6 or $7 million would remove 
small family-owned businesses and farms from the harsh impact of the 
estate tax.
  I share my colleagues concerns about protecting the tax base and 
ensuring that our Tax Code remains progressive. However, I find these 
arguments in support of the estate tax unconvincing in the face of 
substantial evidence otherwise.
  First, there is no clear evidence that the estate tax is progressive 
or that larger estates are paying a greater portion of the tax. 
Wealthier members of our society are able to reduce and or eliminate 
the impact of the estate tax by stuffing money away here and there at 
the suggestion of high-priced attorneys and accountants. Similarly, tax 
planning techniques such as gift tax exclusions or valuation discounts 
reduce the size of the gross estate but do not appear in the IRS data 
causing effective tax rates to be overstated for many larger estates. 
The Institute for Policy Innovation recently revealed evidence of this 
fact in a study showing that the effective tax rate on the most 
valuable estates was actually lower than that on medium-sized estates.
  Second, the insignificant amount of money the estate tax raises for 
the Federal Government cannot justify the harmful effects it has on 
business owners who spend more to avoid

[[Page H1932]]

the tax than the federal tax revenue raised. According to the 
President's fiscal year 2005 Budget, the estate and gift tax brought in 
$22.8 billion in revenues to the Federal Government in 2003. This 
represents less than 1.1 percent of the total revenues out of a more 
than $2 trillion Federal budget and less than the amount of money spent 
complying with, or trying to circumvent, the death tax.
  In 2003, Congress' Joint Economic Committee reported that the death 
tax brought in $22 billion in annual revenue, but cost the private 
sector another $22 billion in compliance costs. Therefore, the total 
impact on the economy was a staggering $44 billion. And, when one 
calculates the amount of money spent on complying with the tax, the 
number of lost jobs resulting from businesses being sold, or the 
resources directed away from business expansion and into estate 
planning, it is clear why this punitive tax must be eliminated.
  It is also important to note that many economists believe that 
overall tax revenues would increase if the estate tax were repealed. 
According to a study of estate tax repeal proposals, which was prepared 
by Dr. Allen Sinai for American Council for Capital Formation and 
Center for Policy Research, Federal tax receipts would rise in response 
to a stronger economy, feeding back 20 cents of every dollar of estate 
tax reduction. In fact, over the years 2001 to 2008, estate tax repeal 
would increase real Gross Domestic Product by $90 billion to $150 
billion, and U.S. employment by 80,000 to 165,000.
  Finally, it is not clear that increasing the unified credit to $6 or 
$7 million would remove small family-owned businesses and farms from 
the threat of the estate tax. The Small Business Administration's 
definition of a small business is based on industry size standards. For 
example, a construction company or grocery store with less than $27.5 
million in annual receipts is considered a small business. Thus, 
families who build their businesses past the exemption amount will 
continue to face estate taxes that range from the aforementioned, 
alarming rate of 45 to 47 percent. The exemption threshold would not 
help these small businesses. More significantly, without significant 
reform or, more appropriately, repeal, these same small businesses face 
the prospect of estate tax rates as high as 60 percent beginning in 
2011.
  Permanent repeal of the estate tax will provide American families 
with fairness in our tax system and remove the perverse incentive that 
makes it is cheaper for an individual to sell the business prior to 
death and pay the individual capital gains rate than pass it on to 
heirs. But for minorities, it provides much more. It will allow wealth 
created in one generation to be passed on to the next thereby 
establishing sustainable minority communities through better jobs and 
education, better healthcare, and safer communities.
  Mr. Speaker, I urge my colleagues to support H.R. 8 to permanently 
repeal the Federal estate tax and to restore fairness to our Nation's 
Tax Code.
  Mr. ETHERIDGE. Mr. Speaker, I rise today to voice my opposition to 
H.R. 8. As a part-time farmer and former small business owner, I have 
long supported responsible legislation to provide estate tax relief for 
family-owned businesses. Unfortunately, this bill will not accomplish 
that goal.
  Throughout my service in the U.S. House, 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 for the first time indexed it to inflation. But H.R. 8 is an 
extremely irresponsible bill that will add billions to our national 
debt for our children and grandchildren to pay and will harm more 
taxpayers than it helps.
  The unfortunate reality of our situation is that we have witnessed 
the most dramatic fiscal reversal in our Nation's history. Our budget 
surpluses have been frittered away, and our Nation is now drowning in 
red ink with ever- growing budget deficits and increasing Federal debt. 
The primary culprits for our increasing debt are the risky, 
irresponsible tax schemes the Republican Congress has enacted the last 
4 years.
  Instead of adopting a bill that would increase the burden on our 
children and grandchildren, we need a common-sense solution that would 
exempt the vast majority of Americans from an estate tax while 
maintaining a degree of fiscal integrity.
  That is why I am supporting the Democratic substitute authored by 
Representative Earl Pomeroy. This substitute provides an estate tax 
exemption of $3 million for individuals and $6 million for couples 
beginning in 2006, and the exemption would increase to $3.5 million and 
$7 million respectively in 2009. Furthermore, this plan would instantly 
repeal the estate tax on a vast majority of farms and small businesses, 
as well as shield heirs from dramatic capital gains tax liabilities 
that are part of the Republican plan. The U.S. Department of 
Agriculture has estimated that more farm estates would have an 
increased tax liability from the Republican plan's carry-over basis 
rules than would ever benefit from the repeal of the estate tax.
  I support 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 the Republican bill is by taking more money out of the Social 
Security an Medicare Trust Funds and replacing it with IOUs. H.R. 8 
will compound the fiscal mistakes Congress has made the last 2 years 
with its policy of tax cuts at any cost, including our children's 
education and our Nation's future.
  The people of North Carolina's Second District elected me to help 
chart a common-sense, fiscally prudent course for the country. I 
pledged to represent my constituents by paying down the national debt; 
saving Social Security and Medicare funds for older Americans, and 
investing our country's resources into education, health care and other 
initiatives that enable people to improve their lives. H.R. 8 is 
inconsistent with these goals; therefore, I oppose the bill.
  Mr. WELDON of Florida. Mr. Speaker, I want to express my strong 
support for H.R. 8, the Death Tax Repeal Permanency Act of 2005. I have 
supported this measure in the past and have introduced similar 
legislation to make the death tax repeal permanent. I believe it is 
important that we accomplish the goal of passing this in the House and 
the Senate and seeing this bill enacted into law.
  The Death Tax needs to die. Along with the marriage penalty, the 
death tax is perhaps the most disgraceful tax levied by the Federal 
Government and it should be repealed immediately. The death tax is 
double taxation. Small business owners and family farmers pay taxes 
throughout their lifetime, then at the time of death they are assessed 
another tax on the value of the property on which they have already 
paid taxes. This is unfair, unjust and an inefficient burden on our 
economy.
  I have spoken in the past about a constituent of mine, Danny Sexton 
of Kissimmee, FL and owner of Kissimmee Florist. He, like millions of 
other Americans, has experienced the sad realities of the Death Tax. He 
joined me several years ago in Washington to highlight the adverse 
impact the Death Tax had on his family business.
  Mr. Sexton, who comes from a family of florists, inherited his 
uncle's flower shop and was faced with paying almost $160,000 in estate 
taxes. This forced him to have to liquidate all of the assets, layoff 
workers and take out a loan just to pay the death tax. He also had to 
establish a line of credit just to keep the operation running.
  Danny Sexton is the reason we need to appeal the death tax. The death 
tax isn't a tax on just the rich, it is a tax that hurts family owned 
businesses--family owned businesses that are the backbone of this great 
Nation. It also caused several average workers to lose their jobs.
  Family owned businesses provide and create millions of jobs for 
American workers. The people who worked in Mr. Sexton's florist were 
not rich, but they lost their jobs because of the Death Tax.
  In a recent survey conducted by the National Federation of 
Independent Businesses, 89 percent of small business owners favored 
permanent repeal of the death tax. Why? Because these small business 
owners know this tax may mean the death of their business for future 
generations. According to the Center for the Study of Taxation, more 
than 70 percent of family businesses do not survive the second 
generation and 87 percent do not make it to the third generation. 
Family owned and operated businesses deserve the right to be inherited 
by the next generation without the blow of the death tax.
  In current law, the death tax is phased-out, completely repealed in 
2010. But that is not good enough because in 2011, the tax reemerges in 
full force. That means taxpayers must plan for three different 
scenarios when passing along their family business--pre- 2010 when the 
exemption levels are gradually increasing and the top rate gradually 
decreasing; 2010 when the tax is completely repealed; or 2011 when the 
tax reemerges. This is complicated, confusing and hard to plan for--
unless a small business owner knows for certain when his or her death 
will occur. When we make this tax repeal permanent, taxpayers will have 
the ability to make long-term financial plans with certainty and will 
have the opportunity to pass on their hard earned family businesses and 
farms to future generations. It will also ensure that those who work 
for these small businesses are able to keep their jobs.
  I urge my colleagues to vote for H.R. 8, the Death Tax Repeal 
Permanency Act of 2005.
  Mr. HOLT. Mr. Speaker, I favor cutting unnecessary, ineffective or 
unfair taxes, but in balanced and fiscally responsible ways. I have 
been one of the few Democrats in Congress who has been willing to cross 
party lines to vote for tax cuts. I have voted to eliminate the estate 
tax in the past. I have been willing to vote for eliminating the 
marriage penalty, to vote for cutting taxes for small businesses, to

