[Congressional Record Volume 152, Number 72 (Thursday, June 8, 2006)]
[Senate]
[Pages S5610-S5629]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       DEATH TAX REPEAL PERMANENCY ACT OF 2005--MOTION TO PROCEED

  The PRESIDENT pro tempore. The Senate will resume consideration of 
H.R. 8, which the clerk will report.
  The bill clerk read as follows:

       Motion to proceed to the consideration of H.R. 8, to make 
     the repeal of the estate tax permanent.

  The PRESIDENT pro tempore. Under the previous order, there is 1 hour 
of debate equally divided between the two leaders or their designees, 
with 10 minutes of the minority time reserved for Senator Durbin, 10 
minutes for Senator Dorgan, and the last 20 minutes reserved as 
follows: 10 minutes for the Democratic leader, to be followed by the 
majority leader.
  The Senator is recognized.
  Mr. DURBIN. Mr. President, we are now considering the repeal of the 
estate tax. The estate tax is a tax paid by 2 out of every 1,000 
Americans. It is not a tax that will affect the vast majority of 
Americans because they have not accumulated enough wealth in their 
lifetime to be subject to the tax.
  It is an action which is imposed on the very wealthiest, the very 
richest people in America. It is a tax which is imposed on their 
estates after a certain amount is exempt. Up to $4 million is exempt 
for a couple under current estate tax, and that number is scheduled to 
rise.
  However, the Republican majority believes this tax is unfair. They 
believe it is unfair for the wealthiest people in America, who have 
accumulated millions of dollars, to pay any tax to the Government on 
that accumulated wealth when they die. They say that is fundamentally 
unfair. They come to the Senate with a sense of outrage that we would 
ask wealthy people in America to pay taxes, so they propose the 
elimination or dramatic reduction of this tax, to the point where it 
will add substantially to the deficit of the United States of America.
  This is not a tax cut for the wealthy; it is a tax deferral. By 
reducing or eliminating the tax on the wealthiest, they are passing the 
burden of taxation on to those in lower income groups. With their 
elimination of the death tax, they are creating a birth tax.
  In other words, if you happen to be born in America and you are one 
of the 997 out of 1,000 who don't pay the estate tax, you will have a 
bigger debt and a bigger burden because the Republican majority 
believes the wealthiest should be spared paying taxes. People who have 
had the good fortune of living and succeeding in America should be 
spared, according to the Republicans, any responsibility to pay back to 
this great Nation for the benefits they have accrued during their 
lifetime. There is a sense of outrage on the Republican side of the 
aisle that somehow we would impose this tax. They have created this 
vast mythology about the estate tax. They translated it into a death 
tax, suggesting to Americans that when you die you must pay taxes. That 
is plain false. Only 2 or 3 out of 1,000 people who die each year pay 
any such tax. Yet the average person on the street believes the 
Government is going to come and grab whatever small amounts they have 
kept together for their sons and daughters and take it away in tax 
collection. It is not true. It is false. It is misleading. It is 
deceptive.
  Who is pushing this great effort to eliminate the estate tax? Will it 
surprise you to know they are the fattest special interests in 
Washington, DC? An analysis has shown--and these numbers are nothing 
short of amazing--that 18 families in the United States of America, 
with a combined net worth of $185 billion, have spent $200 million 
lobbying on Capitol Hill to repeal this estate tax. Why? They are going 
to make a fortune because their fortunes will be

[[Page S5611]]

protected from being taxed. This is the ultimate special interest bill. 
This bill has nothing to do with the average American, the average 
American family, the average American farm or the average American 
business. It is about the wealthiest people in America flexing their 
muscles, pushing through on Capitol Hill the most outrageous piece of 
special interest legislation in modern memory. The Republican majority 
is pushing this to the floor with a straight face: We want to eliminate 
the death tax.
  What does it mean for the families behind Wal-Mart, Gallo wine, 
Campbell's soup and other companies? It means that if they are given 
full repeal of the estate tax, these 18 families will collectively net 
a windfall of $71 billion. That is what this is about.
  Who will end up paying for it? Our children will. We will take the 
money which we are not going to collect from the estate tax and end up 
borrowing. And who will loan us the money? More and more the Bush 
administration goes overseas to borrow the money: Japan, China, Korea, 
the oil sheikhs, they will loan us the money. But there are strings 
attached. Do you remember the Dubai Ports deal? Think there is a 
connection between these Middle Eastern oil giants now buying into the 
American economy and what we are doing on the estate tax? It is 
directly linked. There are bankers, mortgagors. They sell us oil. Why? 
Because the Republican majority runs up the biggest deficits in the 
history of the United States.
  When President Bush took office, the national debt was $5.8 trillion. 
The accumulated debt in the history of America was $5.8 trillion. Five 
years later, the national debt is knocking on the door of $9 trillion. 
And if they continue to eliminate taxes on the wealthiest people, the 
debt will be $11 trillion. For the students who are watching this 
debate on television, in the galleries, through C-SPAN, let me tell 
you, this effort to find a benefit for the wealthiest families, to 
absolve them from paying debts for the success they have experienced, 
is going to be visited on our children and grandchildren. Where is the 
fairness and where is the justice? Where is the sense of outrage that 
we would give this special interest legislation such a priority in the 
Senate? Why wouldn't we consider changing the Tax Code so that average 
working families can deduct the cost of college education for their 
kids? Isn't that something good for America? Isn't that of greater 
value than to say to the superrich: We are going to spare you from 
paying $71 billion in taxes over the life of this repeal? No. From 
their point of view, you don't think about the families putting the 
kids through college. You don't worry about the situation where we have 
so many Americans, 46 million in fact, without health insurance today. 
You don't deal with the reality of funding education. You focus your 
attention and the time of the Republican majority on repealing a tax on 
the super wealthiest people in America.
  Warren Buffett is the second richest man in America. He said: Do you 
know what is going on here? It is class warfare. And do you know what? 
My class is winning.
  They sure are.
  Today the Republican majority will try to put a victory on the board 
for the richest people in America. Why do we do this? For some, it is a 
matter of philosophy. They happen to believe if the rich get richer, 
America will be better off. That has been a philosophy around this 
country for a long time. I come from a different point of view. I think 
the strength of America is in its families, those families getting up 
and going to work every day, doing their best to keep families 
together, to save money for the future, to put their kids through 
college. It is in small businesses that take risks and sometimes fail 
but, when they succeed, build into a business that gives them a chance 
to hire more people. It is in family farms. That is the strength of 
America. These other folks have done quite well.
  The New York Times went to the Farm Bureau and asked them: Name for 
us a single example of a family being forced to sell its farm because 
of estate tax liability. Not one single example derived from the 
American Farm Bureau. They couldn't find one. I did the same thing in 
Illinois. Not one farm has been lost because of Federal estate tax 
liability.
  We will hear them crying and moaning and whining and rending their 
garments about how this is needed to save family farms. They can't come 
up with a single example where a family farm has been lost by the 
estate tax. According to the Congressional Budget Office, only 123 
family-owned farms and 135 family-owned small businesses would pay any 
estate tax at all with a $2 million exemption level--across America, 
pay any tax at all, let alone risk losing their business or farm.
  This has been exaggerated to a point which is shameful. To think that 
at a time when we are facing the biggest deficits, when we are involved 
in a war where we are asking our sons and daughters to risk their lives 
for America, that we are going to make those who are comfortable more 
comfortable by sparing them their taxes, that we are going to welcome 
home the soldiers by saying, thanks for serving America and, 
incidentally, here is a larger national debt for you to carry the rest 
of your life.
  I urge my colleagues to defeat this effort to repeal the estate tax.
  The PRESIDING OFFICER (Ms. Murkowski). The Senator from Arizona is 
recognized for 10 minutes.
  Mr. KYL. I thank the Chair.
  Madam President, we are going to have an opportunity very shortly to 
do something historic; that is, to begin consideration of a process by 
which we can either eliminate or substantially reduce the impact of 
this most unfair tax of all, the estate tax, on small businesses, on 
family farms, on Americans of all stripes who worry that they will have 
to pay up to half of what they have put into their life savings, their 
business, their farm, to the Government in an estate tax.
  It has been found by Gallup surveys and others that the American 
people believe this is the most unfair tax and by percentages, 60 to 70 
percent agree that it should be eliminated. To some extent there has 
been an argument that I have to address because it is a straw man. That 
argument is that this is all about helping the most wealthy families. 
That is not correct. Here is why. What we have proposed is that 
immediately upon going to the House bill, there be a cloture vote on 
that bill which, frankly, I think all would agree, is doubtful of 
passing. That is to say that there aren't 60 votes in this Chamber to 
permanently repeal the estate tax. That is what the Senator from 
Illinois was talking about. We all know that.
  As a result, the majority leader has made an absolute commitment--and 
I reaffirm it--that immediately following that vote, the majority 
leader would lay down a substitute, a compromise, if you will, that 
provides that the estate tax will be substantially modified but not 
repealed. It will be modified in a way that will help those who, 
because land values have been increasing or because they put all of 
their money into a small business, would be either required to pay 
substantial amounts of money to plan for the potential of paying the 
estate tax, paying lawyers and accountants and buying insurance and the 
like, would be responsible for a substantial estate tax bill, it would 
give them relief from that obligation, but it would still say that the 
wealthiest families, the Warren Buffetts and others mentioned a moment 
ago, would still have to pay a substantial amount of estate tax.
  The specific proposal that will be offered provides that there will 
be $5 million exempted and that that would be indexed to inflation and 
that after that, the capital gains rate would be the rate that would 
apply to estates that would be taxed. But when you get to the superrich 
the Senator from Illinois referred to, those with a $30 million estate 
who would probably qualify in that category, anything above that amount 
would be taxed at a 30 percent rate which would bring in, obviously, a 
substantial amount of revenue given the wealth of some of those 
estates. We are not here debating whether it is going to be either all 
or nothing, a permanent repeal of the estate tax or the status quo. 
What we are talking about is going to a process by which we consider a 
compromise which will, in fact, tax the most wealthy but will allow 
those small businesses and farms the opportunity to continue their 
existence.
  It is interesting that there is a suggestion that this somehow 
wouldn't

[[Page S5612]]

help the small business or the family farm. Let's quote some actual 
data. For example, the Senator from Illinois challenged us to show one 
farm that had to sell property in order to pay the estate tax. Here is 
one, Sam and Ann Payne in Georgia, not too far north of Atlanta. The 
farm had been in their family since the early 1800s. When their father 
died in 1968, they had their first experience with the death tax. But 
then Sam's mother was still alive and it was manageable. When she died 
6 years ago, they had to pay close to $400,000 in estate tax. Their 
land had increased in value. So in order to pay that tax, they had to 
sell part of their farm to local developers, including an airport. Here 
is what Sam Payne said:

       At a certain point, you sell off too much land and your 
     farm gets so small that you are not a viable agricultural 
     unit, making it difficult to turn a profit.

  There are many other examples. Here is what the American Farm Bureau 
said in a survey. They surveyed their members and nearly 20 percent of 
the farmers responded to a survey that said that they had to pay 
Federal estate taxes in the previous 5 years; 44 percent said they 
would have to mortgage the farm to pay the death tax; 28 percent said 
that all or part of the farm's business would have to be sold; 39 
percent said that any plans for growth would have to be delayed or 
canceled.
  Here is a pernicious aspect of this. A lot of people spend a fortune 
trying to avoid the tax: 77 percent of farmers reported that they had 
to spend money each year on estate planning; 40 percent said that they 
paid more than $10,000 a year; 13 percent more than $25,000 a year; 5 
percent pay more than $100,000 a year. That is a real impact, the same 
kind of impact on small business. We can provide examples. I gave an 
example yesterday.
  Minority businesses are the most hard hit. Here is what Robert 
Johnson, founder of Black Entertainment TV, had to say:

       Elimination of the estate tax will help close the wealth 
     gap in this nation between African-American families and 
     white families.

  A 2004 study by Impacto Group LLC surveyed Hispanic family-owned 
business owners; 20 percent of Hispanic family business owners said 
they would have to sell their business or property in order to pay the 
estate tax. Only about half of the respondents believe that they are 
prepared to deal with the death taxes if the principal owner dies.
  Surveys conducted by the Family Enterprise Center of Kennesaw State 
College and the Center for Family Business at Loyola University found 
that 90 percent of black-owned, family firms say that paying estate 
taxes makes growth of the business more difficult; 87 percent say 
paying the estate tax makes the survival of the business more 
difficult. Nobody who has run a small business or family farm or has 
accumulated wealth, perhaps simply by the growth in the value of real 
estate, will argue that this is not a matter of concern to them.
  As the Wall Street Journal editorialized today, even the people who 
appreciate the fact that it won't apply to them favor repeal. I will 
quote from the editorial:

       Americans favor repealing the death tax not because they 
     think it will help them directly. They're more principled 
     than that. Two-thirds of the public wants to repeal it 
     because they think taxing a lifetime of thrift due to the 
     accident of death is unfair and even immoral. They also 
     understand that the really rich won't pay the tax anyway 
     because they hire lawyers to avoid it.

  That is the point of the argument we heard a moment ago.
  I ask unanimous consent to print the editorial in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                           Taxes Everlasting

       If you've followed the death tax debate, you know that few 
     issues raise liberal blood pressure more. Liberal journalists 
     in particular are around the bend: How in the world can the 
     public support repealing a tax that most Americans will never 
     pay? Good question, so let us try to answer.
       Americans favor repealing the death tax not because they 
     think it will help them indirectly. They're more principled 
     than that. Two-thirds of the public wants to repeal it 
     because they think taxing a lifetime of thrift due to the 
     accident of death is unfair, and even immoral. They also 
     understand that the really rich won't pay the tax anyway 
     because they hire lawyers to avoid it.
       For proof that they're right, they need only watch the 
     current debate. The superrich or their kin--such as Bill 
     Gates Sr. and Warren Buffett--are some of the loudest voices 
     opposing repeal. Yet they are able to shelter their own vast 
     wealth by creating foundations or via other crafty estate 
     planning. Edward McCaffery, an estate tax expert at USC Law 
     School, argues that ``if breaking up large concentrations of 
     wealth is the intention of the death tax, then it is a 
     miserable failure.''
       Do the Kennedys or Rockefellers look any poorer from the 
     existence of a tax first created in 1917? The real people who 
     pay the levy are the thrifty middle class and entrepreneurs 
     who've built up a modest nest egg or business and are hit by 
     a 46% tax rate when they die. Americans want family 
     businesses, ranches, farms and other assets to be passed from 
     one generation to the next. Yet the U.S. has one of the 
     highest death tax rates in the world.
       By far the largest supporter of preserving the death tax is 
     the life insurance lobby, which could lose billions of 
     dollars from policies written to avoid the tax. The Los 
     Angeles Times reported this week that the insurance industry 
     is the main funder of an anti-repeal outfit known as the 
     Coalition for America's Priorities. A coalition ad features a 
     sound-alike of heiress Paris Hilton praising the Senate as 
     ``like awesome'' for cutting her family's taxes. But this is 
     the opposite of the truth. The American Family Business 
     Institute has found that the bulk of the Hilton estate has 
     long been sheltered from the IRS in tax-free trusts.
       Frank Keating, president of the American Council of Life 
     Insurers, has criticized repeal by saying: ``I am 
     institutionally and intestinally against huge blocs of 
     inherited wealth. I don't think we need the Viscount of Enron 
     or the Duke of Microsoft.'' But while he was Oklahoma 
     Governor in the 1990s, Mr. Keating took a different line: ``I 
     believe death taxes are un-American. They are rooted in the 
     failed collectivist schemes of the past and have no place in 
     a society that values entrepreneurship, work, saving, and 
     families.'' We can appreciate how such a marked change of 
     views would give Mr. Keating intestinal issues.
       Which brings us back to the political paradox that, even 
     with Republicans at a low ebb, voters still support death tax 
     repeal. A majority in both houses of Congress also supports 
     it, so Senate Democrats can only stop repeal with the 
     procedural dodge of a filibuster. Even at that, several 
     Democrats are clamoring for a compromise that would take the 
     issue off the table in November. They recall what happened in 
     2004 to Tom Daschle in South Dakota.
       But Republicans should only accept a compromise if it 
     lowers the death tax rate enough (to 15%) to reduce the 
     incentive for avoidance and eliminate its punitive nature. 
     Voters have been saying clearly and for years that they don't 
     want a tax whose only justification is government greed and 
     envy.