[[Page H1933]]

vote for cutting taxes to help people pay for education and retirement, 
and to vote for cutting taxes for senior citizens and to give business 
tax credit for research work.
  With a war in Iraq and looming postwar costs, increased expenses for 
domestic security and a ballooning budget deficit, Congress must 
exercise restraint on both revenues and spending to prevent fiscal 
policy from spiraling out of control. The consensus in favor of 
balancing the budget over the long term must be re-established.
  There are a wide range of pressing national challenges that need 
action, from rapidly increasing health care costs, to our increasing 
dependence on ever-more-expensive foreign oil, to a broken and 
increasingly corrupt political system, and yet today we are passing a 
bill that will only help a few of the already wealthy.
  Today we are debating total elimination of the federal inheritance 
tax. Permanently repealing the estate tax would further balloon the 
Federal budget deficit by an estimated $290 billion through 2015; and 
by $745 billion through 2021. Add in the interest costs of borrowing 
the funds to pay for this measure, and the true 10-year cost is nearly 
$1.3 trillion.
  I support the substitute offered by Representative Earl Pomeroy which 
will protect families and small business from the estate tax. The 
substitute increases the estate tax credit to $3 million, $6 million 
for married couples, beginning in 2006. Under the substitute, the 
credit would be increased to $3.5 million, $7 million for couples, in 
2009. The Pomeroy substitute would eliminate tax reporting compliance 
burdens and carryover taxes for over 71,000 estates each year which 
effects small business and families. According to Representative 
Pomeroy's calculation, his package would exempt 99.68 percent of all 
estates from the estate tax, yet it would save the Treasury $217 
billion compared to total repeal. It is worth noting that the saving of 
$217 billion is equal to 40 percent of the shortfall of Social Security 
of the next 75 years.
  Mr. Speaker, today the national debt is the largest in history. 
Americans now collectively owe about $7.8 trillion. Here we have 
another tax cut that is not being paid for, even as the Bush 
administration and the leadership of this Congress spend more than the 
American government has ever spent on homeland security and on all the 
other expenses of running the Government--especially the huge costs of 
the war in, and occupation of, Iraq. Government borrowing of this scale 
places the burden of repaying our debts on our children.
  Governing is about making choices. Our constituents all across 
America sent us to Congress to make the tough decisions. They did not 
send us here so we can pass those decisions on to our children, and 
they certainly did not send us here to pass the cost of our decisions 
on to our children.
  I want the people of this country to realize that, right now, we owe 
collectively, about $4.5 trillion to foreign countries. Japan holds 
$702 billion of our debt; China, including Hong Kong, $246 billion; the 
U.K. $163 billion; Taiwan, $59 billion; Germany, $57 billion; OPEC 
countries, $65 billion; Switzerland, $50 billion; Korea, $68 billion; 
Mexico, $41 billion; Luxembourg, $29 billion; Canada, $43 billion--the 
list goes on and on.
  More tax cuts of this size will not only jeopardize critical public 
services now, but they will also hurt Americans well into the future. 
Massive deficits now create large debt and will create high interest 
payments that will crowd out spending on public investments for future 
generations. Moreover, these deep deficits threaten to increase 
interest rates in the future--making it harder for Americans to buy 
homes and afford higher education and making it harder for businesses 
to raise capital.
  I urge my colleagues to join me in supporting permanent reform of the 
estate tax, but not irresponsibly repealing it. Government should 
follow the principle of helping the present generation and helping 
future generation as well--not leaving future generations to pay our 
bill.


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

  Mr. POMEROY. Mr. Speaker, pursuant to H. Res. 202, I offer an 
amendment in the nature of a substitute.
  The SPEAKER pro tempore (Mr. LaHood). 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. SHORT TITLE.

       This Act may be cited as the ``Certain and Immediate Estate 
     Tax Relief Act of 2005''.

     SEC. 2. RETENTION 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.--Section 901 of the Economic 
     Growth and Tax Relief Reconciliation Act of 2001 shall not 
     apply to title V of such Act.
       (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. 3. MODIFICATIONS TO ESTATE TAX.

       (a) Immediate Increase in Exclusion Equivalent of Unified 
     Credit.--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 
     $3,500,000 ($3,000,000 in the case of estates of decedents 
     dying before 2009).''.
       (b) Freeze Maximum Estate Tax Rate at 47 Percent; 
     Restoration of Phaseout of Graduated Rates and Unified 
     Credit.--
       (1) Paragraph (1) of section 2001(c) of such Code is 
     amended by striking the last 2 items in the table and 
     inserting the following new item:


``Over $2,000,000......................  $780,800, plus 47 percent of
                                          the excess of such amount over
                                          $2,000,000.''.

       (2) 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 
     $159,200.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2005.

     SEC. 4. 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
       ``(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,

[[Page H1934]]

       ``(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.
       Amend the title so as to read: ``A bill to amend the 
     Internal Revenue Code of 1986 to retain the estate tax with 
     an immediate increase in the exemption, to repeal the new 
     carryover basis rules in order to prevent tax increases and 
     the imposition of compliance burdens on many more estates 
     than would benefit from repeal, and for other purposes.''.

  The SPEAKER pro tempore. Pursuant to H. Res. 202, the gentleman from 
North Dakota (Mr. Pomeroy) and a Member opposed each will control 30 
minutes.
  Mr. HULSHOF. Mr. Speaker, I claim the time in opposition.
  The SPEAKER pro tempore. The gentleman from Missouri (Mr. Hulshof) 
will be recognized for 30 minutes in opposition to the amendment in the 
nature of a substitute.
  The Chair recognizes the gentleman from North Dakota (Mr. Pomeroy).
  Mr. POMEROY. Mr. Speaker, I am pleased to begin the presentation of 
the amendment in the nature of a substitute by yielding such time as he 
may consume to the distinguished gentleman from Maryland (Mr. Hoyer), 
the minority whip.
  Mr. HOYER. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, I was very interested in the last presentation. The 
bottom line was, he did not pay a tax. All that story, all those facts, 
and he did not pay a tax. He did pay his accountant some money to go 
through and make sure that he was doing what was right. He did that 
because the Tax Code is extraordinarily complicated and has been made 
25 percent more complicated by the Republican majority over just the 
last 48 months.
  Mr. Speaker, let us be absolutely crystal clear: This Republican 
proposal is nothing but a tax increase. Hear me, this is a tax increase 
disguised as a tax cut.
  ``Who are you, Mr. Hoyer? Lewis Carroll? What is this gibberish that 
you are talking about?''
  It would raise taxes for thousands of families and thousands of 
family farmers and small businesses. There are no two ways about it.
  For years, House Republicans have proclaimed that the elimination of 
the inheritance tax, a tax, now hear me on this side of the aisle, I 
know you want to hear this, a tax first proposed by Theodore Roosevelt 
in 1906. Now for those of you who may not be quite fully cognizant of 
our history, Theodore Roosevelt, of course, was a Republican President 
of the United States of America. It was intended to save family farms 
and small businesses.
  But, today, not according to the gentleman from Maryland (Mr. Hoyer), 
not according to the gentleman from North Dakota (Mr. Pomeroy), not 
according to all the Democrats in this House or in the Senate, 
according to the Republican Department of Agriculture, I tell my friend 
from Missouri, the Republican Department of Agriculture says more farm 
estates would have increased tax liability from the carryover basis 
rules in this bill than would benefit from repeal of the inheritance 
tax. In other words, if we pass this bill, family farmers and small 
businesses are going to pay more taxes.
  Now, I am for the Pomeroy alternative. First of all, we do not have 
that complicated look-back to find out what the basis was 10, 20, 30, 
40, 50 years ago. We do as we do now, what is the basis now when you 
get it?
  But we exempt under the substitute offered by the gentleman from 
North Dakota (Mr. Pomeroy) $7 million. That means that 99.7 percent of 
the people in America would never pay an estate tax. I am for that. So 
this argument, I tell my friend from Missouri, is about the three-
tenths of 1 percent of the very largest estates in America. Because if 
you vote for Pomeroy, 99.7 percent are exempt. So, as we have been 
doing for the last 4 years, we have been talking about the upper 1 
percent. That is who we are talking about.
  Now we are pretty well off in Congress. The American people do pretty 
well by us, very frankly. I am doing well enough. I paid a little bit 
of Alternative Minimum Tax this year. It shocked me, but my accountant 
pointed out that I did. So we are doing pretty well.
  But there are a whole lot of people that are not doing nearly as well 
as we are doing, and we are not helping them at all by simply giving 
away revenue that we could spend on the education of their kids and the 
defense of their country, which we are borrowing for, of course, so 
that their kids will pay the debts.
  Mr. Speaker, under current law, the Joint Economic Committee 
estimates that only 7,500 estates, in a Nation of 290 million people 
where some 3 million people die every year, 7,500 estates out of the 3 
million people that die would have any estate tax liability in 2009. 
However, the permanent switch to carryover basis rules, rules that are 
used to calculate cap gains, would impact an estimated 71,000 
additional estates, and many of those estates would face capital gains 
tax increases.
  Now even as this bill increases the capital gains tax on many farm 
estates and small businesses, I tell my friend, it still adheres to 
what seems to be the Republican Party's core economic principle: fiscal 
irresponsibility.
  The gentleman says this tax, that tax, and he is right. There are a 
lot of taxes on all of us, and we have a lot of services in this 
country. And, frankly, for the most part, as the gentleman knows, 
particularly if you take the industrialized nations, our tax structure 
at the Federal level is lower. But, still, they are high, and we would 
like to see them reduced.
  But the fact of the matter is, I have three children, three 
daughters, they are wonderful people, and they provided me with three 
grandchildren. And I am buying stuff. I am buying defense against 
terrorists, I am buying stabilizing Iraq, I am buying education, I am 
buying health care, I am buying roads. All of us are buying that.
  I do not want to have to say to my grandchildren, look, I am going to 
use it, but you pay for it. That is an immoral policy as well as a 
fiscally irresponsible one, an unwillingness to pay our bills.
  Now, this is $290 billion. Just $29 billion a year over 10 years. No 
sweat. Shoot, we are borrowing all the Social Security money right now 
that the Republicans said they were not going to spend a nickel of. 
They are going to spend $170 billion of Social Security money this year 
alone. How do we do that? We borrowed $118 billion last February, from 
foreigners mostly, which we are putting our kids deeply in hock to 
China, to Japan, to Germany.
  At a time of record budget deficits of nearly half a trillion 
dollars, this Republican bill would cost nearly $1 trillion over the 
first 10 years of full repeal. It would irresponsibly drive our Nation 
even further into debt and immorally force our children to continue to 
be liable for our bills.
  In sharp contrast, I tell my friend from Missouri, and I wish there 
were more people on this floor, but it is only giving away, you know, 
$250 billion to $1 trillion. What do we care? We have given away 
trillions of dollars over the last 4 years as we go trillions of 
dollars into debt. As a matter of fact, $9 trillion into debt.
  The substitute offered by the gentleman from North Dakota (Mr. 
Pomeroy) is excellent. It costs less than