  Mr. KYL. A lot of the superrich don't care. That is true. There are 
certain people I will not name, but they have been named, who support 
continuation of the tax. They have the wealth to be able to get around 
it with estate planning and to buy the insurance. You heard me quote 
from minority business owners and farmers who say they cannot afford to 
pay the cost of that insurance and the estate planning.
  Of all of the groups, there is only one that opposes what we are 
trying to do, and that is the insurance industry. Why not? They make 
money off of it. If we are talking about special interest legislation, 
let's understand that the special interests we are trying to protect 
here are the family-owned businesses, the family farms, the minority 
businesses; and the special interests that are fighting us are the big 
insurance companies and the estate planners that make millions of 
dollars every year.
  Alicia Munnell, who was a member of the Clinton administration, has 
said that the American people pay each year about the same amount to 
plan against paying the estate tax as the Federal Government collects 
in revenues from the estate tax. So in effect it is a double tax. Sure, 
the superwealthy don't care because they have enough money to plan 
against that. What we are going to do in this proposed compromise is 
make sure that they pay, but that the people who get caught simply 
because of the increased value of their property or business will not 
have to pay.
  I also ask unanimous consent to have printed in the Record an article 
by Harvey Rosen from the Market Watch, dated June 8, which makes the 
point that the American people will benefit when we reduce the rates on 
the estate tax because it enables capital formation by entrepreneurs 
and that the economy is better off as a result of the reduction of 
these rates.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

[[Page S5613]]

                   [From Market Watch, June 8, 2006]

                 It Is the Estate Tax Rate That Matters

                          (By Harvey S. Rosen)

       Princeton, NJ.--This week, the U.S. Senate is expected to 
     turn its attention to the Federal estate tax.
       Under current law, the estate tax is being phased out, with 
     repeal set for 2010. But then in 2011 the old law is 
     scheduled to be restored, with marginal tax rates that can 
     exceed 50%. The old law was capricious, complex, and 
     inefficient--bringing it back to life in 2011 would be bad 
     policy.
       While the first-best policy response would be to make 
     repeal permanent, this option appears to be politically 
     infeasible. An interesting alternative proposed by Senator 
     John Kyl, R-Ariz., would make the estate tax rate permanent 
     at 15%, increase the exemption level to $5 million, and 
     include step-up in basis.
       As the debate on Senator Kyl's and other options moves 
     forward, it is important to focus on keeping the rate of the 
     tax law because of the negative consequences that a high rate 
     has on the economy.
       First, a high estate tax rate has a detrimental effect on 
     the behavior of individuals in their roles as entrepreneurs. 
     People with large estates are disproportionately owners of 
     small businesses--Douglas Holtz-Eakin, former director of the 
     Congressional Budget Office and Donald Marples (GAO) estimate 
     that entrepreneurs are three times more likely to be subject 
     to the estate tax than portfolio investors. The estate tax in 
     effect reduces the returns to entrepreneurs' investment. 
     Thus, the estate tax increases the ``user cost of capital''--
     the rate of return that an investment must make in order to 
     be profitable. The higher the user cost of capital, the lower 
     the number of profitable investments available to the 
     entrepreneur.
       According to the U.S. Treasury's Office of Tax Analysis, 
     the estate tax leads to an increase in the tax rate of 
     between 4.5 to 9%. Research on entrepreneurial decision 
     making that I published with several colleagues suggests that 
     a 5 percentage point increase in marginal tax rates leads to 
     a 9.9% decline in investment by entrepreneurs. So, if we take 
     the 4.5% tax increase at the low end of the Treasury's range, 
     the implied decrease in entrepreneurial investment is 8.9%. 
     Using the 9% tax rate at the top of the Treasury's range, the 
     decrease in capital accumulation by entrepreneurs is 17.8%.
       In short, changes in the user cost of capital induced by 
     the estate tax have a substantial impact on entrepreneurs's 
     investment spending. Given that entrepreneurial enterprises 
     are an important source of growth and innovation in our 
     economy, this is a very sobering result.
       Second, an increase in the estate tax rate would have a 
     negative effect on individual saving rates and wealth 
     accumulation. Research by academic economists suggests that 
     an increase in the estate tax rate of 10% leads to a roughly 
     14% decrease in net worth. Other serious studies conclude 
     that there would be a substantial increase in saving if the 
     estate tax were eliminated altogether.
       Put this together with an observation taught in every 
     introductory course in economics: a smaller capital stock 
     reduces productivity and labor income throughout the economy. 
     The clear implication is that the estate tax reduces incomes 
     for everyone. Because of its negative effect on capital 
     accumulation, the burden of the estate tax is shifted, at 
     least in part, to all workers. In particular, future 
     generations are worse off by virtue of having a smaller 
     capital stock with which to work.
       Third, arguments that high estate tax rates make the U.S. 
     tax code more progressive are problematic. The basic 
     assumption is that the burden of the estate tax falls 
     entirely on the decedent--the rich dead guy takes the entire 
     tax hit. This assumption is natural because, by law, the 
     decedent's estate is responsible for paying the tax. However, 
     it reflects an approach that the economics profession has 
     rejected for at least a century. Who bears the burden of a 
     tax depends on the underlying economic fundamentals, not on 
     who writes the check to the IRS. When the government levied a 
     special tax on yachts, for example, the burden fell not only 
     on the owners of yachts, but also on the individuals who 
     produced and serviced them. Applying the same kind of logic 
     in this case, the most likely scenario is that the decedent 
     will not bear the burden of the tax. Rather, he or she will 
     simply leave a smaller bequest, because the estate tax makes 
     wealth accumulation (saving) less attractive.
       Thus, the argument made by estate tax proponents that 
     increasing the exemption will enhance progressivity is 
     flawed. Whatever the size of the exemption, some 
     entrepreneurs will be hit by the tax and scale back their 
     investment. Other individuals will simply save less. In both 
     cases, the result is the same: workers are worse off. Any 
     estate tax that is big enough to collect substantial revenue 
     is also big enough to have a substantial negative effect on 
     saving and the economy.
       In conclusion, although increasing the exemption for the 
     estate tax while retaining a high rate might appear to 
     enhance the progressivity of the tax system, this is not 
     likely correct. True, the typical worker has little reason to 
     know that her weekly paycheck is smaller because of the 
     estate tax. She may never realize that part of the burden of 
     the tax falls on her. But conventional economic analysis 
     suggests that these subtle, indirect effects are real, and 
     critical to understanding the ultimate burden of the tax. As 
     the debate on increasing the estate tax exemption moves 
     forward, policymakers should understand that the putative 
     progressivity of such a step is likely illusory and that 
     reducing the rate would benefit the economy.
  Mr. KYL. He concludes that ``any estate tax big enough to collect 
substantial revenue is also big enough to have a substantial negative 
effect on saving and the economy. Reducing the rate will benefit the 
economy.''
  The bottom line is this: We are going to have an opportunity to vote 
yes on cloture to take up the House repeal bill. For those who believe 
in full repeal, the next vote would be to support full repeal. 
Presumably, that won't pass. The next thing that will happen--and the 
majority leader made this crystal clear, and I reiterate this 
commitment--is that we will have an opportunity then to vote on the 
proposal that Senator Baucus and Senator Lincoln and Senators Bill 
Nelson and Ben Nelson and others of us have been working on to provide 
a substantial exempted amount--$5 million per spouse--capital gains 
rate to apply to whatever has to be paid. But when an estate hits $30 
million, from then on, it gets hit with a 30-percent rate. That is a 
fair way to help the people at the lower end of the spectrum and yet 
collect the revenue from those very wealthy estates which we all agree 
can pay part of this estate tax.
  Mr. COBURN. Will the Senator yield for a question?
  Mr. KYL. Yes.
  Mr. COBURN. A lot has been made that we are going to borrow money to 
pay for this tax. But the fact is that the amount of money not 
collected that is owed to the Federal Government is close to $400 
billion a year. The other side of that is there is over $200 billion a 
year that has been proven to be wasteful or fraudulently misspent by 
this Government, which we condone each year. That is $600 billion.
  We would not be debating this tax if we were doing our job in terms 
of oversight. Just in terms of improper payments, is the Senator aware 
of the fact that there is over $150 billion a year paid out by the 
Federal Government to people who do not deserve it, have not earned it, 
and yet have manipulated the system to get it? I am not talking about 
poor people; I am talking about contractors. The point I want to make 
is that we would not even be having a discussion on the principles of 
this tax because it is not needed because we are not doing our jobs in 
terms of oversight. There is $600 billion that would put us into 
surplus by $200 billion right now, including the cost of the war, if we 
would just do our job. I wondered if the Senator was aware of that.
  Mr. KYL. Yes, because of the great work of the Senator from Oklahoma, 
we have been made aware of that. He has helped to lead the effort to 
collect this money and save the money the Government is wasting. The 
Senator knows that we support fully his efforts in that regard and 
intend to pursue it.
  I will conclude my remarks by simply saying that we have an 
opportunity to do something very historic for an awful lot of folks in 
this country who deserve the relief. I hope colleagues will give us the 
opportunity by supporting the cloture motion when that comes up.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.
  Mr. DORGAN. Madam President, this is an interesting debate, and in 
some ways it is very troubling. I wish to talk a little about fiscal 
policy and where we find ourselves.
  It is almost as if this place is disconnected from what is happening. 
The night before last, I sat in HC-5 until about 1:30 in the morning 
working on the emergency supplemental appropriation request--roughly 
$90 billion for Iraq, Afghanistan, and a portion for Katrina. None of 
it is paid for; it is just emergency spending--$90 billion. This takes 
us to something close to $400 billion over these recent years, none of 
it paid for.
  Not many weeks ago, we had on the floor of the Senate a proposed $70 
billion tax cut. That passed. It wasn't paid for. Just cutting the 
revenues. I voted against that. So we are spending money without 
covering it. We are cutting taxes. The gross federal debt will be $8.6 
trillion at the end of 2006. We will add over $600 billion to the 
indebtedness just this year alone in fiscal policy. We will add over 
$700 billion this

[[Page S5614]]

year alone in trade deficits. That is different from the fiscal policy. 
Combined this year, we likely will be in debt by some $1.3 trillion. 
Everybody understands this is completely off track and dangerous.
  So what is the business today? How about cutting some taxes again? 
What is going to come behind this? A third tax cut bill coming from the 
Finance Committee. It is unbelievable. It is almost as if somebody 
pulled the plug out of the socket, so there is no current coming 
through here by which people can think straight. You can go to the 
hometown cafe or restaurant and folks ask: What do you do next? You are 
choking on debt up to your neck--$8.6 trillion of fiscal policy debt 
this year. It is going to increase to almost $12 trillion in the next 
five years, we expect. So what do we do next? We say we ought to get 
rid of the ``death tax.''
  But there is no death tax, of course. This is a function of a clever 
pollster, paid handsomely by people with a lot of money to come up with 
a moniker that would allow them politically to cast this into the water 
and have it float. My colleague spoke at great length about the ``death 
tax.'' Clever, interesting, but it doesn't exist.
  There is, in fact, a tax on inherited wealth in this country. Very 
few Americans pay it. Currently, the exemption is $2 million for a 
husband and $2 million for a wife. If you don't have $4 million in net 
assets in your family, don't worry about this issue. That is going to 
$3.5 million apiece, so that is $7 million. If you are not above $7 
million, don't worry about it.
  By the way, notwithstanding those exemptions, if one spouse dies, the 
other owns everything--a 100-percent exemption--and there is no estate 
tax. It doesn't matter what the estate is worth; the other spouse owns 
it. There is a 100-percent spousal exemption.
  This ruse of suggesting that this is a death tax is an unbelievable. 
The most interesting hoax of all is this small business and family farm 
issue. I will tell you why it is a hoax. I came to the floor of the 
Senate twice and offered amendments twice. The last time I offered the 
amendment, it would have completely repealed the estate tax obligation 
of any small business and any family farm passed from the parents to 
the children, the lineal descendants who continued to operate it. If 
that family business or farm, no matter the size, were passed from the 
parents to the children, on January 1, 2003, it would have forever been 
exempt from an estate tax. My amendment would have taken that issue off 
the table. And 54 Members of the Senate voted against that, including 
the people here today crying crocodile tears over small business and 
family farm issues. When they had the chance to do this, they didn't 
want to. Why? That is not the purpose.
  The purpose of this issue is to say to the wealthiest Americans that 
we want to help you. My colleague said we are going to craft something 
that is a little bit of a modification. He didn't tell you that the 
modification would lose some 80 percent of the money. But his real 
interest and the interest of most of the folks who are speaking is to 
repeal the death tax, which doesn't exist.
  Now, we are at war, up to our neck in debt--$8.6 trillion in debt, 
heading toward $12 trillion in debt--with a budget policy that is 
completely out of control and a trade policy that is wildly out of 
control. What do those who have the majority in this Chamber decide 
they ought to do? The President, the majority in this Chamber and in 
the House--what is their next step? It is to cut taxes for the 
wealthiest Americans.
  Let me tell you what Warren Buffett says about this. He is an 
interesting guy. He is the second richest man in the world but a really 
public-spirited man. He said, ``If this is class warfare, my side is 
winning.'' He doesn't approve of this; he thinks this is nuts. He has 
an estimated worth of $42 billion. He said:

       I personally think that society is responsible for a very 
     significant percentage of what I have earned. If you stick me 
     down in the middle of Bangladesh, or Peru, or someplace, you 
     will find out how much this talent is going to produce in the 
     wrong kind of soil.

  Being here is what allowed him to be successful, he said. He said, by 
implication, that we owe something back.
  We are at war, and my colleagues have decided that the pressing 
priority is to remove the tax burden from the wealthiest people in this 
country, the ones worth billions of dollars. Franklin Delano Roosevelt 
said in one of his fireside chats--this in another age when we were at 
war:

       Not all of us can have the privilege of fighting our 
     enemies in distant parts of the world. Not all of us can have 
     the privilege of working in a munitions factory or a 
     shipyard, or on the farms or in the oil fields or mines, 
     producing the weapons or raw materials that are needed by our 
     Armed Forces. But there is one front and one battle where 
     everyone in the United States--every man, woman, and child--
     is in action. . . . That front is right here at home, in our 
     daily lives, and in our daily tasks. Here at home everyone 
     will have the privilege of making whatever self-denial is 
     necessary, not only to supply our fighting men, but to keep 
     the economic structure of our country fortified and secure. . 
     . .