[[Page H1935]]

one-third of this Republican bill. It would permanently increase the 
current exclusion amounts to $3.5 million per individual and $7 million 
for couples. Three-tenths of the estates would be left in 2009 and, as 
a result, exempt 99.7 percent of all estates from estate tax liability.
  Mr. Speaker, I congratulate the gentleman from North Dakota (Mr. 
Pomeroy) for this alternative. It solves the problems of small farmers, 
it solves the problems of small businesses, it solves the problems of 
pretty significant but nevertheless smaller estates, to make sure that 
the hard work of mom and dad can be passed along to their daughter and 
their son and their son's and daughter's families.

                              {time}  1545

  We agree with the gentleman from Missouri (Mr. Hulshof) that that is 
a good objective, but we also agree that we ought to have fiscally 
responsible policies.
  Mr. POMEROY. Mr. Speaker, I reserve the balance of my time.
  Mr. HULSHOF. Mr. Speaker, just a quick comment for whatever time I 
may consume before yielding to the gentleman from South Carolina (Mr. 
Barrett).
  Did I hear the last speaker correctly, that we have given away, whose 
money is that? It would be the American taxpayers' money, who are 
probably, even as we speak, trying to grapple with those forms as they 
have tax day coming, as the income tax payers of America that provide 
for the comfortable living that he and I enjoy.
  Mr. HOYER. Mr. Speaker, will the gentleman yield?
  Mr. HULSHOF. I yield to the gentleman from Maryland.
  Mr. HOYER. Mr. Speaker, I ask my friend, whose debt is it?
  Mr. HULSHOF. Mr. Speaker, I would say to my friend, and of course, as 
we have had a lot of unforeseen circumstances that have occurred, as 
was mentioned earlier, Iraq and Afghanistan. And let us hope and pray 
that as permanent repeal occurs, if it occurs, in the outyears that we 
will not be in that war on terrorism. But I would say to my friend, and 
I appreciate the question, but he also mentioned the Department of 
Agriculture, and lest, Mr. Speaker, anyone wonder who those 
agricultural groups are that represent farm families across America, I 
would place into the Record a letter from said groups.
  In essence, the letter reads as follows: The groups listed below 
support permanent estate tax repeal, ask for this body to vote for H.R. 
8, and the letter goes on to say, individuals and families own 
virtually all of the farms and ranches that dot America's rural 
landscape. Death taxes threaten the transfer of these operations to the 
next generation of food and fiber producers. Sincerely, Alabama Farmers 
Federation, American Farm Bureau Federation, American Sheep Industry 
Association, the American Soybean Association, Farm Credit Council, 
National Association of Wheat Growers; to my friend from North Dakota, 
National Cattlemen's Beef Association, National Corn Growers 
Association, National Cotton Council, National Grain Sorghum Producers, 
National Milk Producers Federation, National Potato Council, USA Rice 
Producers Federation, U.S. Rice Producers Association, and the Western 
Peanut Growers Association.

                                                   April 13, 2005.
     House of Representatives,
     Washington, DC.
       Dear Representative: The groups listed below support 
     permanent estate tax repeal and ask you to vote for H.R. 8, 
     the Death Tax Repeal Permanency Act of 2005.
       Individuals and families own virtually all of the farms and 
     ranches that dot America's rural landscape. Death taxes 
     threaten the transfer of these operations to the next 
     generation of food and fiber producers.
       In 2001, Congress recognized the harm that death taxes 
     cause family businesses and voted to repeal this onerous tax. 
     Unfortunately, repeal scheduled for 2010 is temporary and 
     sunsets after only one year.
       Congress should act now to make death tax repeal permanent. 
     Please show your support for permanent death tax repeal by 
     voting for H.R. 8 when the bill reaches the House floor this 
     week.
           Sincerely,
         Alabama Farmers Federation, American Farm Bureau 
           Federation, American Sheep Industry Association, 
           American Soybean Association, Farm Credit Council, 
           National Association of Wheat Growers, National 
           Cattlemen's Beef Association, National Corn Growers 
           Association, National Cotton Council, National Grain 
           Sorghum Producers, National Milk Producers Federation, 
           National Potato Council, USA Rice Federation, US Rice 
           Producers Association, Western Peanut Growers 
           Association.

  Mr. Speaker, to my friend from South Carolina, I am not sure if any 
of those groups happen to represent farm families in his district, but 
I yield 2 minutes to the gentleman from South Carolina (Mr. Barrett).
  Mr. BARRETT of South Carolina. Mr. Speaker, I thank the gentleman for 
yielding me this time. And, yes, I say to the gentleman, they are from 
South Carolina, and I see them every day.
  Mr. Speaker, I rise today against the Pomeroy substitute and in full 
support of H.R. 8, the Death Tax Repeal Permanency Act of 2005.
  The death tax defies common sense and is fundamentally unfair, Mr. 
Speaker. Prior to 2001, the top death tax rate was 55 percent. Today, 
the top rate is 47 percent, and these are unbelievably high tax rates, 
especially when the tax is imposed after a lifetime of hard work.
  The death tax is also a job killer, Mr. Speaker. Resources that could 
be used to expand businesses and hire new employees are instead used 
inefficiently to plan for the impact of the death tax. The Joint 
Economic Committee noted that the death tax reduces the stock in the 
economy, listen to this now, approximately one-half of $1 trillion.
  Mr. Speaker, the permanent repeal of the death tax will not only 
ensure that small businesses and family farms are not subject to these 
unfair rates of taxation, but also simplify the tax law and facilitate 
long-term financial planning. The 2010 sunset date for the death tax 
repeal makes it nearly impossible for taxpayers to make long-term 
financial decisions as they relate to the tax. Enactment of the Death 
Tax Repeal Permanency Act promotes fairness and simplification by 
giving taxpayers the certainty they deserve.
  Mr. Speaker, I strongly support H.R. 8, the Death Tax Repeal 
Permanency Act of 2005, and I urge my colleagues to vote ``no'' on the 
Pomeroy substitute amendment.
  Mr. POMEROY. Mr. Speaker, I yield 4 minutes to the gentleman from 
Oregon (Mr. Blumenauer), the other member of the Earl Caucus of this 
House.
  Mr. BLUMENAUER. Mr. Speaker, I appreciate my namesake's courtesy in 
permitting me to speak on his substitute. I appreciate his hard work 
and clarity in dealing with this issue and a step forward to stop a 
cynical game that I have watched be played here in this Congress since 
I was first elected 9 years ago.
  There is today, and there has been throughout these 9 years, a 
consensus to make adjustments to the inheritance tax, to make it less 
steeply graduated, to raise the exemptions, to be able to do fine-
tuning, to deal with the legitimate problems of small, closely held 
businesses and farms. And if the Republican majority would have 
permitted a fair and honest debate on this floor of the inheritance 
tax, we would have enacted significant permanent adjustments that would 
have solved the vast majority of the problems for 99.9 percent, I dare 
say. But that is not to be.
  Instead, we have been involved with a cynical process that we are 
seeing played out here today. Nobody expects over the long haul that we 
are, in fact, going to eliminate in its entirety the inheritance tax. 
Our Republican friends have been involved with a roller coaster of a 
10-year phase-out, and then insanely reinstating it in its entirety. As 
a result nobody has been able to plan thoughtfully for the last 5 
years.
  My friend from Missouri says, well, on the one hand, it is only 1.5 
percent of Federal revenues; but that is half of the problem of Social 
Security that has driven some people into a frenzy. It is not an 
insignificant number, in the neighborhood of $1.5 to $2 trillion over 
the period of time we are talking about.
  But my Republican friends do not want to allow the legislative 
process to work, and have a permanent solution that will stop the 
ambiguity and that will solve the problem for closely held businesses 
and yet, not allow vast amounts of wealth, wealth that is so 
significant that Bill Gates's own father does not think that it should 
eliminate

[[Page H1936]]

the inheritance tax and has even written a book about it.
  The gentleman from North Dakota has proposed not that we game the 
system. The gentleman from Missouri (Mr. Hulshof) found out that his 
parents, like 99 percent of the people, are not subjected to the 
inheritance tax.
  The Pomeroy amendment would immediately raise that threshold to $6 
million, with further adjustments to $7 million in 4 or 5 years from 
now, I forget the exact period of time; he will correct me, I am sure. 
This brings it up so that 99.7 percent of the American public are 
exempt, and it does it today. Not with games, not with promises but by 
solving the problem. I think this is so important as I think of the 
millions of Americans today that are struggling with the 1040 form, the 
2.9 million Americans subjected to the alternative minimum tax, soon to 
be 16 million families next year. Not enough money, not enough time to 
solve that yet we are going to be involved with this cynical game of 
the inheritance tax.
  I strongly urge the adoption of the Pomeroy substitute, which will 
solve the problem once and for all for the vast majority of the family 
farms, the small businesses, and, in fact, a number of people of 
significant wealth; and it will provide resources so that we can solve 
problems like Social Security and the alternative minimum tax and be 
about our business.
  Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the gentleman just indicated that the Pomeroy substitute 
solves the problem once and for all, and I have listened to a number of 
individuals on the other side during the course of this discussion that 
this is only going to affect the superwealthy and that really there are 
no family businesses that are affected by the estate tax. It has been 
interesting, because some of those comments have come from colleagues 
of mine on the Committee on Ways and Means.
  Mr. Speaker, we have had a number of hearings going back to at least, 
from my memory, 1997. So I will mention some of these folks who have 
come and testified in front of the Committee on Ways and Means.
  Martin Whalen testified about his family-owned and -operated company, 
Etline Foods Corporation, a distributor of food service products in 
York, Pennsylvania. When they purchased the business, 48 employees; in 
1997, 105 employees. Rhetorically, I would say to my friend from North 
Dakota, will this solve their problem?
  Wayne Nelson, a farmer from Winner, South Dakota. His father farmed 
until his father's death in 1993. Their estate planning was inadequate. 
Several parcels of land in South Dakota were liquidated in order to pay 
the Federal tax. Will the substitute rectify that situation?
  What about Roger Hannay of Hannay Reels, Incorporated, a small 
manufacturer in the foothills of the Catskill Mountains about 25 miles 
from Albany, New York, a small manufacturer employing 150 employees?
  What about Richard Forrestal, Jr., a principal in Cold Spring 
Construction, a firm specializing in highway and bridge construction?
  What about Douglas Stinson, a tree farmer from Toledo, Washington, 
that runs the Cowlitz Ridge Tree Farm? Each of these testified, Mr. 
Speaker, that they were impacted negatively by the existence of the 
death tax.
  What about Carol Loop, Jr., president of Luke's Nursery and 
Greenhouses, a wholesale plant nursery operation in Jacksonville, 
Florida? He started his business with a $1,500 loan and a borrowed 
truck. Would the problem be solved with the Pomeroy substitute?
  Or Christopher and Kimberly Clements of Golden Eagle Distributors in 
Tucson, Arizona. They lost their father unexpectedly after a valiant 
bout with cancer. He lost his life at the age of 58.
  Or Jeannine Mizell, a third-generation owner of Mizell Lumber and 
Hardware Company of Kensington, Maryland.
  What about Robert Sakata, a vegetable farmer from Brighton, Colorado, 
or Jean Stinson, a railroad track manufacturing company in Barto, 
Florida, running the R. W. Summers Railroad Contractors? Their family 
had to shut down a facility in North Carolina, laying off two-thirds of 
the 110 employees to pay the estate tax.
  Or Jack Cakebread, founder of Cakebread Cellars in Napa Valley, 
California. Would each of these individuals be solved or their estate 
problems solved by the substitute?
  It is a rhetorical question, and the gentleman from North Dakota (Mr. 
Pomeroy) knows it, and I do not mean to put him on the spot, but he 
cannot answer the question because when we draw a line, an arbitrary 
line, wherever we draw that line, we still are going to have those 
entrepreneurs that have been willing to invest in their businesses, 
hire employees, build local communities; and as long as the death tax 
remains in existence, they are going to have to do some sort of estate 
planning.
  I think it is much the better course to completely and finally 
permanently repeal the tax.
  Mr. Speaker, I reserve the balance of my time.
  Mr. POMEROY. Mr. Speaker, I yield myself 5 minutes.
  Mr. Speaker, it is a privilege to carry this debate today on behalf 
of the minority, and a privilege to participate with the gentleman from 
Missouri, who is one of my favorite Members of the House. He has 
presented his side very well.
  He asked relative to a number of estates, would they be covered under 
the Pomeroy substitute? Well, I believe that a number of them would 
have their estate tax problems completely eliminated, because we take 
the exemption and we double it. We go from today, a joint estate at $3 
million, and we say, if you have a joint estate of $6 million, no 
estate tax. We, like 2009, take that up to $7 million in a joint estate 
circumstance.
  So as to the question he asked, I do not know the particulars of 
those cases, but I expect that a number, if not all of them are 
covered, because 99.7 percent of the estates in this country are under 
that amount.
  But there is a feature of the majority proposal that is not 
represented in our substitute, and I want to talk about it right now, 
and this involves the imposition of capital gains liability at the 
handling of an estate under the majority bill.
  I can just imagine Members in the majority, some of them that might 
have signed that ``no new tax'' pledge that was going around last 
Congress, just wringing their hands because they are about to vote for 
a tax increase, a tax increase in the form of capital gains taxation on 
estates. Section 541 of the bill that the majority proposal would make 
permanent reads this way: termination of step-up in basis at death. Tax 
legalese, but what does it mean? It means new capital gains and capital 
gains if you have an estate that exceeds that 1.3 gross value. You have 
a reporting commitment that attaches at 1.3 gross value for estate.

                              {time}  1600

  You know, it is the darndest tax bill I ever saw. Because, while they 
talk about tax relief, they are hurting more than they are helping.
  I direct you to this chart. Number of estates today with capital 
gains issue, zero; and that is because the taxable basis in the 
property is established at time of transfer in an estate. No capital 
gains.
  What happens under their proposal? Well, we know that there are 
71,000 estates in the year 2011 that are likely to have reportable 
amounts, in other words, gross valuation over $1.3 million. Some will 
have a capital gains issue they have to pay. Some will not. But they 
are all going to have to report with the IRS.
  And this report is something else. It means going back in and trying 
to establish what the value of the property was at the time mom and dad 
acquired it. It is a nightmare. And that is well-established in the 
Congressional Record. Because I have here the hearing, I have here the 
Ways and Means record at the time the committee considered testimony to 
repeal the carryover basis, the very provision they want to re-
establish in tax law.
  You see, it passed once before, in 1976. It was delayed from 
implementation and then repealed retroactively because of its 
consequences.
  Here is what some very interesting participants had to bring to the 
committee. Carryover basis fosters an insidious bias against farmers 
and ranchers. Carryover basis calculations for

[[Page H1937]]