  Do you see any urge at all by the majority here, by the White House, 
to call this country to action for some public spiritedness, about what 
we need to do together? We have soldiers dying on the battlefield, and 
we are sitting downstairs in the Capitol Building until about 1:30 in 
the morning appropriating money for those soldiers for their munitions, 
for their trucks and tanks and battleships, and we will not pay for it. 
The majority party says we will not pay for it. Even as we spend money, 
we won't pay for it. But we see that their highest priority is to cut 
taxes for those who are very well off.
  The wealthiest 1 percent of Americans now own a bigger piece of the 
pie than the poorest 90 percent added together. That gap is growing. 
This legislation will once again decide to expand the inequality of 
income in this country.
  Let me say this again. Those who come to this floor talking about 
small businesses and family farms had a chance to vote for the repeal 
of any estate tax obligation for any transfer of any family-owned 
business or any family-owned farm, and that full repeal would have been 
effective on January 1, 2003; and 54 Members of the Senate voted no. I 
daresay almost everybody speaking today in support of this legislation 
because they believe it will help family farms and small businesses, 
when they had the chance to do it, they voted against it.
  And that tells you a little something about what is really at stake.
  Has anybody here ever seen a hearse pull a U-Haul? Don't think so. 
You can't take it with you. We are on this Earth for a relatively short 
period of time. We are blessed to live here, a unique spot on this 
planet. And this, in my judgment, requires of us some responsibilities.
  Oh, I know some don't want to lose anything. They want to take it all 
with them. But you can't take it all with you. The question is: Should 
at least some of the largesse that those who have been most successful 
in this country have accumulated in this lifetime bear a tax because 
most represent an accumulation of assets that never ever bore a tax? 
Growth appreciation of stocks that has never been taxed, should that 
not also contribute to this country's defense and well-being? The 
answer is yes.
  I hope we decide to do the right thing and reject this proposal.
  Mrs. FEINSTEIN. Madam President, I rise to oppose this bill. With an 
$8.4 trillion national debt, a budget deficit that will exceed $300 
billion this year, a looming entitlement crisis, and a mounting 
alternative minimum tax problem, full repeal of the estate tax at this 
time is simply not responsible.
  We have until 2010 to make decisions about the estate tax. In doing 
so, time will afford us the opportunity to make more informed choices, 
with a more complete picture of our Nation's fiscal health.
  We are talking about eliminating nearly $1 trillion in Federal 
revenues here, during a time of war.
  Now is not the time to place the interests of a small number of 
millionaires ahead of millions of working families.
  The estate tax is already being gradually phased down under current 
law. By 2009, only estates valued at more than $7 million per couple--
$3.5 million per individual--will owe any estate tax at all. This means 
that only 3 of every 1,000 people who die would have an estate large 
enough to owe any Federal estate taxes.
  Permanently eliminating the estate tax would cost $402 billion over 
the

[[Page S5615]]

next 10 years, 2007 to 2016, though it is important to note that this 
figure only captures the cost of 5 years of full repeal, from 2011 to 
2016.
  When all costs are included, nearly a trillion dollars will be lost 
in the first decade following repeal, from 2012 to 2021. Included in 
this staggering figure is $213 billion in increased interest payments 
on the national debt.
  Federal revenues are already insufficient to fund our Nation's most 
critical domestic priorities.
  I wish things were different, allowing a vote in support of reforming 
the estate tax to be cast today in good conscience.
  Let me be clear. I am no fan of the estate tax. I understand how hard 
families work to provide opportunities and a better future for their 
children. Transferring assets from generation to generation motivates 
families to work even harder. It is unfair to place unreasonable 
burdens on small businesses and families seeking to provide for future 
generations.
  I am deeply concerned about California's families who own farms and 
small businesses. Like many of my colleagues, I worry that they may be 
forced to sell a primary residence just to pay the estate tax. Our laws 
should not create even more hardship at a time when someone has lost a 
loved one.
  Yet, as we consider estate tax repeal today, our Nation's fiscal 
outlook and the potential impact of this administration's policies are 
uncertain. This President has broken with his predecessors by 
submitting only 5-year budgets.
  Why, you might ask? Especially after we were presented with the 
traditional 10-year numbers during this President's first year in 
office. The answer is that these tax cuts explode the debt and deficit 
in the outyears--the end of the 10-year window.
  The President's tax cuts have already cost more than $1 trillion, and 
those enacted will be more than $3 trillion over the next decade.
  Republicans just passed another round, with the lion's share once 
again going to the very wealthy--$50 billion to extend capital gains 
and dividends tax breaks over 10 years.
  The Federal budget deficit will be at least $300 billion this year. 
The national debt is soaring. And we are at war. Never before have such 
expansive tax cuts been enacted or continued during a time of war.
  Over the next 10 years, the debt is projected to reach nearly $12 
trillion. In this year alone, our national debt is slated to increase 
by $654 billion. More startling is the fact that the national debt is 
currently more than 66 percent of our gross domestic product, GDP. The 
total debt equates to roughly $30,000 owed by every American citizen.
  When you combine the cost of the tax cuts with spending for the war 
in Iraq--currently totaling $370 billion--the inevitable result is that 
the domestic programs that matter most are squeezed.
  For example, the President's fiscal year 2007 budget makes 
significant cuts to programs such as food stamps, cut by $272 million; 
food assistance for seniors and children, cut by $111 million; COPS, 
which put over 118,000 police on the streets nationwide, is being cut 
by more than $407 million, or 15,000 officers nationwide; first 
responders--within Department of Homeland Security--by $573 million or 
25 percent; firefighters--firefighter grant program, within Department 
of Homeland Security--by $355 million; Job Corps--an education and job 
training program for youth--by $55 million, resulting in 1,000 fewer 
at-risk youth being served; mass transit, by $100 million; safe and 
drug-free schools State grants, by $346 million; and education--the 
President's signature education program, No Child Left Behind, would be 
underfunded this year by more than $15 billion and $55.7 billion since 
it was enacted.
  Let me explain. Most of the money the Federal Government outlays in a 
given year is currently not controllable. It is spent on what are 
called entitlements--Social Security, Medicare, Medicaid, veterans 
benefits. If you are entitled to these benefits, you get them.
  And if you add interest on the debt--nearly $400 billion in 2006--
that is about 60 percent of everything spent in a given year. So that 
leaves 40 percent, half of which is the defense budget and half is 
everything else.
  There is a war going on, so it is very difficult to cut defense 
spending.
  So while a select few are benefiting from massive tax breaks, budget 
cuts must be made--to the programs many Americans rely upon--to prevent 
uncontainable deficits.
  There is a fundamental shift taking place. Republicans have become 
the profligate spenders, while Democrats have become the deficit hawks.
  Americans deserve more responsible leadership. Leadership is about 
planning for the future and making the difficult decisions that ensure 
economic stability for our children and their grandchildren.
  With the threatening fiscal demands of baby boomers retiring and the 
pending insolvency of Medicare in less than two decades, repealing the 
estate tax today would be inconceivably shortsighted.
  I urge my colleagues to employ sensible leadership and understand the 
responsibilities we have to uphold. We have a responsibility to working 
families, veterans, senior citizens, children, and low-income 
communities.
  No one will deny that this issue needs to be revisited in the coming 
years. We must adopt a balanced estate tax compromise, while holding 
the line on spending in order to restore a program of fiscal sanity. I 
look forward to working with my colleagues to protect small businesses 
and family farms, without unreasonably jeopardizing our Nation's 
financial well-being and our ability to help those who need Congress 
most.
  In the meantime, I urge my colleagues to do what they know is right: 
encourage a more responsible fiscal course and stand in opposition to 
full repeal of the estate tax at this time. This is the wrong policy at 
the wrong time.
  Mr. McCONNELL. Madam President, nothing could place more stress on a 
family than the loss of a loved one. Yet at such a difficult time, too 
many families in America today must make decisions about selling a 
business or a farm that has been in the family for generations in order 
to pay estate taxes, or, as they are more commonly called, death taxes.
  That is wrong. That is why I support the repeal of the death tax--
immediately, completely, and permanently. No American family should be 
forced to visit the undertaker and the tax collector on the same day.
  We have made important progress towards eliminating this onerous tax 
under President Bush's leadership. In 2001, Congress began phasing out 
the death tax, and will phase it out completely in 2010. Yet because of 
our budget rules, the death tax will return in full force in 2011.
  Starting in 2011, many small-business owners and their families may 
be unfairly penalized if we do not eliminate the death tax. We can 
change that by repealing one of the most destructive, unfair taxes ever 
conceived by government. Let's kill the death tax forever.
  We ought to kill it especially on behalf of America's small 
businesses, the lifeblood of our growing economy. From their successes 
come the new jobs of today and the economic growth of tomorrow. Yet the 
death tax often hits small businesses the hardest.
  Today, we see a dogged minority working again to keep death and taxes 
not just inevitable, but inseparable. But death and taxes are a 
destructive tag team for our economy, because the death tax destroys 
small businesses.
  My colleague the Democratic leader said recently that during a trip 
home to his native Nevada, not a single one of his constituents spoke 
to him about the repeal of the death tax. I think he took this as some 
kind of proof that we should not address this issue.
  Well, I want to bring to my colleagues' attention a Kentuckian who 
did approach me about this issue last week, when I was at the Perry 
County Civic Night at Hazard Community College in Hazard, KY, on May 
31.
  I spoke with a constituent named Bill Fields. He is the co-owner of 
Perry Distributors Inc., a beer distributor. Without permanent relief 
from the death tax, he is unable to plan for the future of his business 
and his family.
  Bill is the third generation of his family to be active in the 
business, and his parents are still active in it as well. Right now, 
the Fields family has to pay between $15,000 and $25,000 a year

[[Page S5616]]

for an insurance policy, just in the event that Bill's parents pass on 
and the family is hit with this massive death tax.
  And even at such a high cost, that policy will not cover the full tax 
burden. Bill estimates it will only cover about 20 percent. He would 
have to borrow to pay the rest.
  Bill says: ``The way things are now, nobody knows what to do with 
estate planning.'' It's a shame, but it is true.
  Now, Bill is still a young man--he is 43--with plenty of working 
years left in him. But one day, he will want to pass on his business to 
his heirs.
  Unless we act, after Bill passes away, his family may have to sell 
the business he worked so hard to build during his lifetime just to pay 
these burdensome taxes. Bill's family faces the same dilemma as too 
many other Kentucky families who own small businesses.
  Before I conclude my remarks, I want to bring to my colleagues' 
attention an excellent column in this Monday's Washington Post by the 
Senator from Alabama, Jeff Sessions, titled ``. . . Or Unfair Burden on 
Families?''
  The Senator from Alabama rightly says, ``The death tax is almost 
dead. Let's put the stake in its heart.''
  I commend my colleague Senator Sessions for writing so cogently and 
persuasively on the pernicious effects of the death tax. I ask that his 
column be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the Washington Post, June 5, 2006]

                ``. . . or Unfair Burden on Families?''

                           (By Jeff Sessions)

       This week the Senate is expected to vote on permanent 
     repeal of the estate tax. With this vote, Congress will have 
     an opportunity to finish the job it started five years ago.
       The estate tax--or, as many of us prefer to call it, the 
     death tax--is a tax imposed on the transfer of assets or 
     property from a deceased person to his or her heirs. This is 
     one of the IRS's most painful taxes, as it hits families at 
     the worst possible time, when they are dealing with the death 
     of a loved one.
       Congress passed a gradual phaseout of this tax at the 
     urging of President Bush in 2001, and it was scheduled to 
     disappear in 2010. But because of the peculiarities of the 
     lawmaking process, the death tax will return in 2011--at the 
     same high rates that existed before--unless Congress enacts 
     new legislation. In April 2005 the House passed a permanent 
     repeal of the death tax by a vote of 272 to 162. Over a year 
     has passed since; it is time for the Senate to act:
       The list of reasons for eliminating the death tax is long. 
     To begin with, this tax punishes thrift and saving. It tells 
     people that it's better to spend freely during their 
     lifetimes than to leave assets for their children and 
     grandchildren, which will be taxed heavily by the federal 
     government.
       The death tax hits hardest at heirs of small-business 
     owners and family farmers. In many cases, the heirs cannot 
     afford to pay the tax and are forced to downsize, layoff 
     employees or even sell their business or farm.
       There can be no doubt that closely held family businesses 
     that are growing and beginning to compete with the big guys 
     are often devastated by the tax. I believe the death tax is a 
     major factor in business consolidation and loss of 
     competition.
       This tax hurts the growth of minority-owned businesses. As 
     the first generation of African American millionaires begins 
     to die, many of the companies they founded will have to be 
     sold to pay the estate taxes. For example, the tax almost 
     forced the oldest African American-owned newspaper--the 
     Chicago Daily Defender--out of business.
       According to Heritage Foundation economists, the death tax 
     also costs the American economy 170,000 to 250,000 potential 
     jobs each year. These jobs are never created because the 
     investments that would have financed them are not made, as 
     these resources are diverted to pay for complex trusts and 
     insurance policies to avoid the tax.
       The death tax is double taxation. Most of the assets taxed 
     at death have already been taxed throughout an individual's 
     lifetime.
       The death tax accounts for a small portion of federal 
     government revenue, an expected $28 billion in 2006, or only 
     1.2 percent of federal receipts.
       Many argue that repealing the death tax would decrease 
     charitable giving, as this tax allows individuals to deduct 
     gifts to charitable organizations. Yet, even though the 
     phasing out of the death tax began in 2001, charitable 
     contributions in the United States reached a record high in 
     2004.
       The death tax even has a negative effect on the 
     environment, as heirs are often forced to develop 
     environmentally sensitive land to pay the tax. According to a 
     study by researchers from Mississippi State University and 
     the U.S. Forest Service, about 2.5 million acres of forest 
     land were harvested and 1.3 million acres were sold each year 
     from 1987 through 1997 to pay the estate tax.
       Finally, the American people already understand the 
     unfairness of the death tax and support its repeal. Sixty-
     eight percent of those surveyed in a recent poll commissioned 
     by the Tax Foundation supported repeal of the estate tax. 
     Moreover, the death tax was rated by Americans in the same 
     survey as the least fair tax.
       As a vote approaches, it is essential that constituents let 
     their representatives hear now how unfair they believe this 
     tax is. The death tax is almost dead. Let's put the stake in 
     its heart.
  Mr. ENZI. Mr. President, I want to take this opportunity to voice my 
support for H.R. 8, the Death Tax Repeal Permanency Act. Since coming 
to the Senate, I have continuously supported the repeal of this 
burdensome and unfair tax and am also a proud cosponsor of S. 420, the 
Death Tax Repeal Permanency Act and S. 988, the Jobs Protection and 
Estate Tax Reform Act.
  I believe the death tax is fundamentally unfair because it 
constitutes another layer of taxation. After years of paying State and 
Federal income taxes and other taxes on property while trying to grow a 
business, the family must pay again at the time of death. This double 
taxation is unfair and should be eliminated.
  Many small, family-owned businesses throughout my State of Wyoming 
cannot afford to pay the tax and are forced to close their doors. In 
addition, many landowners are forced to sell their property in order to 
afford paying this unfair tax and avoid passing on the costs to the 
next generation. Our country should encourage growth and investment, 
not force people to sell their assets. Families should not have to 
choose between paying taxes or operating their business just because a 
family member passed away. In Wyoming, we work hard, in pursuit of the 
American Dream, to create a better life for our children and 
grandchildren. Yet the death tax punishes this dream and the families 
who must pick up the pieces after losing a loved one.
  The death tax not only hurts the families who are forced to pay the 
tax, it also hurts our overall economy. A Heritage Foundation study 
reports that repeal of this tax would create 482 jobs in Wyoming alone. 
While this number may not seem large to my colleagues from New York and 
California, 482 jobs would have a substantial economic impact for 
communities throughout my State. I believe we will see additional 
financial gains when businesses can continue their operations where 
previously they would have had to shut their doors.
  The death tax forces families to spend thousands of dollars on estate 
planning. By forcing individuals and families to use vital financial 
resources on estate planning, money is being taken away from the family 
business or the family farm. When we eliminate this tax, jobs will be 
saved and money will be devoted to economic growth rather than 
extensive estate planning costs.
  I urge my colleagues to support the passage of H.R. 8, which offers 
relief to America's hard-working families. Eliminating the death tax 
will bring fairness to our Tax Code as well as encourage continued 
growth in our economy.
  Mr. OBAMA. Madam President, I rise to speak in opposition to the 
complete repeal of the estate tax.
  First of all, let call this trillion-dollar giveaway what it is--the 
Paris Hilton tax break. It is about giving billions of dollars to 
billionaire heirs and heiresses at a time when American taxpayers just 
can't afford it.
  My colleagues on the other side of the aisle have brought out the 
Paris Hilton tax break in June because they are eager to make it an 
election issue in November.
  And I think that is fine. In fact, I am eager for the American people 
to choose. Because if people want their Government to spend $1 
trillion--an amount more than double what we have spent on Iraq, 
Afghanistan, and the war on terror combined--on tax breaks for 
multimillionaires and multibillionaires, then the Republican Party is 
their party.
  If the American people want to borrow billions more from foreign 
countries, spend billions more in taxes to pay the interest on our 
national debt, and watch billions cut from health care and education 
and gulf coast reconstruction, then the Paris Hilton tax break is your 
tax break.
  Now let's be honest. This is not about saving small businesses and 
family