land, buildings, machinery, livestock and timber have been described 
as, at best, potential nightmares. Trying to establish what the taxable 
basis on this is, which their law would require, is a nightmare. So 
says the American Farm Bureau in their 1979 testimony.
  The Cattlemen's Association, one touted as one of these that want to 
re-establish capital gains on estates, they say, because of its 
complexity, carryover base is impossible to comply with. It will 
increase the tax burden and compound the illiquidity of estates of 
farmers, ranchers and other family business operators who sell 
inherited property in the normal course of business, and I quote, and 
find it in the record from the National Cattlemen's Association.
  NFIB also states, I strongly urge you, as an individual and as a 
taxpayer and as one who professionally and through an association 
represents small business people, repeal the carryover basis. So says 
the National Federation of Independent Business, the very group that 
they have cited as trying to re-establish carryover basis in the Tax 
Code and put capital gains back on estates.
  We have been here before. We do not want to do it again. Do you not 
understand, voting for the repeal bill brings a new bill, a capital 
gains bill, and a capital gains bill to thousands that have no estate 
tax consequence?
  So if you want to cast a vote this afternoon for a tax relief 
proposal, vote the Pomeroy substitute. No capital gains in the Pomeroy 
substitute.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.
  As the gentleman from North Dakota recognizes; and, again, I do not 
think he meant to misspeak, but the underlying bill, H.R. 8, does 
provide a step up in basis of $3 million for the surviving spouse and a 
$1.3 million step up in basis for surviving heirs.
  Mr. Speaker, many have worked on the death tax repeal and going back 
even to the, I think, Family Heritage Preservation Act of 1993. The 
gentleman from California introduced that bill and I think had 29 
cosponsors. Now, of course, we are over 200 on permanent repeal.
  Mr. Speaker, I yield 4\1/2\ minutes to the gentleman from California 
(Mr. Cox).
  Mr. COX. Mr. Speaker, the preceding speaker just told us that he does 
not like the carryover basis. And I will tell you what. If his 
amendment got rid of any aspect of carryover basis in death tax I would 
vote for it. But this is a give-with-the-right-hand, take-away-with-
the-left-hand operation that he is proposing, because what he is also 
doing is he is bringing back the 47 percent death tax.
  We are trying to repeal the death tax, not bring it back; and you 
cannot tell us that capital gains at 15 percent is worse than the death 
tax at 47 percent.
  And as the gentleman from North Dakota just mentioned, we do not have 
a carryover basis in its entirety. We have simply a step up in basis 
for both the spouse and for the children.
  I wish we could get rid of the carryover basis. I would be thrilled 
with that. But the Pomeroy substitute gives us the death tax back full 
strength at 47 percent tax rate, and it arbitrarily says that a small 
business that is worth $3 million is going to have to deal with this.
  Now you have to ask yourself, in advance of your death, do you know 
what the assets and inventory of your business is going to be 10 years, 
20 years, 30 years down the road? The answer is no. Of course not. You 
are going to have to do that tax compliance year in and year out.
  Tax compliance, the cost of actual accountants and lawyers and life 
insurance and all the other things that you have to do to deal with the 
death tax year in and year out is $20 billion a year.
  This tax, the death tax, kills between 170,000 and a quarter million 
jobs each year, according to the Nonprofit Center For Data Analysis. 
The death tax is a job killer. It is destroying family farms and 
businesses. It is a drag on economic growth, and it is the greatest 
disincentive to invest additional capital in family businesses in 
America.
  But the authors of this amendment still want to pry lots of cash out 
of the cold dead fingers of America's deceased entrepreneurs. So they 
rewrite the language of the Tax Code so we can keep all 88 pages of 
complexity of the death tax and all the thousands of pages of 
regulation and the hundreds of thousands of pages of case law that go 
with it. This is the most complex part of one of the most complex tax 
systems in the world, and it is time to drive a stake through its 
heart. It is time for the death tax to die.
  This is not the time to redefine the death tax or add legislative 
language so that tax lawyers and accountants can have more to play 
with. It is time to kill it. And that is why we must vote against this 
amendment and in favor of the total repeal of the death tax.
  Here is the message that this amendment, were it to be adopted, sends 
to American workers: Do not work for a small- or medium-sized American 
family business. Do not work for a large family owned business. To be 
safe, do not work for any small businesses that are growing quickly or 
picking up new customers or introducing new products. Because the 
Federal Government has decided that the family businesses can grow 
without the destructive burden of the death tax but only until some IRS 
bureaucrat decides that these businesses are worth $3.5 million 
dollars. Then the businesses will be subject to huge new tax burdens. 
And guess what? You will not know until it is too late whether you are 
on one side or the other side of that threshold.
  I have to tell you, it sounds like $3 million is a lot of money. And 
it is if you or I had it in our pocket. But for a business, counting 
its real estate, its assets, its inventory, its trucks, that is a tiny 
business indeed. And if you are trying to employ some people, you have 
10, 11, 12 people that work for that business, what are you going to 
say to them when they lose their jobs because the family business has 
to be liquidated on the death of the entrepreneur in order to come up 
with the actual cash to pay for it?
  The IRS is not going to accept shares of stock in the family business 
in payment of the death tax. They are going to say, go sell those 
shares, go liquidate the business, go sell the assets in order to pay 
off the tax plan.
  To the supporters of this amendment I say we agree with you that the 
death tax destroys family farms and businesses. Obviously, that is your 
presumption if you are trying to have a threshold below which people 
will not pay it. We agree with you that the death tax destroys family 
farms and businesses, that it kills jobs and reduces economic growth. 
So why do you want to keep this monster alive?
  Please join with us and kill the death tax once and for all.
  Mr. POMEROY. Mr. Speaker, I yield myself 90 seconds.
  You know, anyone in the accountant or tax-planning profession 
worrying about losing business because of the estate tax is going to be 
smiling broadly at the end of tonight when we pass this re-creation of 
capital gains tax and estates.
  In fact, the ABA Task Force report devotes almost 70 pages to 
discussing the problems that exist with the new carryover basis rules 
in their legislation. The problems identified in the report include 
unequal treatment of capital losses, difficulty in applying basis 
adjustments to property sold during the administration of the estate, 
treatment of property with debt and excessive basis, treatment of 
installment loans, unequal treatment of pension assets, administrative 
problems with allocation to spousal property, discrimination in favor 
of spouses in community property states. Even a cursory examination of 
that report leads to a conclusion that serious problems exist with the 
new rules and that their surface simplicity is quite misleading.
  Let us just walk through some of the titles, some of the titles of 
the new capital gains law that they are going to have: Basis increase 
for certain property; limit increased by unused built-in losses and 
carryovers; spousal property basis increases; qualified terminable 
interest property; definitions and special rules for application of 
subsections (b) and (c); fair market value limitation; coordination 
with Section 691; information returns, et cetera.
  And to think that for every one taxpayer getting relief under their 
proposal, an additional ten are now going to face this nightmare. It is 
a funny way to give tax relief.

[[Page H1938]]

  Mr. Speaker, I yield 4 minutes to the gentleman from California (Mr. 
Sherman).
  Mr. SHERMAN. Mr. Speaker, I thank the gentleman from North Dakota for 
yielding me this time and perhaps for mentioning what I see as the only 
good part of this bill. You see, I am a CPA and tax lawyer by training, 
and this bill is the full employment act for both my CPA friends and my 
tax lawyer friends.
  Republican after Republican has come to that microphone and talked 
about the electrical tax, the sales tax, the telephone tax, the payroll 
tax, the income tax, the marriage tax, the cable tax and the fuel tax.
  And what is their solution? To eliminate a tax that applies to only 
\1/4\ of 1 percent of America's families. Yes, that is right. They want 
to keep the electrical tax, the sales tax, telephone tax, payroll tax, 
the income tax, marriage tax, cable tax and the fuel tax.
  They want to vote for a bill that takes $290 billion out of the 
Treasury in its first 4 plus years and about $70 billion a year 
thereafter and make it impossible for the Federal Government to ever 
give any relief for those other taxes. It is a bill to shaft 99 and \3/
4\ percent of all American families.
  But that does not stop there. Republican after Republican has come up 
here and boasted how the passage of this bill will slash charitable 
giving. So it is not just a loss to the Federal Treasury, it is a loss 
to our hospitals and a loss to our universities, who are strangely 
silent on this bill because they are afraid of angering \1/4\ of 1 
percent of the families in the United States who happen to be a huge 
chunk of their donors.
  Let us look at the substitute. It is more fiscally responsible, costs 
about \1/4\ as much, but it provides more tax relief for middle-class 
families.
  Let us look at this from the standpoint of a widow, a surviving 
spouse. Under current law and under the Pomeroy substitute, no estate 
tax, no capital gains tax and little or no compliance work. Under their 
bill, more compliance work and sharp restrictions on the step up in 
basis.
  So this bill is an attack on working families, an attack on the 
middle class, and an attack on widows. They have lost their spouse, and 
now you want them to lose their step up in basis as well. These are 
people who pay zero estate tax and get zero benefit from this bill. 
They have lost a spouse, and that is the folks you go after. $290 
billion in the first 4 plus years. It is part of an overall Republican 
tax package.
  I am on the International Relations Committee. We are waging a war on 
terrorism. We turn to our men and women in uniform and say, stand ready 
to make the ultimate sacrifice; and we turn to the richest families in 
America and say, you should make a zero sacrifice.
  Now these Republican tax policies have caused the President of the 
United States to call into question our intent and ability to pay U.S. 
government bonds.

                              {time}  1615

  It calls into question our ability to pay our bonds.
  Now, the President will not warn the Chinese investors. He wants them 
to buy the bonds, but he has warned every Social Security recipient 
that we may dishonor the U.S. Government bonds held by the Social 
Security trustees.
  This bill is part of an overall plan that keeps in effect the 
electrical tax, the sales tax, the telephone tax, the income tax, the 
payroll tax, the marriage tax, the cable tax, and the fuel tax. And it 
is part of an overall plan that, well, I ought to write a commercial 
because there is a lot of public policy commercials out there, and I 
ought to write them for them.
  Allowing corporations to avoid American taxes just by renting a hotel 
room in the Bahamas, $8 billion. Allowing millionaires to pay virtually 
nothing on dividend income, $80 billion. Eliminating the estate tax 
even on the richest estates, $290 billion. Telling our soldiers in the 
field that it is the billionaire families who are the ones who have 
sacrificed too much for America, priceless.
  And the Republi-card, accepted everywhere. The very wealthy want 
their taxes released.
  And do not forget the Deficit Express Card, now with a new $12 
trillion credit limit.
  Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, notwithstanding the gentleman's props, I would commend 
to him for his reading leisurely ``The Economics of the Estate Tax: An 
Update,'' a Joint Economic Committee study dated June 2003 which in 
essence states the estate tax raises very little, if any, net revenue 
because of distortionary effects of the estate resulting in income tax 
losses roughly the same size as the revenue collected. Secondly, estate 
taxes force the development of environmentally sensitive land. Through 
2001, 2.6 million acres of forest land were harvested and 1.3 million 
acres were sold every year to raise funds to pay the estate tax.
  Regarding his criticism on philanthropy, the estate tax according to 
the Joint Economic Committee study, the estate tax may actually be one 
of the greatest obstacles to charitable giving as estate taxes crowd 
out charitable bequests.
  Mr. Speaker, I yield two minutes to the gentleman from Iowa (Mr. 
Latham).
  Mr. LATHAM. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, it is fascinating if you would think if there was a 
proposal in the substitute to eliminate the whole list of taxes that 
the gentleman referred to, but I have never heard one case where they 
have talked about eliminating any tax, only increasing taxes. So it is 
quite an interesting debate.
  Let me just say, I come to this as someone who grew up in a family 
farm operation, a family small business. I can tell you firsthand from 
real life, honest experience the effect that the death tax has on 
families and creating jobs and opportunities and being able to continue 
what I believe is the American Dream, and that is to have an 
opportunity for your children and your grandchildren to continue a life 
that you love and cherish. Nothing stands in the way more for families 
and small businesses to be successful, to continue, than the death tax.
  We spend thousands and thousands of dollars every year as a way to 
try and avoid what the death tax will do to us. It is morally wrong 
that the day you die, your heirs should not only see the undertaker but 
have to go see the tax man to see how much the Federal Government is 
going to take away from a lifetime of work.
  The idea, while the gentleman from North Dakota (Mr. Pomeroy), I have 
the greatest respect for him, but the idea of continuing an immoral tax 
that destroys family, destroys family businesses, I have seen neighbors 
who have lost everything they have, lost generations of work on a 
family farm because of the death tax. It is a fact that nothing is more 
harmful, nothing is more hurtful than a tax that takes away the hope of 
the American Dream.
  This country is based on farms, on small businesses. That is the 
lifeblood of this Nation, and nothing destroys it more than the death 
tax; and that is why we have to kill this death tax to make sure that 
we can experience the American Dream in this country.
  Mr. POMEROY. Mr. Speaker, I yield 3 minutes to the gentleman from 
Tennessee (Mr. Davis).
  (Mr. DAVIS of Tennessee asked and was given permission to revise and 
extend his remarks.)
  Mr. DAVIS of Tennessee. Mr. Speaker, I thank the gentleman for 
yielding me time.
  Mr. Speaker, I rise today in strong support of the Pomeroy substitute 
to House Resolution 8. And I argue that anyone in this body who is 
currently concerned about our ballooning national debt should vote in 
favor of the substitute.
  The Pomeroy substitute is fair, and it covers those who need tax 
exemption now, America's small businessmen and America's farmers.
  It is clear from the debate today that the majority of Members in 
this body believe that our farmers and small businessmen and -women 
need relief from the estate tax, and I will do all I can to ensure that 
these hardworking Americans get their due tax relief. In my opinion, 
the Pomeroy substitute does this by increasing the estate tax exemption 
level in 2006 by $3 million for individuals and $6 million for couples. 
Additionally, from 2009 forward, the tax exemption level would be $3.5

[[Page H1939]]

million for individuals and $7 million for couples. This will fully 
cover 99.8 percent, 99.8 percent of all the estates in this country. 
Only two out of every 1,000 would not be totally covered.
  I know my friends on the other side of the aisle desperately want to 
make sure that the Paris Hiltons of America are fully covered, but they 
have done pretty good the last 100 years; and I am sure under the 
Pomeroy bill in the future they will continue to do pretty good.
  Additionally, the substitute bill eliminates the liability for tax on 
gains accrued before death. This is incredibly important to those 
children who may decide to sell the small farms and businesses they 
have just inherited. By using the stepped-up basis to calculate the 
value on an estate at a time of death, the substitute bill is actually 
making the Tax Code simpler and less cumbersome. It seems to me that 
this is important to us. It is important to the President, and it is 
important to many of us in Congress.
  I will do all that I need to do in order to support estate tax relief 
for farmers and small business owners in my district. But would it not 
be a great message to send to the Senate and to the American people by 
providing them with the estate tax relief they want and need without 
breaking the bank? It seems to me that it is the fiscally conservative 
thing to do. I truly believe we have got to stop this liberal policy of 
borrowing and spending.
  To my friends on the right who believe that any estate tax is so vile 
that you took your polling advice and decided to start calling it the 
death tax, you should read Leviticus 25 containing God's message to 
Moses that every 50 years, called the Jubilee, all possessions must be 
returned to the original owners. I invite you to read that scripture.
  You had a chance in 2002 to increase the benefits by giving the tax 
relief to the estates of all Americans. Why did you not? It clearly was 
not to keep the budget balanced. Was it political? Every year around 
tax time and every 2 years around election time, you come back with 
permanent tax repeal. I think now is the time to do it. Let us get it 
done.
  The Pomeroy substitute bill is a bill we need to send to the Senate. 
It is a fair bill. It is fiscally responsible. It should be the House's 
bill.
  Mr. POMEROY. Mr. Speaker, how much time remains on each side?
  The SPEAKER pro tempore (Mr. Simpson). The gentleman from North 
Dakota (Mr. Pomeroy) has 4\1/2\ minutes remaining. The gentleman from 
Missouri (Mr. Hulshof) has 14\1/2\ minutes remaining.
  Mr. POMEROY. Mr. Speaker, I reserve the balance of my time.
  Mr. HULSHOF. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman 
from Georgia (Mr. Price).
  Mr. PRICE of Georgia. Mr. Speaker, I thank the gentleman for yielding 
me time. I thank the gentleman for his leadership on this issue.
  I think it is important that we spend a moment or two and talk about 
how we got here, why do we have a death tax and what is its 
consequence; what is the fundamental we are talking about.
  The death tax began in 1916 in order to fund World War I, a noble 
cause but a cause that has long since passed. It remained through the 
1920s and 1930s under the rationale that we should prevent the 
accumulation of wealth, an issue more than addressed with our current 
anti-trust laws.
  The death tax has become a harmful relic of previous times. It 
survives through the inertia of government and now has the consequence 
of punishing hard work and success. It harms families, and it kills 
small businesses.
  Families should not have to visit the undertaker and the tax 
collector on the very same day.
  The death tax is fundamentally unfair and violates what should be our 
principle of freedom and liberty and the imperative of personal 
property rights.
  Freedom and liberty demand that hard-working Americans be able to 
leave their children and their grandchildren the results of their 
diligence and their success and not have Washington get a windfall.
  I urge all of my colleagues to act positively today on behalf of all 
Americans and let the death tax die for good.
  Mr. POMEROY. Mr. Speaker, in light of the imbalance of time, I would 
be happy to have my friend from Missouri burn up a little more of his 
time, unless he has no further speakers.
  Mr. HULSHOF. Mr. Speaker, I have no further requests for time, and I 
can assure my friend I will not use the entire 14 minutes to close.
  Mr. Speaker, who has the right to close?
  The SPEAKER pro tempore. The gentleman from Missouri (Mr. Hulshof) 
has the right to close.
  Mr. HULSHOF. Mr. Speaker, I reserve the balance of my time.
  Mr. POMEROY. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman 
from Illinois (Mr. Emanuel).
  Mr. EMANUEL. Mr. Speaker, I rise in opposition to H.R. 8, which 
continues, in my view, the policies by the majority of three tax cuts, 
in 4 years, with four straight record-breaking deficits that have added 
$2 trillion in 4 years to the Nation's debt. And here again the 
majority offers $850 billion of tax cuts to the wealthiest families in 
this country.
  When you get in a hole that is $2 trillion deep, rule one, stop 
digging. If you cannot figure that out, you cannot produce any more 
when it comes to economic growth for this country or jobs or resolving 
the health care crisis or the educational crisis we have in the 
country. My view is repeating the same mistake and expecting a 
different result is a sign that you have lost your bearings.
  This bill will do nothing to stimulate the economic growth or 
savings, which is what we should be focused on, rather than further 
shifting the tax burden from wealth to work.
  We could be debating and using this time on simplifying the code. 
Just 2 weeks ago there was a report out by the IRS and others showing 
that $350 billion a year goes unreported in taxes where people are not 
complying and cheating.
  We have a Tax Code that rewards and initiates a culture of cheating 
and penalizes those who abide by the rules. That is where we should be 
focusing, on simplifying the code and taking away the incentive to 
cheat, which is what we have today in our code.
  With all the economic challenges we are facing today in the area of 
health care, energy, education, eliminating the estate tax, fully 
eliminating, should be the last of our priorities. But the Republicans 
will soldier on and continue to fight until taxes are eliminated for 
the very last multimillionaire. Instead of helping the wealthy avoid 
taxes, we should be helping middle-class families save for their 
retirement.
  That is a true deficit we have in this country, a retirement and 
savings deficit. The savings rate is at its lowest level since the 
1930s, lower than any other industrialized nation. Millions of families 
are financially unprepared for retirement.
  Given this reality, why are we debating the elimination of the estate 
tax instead of real tax reform and a savings agenda for the middle 
class.
  Are holding the interests of the wealthy and special interests above 
the hopes and dreams of the middle-class families the kind of values we 
want our Tax Code to reflect?
  As late former Supreme Court Justice Louis Brandeis once said, ``We 
can have democracy in this country or we can have great wealth 
concentrated in the hands of a few, but we cannot have both.''
  Mr. Speaker, there is no doubt which one this bill will achieve.
  Mr. HULSHOF. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Washington (Miss McMorris), a newly elected Member from the State of 
Washington.
  Miss McMORRIS. Mr. Speaker, I appreciate the opportunity to address 
the House today on this very important piece of legislation, the repeal 
of the death tax and making it permanent.
  The repeal of the death tax is one of the first bills that I was 
honored to place my name on as a cosponsor.
  Growing up on a family farm in eastern Washington, I have seen 
firsthand the negative impacts the death tax has on our families and 
our businesses.
  One of my top priorities in Congress is to grow jobs and expand the 
economy in the Pacific Northwest.