[[Page S5617]]

farms. We can reform the estate tax to protect the few farms that are 
affected. We can set it at a level where no small business is ever 
affected. We can even repeal the estate tax altogether for the 99.5 
percent of families with less than $7 million in taxable assets--that 
means families with assets almost 100 times greater than the average 
American household net worth.
  Democrats have offered to reform the estate tax in these ways time 
and time again. Reform is possible in a way that doesn cost $1 
trillion.
  But our offers have always been refused, which can only mean that the 
party in power is really interested in an unprecedented giveaway to the 
wealthiest of the wealthy.
  And don't think for a minute that there is any plan to pay for this. 
Every proposal to enforce pay-as-you-go rules for fiscal responsibility 
has been rebuffed. This tax cut will have to be paid for in the years 
ahead by higher taxes on working families and reduced public services 
in all of our communities. This tax cut will have to be paid for by 
higher interest rates on homes and student loans. This tax cut will 
have to be paid for by greater dependence on foreign countries. Alan 
Greenspan warned us against financing tax cuts with debt. But that is 
exactly what this bill does.
  So I would ask the American people one question. At a time like 
this--a time where America finds itself deeply in debt, struggling to 
pay for a war in Iraq, a war in Afghanistan, security for our homeland, 
armor for our troops, health care for our workers, and education for 
our children--at a time of all this need, can you imagine opening 
Forbes magazine, looking at its list of the 400 wealthiest Americans, 
and realizing that our Government gave the people on that list far more 
than half a trillion dollars worth of tax breaks?
  I know I can imagine that. And I would bet that most Americans can 
imagine that either.
  This is shameful. Are we really going to cut taxes again for the 
Forbes 400 before we fix the alternative minimum tax which affects 
middle-class families? Are we really going to cut taxes again for 
multimillionaires and billionaires before we extend the expiring child 
tax credit which helps working families? Are we really going to worsen 
our country's financial future for all Americans just so that a tiny 
number of the estates--estates that average over $13 million--can 
escape all taxes?
  There is no economic justification for repealing the estate tax and 
certainly no moral justification. This is politics pure and simple.
  So if the Republicans want to bring up their Paris Hilton tax break 
to use it as an election issue later, I say go for it. Because I can 
think of no better statement about where and how we differ in 
priorities than that.
  Mr. HARKIN. Madam President, I am dumbfounded that the Senate is 
debating yet another gigantic tax break for the wealthiest people in 
our society. The Republicans are pushing this latest giveaway despite 
the fact that we are facing a deficit, this year, in excess of $300 
billion a year, despite the fact that they have run up $2 trillion in 
new debt since President Bush took office, despite the fact that they 
have increased spending by 25 percent in just 5 years' time, and 
despite the fact that we are spending $10 billion a month on seemingly 
endless wars in Iraq and Afghanistan.
  The level of irresponsibility is just breathtaking. This is a tax 
break we cannot afford, benefitting people who don't need it. 
Currently, the estate tax impacts far less than 1 percent of the 
wealthiest families in America. And you can be sure that these are not 
families facing economic hardship or struggling to make ends meet.
  Repeal of the estate tax would not create a single new job. It would 
do nothing to increase productivity or competitiveness. It would do 
nothing to improve the education of our children or the general well-
being of the American people. No, this is a pure and simple giveaway--a 
bonanza for those who have already received the lion's share of the tax 
breaks passed over the last 5 years.
  And let's be clear: There is nothing conservative about handing out 
tax breaks costing nearly $1 trillion, including interest, over 10 
years and passing the bill to our children and grandchildren.
  In his State of the Union speech 3 years ago, President Bush made 
this statement: ``We will not deny, we will not ignore, we will not 
pass along our problems to other Congresses, to other presidents, and 
other generations.'' But that is exactly what repeal of the estate tax 
would do. It would add hundreds of billions of dollars to the already-
massive debt that President Bush is passing on to ``other 
generations.'' This is not only irresponsible and reckless; it is just 
plain shameful.
  Average family farmers are being told that they need repeal of the 
estate tax to save them from a large burden, perhaps losing their farm 
to pay the tax. But this is pure propaganda. It is simply not true.
  The Congressional Budget Office analysis of estate tax returns from 
the year 2000 showed a very different picture. It showed that if we 
provide a $2 million exemption, $4 million for a married couple, which 
is the law for this year, only 123 farm-dominated estates would have 
had to pay any estate tax. That is a mere 123 farm-dominated estates in 
the entire United States. The details of the study note that, of those 
farm-dominated estates, only 15--15 in the entire United States--would 
not have sufficient liquidity to pay the tax. Only those 15 might have 
to sell land--though I doubt it. Large farm operations have a range of 
financial options to fall back on. Moreover, as a Washington Post 
editorial pointed out yesterday, family farm and business estate 
``heirs can spread estate tax payments over 14 years, so even those 
without liquid assets have plenty of time to take over the farm or 
firm, manage it productively, and thus generate the cash to pay the 
tax.''
  Neal Harl, one of the Nation's most respected lawyers and 
agricultural economists, knows of no instance where a farm has had to 
be sold because of the estate tax. Iowa Farm groups supporting estate 
tax repeal have not been able to identify even one instance, so far as 
I am aware.
  There are, indeed, some family-business-dominated estates that would 
have to pay some estate tax. According to the Congressional Budget 
Office, at the current level of exemption, there are 135 estates. Only 
135 estates in the entire Nation. So why is the Senate wasting precious 
legislative days addressing an issue affecting only 135 estates?
  There is little question that the great majority of Senators--
including myself and many other Democrats--would be in favor of passing 
a reasonable compromise, for example a permanent exemption of at least 
a $2 million for an individual, $4 million for a couple that is the 
current exemption.
  Of course, I don't want to minimize or dismiss those few instances 
where real farmers and small business people might have difficulty 
paying the tax. I do believe that it should be possible to pass family 
farms and family businesses from one generation to the next. Bear in 
mind, however, that we have had substantial estate taxes for a long 
time. And, the reality is that many of those who face the current tax 
had parents who passed on those same businesses with higher rates than 
they face today.
  There is little question that the great majority of Senators--
including myself and many other Democrats--would be in favor of passing 
a reasonable compromise, for example a permanent exemption of at least 
a $2 million for an individual, $4 million for a couple. But I 
challenge my Republican colleagues to tell us how they intend to make 
up for the revenue that would be lost if a full repeal of the estate 
tax is passed. The difference between a $2 million exemption and full 
repeal is about a half trillion in the decade after 2011. How do the 
Republicans propose to offset that lost revenue? What do they propose 
to cut? Social Security? Medicare? Education? National defense? What 
other taxes would they increase? Or do they intend to simply pass on 
another half trillion in debt to our children and grandchildren?

  Based on the record of the last 5 years, the most likely option is 
that the debt would simply be passed on to future generations. Since 
President Bush took office, we have already piled up nearly $2 trillion 
in new debt.
  It is hard to believe, but just 6 years ago, before President Bush 
took office, we were running huge budget surpluses. We faced the very 
real prospect

[[Page S5618]]

of completely eliminating the national debt within the decade. But 
those bright prospects have been squandered in reckless tax cuts and 
out-of-control spending. We are now running record deficits. The debt 
tax will rise from about $600 for every man, woman, and child in 
America in recent years to more than $1,000 per person in 2010 
according to the President's most recent budget submission.
  How in the world can any responsible person who cares about the 
fiscal health of our Nation allow this to happen? How can anyone who 
believes in maintaining a ladder of economic opportunity for future 
generations--how can we instead saddle those future generations with a 
debt burden of this magnitude?
  As President Kennedy said, ``to govern is to choose.'' If you vote to 
support this estate tax repeal, who exactly are you choosing to help? 
Well, according to Congress Watch, and United for a Fair Economy, just 
18 families are in the forefront of those demanding this repeal. Those 
18 families, with over $180 billion in accumulated wealth, stand to 
gain more than $70 billion in reduced taxes in the coming years if the 
estate tax is repealed. They have been spending huge sums for lobbyists 
and media campaigns. And if they succeed in avoiding paying $70 billion 
in taxes, then who will get stuck with the bill?
  Of those 18 families, the biggest single beneficiary of full repeal 
would be the Walton family, which owns a lion's share of Wal-Mart. That 
one family may save as much as $30 billion.
  I reject that choice. I reject giving away another half trillion 
dollars in tax breaks to those who have already been showered with 
fabulous wealth and good fortune. If we are going to pass new tax 
breaks, let's focus on working Americans who actually need them, 
beginning with working parents struggling to raise their children and 
pay college tuition.
  Last month, I met with Warren Buffet, a multibillionaire and a very 
savvy judge of the economy and business. He said that he is working to 
shift some of his investments away from the dollar. He believes that 
the estate tax is good public policy, and he believes that a Nation 
that recklessly cuts taxes while racking up huge budget and trade 
deficits is heading for big, big trouble.
  We need to come to our senses. Let's freeze the tax where it is, or 
let's consider a somewhat higher exemption, perhaps $4 million per 
couple. But let's reject the notion that huge estates should be passed 
on at a tax rate lower than what hard-working people pay on their 
earned income.
  In any case, it is unacceptable that we on the minority side of the 
aisle are being denied an opportunity to propose reasonable compromise 
alternatives. We should not move to consider this bill until we have an 
agreement that Senators can have an open debate, with amendments 
offered and voted on by each side. And if we cannot receive such a 
guarantee, we should vote to reject cloture.
  Madam President, this bill to repeal the estate tax would give away a 
half trillion dollars, as compared to the law for this year. It would 
give away money we don't have, overwhelmingly to people who don't need 
it, and it would pass the resulting debt to people who haven't even 
been born yet. This bill, in its current form, is reckless and 
irresponsible. I urge my colleagues to vote against cloture. This bill 
certainly shouldn't go forward until we have a fair, balanced proposal 
allowing amendments to the bill.
  Mr. ALEXANDER. Madam President, I wish to express my support for a 
full and permanent repeal of the death tax. This is an issue of tax 
fairness. The death tax can consume up to half of the deceased owner's 
estate. Many assets that are subject to the death tax were already 
taxed during the life of the deceased through income taxes, property 
taxes and other levies. Imposing another tax on someone's estate at the 
time of his or her death is a grossly unfair form of double taxation.
  In 2001, Congress passed a phase-out of the estate tax with full 
repeal effective in 2010. If Congress does not act soon, the law will 
revert back to where it was prior to 2001, placing an enormous tax 
burden on family-owned farms and small businesses. Some families would 
be forced to sell the farm or business they have just inherited to pay 
the enormous death tax bill. This goes completely against the American 
dream of working hard, growing a business and some wealth, and leaving 
the fruits of your labor to your children.
  Some argue that death tax repeal only would benefit the very wealthy. 
During this debate we have heard names like Bill Gates and Donald 
Trump. However, the death tax has a major impact on a lot of Americans 
who aren't household names. For example, I want to talk about Clint 
Callicott from Williamson County, TN. Clint's family farmed on land in 
Williamson County that his father owned and then Clint inherited. The 
farm's value began to increase due to economic growth and development 
in the county, so at the time his father passed away the land was worth 
over $1 million. Clint was forced to sell the family farm against his 
wishes in order to pay the large death tax, and the Callicott family 
had to relocate to another county.
  This unfortunate story illustrates the negative effect the death tax 
can have on family farms and small businesses, and this example is only 
one of many. In Alcoa, TN, Dick Daugherty and his wife tried to plan 
for the impact of the death tax in the early 1990's by hiring a very 
expensive estate lawyer. Their hope was to preserve their family farm 
for their children, and they went so far as to take out an insurance 
policy with significant premiums to ensure there would be enough cash 
when the time came to pay the death tax bill. However, today the value 
of the farm land has increased so much due to development in the Alcoa 
area that--despite their best efforts to plan ahead--it now looks 
unlikely that the Daugherty sons will be able to afford to hold on to 
the land that has been in their family since 1871.
  Clearly, there is something wrong with a tax system that forces 
people off the land that has been in their family for generations. And 
it is just as wrong when the tax system makes it harder for family-
owned small businesses to succeed. According to one study, less than 30 
percent of these small businesses survive to a second generation and 
only about 13 percent continue to a third generation. These small 
businesses face enough hurdles as it is without Uncle Sam imposing yet 
another obstacle in the form of the death tax.
  Supporters of keeping the death tax claim that repeal would be too 
costly for the Treasury. However, over the last 10 years the death tax 
only has accounted for about 1.3 percent of all Federal tax revenue. In 
addition, the ``costs'' of repeal have been overstated because 
estimates fail to account for estate planning and compliance costs, the 
tax revenue lost when a farm or business ceases operation due to the 
death tax burden, or the economic growth and job creation that would be 
generated by freeing up capital for investment.
  I mentioned the burden of estate planning and compliance costs, and 
wanted to share another example from my home State of Tennessee. The 
Anderson Family operates a crop and beef cattle farm. Mr. Anderson 
recognized the need for estate planning and formed a family partnership 
that allowed him to pass on his farm assets to his children during his 
lifetime. This plan is likely to minimize the impact of the death tax, 
and will increase the chances that the Anderson children will be able 
to hold onto the family business. However, the considerable legal and 
accounting costs involved in forming this partnership could have been 
better utilized elsewhere in the family business.
  It is staggering to note that as much as $847 billion over the last 
several decades has been diverted from the economy for estate planning 
and compliance costs, according to a Joint Economic Committee study. 
Estate planning can cost individual families as much as $150,000. This 
money could be put to better use if it were invested in creating jobs 
growing our economy. According to the Heritage Foundation, it's 
estimated that the Federal death tax alone is responsible for the loss 
of between 170,000 and 250,000 potential jobs each year.
  We want a tax system that encourages growth and prosperity, not one 
that acts as a job killer. However, anticipation of the death tax's 
impact on one's heirs causes many people to stop working at an earlier 
age, to reduce

[[Page S5619]]

the amount of saving and investing, and to cut back on their 
entrepreneurial activities. Once these Americans reach a certain age, 
there is less incentive to further build up the estate because that 
simply increases the tax burden for the loved ones they leave behind.
  That is not the right message to send. We should encourage the 
creation of jobs, new ideas, and new investment in our country. We 
should encourage our citizens to continue to strive for the American 
dream of working hard, building up their assets, and passing them on to 
future generations.
  I am disappointed that efforts to repeal the death tax have been 
blocked in the Senate for the last few years, and I hope Congress will 
enact a full and permanent repeal.
  Mr. LEVIN. Madam President, this bill to repeal the estate tax is 
unfair and unaffordable. Full repeal is estimated by the Joint 
Committee on Taxation to cost $776 billion over the first 10 years it 
is in full effect. And in fact that cost would be nearly $1 trillion 
when interest payments on the extra debt that would be required are 
taken into account.
  Repealing the estate tax would only benefit a tiny percentage of the 
very wealthiest Americans among us by enabling them to pass additional 
millions of dollars to their heirs tax-free. It would shift an even 
larger share of the Nation's tax burden and debt onto the backs of 
average working families and our children and grandchildren.
  Only a tiny fraction of estates pay the estate tax. In 2004, only 1 
percent of estates in Michigan and 1.2 percent nationwide paid any 
estate tax. In 2006, those numbers will likely be even smaller because 
each individual's exemption from the estate tax will increase from $1.5 
million to $2 million, with those numbers doubled for married couples. 
In fact, it is estimated that in 2006, just one-half of 1 percent of 
all estates will owe any estate tax. This percentage will continue to 
shrink as the exemption level rises. By 2009, when $3.5 million--$7 
million for married couples--will be exempt, only three out of every 
1,000 estates will owe any estate tax; that's one-third of 1 percent.
  Why are the Republican leaders pressing this? Over the last decade, a 
massive public relations campaign funded by a handful of families has 
succeeded in creating the mistaken impression that the estate tax 
catches millions of average Americans. According to a recent report by 
two nonprofit organizations, Public Citizen and United for a Fair 
Economy, 18 families worth a total of $185.5 billion quietly financed 
and coordinated a 10-year effort to repeal the estate tax. The report 
tells how these families spent over $200 million contributing to 
political campaigns, financing outside lobby groups and trade 
associations, and creating a massive anti-estate tax coalition that 
served as the main coordinator of the repeal campaign.
  The advocates of repeal have not been forthcoming about the billions 
they would save if the estate tax were repealed, but instead they have 
promoted stories about the effects of the estate tax on family farms 
and small businesses. Such family-run enterprises make up the core of 
the American economy and society, so it is no surprise that using them 
as the poster children in the campaign for repeal has been met with 
some public relations success. The well-funded initiative has left many 
with the mistaken impression that the estate tax requires many small 
businesses and family farms to be sold to cover the estate tax bill.
  Few, if any, examples of that are ever offered, but no matter. The 
disinformation campaign continues. What is the reality? According to 
data from the Tax Policy Center, of the 18,800 taxable estates in 2004, 
there were only 440--or two percent--in which farm or business assets 
made up at least half the total value of the estate. Forty percent of 
these 440 farm and business estates were valued at less than $2 million 
and paid an effective tax rate of only 1.6 percent.
  According to the Congressional Budget Office, at the upcoming 
exemption level of $3.5 million, only 200 farms in the year 2000 would 
have had to even file the estate tax, and fewer than 15 of those 
estates would have lacked sufficient liquidity to pay the estate tax.
  From these numbers, it is clear that an exemption level and other 
safeguards can be set to keep effectively all small businesses and 
family farms from having to sell their businesses to pay the tax. That 
is why I hope that at some point in the near future we will be able to 
adopt a commonsense proposal to permanently set an appropriate, 
inflation-adjusted exemption level.
  But proceeding to this bill at this time would not achieve that goal. 
The majority has indicated that if we proceed to debate this bill, 
consideration would be limited to a small number of predetermined 
amendments, each of which would set the tax rate on inherited wealth 
lower than the tax rate on workers' wages. Giving tax preference to 
inheritance over workers' wages is not the American way.
  Furthermore, in the face of mounting deficits, adoption of any of the 
so-called compromise amendments being talked about would be fiscally 
irresponsible and would unfairly burden average taxpayers to make up 
the difference in lost revenue from the Treasury. The proposal endorsed 
by Senator Kyl would still cost eighty-four percent of the cost of full 
repeal.
  The estate tax was created not only to raise revenue but also to 
prevent the concentration of wealth in the hands of just a few 
families. It ensures that those who prosper so greatly in the American 
economic system do their fair share to contribute to our continued 
national well-being. Just like other Americans, the very wealthy 
benefit from public investment of tax dollars in areas such as defense, 
homeland security, environmental protection and infrastructure, and 
they rely even more than others on the Government's protection of 
individual property rights. The estate tax is not intended to 
discourage people from seeing to it that their children are more 
secure, but rather, it is aimed at helping keep avenues of opportunity 
open to all citizens. In the words of President Teddy Roosevelt, who 
proposed the estate tax: ``[I]nherited 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.''
  We should make sure that our current and future tax policies consider 
not only the value to taxpayers of their take-home pay or accumulated 
wealth, but also the value to them of the essential government services 
that are funded by their taxes. It is not a popular thing to talk about 
these days, but our Nation relies on and needs tax revenues. Every day 
in Iraq and around the world our military needs tanks, aircraft 
carriers and protective body armor. We need scientists working toward 
cures for cancer, Alzheimer's disease and birth defects. We need 
teachers to educate our children so they can keep our Nation 
economically competitive in the next generation. We need USDA personnel 
to screen our meat and livestock for mad cow disease and harmful 
toxins. We need Government grants to help buy bulletproof vests for the 
cops on our streets. We need dollars to build new bridges and highways 
to relieve congested traffic, as well as dollars to repair potholes in 
existing roads.
  On top of these things and many others we already appreciate, there 
are many other important initiatives: lowering the spiraling cost of 
healthcare so that all Americans can get the care and medicine they 
need, improving our education system so that every child grows up 
prepared to make a valuable contribution to our society, investing in 
leap-ahead energy technologies that will boost our auto industry and 
help end our dependence on imported oil, preserving our irreplaceable 
natural resources, and protecting the jobs provided by our Nation's 
manufacturers.
  If we are to have any hope of paying for even a few of these 
priorities, eliminating the estate tax for the extremely wealthy is 
exactly the wrong thing to do. We are running record deficits and we 
are fighting a war in Iraq. We simply cannot afford such a massive tax 
cut which would push us even further into the deficit ditch. Today, 
each American citizen's share of the debt is almost $28,000, and as we 
continue to run up record yearly deficits, the country's total debt is 
estimated to reach over $12 trillion by 2016, which is $39,000 per 
person. It is not just reckless fiscal and economic policy to saddle 
future generations with this kind of crushing

[[Page S5620]]

debt burden; it is morally reprehensible to pass this kind of burden to 
our children and grandchildren.
  We need to look out for all of our citizens, not just the few who are 
extraordinarily wealthy. I cannot agree with policy changes that favor 
a handful of multimillionaires, one-third of 1 percent of our people 
who are the very wealthiest, at the expense of working American 
families and of critical national priorities. That is why I am opposed 
to repealing the estate tax.
  Mr. KERRY. Madam President, today we are debating repeal of the 
estate tax. Many of us have supported reform to the estate tax in a 
reasonable way that will help families keep their small businesses and 
farms. But this debate about repeal of the estate tax has become 
unreasonable and fiscally irresponsible.
  Some in the Republican majority are calling for full and permanent 
repeal of the estate tax and have referred to the estate tax as 
``immoral'' and ``vicious.'' I disagree. Only very wealthy Americans 
will benefit from the proposal before us today. It is a proposal that 
does not reward work, entrepreneurship, or innovation.
  I also wonder why we are debating this today. The estate tax debate 
was postponed last fall because of Hurricane Katrina. New Orleans is 
still recovering and all signs point to the region being in dire need 
of more Federal assistance in the months to come. I believe it is still 
an inappropriate time to debate the estate tax. Congress just passed a 
$70 billion tax cut that will give those with an income of $1 million 
an average tax cut of $43,000. Additionally, we have had troops in 
Afghanistan since October of 2001 and in Iraq since March of 2003. This 
is a time for sacrifice, not time for another debt financed tax cut for 
the richest Americans.
  Congress is not sending the right message by debating the repeal of 
the estate tax when soldiers are risking their lives and many citizens 
are still left homeless by Hurricane Katrina. The estate tax is simply 
the wrong priority.
  Only a few wealthy Americans will benefit from repeal of the estate 
tax, but it will harm many. Repeal hurts tens of millions of Americans 
by shifting even more of the tax burden from those who hold wealth to 
those who work day in and day out to earn a paycheck. Since the 
proposal is not paid for, it hurts our children and grandchildren by 
creating billions in debt and interest that they will have to pay for. 
According to the Center on Budget and Policy Priorities, the total cost 
of repealing the estate tax for a decade would be nearly a trillion 
dollars. This revenue could be well spent on essential initiatives such 
as rebuilding the areas devastated by Hurricane Katrina, our national 
defense, children's health care, equitable tax reform or paying down 
the debt.
  Repeal of the estate tax hurts millions of working families who need 
Congress to resolve far greater problems in our tax code, like the 
punishing and expanding alternative minimum tax, AMT. The AMT is levied 
on taxpayers merely because they have children and happen to live in 
particular States. Yet according to the majority leader, the estate 
tax--which is levied on individuals who will inherit at least several 
million dollars--is the ``cruelest and most unfair tax.'' I don't see 
the logic in that argument and I am confident the American people can 
see through it as well.
  My colleagues on the other side of the aisle argue that estate tax 
repeal is needed to help small businesses, but I bet you would not hear 
them discuss a provision in H.R. 8 that will result in increased 
capital gains taxes for small firms. Under current law when a person 
inherits an asset, they receive a ``step-up'' in basis. This means that 
the person inheriting the assets receives a tax basis increased to fair 
market value at time of death. When the person sells the property, he 
or she is only taxed on the difference between the sales price and the 
fair market value at the date of death.
  H.R. 8 would limit the amount of assets that are eligible for step-up 
basis. Assets exceeding $1.3 million would receive ``carryover'' basis 
under which the heirs receive the same basis as the deceased owner. 
Assets of up to $4.3 million transferred to a spouse will receive step-
up basis. Carryover basis usually results in higher capital gains taxes 
because tax will be owed on the difference between the sales price and 
the basis that the decedent had in the asset. Certain assets will no 
longer have step-up basis which gives heirs a basis equal to the fair 
market value at time of death. This change in basis will result in a 
greater difference between the sale price and the heir's basis.
  I agree that Congress should address the estate tax in the coming 
years, but we need to keep in mind that the current uncertainty was 
created by the majority's unsound tax policy. It is because of the 
Republican tax policies that the estate tax is now set to disappear in 
2010 and then return to its previous levels in 2011. We tried in the 
past to make estate tax relief permanent. In 2002, we proposed 
exempting estates of up to $4 billion and permanently reducing the top 
rate to 45 percent, but that was not acceptable to advocates for full 
repeal. Now the Republican majority points to the problems they created 
with earlier tax cuts as justification for repealing the estate tax--
creating further problems, greater inequity, and more debt.
  According to a July 2005 Congressional Budget Office, CBO, report, 
very few farms and small businesses will pay the estate tax if it is 
set at a reasonable level. The CBO report shows that if the exemption 
is set at $2 million, only 123 farms and 135 family-owned businesses 
would have taxable estates and even fewer would have insufficient 
liquidity to pay the estate tax. Even if one disagrees with the CBO 
report, we should all be able to agree that raising the exemption 
amount helps small business and farms. Proposals that exempt 
inheritances above $3.5 million would overwhelmingly benefit those who 
own stocks and other securities and really have nothing to do with 
helping family farms or businesses. If the exemption is increased to 
$3.5 million, only 0.3 percent of all estates would be affected. Many 
of these assets have never been taxed, given that assets of wealthy 
estate frequently include stocks that have never been taxed.
  Often it is argued that the estate tax needs to be repealed to assist 
small businesses. There is no concrete evidence that a family-run 
business has been put out of business by the estate tax. If the AMT is 
not addressed it will hurt many more small businesses, but instead of 
addressing it, Republicans prefer to promote the myth that the estate 
tax shatters small businesses.
  At a time when income inequality is increasing, the estate tax should 
not be the priority of the Senate. According to the Federal Reserve's 
Survey of Consumer Finances, the average net worth of an American 
family grew 6.3 percent while the bottom 40 percent of families' median 
net worth fell.
  When President Theodore Roosevelt advocated an estate tax nearly a 
century ago, he argued that, the ``man of great wealth owes a peculiar 
obligation to the state, because he derives special advantage from the 
mere existence of government.'' He further advocated, ``We are bound in 
honor to refuse to listen to those men who make us desist from the 
effort to do away with the inequality, which means injustice; the 
inequality of right, opportunity, of privilege. We are bound in honor 
to strive to bring ever nearer the day when, as far as is humanly 
possible, we shall be able to realize the ideal that each man shall 
have an equal opportunity to show the stuff that is in him by the way 
in which he renders service.'' We should heed the words of President 
Roosevelt and vote against estate tax repeal.
  We need to return to a tax system of fairness and equity. Our tax 
system should reward work and create wealth for more people; it should 
not be skewed to the wealthiest among us. We need to work together to 
find a solution to the estate tax which reflects the reality of our 
fiscal situation and provides certainty for hard-working families.
  Mr. BOND. Madam President, 5 years ago Congress took steps to end the 
death tax. Now the American people expect us to finish the job.
  We need to end permanently the tax that punishes American values of 
savings and investment and of building small businesses and family 
farms and ranches.
  The death tax punishes the American dream--making it virtually 
impossible for the average American family to build wealth across 
generations.

[[Page S5621]]

  The death tax is anti-savings, anti-family, and anti-investment. It 
is quite simply un-American.
  If we don't act now, the death tax will come back in just a few 
years. Under current law the death tax is phased out in 2010 but comes 
back in full force in 2011. That is a ridiculous and untenable policy.
  The death tax should be completely and permanently repealed now in 
order to make the Tax Code fairer and simpler and to eliminate the 
harmful drag this tax has on the economy.
  According to the Small Business Administration, more than 70 percent 
of all family businesses do not survive through the second generation, 
and 8 percent do not make it to a third.
  The death tax is one of the leading causes of the dissolution of 
small businesses.
  It hits those who own small businesses and family farmers the most. 
When faced with the death tax, farmers and ranchers are in an 
especially tough spot with most of their assets tied up in land and 
buildings, livestock and equipment. This gives them little flexibility 
when settling estates. Unlike an investor with a stock portfolio, they 
can't simply sell off a block of stocks and move on.
  We can all understand budget shortfalls due to a multitude of 
national and international events. But it is wrong to argue that we can 
shore up the budget by imposing a death tax on hard-working farmers and 
small business owners who are the backbone of the American economy.
  In reality, the death tax collects little revenue, less than 1.5 
percent of Federal revenue.
  According to the CATO Institute, compliance with the death tax costs 
the economy about what the Treasury collects.
  A recent study analysis in 2005 by professors at Carnegie Mellon 
University suggest that repeal would cause a net increase in Federal 
revenues through dynamic growth effects and increased capital gains 
receipt.
  The Wall Street Journal has reported that repealing the death tax 
would create an extra 200,000 jobs per year.
  Debate usually focuses only on the taxes that estates actually pay, 
ignoring the real costs this tax imposes on owners of small businesses 
and family farms. These include estate-planning costs, compliance costs 
at death, and overall economic growth.
  Americans are paying millions of dollars every year to lawyers and 
accountants just hoping their children will not have to sell off the 
family business to pay the death taxes. Most small businesses and 
ranches will not be viable if the children have to sell off half to pay 
the tax.
  That money would be much better spent creating jobs, upgrading family 
farms, or saving for retirement or a child's college education.
  Eliminating the death tax is a matter of fairness.
  When folks work their entire lives to build up and pass on a business 
or family to their children, the kids should not get hit with a huge 
tax when they die. That is just not the American way.
  Americans overwhelmingly agree that it is wrong to tax property and 
earnings that have already been taxed before. Polls consistently show 
over 70 percent of Americans support repeal.
  Let's have the courage to separate death and taxes.
  Mr. HATCH. Madam President, I want to take a few moments to discuss 
the estate tax and explain why I support its permanent repeal.
  I am well aware that many see the move to eliminate the estate tax as 
little more than a gift to the rich. In my home State of Utah, for 
instance, the Salt Lake Tribune characterized the elimination of the 
estate tax as nothing more than ``subsidizing spoiled heiresses at the 
expense of everyone else.''
  I believe that while this is a commonly held view of the estate tax, 
it is an unfair and inaccurate pejorative of a principled policy 
position. A punitive tax on inherited wealth is in no one's best 
interest, least of all the people with no inherited wealth. The Tax 
Code should collect revenue in a way that does the least harm to 
economic growth, and this goal should take precedence over any desire 
to punish the Paris Hiltons of the world.
  Without a doubt, the high estate tax rate harms economic growth.
  Perhaps our tax system's biggest flaw is that it taxes the returns to 
investment, usually more than once. When our employer pays us a dollar, 
both the Federal and State governments gets their share. When we save 
what is left over by investing it in stocks or bonds, the government 
takes another bite at the apple by getting a share of the profits of 
the company in which we invested. And when the stock or bond delivers 
an investment return to us, we get to pay the tax man yet again.
  The estate tax is often yet another layer of taxation on the 
investment. How many times does the government need a cut of our money?
  At what point do we stand up and say: Don't tax more; spend less?
  Because of the estate tax, people save less than they otherwise would 
and as a result businesses have less capital available to use to grow, 
expand, and create jobs. With less investment, workers are less 
productive and wages are lower than would otherwise be the case.
  The Bush administration's signature economic achievement, in my view, 
has been to lower the tax on dividends and capital gains, a change that 
deserves much of the credit for the strong productivity growth of the 
past three years. This policy change greatly increased investment and 
the concomitant growth in output has a lot to do with the simply 
incredible growth in tax revenue we have seen in the past 2 years.
  It now appears that we will collect 30 percent more tax revenue this 
year than we did just 2 years ago, according to the Congressional 
Budget Office. This is really incredible. Especially when you consider 
that the economy was headed for a free fall just 5 years ago. Our 
efforts to cut taxes have saved our economy over the last 5 years.
  A sensible tax system should tax income just once and at a low rate. 
The inheritance tax does neither.
  The current 46-percent estate tax rate borders on being confiscatory. 
Chris Edwards of the Cato Institute reports that out of the 50 largest 
economies in the world, we have the third highest estate tax rate.
  Len Burman of the Urban Institute recently wrote that it is time for 
both sides of the aisle to agree that the U.S. Tax Code should be 
designed solely to collect money in the most efficient way possible, so 
that it does the least damage to economic growth. From that beginning 
we can then move to address distributional issues outside of the scope 
of the Tax Code.
  I believe this makes a lot of sense. Strong economic growth is in 
everyone's best interest, and we have not done a good job communicating 
that fact to the American people. Too often economic growth is viewed 
as a barrier to a cleaner environment, or stronger families, or less 
poverty, when in fact nothing could be further from the truth. Nearly 
everyone in society benefits from a more productive economy, especially 
those on the lower rung of the economic ladder.
  The way to help the people at the bottom of the ladder is not to pull 
down those at the top of the ladder, but to help those at the bottom to 
get the education and training they need to obtain and keep good jobs.
  The estate tax as it currently stands represents a barrier to 
economic growth, and it behooves us to remedy this situation as quickly 
as we can by making its repeal permanent.
  Mr. BURNS. Madam President, I rise today to express my support for 
H.R. 8, a bill that would permanently repeal the death tax. This burden 
is especially harmful to many Montana farms, ranches, and small 
businesses. As we have heard many times in the past several days, the 
value of a person's estate is measured by its fair market value at the 
time of death.
  In Montana, as you can imagine, land value has appreciated 
significantly in recent years. When the death tax hits, often part of 
the ranch or farm must be sold off to pay federal taxes. The death tax 
is not only about the wealthy--it harms working families in Montana who 
have farmed or ranched on the same land for generations, but now, due 
to no fault of their own, are forced to give up their way of life just 
to pay the tax bill.
  Land appreciation in Montana is a double-edged sword. While soaring 
property values benefit sellers and the