[[Page H1940]]

                              {time}  1630

  I believe that the repeal of the death tax will help accomplish this 
goal, especially for the farmers and small businesses in my district.
  The death tax costs thousands of jobs each year; and by repealing 
this unnecessary tax, jobs will be created and many small business 
owners will be able to add workers to their payrolls.
  As a Member who represents a significant farming sector, I have seen 
the death tax destroy some family farms. Without a doubt, death taxes 
hurt our farmers and our ranchers by forcing family farms to sell land, 
buildings or equipment needed to operate their business in order to pay 
for this excessive tax. Some family farmers have had to take out a 
second mortgage on their home to pay for the tax.
  When farms and ranches shut down, so do the businesses they support, 
leaving many out of work and leading to a depressed rural economy.
  The time is now to end the death tax. I support the passage of H.R. 8 
in order to end this unjust, unfair, and inefficient tax burden on our 
families, businesses and especially our farming communities.
  Mr. POMEROY. Mr. Speaker, I believe we are at the end of our time, 
and I yield myself the balance of the time to close our side.
  Mr. Speaker, I am feeling a bit like the man in the middle as we 
approach this debate. There has been some on our side that suggests the 
Pomeroy substitute provides too much estate tax relief. Indeed, the 
amounts are higher than acceptable. Obviously, we have heard from the 
other side they believe this is too low, but I would say to my friends 
in the majority, and listen to this carefully, those who approach this 
issue with an all-or-nothing mentality are likely to get nothing.
  We cannot tell what is going to happen in the year 2010. None of us 
know. Except there is one thing we know, and look at this chart, the 
national debt is going to exceed $10 trillion, $10 trillion, 36 percent 
above where we are at today, and this is based upon established budget 
projections.
  Do we really believe that that future Congress is going to sit 
blithely by and let this become implemented? There is not a nickel's 
worth of certainty in that. And we all know, because as damaging as 
this is to the budget in the first 10 years, with $290 billion of 
revenue loss, debt service added, this is a $326 billion hit to the 
budget in the first 10 years, look what happens in the second 10 years: 
$1.3 trillion impact in the second 10 years when we count the value of 
the debt service.
  Do any of us think that we are really going to allow this to happen 
in the future years?
  That is why I have advanced a very different alternative, entitled 
certain and immediate estate tax relief, because it is certain and it 
is immediate, and it deals by taking the estate tax to $6 million per 
couple, $7 million per couple by the time we get to 2009. It deals with 
the estate tax issues of 99.7 percent of the population.
  Those of my colleagues looking at this chart may not be able to see 
this tiny red line, because that is what three-tenths of 1 percent 
represent with looking at the total population, three out of 1,000, and 
we know that on average those estates are going to average $15 million.
  So for three-tenths of 1 percent we offer an alternative that has no 
capital gains, that is one-quarter of the cost, that immediately phases 
in estate tax relief and is far and away the superior way to go. All or 
nothing gets us nothing. Vote Pomeroy, immediate and certain estate tax 
relief.
  Mr. Speaker, I yield back the balance of my time.
  Mr. HULSHOF. Mr. Speaker, I yield myself the balance of the time.
  Let me first say, Mr. Speaker, how much I appreciate my friend from 
North Dakota as we have done this in a number of sessions of Congress, 
and I appreciate the tone, and he is a friend of mine, and I have a lot 
of respect for him and the intent with which he comes to this debate.
  Let me answer a couple of points that have been raised in particular, 
first of all, about the tax simplification. Tax day is 2 days away, and 
I am sure taxpayers, in particular small businesses and family farmers, 
would appreciate anything that we can do to simplify our tax laws, and 
I would submit that permanent repeal of the death tax does just that.
  In fact, H.R. 8 is one simple paragraph, and it reads as follows: 
``Section 901 of the Economic Growth and Tax Relief Reconciliation Act 
of 2001 shall not apply to title V of such Act.'' Basically, we repeal 
the sunset.
  Now, again, the gentleman from North Dakota's (Mr. Pomeroy) 
substitute, I counted, and I hope I am counting correctly, but 40 
subparagraphs and directing accountants and the like to this 
subparagraph or that particular paragraph.
  The reason that we are here is because of complicated and arcane 
Senate budget rules, called the Byrd rule, that we phase out the death 
tax for one single year. In 2010, it magically disappears, and then on 
January 1 of 2011 it springs back to life, and the uncertainty, how 
would one as an estate planner advise a client when the tax is gone 
today and comes back again in the very next year? By making death tax 
repeal permanent, we give taxpayers the certainty they need to make 
those long-term financial decisions.
  The form itself, the blank form I am holding here, Form 706, is 40 
pages in length for the estate tax return, 40 pages in length, and it 
comes with a handy dandy 30-page instruction booklet. So when one is 
talking about simplification, what better simplification would there be 
than ripping these pages dealing with the estate tax completely out of 
the Internal Revenue Code?
  Lastly, when it comes down to the nuts and bolts of it, whether or 
not the Pomeroy substitute, and again, in the effort to pursue the 
American dream, whether those businesses are going to be shielded by 
the Pomeroy substitute or not shielded, the fact is that as long as the 
tax is on the books, as long as Congress draws some line in the sand, 
and that is all we are doing with the substitute, is just some 
arbitrary line, we are still going to have those family businesses that 
are going to be taking some of their resources and these convoluted 
schemes, legal, but efforts to avoid the tax.
  Again, we hear a lot about these very high-profile individuals who 
have been successful. I mean, this is the land of opportunity, is it 
not? I would submit to my colleagues that the billionaires and the top 
of the Fortune 500 lists, those folks have a stable full of lawyers and 
accountants to create this intricate estate plan to thwart the estate 
tax.
  Not so, and I go back to the original discussion, that small family 
in Columbia, Missouri, the Eiffert family who spends $52,000 a year 
just to buy term life insurance because they might have to face the 
estate tax. Under the current law, or probably even under the gentleman 
from North Dakota's (Mr. Pomeroy) substitute, there is no certainty for 
families like the Eiffert family.
  So I salute my colleague.
  The gentleman from Illinois (Mr. Emanuel), again a colleague of mine 
on the Committee on Ways and Means, said, why are not we debating real 
reform? Interestingly, there is a lot of discussion. I am not here to 
advocate one particular tax reform proposal because we have got this 
blue ribbon panel that is happening and looking at various options. 
There is a lot of talk about the consumption tax, and yet it is notable 
that, while there may be support for the idea of a general consumption 
tax, the death tax, by contrast, is a tax on nonconsumption.
  We talk a lot, too, about sin taxes. Why can we not put taxes on 
alcohol or on cigarettes and the like and whether or not that generates 
support among certain groups. This death tax is a tax on virtue. In 
other words, if you work hard, you play by the rules, if you scrape 
together your savings, and, again, we as an industrialized Nation, not 
only do we have even under the Pomeroy substitute a 47 percent death 
tax rate which would be the second highest in the world, but the fact 
is that we are not very good at savings and investments. In fact, if 
you are looking at your 1040 right now, look at line eight because it 
says if you have been thrifty and you are able to generate a little 
interest income, guess what, Uncle Sam says put this amount here 
because we are going to take our bite of the apple.
  Permanent repeal of the death tax actually rewards virtue.
  Let me just paraphrase a column recently, actually it was some years 
ago

[[Page H1941]]

but I think republished recently by Professor Edward J. McCaffery. He 
is a professor who says this: ``As a committed liberal myself, I used 
to believe that the gift and estate tax was essential to a just 
society. But as a former estate planner and a scholar in both law and 
economics, I confess that I was mistaken. The gift and estate tax is 
quite simply a bad tax, even, and maybe especially, when viewed from a 
liberal perspective.''
  Professor McCaffrey goes on and says, ``This is not a supply-side 
argument but a moral one. People who die with large amounts of wealth 
have done three good things for society. They have exercised their 
talents, rather than living a life of leisure. They have saved, 
contributing to a common pool of capital whose benefits manifest, for 
example, in lower interest rates, inure to all. And they have refrained 
from spending all of their wealth on themselves.''
  In fact, Professor McCaffrey across the Capitol some years ago I 
think before the Senate Finance Committee said, to paraphrase 
Scripture, the reason he changed his mind, I was blind but now I see.
  If this comes from an unrequited liberal that the estate tax, the 
death tax, is a bad tax, then I would suggest to all of my colleagues 
here that it is time to permanently and completely repeal the tax.
  Finally, I would say to my friend again, because there has been some 
discussion about creating a new tax, as the gentleman knows, the intent 
of H.R. 8, the underlying bill, is to help make it easier to pass a 
family business from one generation to the next. As we have heard from 
nonpartisan groups, 70 percent of family businesses do not make it to a 
second generation, 87 percent of family businesses do not make it to a 
third generation, and often the reason cited is because of this very 
confiscatory punitive tax called the death tax.
  The fact is that under H.R. 8, if it were to pass and become the law 
of the land, the tax rate imposed at death on a lifetime of work and 
thrift is zero percent. Under my friend's substitute amendment, the 
rate imposed would be locked in at 47 percent.
  Now I mentioned my personal experience, and I am running our family 
farm. If a surviving heir chooses not to farm and then makes the 
conscious decision to dispose of assets, then that is a taxable event, 
but that is a purposeful decision made by the heirs of that family 
business owner. It is not the Federal Government requiring the death of 
a family member to be a taxable event.
  So I would simply say to all of my colleagues that death should not 
be a taxable event, period. Under the underlying bill of H.R. 8, it 
would no longer be a taxable event. Under the substitute from my 
friend, individuals above an arbitrary line drawn by this body, death 
would continue to be an event that triggers the Federal death tax. That 
is why prominent organizations such as the Chamber of Commerce, 
National Federation of Independent Business, American Farm Bureau 
Federation and a host of other small business coalition members, 
representing the interest of small businesses and family farms across 
the country, support H.R. 8 and oppose my friend from North Dakota's 
substitute.
  I urge a ``no'' on the substitute and a ``yes'' on the underlying 
bill.
  Mr. KIND. Mr. Speaker, I rise today in strong support of making 
estate tax relief permanent so that family-owned farms and businesses 
can be passed down from generation to generation. The estate tax should 
be updated and modernized to reflect both the economic growth many 
Americans have experienced in recent years, and the hard work of 
millions of entrepreneurs and those just trying to make a living. These 
businesses should not be punished for being successful or for simply 
having their owners pass away.
  The United States is the land of opportunity, encouraging free 
enterprise and rewarding entrepreneurs. The estate tax should be 
modified to protect family-owned small businesses and family farms from 
the threat of having to be sold just to pay the tax.
  But, Mr. Speaker, H.R. 8 would fully repeal the estate tax for all 
Americans at a time when the administration is running record deficits 
that threaten the futures of our children's children. As we all know, 
the estate tax applies to fewer than 2 percent of all estates, about 
50,000 a year. This bill would initially cost the Nation's treasury 
$290 billion over 10 years.
  This year alone, our budget deficit will exceed $400 billion. This 
administration has turned a projected $5.6 trillion surplus over ten 
years into deficits totalling $2.6 trillion. However, even with these 
record deficits, we are debating yet another tax cut.
  With the majority's policies leading our Nation toward a fiscal train 
wreck, we should not be talking about totally repealing the death tax 
and instead talk about doing something about the debt tax, which falls 
upon all Americans.
  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 meaningful, 
common-sense bill will exempt 99.7 percent of all estates from the 
estate tax. Under current law, the tax basis for inherited property is 
``stepped up'' to its value at transfer through 2009, which helps 
farmers and small business owners who inherit property by reducing the 
amount of capital gains taxes to which the property is subject. Under 
current law, in 2010, ``carry-over'' basis rules (with a $1.3 million 
exemption) replace the ``stepped-up'' basis rules, creating burdensome 
new requirements and increasing the tax liability for many of these 
property-owners. H.R. 8 makes this switch permanent and creates more 
losers than winners. The Pomeroy substitute, however, will retain the 
``step-up'' rules rather than the ``carry-over'' rules.
  Mr. Speaker, it is our responsibility to avoid towering deficits and 
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 
future generations for the unforeseeable future.
  Mr. HULSHOF. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Simpson). Pursuant to House Resolution 
202, 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 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.