[[Page S5622]]

local tax base, for those with no intention to sell their property to 
the highest bidder, the death tax helps make a difficult decision even 
easier. We already face high out-migration from frontier counties in 
Montana. It is difficult enough to keep younger generations involved in 
the family business, but even harder when a death sets in motion a 
series of unpleasant financial events, including payment of this 
burdensome tax. I have been a strong supporter of the permanent, full 
repeal of the death tax. It isn't fair to families who have worked all 
of their lives to build assets and a way of life that then is taken 
away. At the very least, the Federal Government should not punish small 
businesses, farms, and ranches for filling such an important role vital 
to our economic well-being. I have spent a lot of time on these 
ranches, and I am here to tell you that these Montanans are some of the 
hardest working people in the country. By and large, they are not 
multimillionaires who purchase dude ranches as a pleasant distraction 
from the hustle and bustle of city life. These are folks who spend a 
lot of hot days in June swathing hay to make sure the cows are fed 
throughout the winter. They invest blood, sweat, and tears, often for a 
dwindling profit. For example, let's look at the case of Mary Jo Lane 
from Livingston, MT. She wrote to me, saying:

       My husband Tom operates the family ranch east of Livingston 
     on the Yellowstone River. My father-in-law, Tom Lane, Sr. is 
     the epitome of the American success story. His father was a 
     first generation American and his mother was an Irish 
     immigrant. He started ranching on his family's ranch out of 
     Three Forks with his brother and became a cattle buyer. 
     Through much hard work, determination and moderate living, 
     along with a little Irish luck, he was able to buy the 
     Livingston ranch in 1972, and his brother took over the ranch 
     in Three Forks. Over the last thirty years Tom Sr. has been 
     able to put together a ranching operation large enough to 
     keep all four of his sons working on the family ranch. In 
     addition to my husband on the Livingston ranch, his brothers 
     operate ranches in Cascade, Harlowton and Ismay. In 1972, I 
     am sure he never imagined what would happen to land values in 
     this area. The ultra-wealthy and celebrities have been 
     driving up land values which agriculturally we can never gain 
     enough income to support. This would be great for anyone 
     interested in selling their land, but it puts a huge burden 
     on the family rancher interested in maintaining the dream of 
     passing the land down to their kids and staying true to the 
     family heritage. With these new purchasers gaining land for 
     purely aesthetic reasons, with no consideration to generating 
     income from the land, we just can't keep up with rising 
     estate costs. In our case, we already know it is not a matter 
     of if we have to sell a piece of land, but which piece to 
     sell that will have the least effect on the operation. This 
     issue is not purely agricultural; it flows into so many other 
     segments of society. As you know, this land is like our 
     factory and when part of the factory is sold, that reduces 
     production which in turn reduces income and reduces taxes 
     paid to the government. No matter how much the land is 
     valued, it still requires about 25 acres to carry one cow/
     calf pair. Consider too, what selling out does to the small 
     ag communities in the state that rely on ranchers to buy 
     their farming implements, parts, fuel, etc. etc. Estate taxes 
     have a direct impact on the environment as well. Ranches and 
     farms keep the Western land open, limiting development and 
     giving wildlife and people room to roam. Many people come 
     from all over America to visit our beautiful state, but they 
     don't appreciate the fact that the family rancher is paying 
     quite a price to keep it that way.

  This experience shows how the death tax has affected just one working 
Montana ranch, and makes a powerful case for permanent and full repeal 
of the death tax. Another Montanan called the death tax ``un-American'' 
since ``ranches are having to be sold in part or entirety to pay the 
estate tax.'' This point is well taken--the death tax is not levied 
only against the rich, but against hard-working Montanans. Robert 
Rumney from Cascade, MT, wrote:

       My father has been building this family ranch for almost 50 
     years, and I have been working with him full time for over 25 
     years. This winter, we have been updating our estate 
     planning, so that my son and I will be able to continue to 
     work and live on this family ranch. We did research on fair 
     market value of ranch land, and came up with a very 
     conservative estimate of over $10,000,000 value. This 
     included land, cattle, and presently owned equipment. All of 
     these are absolutely necessary to continue to operate this 
     cattle ranch. With the recreational buyers driving up the 
     price of land far beyond its actual agricultural value, it is 
     becoming virtually impossible to pass on a long-time family 
     ag-operation to the next generation. What is this going to do 
     to our nation? What is the purpose of eliminating the family-
     owned farm or ranch? The affluent buyers are not operating 
     these ranches as producers, but rather using them as private 
     hunting and fishing retreats. How are we going to feed our 
     nation? The estate tax of any kind is going to affect all of 
     us, not just the poor rancher or farmer who is trying to pass 
     along his hard work to the next generation. Please don't 
     allow this to happen. Please vote to eliminate the estate 
     tax.

  Robert's letter points to an inevitable result stemming from the 
death tax. If our working farms and ranches are taxed out of existence, 
the economic impact would extend far beyond these families, and would 
affect domestic agricultural production. This statement may well be a 
reality should the 55 percent tax rate come back in full force in 2011 
without any congressional action. The death tax is unfair because it 
represents essentially a double taxation. Ms. Merelee Manuel from 
Winnett, MT, explained to me:

       Dear Senator Conrad Burns,
       I'm deeply concerned about the repeal of the Death 
     Inheritance Tax. I want to explain what happened to the 
     Gjerde Ranch. I was married to Bud Gjerde. We lost his Dad, 
     John Gjerde. We paid the death tax on the ranch when his 
     mother Margaret Gjerde inherited the ranch. She passed away 
     and death tax was paid again. Bud and I bought the ranch, and 
     then Bud passed away Feb. 3, 1975. The death tax was paid 
     again. This took place in a time span of 10 to 12 years. The 
     death tax was paid 3 times! We were NOT RICH. We saved and 
     scraped and did without so that we could put some savings 
     away for a rainy day. Guess what? It had to be used to pay 
     Death Inheritance Tax. This is the most unfair tax of all. 
     Income tax was being paid on this ranch every year. Please 
     don't think it's just the rich who benefit from not having to 
     pay death inheritance tax.

  I think it's fair to say that Federal share of this ranch in Winnett 
was far larger than it should have been. As this letter shows, it's 
becoming more and more difficult to maintain the family farm in the 
wake of such excessive taxation. The death tax not only poses hardship 
on Montana's farms and ranches, but on a variety of other small 
businesses. Donald Dulle, Jr., runs the Flathead Beverage Company in 
Kalispell, MT. In a letter to me, he said:

       I am counting on you to provide permanent relief from the 
     death tax so I may plan for the future of my business and my 
     family. Evidence has shown that a mere one-third of family-
     owned business survive the next generation. Too often 
     liquidation is the only choice for family members who have 
     worked side by side with parents and siblings to create a 
     business of value in order to provide certainty for 
     generations to come. I urge you and your colleagues, 
     Democrats and Republicans alike, to put aside your 
     differences and demonstrate the leadership for which you were 
     elected by putting America's family-owned businesses first.

  The damaging impact the death tax has on Montana's small businesses 
and estate planning is widespread. This experience is not limited to 
just a few Montana businesses but extends across the country. In the 
Statement of Administration Policy dated June 8, 2006, the 
administration notes that ``Fundamentally, the death tax penalizes 
savings and risk-taking, reduces capital formation in the economy, and 
ultimately, reduces living standards . . . The time to fix this problem 
is now, so American families can plan for the future without worrying 
about whether the death tax will reemerge.''

  For those of you who may be familiar with the band the Beatles, they 
had a song called the ``Taxman.'' Though the lyrics were written in 
1966, they still remain especially true today, even with a reference to 
payment of taxes at death. The lyrics say, ``Now my advice for those 
who die, Declare the pennies on your eyes.''
  In the Senate, we have tried to provide relief for small businesses. 
Unfortunately, we were prevented from continuing work on small business 
health plans. I urge my colleagues to support the full and permanent 
repeal of the death tax to provide basic fairness to these small 
businesses that are the engine that drives not only Montana's economy, 
but the Nation's as well.
  Mr. BYRD. Madam President, along with millions of Americans, I am 
acutely sensitive to the values of saving and hard work. Like citizens 
all across our country, many West Virginians devote their lives to 
acquiring and nurturing a family business or farm in order to pass it 
on to a son or daughter. These forward-looking Americans ought not to 
have to worry about their heirs losing the family heritage

[[Page S5623]]

because of the demands of the tax code. While I oppose full repeal of 
the estate tax, I had hoped to support a compromise measure that would 
exempt small businesses and farms.
  In order to debate the estate tax repeal, and work on an amendment 
exempting small businesses and farms, I had hoped to vote for cloture 
on the motion to proceed. However, if cloture on the motion to proceed 
to the estate tax bill had been invoked, a compromise would not have 
been possible. The majority leadership indicated an intent to 
immediately file cloture on the underlying bill, and then to limit 
votes on amendments. The Senate would have then been forced to accept 
legislation that could have cost the U.S. Treasury up to $1 trillion 
over 15 years.
  If a realistic estate tax repeal is ever to be enacted, the Senate 
must be allowed to fully debate and amend the estate tax repeal. Such a 
sweeping tax repeal should not be forced down the throat of the Senate 
without a thorough debate and the offering of reasonable amendments. 
Until such time as an understanding is reached to fairly debate the 
matter--including the offering of amendments--I must oppose taking up 
the bill.
  Mr. SMITH. Madam President, I would like to express my support for 
compromise on reforming the ``death'' tax. I have always been a 
supporter of full repeal of the estate tax. However, the votes are 
simply not there. For America, small businesses, farmers, and others to 
get the full benefit of estate planning, they need to have something 
permanent--and not something that is suspended in 2010. Therefore, it 
is critical that we come together and support a compromise on the 
estate tax.
  I believe that the greatest issue with the estate tax relates to 
small businesses. In many instances, upon the death of the owner, the 
family needs to sell its business in order to stay in business. This is 
not good for our economy. It is important to remember that these 
earnings which go toward someone's net worth are earnings that if left 
in the economy would create jobs. In fact, the Heritage Foundation 
estimates that repeal of the estate tax could produce 240,000 new jobs 
per year. In my home State of Oregon, repeal would create over 3,000 
new jobs. Clearly, these dollars would do far more good for our economy 
if they are used for employing people and investing in plants and 
equipment than if you take them into the Government and redistribute 
them through Washington.
  Small business owners are out there taking the risks--and I believe 
they should be left with the rewards. When running a small business, 
there is no set calendar which guarantees you vacation or even weekends 
off. You are working all the time--even Christmas. Owning a small 
business is a hard way to go, but it is also a great way to go if you 
have the stamina for it. I applaud all small business owners. They are 
the spark plugs of the American dream. Unfortunately, they tend to be 
underappreciated in the halls of government. But small businesses are 
central to the progress of our country.
  The compromise package that seems to have the most support would 
increase the exemption limit to $5 million. Estates valued over $5 
million but less than $30 million would be taxed at the capital gains 
rate of 15 percent--and estates over $30 million would be taxed at 30 
percent. I think this is a reasonable approach. If your estate is over 
$30 million, you are at a place where you can hire the expensive 
lawyers and purchase the insurance policies. Basically, you can plan 
for the next generation in ways that smaller businesses frankly find 
befuddling and counterproductive to their continued employment and 
operation of their business.
  Some argue that the estate tax is important because it redistributes 
income between generations. But is it really the Government's business 
to redistribute income? My own sense is that it is better for the 
economy if you leave the assets at home--with small businesses and with 
families. In my opinion, the best redistributer of income and inherited 
wealth is freedom. Usually third generations will do very well or 
horribly--thereby redistributing income through freedom.
  Lots of people also argue that very few estates are subject to the 
estate tax today--and they are right. In Oregon, only about 400 estates 
were subject to the estate tax in 2004. However, the reason that lots 
of estates don't pay the tax is because they are expending an 
extraordinary amount of money on insurance policies, lawyers, estate 
planners, and accountants to try to get around it. These extra fees are 
the equivalent of a tax for owners of small businesses and farms that 
need to plan ahead to avoid the tax. Secondly, I believe these 
resources are better spent plowing them back into businesses and 
investments that are more productive than just accounting and 
lawyering.
  It is time to put the death tax to rest. I believe that reasonable 
people should be able to live with compromise. It will provide 
certainty to small businesses and allow them to keep the rewards of 
their hard work.
  I urge all of my colleagues to support a compromise on the death tax.
  Ms. MIKULSKI. Madam President, today the Senate is considering 
whether to repeal the estate tax. I believe strongly there are problems 
with the estate tax. Most importantly, it needs to be reformed so it 
applies to fewer people.
  To ensure our Nation's economic competitiveness, government must 
reward thrift, hard work, and entrepreneurship. It cannot punish those 
who have saved and worked hard. Instead, we should support our small 
businesses and family farms--the engine of economic growth in America.
  To do this, Congress must raise the exemption for the estate tax. In 
2006, estates worth more than $2 million are subject to the tax. This 
is too low and subjects too many Americans to the estate tax. That 
exemption needs to be raised. The baby boomers are growing older and 
approaching retirement, and many have attained some measure of economic 
prosperity through their years of hard work. They should not be 
punished for this well-deserved success. Tripling the exemption to $6 
million will make sure that the estate tax continues to target an 
extremely small group of very wealthy Americans. In fact, with an 
exemption of $6 million per person, or $12 million per couple, less 
than 50 of all those who pass away in Maryland in 2006 will have to pay 
any estate taxes at all.
  At the same time, I stand for a patriotic pause, which means not 
passing any new tax cuts until our Nation has paid for the war in Iraq 
and our troops. The war in Iraq is costing us $2 billion each week. 
Where is the Iraqi oil that we were promised would help pay for this? 
There cannot be a change in our revenue stream until the war is over--
or paid for by Iraqi oil. If I have to choose between a tax cut or body 
armor for our troops, I choose body armor. Our first obligation must be 
to our troops.
  War is not the time to be repealing the estate tax. Americans are 
putting their lives on the line to serve in Iraq and too many are 
making the ultimate sacrifice for their country. Now more than ever, we 
cannot afford to repeal the estate tax. But we must reform it.
  I am a deficit Democrat. The Federal Government has a $337 billion 
budget deficit. But that pales in comparison to our Nation's debt, 
which has risen to $8.3 trillion. It has been estimated that by 2015, 
each American family's share of our national debt will be $85,000. It 
affects us all.
  I took the tough votes in 1990 and 1993 that led to a balanced 
budget. They led to the first budget surplus in a generation. But most 
importantly, those steps put the economy back on track and resulted in 
8 years of prosperity enjoyed by all Americans. We created 23 million 
new jobs and increased wages. Inflation fell and unemployment dropped 
to historic lows.
  Today, Congress must act responsibly. We should not be repealing the 
estate tax. We should be reforming it so it affects fewer people, 
protects our small businesses, and so we can keep our Nation strong and 
secure.
  Mr. McCAIN. Madam President, let me say from the outset that I do not 
support full repeal of the estate tax. I have consistently voted 
against repealing this tax because of the impact it would have on the 
deficit, as well as the possible chilling affect it could have on 
charitable giving in this country. Having said that, I do recognize the 
need for commonsense reform of the estate tax structure. However, due 
to our serious fiscal constraints, we

[[Page S5624]]

must proceed very cautiously on this and all other federal tax and 
spending matters.
  In his 1906 State of the Union Address, President Theodore Roosevelt 
proposed the creation of a Federal inheritance tax. Roosevelt 
explained: ``The man of great wealth owes a peculiar obligation to the 
State because he derives special advantages from the mere existence of 
government.'' Additionally, in a 1907 speech he said: ``Most great 
civilized countries have an income tax and an inheritance tax. In my 
judgement both should be part of our system of federal taxation.'' He 
noted, however, that such taxation should ``be aimed merely at the 
inheritance or transmission in their entirety of those fortunes swollen 
beyond all healthy limits.''
  I agree with President Roosevelt, and I remain opposed to full repeal 
of the estate tax. I have indicated, for several years now, that I am 
open to considering a reasonable compromise that addresses the concerns 
of those on both sides of this issue. What constituted a fortune 
``swollen beyond all healthy limits'' in 1907 is very different from 
the wealth we see today. I don't think it's unreasonable to raise the 
amount exempted from estate taxes in order to protect America's family 
farms and small businesses while maintaining the tax for huge fortunes. 
We need to debate this issue and come to some kind of resolution. As we 
all know, our colleague, Senator Kyl, has worked very hard for a long 
time to craft an alternative to full repeal. His compromise deserves to 
be debated and voted on.
  To his credit, the majority leader has consistently indicated that, 
if the Senate can secure cloture on a motion to proceed to legislation 
dealing with the estate tax, Senator Kyl would be recognized to offer 
his alternative proposal as an amendment. Therefore, I am voting to 
invoke cloture on the motion to proceed to H.R. 8 so that we can debate 
and vote on the Kyl alternative. In 2001, I stated that I supported 
``estate tax reform that will take into account the effect such reform 
will have on our robust charitable community. For this and other 
reasons, I support a $5 million cap with regard to the estate tax 
cut.'' My position remains unchanged today. Senator Kyl's alternative 
proposal would put that $5 million cap in place. It is a good 
compromise and is consistent with my longstanding views on this issue.
  I want to be clear. This vote should in no way be viewed as a vote in 
support of full repeal of the estate tax. It is not. It is simply a 
vote to allow debate and amendments on the issue--with one of those 
amendments being the alternative crafted by Senator Kyl. This vote is 
consistent with both my longstanding opposition to full repeal of the 
estate tax as well as my support for a reasonable compromise. Again--I 
continue to oppose full repeal of the estate tax, but look forward to 
supporting Senator Kyl's alternative proposal.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Madam President, how much time is it remaining on our 
side?
  The PRESIDING OFFICER. There is 7 minute 45 seconds remaining on the 
Republican side.
  Mrs. HUTCHISON. Madam President, I ask unanimous consent that the 
time be divided in the following way: Senators Sessions for 3 minutes, 
Senator DeMint for 2 minutes 45 seconds, and Senator Hutchison for 2 
minutes, and that each be notified of their time when they come to that 
limit.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Alabama.
  Mr. SESSIONS. Madam President, I thank the Senator from Texas. 
Earlier this year, 26 Senators signed a letter that I produced asking 
Senator Frist, the majority leader, to bring up this bill. He has 
worked hard to find the time, and here we are.
  I recall, and I will set the record straight, that the death tax is 
eliminated already in the year 2010. It goes to zero. But the next 
year, the exemption is $1 million and the rate is 55 percent, a 
confiscatory rate.
  The American heritage is one of savings and frugality and a belief in 
the right to own private property and leave that property to whomever 
people choose on their death. That is why overwhelmingly people who are 
not impacted by the death tax believe it is wrong and say in poll after 
poll it should be eliminated.
  The cost of collecting this tax exceeds what it brings in to the 
Government coffers. That is the definition of a bad tax--the very 
definition of it. A good tax is one that is simple and fair and low 
cost to collect. This one is exactly the opposite, causing all kinds of 
gymnastics to avoid it.
  Finally, and importantly, it savages growing closely held businesses. 
I think about one man I met traveling in Alabama. He and his sons own 
three motels. He met with me and told me they were paying $80,000 a 
year for a life insurance policy because when that father dies, it will 
take that much life insurance, $7,000 a month, to pay the death tax.
  They are competing with the big guys--Howard Johnson's, Holiday Inn, 
Marriott--trying to really get up there, but every month they are 
paying $7,000 that could be used to pay down the mortgage on their 
motels and build a competitive business. That is why this tax is 
adversely impacting our country. It is against savings, it is against 
frugality.
  I received a call from Robert Johnson this week, head of Black 
Entertainment Television. He is competing with CBS, NBC, Fox, and ABC. 
He is trying to do well. He has a family-held business. If something 
happens to him, he said there is no other African American who can buy 
this business. It is going to be bought up by some conglomerate.
  I ask my colleagues to remember that CBS, ABC, FOX, and NBC never pay 
a death tax. Holiday Inn never pays a death tax. It is the small, 
closely held businesses that are expanding, have no cash for investing 
in their next new motel who compete with the big guys who have to suck 
out that money.
  Those who want to keep estate tax claim repealing it will cost the 
Government too much money.
  I would like to discuss this issue in some detail. They point to two 
Government reports--one by the Joint Committee on Taxation, or JCT, and 
one by the Congressional Budget Office, or CBO. Both these reports 
assert that repealing the death tax will reduce Government revenues by 
approximately $280 billion from 2011 to 2015. However, simply put, 
these cost estimates are not realistic.
  Before discussing why, it is important to note that the JCT does not 
generally share the specifics of their revenue estimates, describe 
their methodology, or reveal their assumptions to the general public or 
Members of Congress. We thus must speculate exactly how JCT arrives at 
their revenue projections. Of course, if the JCT is so confident in the 
quality of their estimates, one must ask why they are reluctant to 
reveal their methods and assumptions.
  There are many reasons to believe that revenue loss estimates by JCT 
and CBO regarding repeal of death tax are on the ``high side.'' First, 
as Joint Economic Committee points out, JCT has estimated that the 
total revenue loss from death tax repeal would actually exceed revenue 
the tax raises. This is a curious notion, to say the least. At the time 
of JCT's analysis, estate tax was expected to raise $218 billion from 
2011 to 2015--the 5-years after the death tax returns to its 55 percent 
top rate. However, JCT estimates that over that same period of time, 
repeal would lose $281 billion in revenue. In other words, revenue lost 
from estate tax repeal would equal 129 percent of the actual revenue 
the tax is supposed to raise. A similar pattern exists for CBO estimate 
where revenue lost from repeal equals 120 percent of the actual revenue 
it is estimated to raise. This pattern--present in both estimates--
certainly begins to raise questions about these scores.
  Second, passing the bill before us would eliminate the stepped-up 
basis rule. What is the stepped-up basis rule? Current law allows 
inherited assets to be valued at their current market value at the time 
of decedent's death. The heirs get a stepped-up basis rather than 
having as a basis the original purchase price. No capital gains tax is 
therefore applied to any increase in the value of that asset. This 
reduces capital gains tax collections significantly. For example, if an 
heir were to inherit a house valued at $250,000 that was originally 
purchased by her father for

[[Page S5625]]

$100,000, the daughter would pay no capital gains tax on the $150,000 
increase in the value of that home. The bill we are debating today 
would effectively change this to require that a capital gains tax be 
paid on the full increase in the asset price from the time it was 
originally purchased. As the Wall Street Journal pointed out this week, 
the JCT has calculated that changing how inherited assets are treated 
in terms of capital gains tax law would raise $50 billion to $60 
billion a year. Most important, this $50 to $60 billion exceeds the 
amount of revenue the estate tax raises annually, which has only 
accounted for 1 percent to 2 percent of all Federal receipts over the 
years. In other words, the estate tax has not traditionally been a 
major source of revenue for the Federal Government and elimination of 
the stepped-up basis rule should more than cover any loss of revenue 
from eliminating this tax.
  A 2005 study from one econometrics firm--CONSAD Research 
Corporation--backs up this analysis. In particular, they found that the 
revenue impact of permanent repeal coupled with a limited stepped-up 
basis rule for the calculation of estates' capital gains realizations 
would actually yield a small net gain in revenues through 2014.
  Third, JCT and CBO scores ignore fact that existence of estate tax 
itself helps reduce income tax collections. For example, the estate tax 
encourages widespread tax avoidance, given its high top tax rate, which 
would return to 55 percent if we do not pass this bill. To avoid paying 
the estate tax, parents in high-income brackets often shift resources 
to their children in lower tax brackets, lowering income tax receipts. 
Similarly, income tax revenue is lost when transfers are made to tax-
exempt groups, such as charities and family trusts.
  Existence of estate tax also reduces income tax collections by 
reducing the amount of capital in the economy. Joint Economic Committee 
estimates that the estate tax has resulted in $847 billion less in 
savings and capital investment in the United States over the long run--
in other words, investment in such assets as office buildings, 
retirement accounts, houses, factory equipment and so forth. Similarly, 
recent studies have shown that the estate tax encourages consumption 
rather than savings and wealth accumulation, shrinking the size of 
taxable estates.
  In addition, according to Heritage Foundation economists, the estate 
tax costs our economy between 170,000 and 250,000 productive jobs each 
year. These jobs are never created because the investments that would 
have financed them are not made, as these resources are diverted to pay 
the death tax itself or pay for complex trusts and insurance policies 
to avoid the tax. If these jobs were created, each of these 170,000 to 
250,000 individuals would be paying income tax, lessening revenue loss 
from estate tax repeal.
  The estate tax also imposes an excessive compliance cost on 
taxpayers, again lowering income tax collections. Estate planning can 
be very complex, requiring the average family which engages in it to 
spend anywhere from $30,000 to $150,000 according to one study. It 
should be noted that twice the number of estates were required in 2004 
to file all the death tax paperwork than actually paid the tax. Many of 
these filings require hiring lawyers and accountants at a significant 
cost to these estates. In fact, Alicia Munnell, a professor of finance 
at Boston College and a former member of President Clinton's Council of 
Economic Advisers, has estimated that the costs of complying with 
estate tax laws are roughly the same as the revenue raised. In 
particular, she has written that ``in the United States, resources 
spent on avoiding wealth transfer taxes are of the same general 
magnitude as the yield.'' Similarly, she wrote in another article, 
``the compliance, or, more appropriately, the avoidance costs of the 
transfer tax system may well approach the revenue yields.'' Put another 
way, for every dollar of tax revenue raised by the estate tax, Munnell 
estimates that another dollar is wasted simply to comply with or avoid 
the tax.
  Fourth, another reason it is safe to believe that the estimates we 
are discussing today are inaccurate is that, according to an analysis 
by the American Family Business Institute, the CBO underestimates 
economic growth in its analysis and thus tax revenues. Specifically, in 
scoring revenue loss with repeal, CBO assumes that over the next 10 
years that real GDP growth will average 2.95 percent per year. This 
forecast is an underestimation of historical averages. Over the past 40 
years, average growth in GDP is 3.20 percent; the 30-year average is 
3.23 percent; the 20-year average is 3.11 percent; and the past 10-year 
average is 3.34 percent. If we assume a 0.1 percent per year increase 
in GDP growth above CBO baseline, which would keep GDP below any of the 
averages I just mentioned, the result is a revenue loss from repeal of 
only $87 billion over the next 10 years. In other words, revenue loss 
is more than 300 percent lower if we assume only a slightly higher 
growth in GDP, which is still lower than other recent 10-year GDP 
averages.
  Finally, past estimates by JCT and CBO have been wildly off base. JCT 
forecast that the capital gains tax reduction enacted in 2003 would 
``cost'' $3 billion from fiscal years 2003 to 2005.
  What happened? The cut in capital gains tax rate raised revenue. In 
fact, tax receipts from capital gains tax are now expected to be $87 
billion more than CBO originally predicted for years 2003 to 2006. 
Similarly, JCT estimated total revenue loss for the first year of the 
2004 American JOBS Creation Act--a bill that provided several corporate 
tax cuts would be $4.5 billion. In reality, enactment of this law 
actually resulted in a revenue gain of $16 billion.
  Finally, Congress reduced the capital gains rate from 28 to 20 
percent in 1997. JCT estimated at that time that such a reduction would 
result in a revenue loss of $21.2 billion over 10 years. However, over 
the first 4 years following this rate reduction alone, revenues from 
capital gains tax were $47.8 billion more than JCT estimates.
  Given all these problems with the JCT and CBO estimates, what are we 
to believe about the cost of repealing the death tax? Personally, I 
believe that even though the Federal Government may lose some revenue 
from eliminating the estate tax, that amount will be negligible, if the 
Government loses any money at all. Thus, the argument that we cannot 
afford to eliminate the death tax is a hollow one. Two-thirds of the 
American people support repeal of the death tax according to a recent 
survey.
  It is time to follow their wishes.
  The PRESIDING OFFICER. The Senator has used 3 minutes.
  Mr. SESSIONS. I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. DeMINT. Madam President, we are being subjected, once again, to 
the tired old Democratic song that Republicans are trying to help their 
rich friends, even though the other side has said only 2 or 3 out of 
every 1,000 Americans pay this tax. They think we are doing this to get 
votes. Even though they say only a small number of Americans pay this 
tax, the majority of Americans believe it is wrong because they know 
what Senator Sessions was just saying about a family-owned hotel chain, 
that it is not just those who own it who will suffer if it is broken up 
and sold, that it is all the people who work for it.
  So the question today is really when someone dies in America, should 
their property and possessions go to the Government, or should it stay 
working in a family business or farm in producing jobs in this country?
  One point I would like to make in this short period of time is, this 
estate tax does not benefit the average American. It does not help poor 
Americans. In fact, it takes their job.
  Just to deal with the death tax--and we have heard these figures 
before--lawyer and accountant fees are from $30,000 to $150,000, life 
insurance policies, which Senator Sessions just mentioned, appraisal 
costs, tax preparation--the cost of dealing with this is actually much 
more than the revenue.
  This chart reminds us that the revenue in the death tax is less than 
$25 billion a year, but the economic cost to our country is estimated 
at $847 billion in lost capital investment because of the death tax, a 
loss of over 100,000 jobs per year, and over $10 billion in lost 
income.
  The American people are not stupid. They know that while this tax may 
hit