                             Recorded Vote

  Mr. POMEROY. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 194, 
noes 238, not voting 2, as follows:

                             [Roll No. 101]

                               AYES--194

     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Barrow
     Becerra
     Berkley
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boren
     Boswell
     Boucher
     Boyd
     Brown (OH)
     Brown, Corrine
     Butterfield
     Capps
     Capuano
     Cardin
     Cardoza
     Carnahan
     Carson
     Case
     Castle
     Chandler
     Clay
     Cleaver
     Clyburn
     Conyers
     Cooper
     Costa
     Costello
     Crowley
     Cuellar
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Gonzalez
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Harman
     Hastings (FL)
     Herseth
     Higgins
     Hinchey
     Hinojosa
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick (MI)
     Kind
     Kucinich
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren, Zoe
     Lowey
     Lynch
     Maloney
     Markey
     Marshall
     Matheson
     Matsui
     McCarthy
     McCollum (MN)
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Melancon
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore (KS)
     Moore (WI)
     Moran (VA)
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Ortiz
     Owens
     Pallone
     Pascrell
     Payne
     Pelosi
     Peterson (MN)
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Salazar
     Sanchez, Linda T.
     Sanchez, Loretta
     Schakowsky
     Schiff
     Schwartz (PA)
     Scott (GA)
     Scott (VA)
     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)

[[Page H1942]]


     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NOES--238

     Abercrombie
     Aderholt
     Akin
     Alexander
     Bachus
     Baker
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Bean
     Beauprez
     Biggert
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boustany
     Bradley (NH)
     Brady (PA)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Carter
     Chabot
     Chocola
     Coble
     Cole (OK)
     Conaway
     Cox
     Cramer
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis (KY)
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doolittle
     Drake
     Dreier
     Duncan
     Ehlers
     Emerson
     English (PA)
     Everett
     Feeney
     Ferguson
     Fitzpatrick (PA)
     Flake
     Foley
     Forbes
     Fortenberry
     Fossella
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gingrey
     Gohmert
     Goode
     Goodlatte
     Gordon
     Granger
     Graves
     Green (WI)
     Gutknecht
     Hall
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Hulshof
     Hunter
     Hyde
     Inglis (SC)
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     Kuhl (NY)
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas
     Lungren, Daniel E.
     Mack
     Manzullo
     Marchant
     McCaul (TX)
     McCotter
     McCrery
     McHenry
     McHugh
     McKeon
     McMorris
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moran (KS)
     Murphy
     Murtha
     Musgrave
     Myrick
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Olver
     Osborne
     Otter
     Oxley
     Pastor
     Paul
     Pearce
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Poe
     Pombo
     Porter
     Portman
     Price (GA)
     Pryce (OH)
     Putnam
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reichert
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Sanders
     Saxton
     Schwarz (MI)
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (NJ)
     Smith (TX)
     Sodrel
     Souder
     Stearns
     Sullivan
     Sweeney
     Tancredo
     Tanner
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Turner
     Upton
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Westmoreland
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--2

     Gillmor
     Jindal
       

                              {time}  1711

  Ms. GINNY BROWN-WAITE of Florida, Ms. HARRIS, Mrs. DRAKE, and Messrs. 
COX, FORTENBERRY, TERRY and GARY G. MILLER of California changed their 
vote from ``aye'' to ``no.''
  Messrs. OBEY, MEEHAN and TOWNS changed their vote from ``no'' to 
``aye.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  Stated against:
  Mr. JINDAHL. Mr. Speaker, on rollcall No. 101 I was inadvertently 
detained. Had I been present, I would have voted ``no''.
  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.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. SABO. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 272, 
noes 162, not voting 1, as follows:

                             [Roll No. 102]

                               AYES--272

     Aderholt
     Akin
     Alexander
     Bachus
     Baker
     Barrett (SC)
     Barrow
     Bartlett (MD)
     Barton (TX)
     Bass
     Bean
     Beauprez
     Berkley
     Berry
     Biggert
     Bilirakis
     Bishop (GA)
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boren
     Boswell
     Boucher
     Boustany
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burton (IN)
     Butterfield
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Cardoza
     Carter
     Castle
     Chabot
     Chandler
     Chocola
     Clay
     Coble
     Cole (OK)
     Conaway
     Costa
     Costello
     Cox
     Cramer
     Crenshaw
     Cubin
     Cuellar
     Culberson
     Cunningham
     Davis (KY)
     Davis (TN)
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doolittle
     Drake
     Dreier
     Duncan
     Edwards
     Ehlers
     Emerson
     English (PA)
     Everett
     Farr
     Feeney
     Ferguson
     Filner
     Fitzpatrick (PA)
     Flake
     Foley
     Forbes
     Fortenberry
     Fossella
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gingrey
     Gohmert
     Goode
     Goodlatte
     Gordon
     Granger
     Graves
     Green (WI)
     Gutknecht
     Hall
     Harris
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hinojosa
     Hobson
     Hoekstra
     Hooley
     Hostettler
     Hulshof
     Hunter
     Hyde
     Inglis (SC)
     Israel
     Issa
     Istook
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     Jindal
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     Kuhl (NY)
     LaHood
     Larsen (WA)
     Latham
     LaTourette
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas
     Lungren, Daniel E.
     Mack
     Manzullo
     Marchant
     Matheson
     McCarthy
     McCaul (TX)
     McCotter
     McCrery
     McHenry
     McHugh
     McIntyre
     McKeon
     McMorris
     Melancon
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Otter
     Oxley
     Paul
     Pearce
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Poe
     Pombo
     Porter
     Portman
     Price (GA)
     Pryce (OH)
     Putnam
     Radanovich
     Rahall
     Ramstad
     Regula
     Rehberg
     Reichert
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Royce
     Ruppersberger
     Ryan (OH)
     Ryan (WI)
     Ryun (KS)
     Salazar
     Sanchez, Loretta
     Saxton
     Schwarz (MI)
     Scott (GA)
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skelton
     Smith (NJ)
     Smith (TX)
     Sodrel
     Souder
     Stearns
     Sullivan
     Sweeney
     Tancredo
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Towns
     Turner
     Upton
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Westmoreland
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Wynn
     Young (AK)
     Young (FL)

                               NOES--162

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Becerra
     Berman
     Bishop (NY)
     Blumenauer
     Boyd
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Capps
     Capuano
     Cardin
     Carnahan
     Carson
     Case
     Cleaver
     Clyburn
     Conyers
     Cooper
     Crowley
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Dingell
     Doggett
     Doyle
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Fattah
     Ford
     Frank (MA)
     Gonzalez
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Harman
     Hastings (FL)
     Herseth
     Higgins
     Hinchey
     Holden
     Holt
     Honda
     Hoyer
     Inslee
     Jackson (IL)
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick (MI)
     Kind
     Kucinich
     Langevin
     Lantos
     Larson (CT)
     Leach
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren, Zoe
     Lowey
     Lynch
     Maloney
     Markey
     Marshall
     Matsui
     McCollum (MN)
     McDermott
     McGovern
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore (KS)
     Moore (WI)
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Pomeroy
     Price (NC)
     Rangel
     Reyes
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez, Linda T.
     Sanders
     Schakowsky
     Schiff
     Schwartz (PA)
     Scott (VA)
     Serrano
     Sherman
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu

                             NOT VOTING--1

       
     Gillmor
       


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Simpson) (during the vote). Members are 
advised that 2 minutes remain in this vote.

[[Page H1943]]

                              {time}  1727

  Mr. RUSH changed his vote from ``aye'' to ``no.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________