[[Page S5626]]

the wealthiest of Americans, that most of us as Americans work for 
those family businesses or farms. It makes no sense to break up these 
businesses and send the money to the Government where it will not be 
nearly as effective in producing economic prosperity.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Madam President, how much time is remaining?
  The PRESIDING OFFICER. There is 2 minutes remaining.
  Mrs. HUTCHISON. Madam President, we passed a bill in 2001 that 
actually started lowering the death tax for a 10-year period, and then 
it will come back in full force. When it comes back in full force, we 
are going to have up to a 55-percent tax on estates that are over $1 
million.
  What does this mean? It means that if someone owns a farm where the 
property has appreciated but they cannot possibly produce enough on 
that farm to pay one lump sum on its value--55 percent of it--we would 
be breaking up family farms and ranches all over this country. That is 
what the death tax has been doing for years.
  In fact, America has the highest death tax in the world. We say we 
are a country of small businesses, of family-owned businesses, 
entrepreneurs who have started with nothing and built something, and 
yet we do the very thing that hurts those small businesses. In fact, 
they cannot pass to the next generation. Thirty percent of family 
businesses today pass to the second generation; 13 percent make it to 
the third generation. That is because the property owned in a business 
is worth much more in value than it produces.
  The death tax walks away from the American dream. The American dream 
is if you come to this country, if you work hard, you can give your 
children a better chance than you had. The American dream is that you 
can start with nothing and you can build something if you work hard and 
you have a good idea. But the death tax walks away from that because it 
breaks up that family business, it breaks up the ability to accumulate 
wealth, it interferes with freedom and the free enterprise in this 
country today.
  I hope we will not throw people out of jobs, as Senator DeMint just 
mentioned; that we will not prevent people from giving their kids a 
better chance than they had. Please vote for cloture today so that we 
can do the right thing for our country and promote small farms, family-
owned businesses, and entrepreneurship once again.
  The PRESIDING OFFICER. Time has expired.
  Mr. REID. Madam President, it is my understanding that I will speak, 
then Senator Frist will speak, and then we will have a vote; is that 
correct?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. REID. Madam President, first, I understand the people downtown 
and on 5th Avenue have come up with this death tax name, but this is an 
estate tax. If my wife or I die, there would be no tax. I would acquire 
the property she had and vice versa. At such time as she and I pass 
away, and if there is a tax--of course, we have paid no tax on any of 
this--when we pass away, there would be a tax perhaps. But if there was 
a tax, one would have 14 years to pay it.
  I want all within the sound of my voice to understand that 46 million 
people have no health insurance, and there is not a word of debate in 
the Senate. Gas prices are over $3 a gallon in Nevada. Minimum wage has 
not been raised in years, and we are not doing anything on that in the 
Senate.
  The Republican-dominated Congress just eliminated the tuition tax 
credit, a credit for which one could get a tax benefit for sending 
their kids to college. We are not working on that issue.
  We have a deficit approaching $9 trillion, and we are doing nothing 
about that.
  Stem cell research, to give hope to hundreds of thousands, if not 
millions, of Americans with diseases such as Parkinson's, Alzheimer's, 
diabetes, Lou Gehrig disease--we are not doing anything about that.
  Prescription drugs for everyday Americans and for seniors--nothing.
  Not one of these issues is before the Senate, but we are going to 
talk about something today that affects two-tenths of 1 percent of the 
people in America--two-tenths of 1 percent.
  The estate tax is not high on the agenda of people in Nevada. I think 
we are wasting precious days on divisive issues when there are so many 
other matters that deserve and demand our attention. Why aren't we 
doing something in the Senate to address issues that affect 99.8 
percent of the American people?
  I haven't talked about the intractable war in Iraq. It rages on. Our 
soldiers continue to fight valiantly, and heroic performance and 
sacrifice has not been matched, I don't believe, by the fact that we 
have $50 million we need to spend to get the military up to the 
position it was in when the war started. There has been deterioration 
of our equipment.
  With respect to health care, there are 46 million Americans who have 
no health insurance. I think it is a national crisis.
  The national debt--I mentioned that briefly--stands at $8.4 trillion 
right now and is scheduled to grow to $12 trillion by 2011, double what 
stood when President Bush took office. The national debt represents a 
birth tax for our children, our children's children, and their 
children. The Senate is doing nothing to relieve the burden of the 
birth tax. Why?
  Well, we know the answer. The majority, the Senate Republicans, don't 
intend to fix these problems because so many of them are problems they 
created, and they don't want to call attention to them. That is why we 
don't have legislation on which we can offer amendments.
  So, instead, we have the estate tax on the Senate floor, the latest 
effort to distort, distract, and confuse Americans.
  The estate tax is an extremely costly tax for a wealthy few that 
comes at the expense of every American born and yet to be born for 
decades to come. How costly? Roughly $1 trillion. And how few? Twelve 
thousand estates in America. We are a country of 280 million people. We 
are legislating here today for 12,000 people who are rich.

  I think it is fair to say that Warren Buffett, George Soros, the 
Gateses--billionaires--they have said very clearly that this tax should 
remain, that it is their obligation as rich people in America who have 
achieved the American dream to pay these taxes. But there are a few who 
don't feel that way. As Senator Durbin indicated, $800-some-odd billion 
by people who are pushing this legislation by running full-page ads in 
newspapers around the country.
  Let me talk about some myths concerning the estate tax. First, some 
proponents of the estate tax repeal sponsored by about 18 families 
would have us believe that it is a fiscal-free lunch. One group, the 
American Family Business Institute, even claims that repealing the 
estate tax would increase the coffers of this country. Oh, that is so 
wrong.
  The Joint Committee on Taxation has estimated revenue loss over the 
next 10 years to be about $400 billion. Even President Bush's own 
Treasury Department says that repealing the estate tax will reduce 
Federal revenues. The Treasury Department puts the loss at about $340 
billion. That is only half the story.
  According to the Tax Policy Center, a joint project of the Brookings 
Institute and the Urban Institute--these are nonpartisan 
organizations--the revenue loss associated with repealing the estate 
tax over the first full 10 years it is in effect would be $750 billion. 
But we have to borrow that money. So that would mean that this would be 
financed by China, Japan, Saudi Arabia, Great Britain, and other 
countries. Over half the money now that we have borrowed doesn't come 
from Americans; it comes from foreign countries. So that is about $1 
trillion. Over 10 years, we can expect the national debt to increase by 
$1 trillion for 12,000 estates, two-tenths of 1 percent at the most.
  The second myth is that we need to repeal the estate tax to protect 
and preserve small businesses and family farms. That is a myth. Very 
few small businesses and family farms pay any estate tax, and an even 
smaller fraction suffers any liquidity problems as a result of the tax. 
In fact, the American Farm Bureau in California, the largest farm 
producer in America--they grow the most, by far, of any State in the

[[Page S5627]]

Union--the Farm Bureau was asked, Show us a single farm in California 
that was forced to sell as a result of the tax. They could produce not 
a single farm, not one.
  It is a similar situation with small business. In fact, the Small 
Business Council of America has said that the repeal of the estate tax 
will actually harm most small business owners because of how it would 
change the tax benefits they currently receive.
  A third myth. We have a compromise. If there were ever a myth about a 
compromise, listen to this beauty. For the first, I think it is $5 
million or $10 million I read in the paper, no tax. None. Then, after 
you have over $5 million or $10 million, or whatever the bottom figure 
is, then the tax goes up to the outrageous sum of 15 percent. Over $30 
million, then it goes up to 30 percent. Someone who is worth $30 
million net--that is a lot of money--and it would even be more than 
that because you would subtract stuff to get to the net estate--they 
would be paying less taxes than somebody who works in Henderson, NV at 
one of the industrial plants. They pay more taxes, somebody working for 
wages, than somebody with that kind of money.
  So the third myth perpetuated here by the majority is that the only 
way to reach a deal on the estate tax is by voting on a motion to 
proceed and foregoing your right to vote on all amendments, save one, 
drafted by supporters of full repeal, and it is a full repeal anyway. 
It amounts to about 85 or 90 percent of the lost revenue.
  This country is bleeding in red ink. I support fiscally responsible 
reform of the estate tax, but anyone who knows the Senate and knows the 
compromise proposal will quickly see that the majority's proposal 
doesn't even pass the laugh test. The best way to bring Members 
together on a difficult issue is to let the Senate work its will. That 
is what is supposed to be done, with Members of both parties able to 
offer any amendment they choose and get a vote. Yet under the 
majority's offer, only the most ardent supporter of repeal of the 
estate tax will be permitted to draft and offer an amendment. All other 
Members would be denied that opportunity. That fact alone should tell 
people our majority friends are not serious about letting the Senate 
work its will to develop a true bipartisan compromise.
  But it is even worse than that. No one I know has seen the actual 
language of the so-called compromise--only what was in the newspapers--
and there certainly has not been any actual score of how much it would 
cost. But on descriptions of the amendment we have seen in the press, 
credible outside analysts have indicated this new proposal would cost 
about $825 billion or $850 billion. As I have said, it is 85 or 90 
percent of the cost of full repeal. Only those trying to sell the 
people a bill of goods could possibly call something a compromise that 
is not a compromise when the costs are this large, are this close to 
full repeal.
  I don't know where the term ``a pig in a poke'' came from, but if 
there were ever a description of what I think it means, that is, you 
have a container and you put something in it and you wind up with 
nothing, this is it. This is an absolute farce.
  I hope this Senate will not focus its attention on two-tenths of 1 
percent of the American people and leave 285 million people still 
wondering when are we going to get some health insurance reform, when 
are we going to do something for health care, stem cell research, when 
are we going to do something about education costs. I can't imagine 
that our Senate would do this with the red ink as far as you can see, 
and we are going to focus on two-tenths of 1 percent and leave 
everyone, including the folks wanting a minimum wage increase, out in 
the cold as they have been for years. This is unfair. I would hope that 
we would not vote for cloture on the motion to proceed. This is wrong.
  Madam President, the majority leader is on his way. I suggest the 
absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. FRIST. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. FRIST. Madam President, Michael Caudle's father founded the 
Greenfield Lumber Company in Greenfield, TN in 1955. Michael's dad and 
his granddad spent years building that business into the trusted, 
reliable family business that exists today. But when Michael's dad 
passed away 6 years ago in 2000, the business was put on the brink. The 
family at that time, all of a sudden, was forced to pay nearly $400,000 
in death taxes and almost had to sell the business they had worked so 
hard to put together to pay the tax.
  Michael says he hopes to pass that lumber company on to his children 
and his grandchildren. It is his life. It is what he has worked for: to 
give them that sense of family pride and community, that pride and 
community that his dad had passed on to him.
  But like so many American families, his dream is threatened by what 
has come to be known in my State as the ``buzzard tax,'' and by people 
who don't see the value in preserving a hard-won family tradition, that 
name is appropriate.
  One Tennessee couple told my office they decided not to trust their 
fate to the tax man. They sold their east Tennessee car dealership so 
that if one of them were to die suddenly, the other one simply wouldn't 
have to pay those exorbitant taxes; that burden wouldn't fall on their 
shoulders. They didn't want that buzzard picking apart that dream that 
they had built together.
  Fred Heinecke's parents, unfortunately, didn't know about that kind 
of tax planning. As Mr. Heinecke of Vanore, TN wrote to the Knoxville 
News just this Saturday:

       Current law allows a $4 million deduction for a couple. 
     That may be true if they die at the same time, such as in a 
     plane crash, but not if they die separately as most couples 
     do. I learned the hard way because my parents died a couple 
     years apart without a trust. When my mom died in 2003, I 
     wrote a painful check for over $300,000 to the Federal 
     government. This required the sale of property that had been 
     in the family for over 50 years.

  Fred, like so many people, not only had to write that unexpected and 
huge check to the Federal Government in order to pay, he had to 
negotiate the sale of his parents' property at one of the worst moments 
in anybody's life, and that is the time of their death, the passing of 
his mom. As Fred's story, which is so typical and like so many other 
stories, illustrates, this death tax is unfair. I think that is the 
strongest argument of why we bring the repeal of the death tax back to 
the floor today. It is time to bury it. It is time for it to go.
  In a few moments we will have a vote on cloture on the motion to 
proceed to H.R. 8, and we need to be very clear about what this vote 
means. A vote in favor is a vote to move forward with this important 
debate. A vote against is a vote to kill any chance of repealing or 
even reforming this onerous tax and is a vote in favor of returning the 
death tax to the pre-2001 confiscatory rate of 55 percent, an exemption 
of only $1 million per person.
  Back in 2001, we passed a gradual phaseout of the death tax--real 
progress. Under that 2001 Economic Growth Tax Relief and Reconciliation 
Act, the death tax is scheduled to disappear in 2010.
  But under the terms of this compromise legislation, after 2010 it 
comes roaring back with that tax level of 55 percent in 2011. That is 
why we need to act. We need a permanent fix, and that is what this vote 
is all about.
  Last spring, the House passed a bill to make full repeal of the death 
tax permanent. They did so with strong bipartisan support. Over a year 
has passed and thus now it is time for us to act.
  Americans have broadly said they support repealing the death tax. In 
a recent poll commissioned by the Tax Foundation, nearly 70 percent 
polled in favor of repeal.
  With stories like Mr. Henicke's, it is not hard to understand why. We 
already pay enough taxes over our lifetimes, whether it is a water tax, 
a gas tax, a payroll tax, a utility tax, a cable tax, a property tax, a 
sales tax, an income tax--we are taxed every minute of our lives. We 
are taxed from that first cup of coffee in the morning to the time we 
flip off the lights at bedtime. In fact, we are taxed so much that one 
nonpartisan organization calculates

[[Page S5628]]

that the first 5 months of the average American's salary is confiscated 
by the Government.
  If you are an enterprising entrepreneur who has worked hard to grow a 
family business or to keep and maintain that family farm, your spouse 
and children can expect to hear the knock of the tax man right after 
the Grim Reaper.
  Some on the other side of the aisle argue that the death tax is a 
critical stream of Federal revenue and that in any event it only hits 
the superrich. Neither is true. Mounting evidence shows that once 
widespread estate tax avoidance is accounted for, the death tax nets 
zero to negative tax revenue. Worse yet, the death tax may be 
responsible for the loss of from as many as 170,000 to 250,000 
potential jobs each year.
  Meanwhile, it is not the superrich who are hardest hit by the death 
tax; family businesses bear the brunt. The Seattle Times Company 
reports that 89 percent of all taxable estates filed in 1995, before 
the 2001 reform, were $2.5 million or less in size. What does this 
mean?

       A family-owned business stands to lose nearly half of all 
     its assets when it passes from one generation to the next. 
     That is over half of everything, including land, buildings, 
     equipment, money and more--all because of the current estate 
     tax law which is really a tax on death. They sell out, 
     letting long-term employees go. Not because they want to. But 
     because they have to. And the echo reverberates through an 
     entire community.

  Just yesterday I heard from farmers and western landowners and 
listened to the damage, the harm they suffered as a result of this 
death tax. Some of my colleagues have said that the death tax doesn't 
hurt farmers, but the farmers simply take a different view. Many of 
them are cash poor. They own land handed down from their parents. They 
know there is no easy way their children can continue to work the land 
if they are subjected to this death tax, so rather than wait for the 
death tax to pick apart their family farm, they make plans to sell the 
land in advance. That is the part of the story that never gets told. 
The death tax not only confiscates the honest earnings of the recently 
deceased, it often forces families to divest themselves of that family 
enterprise.
  In the past, when Congress enacted a death tax, it was at an 
extraordinary time of war, and the purpose was to raise temporary 
funds. But after the war was over the death tax would go away, it was 
repealed. But that changed in the last century. The death tax was 
imposed and has never been lifted. Instead, it became entrenched and it 
took 90 years to roll back.
  It is time to stop punishing America's entrepreneurs and job creators 
for saving, for investing, and succeeding. The death tax tells people 
it is better to consume today than to invest for the future; to consume 
today rather than save for the future; to spend now and leave nothing 
for later. That doesn't make sense. It is unfair.
  On February 10 of this year I said the Senate would debate and decide 
the fate of the death tax. That time is upon us. I urge my colleagues 
to cast their vote in favor of cloture, of proceeding to allow debate 
on elimination of the death tax. If we do not, the death tax prevails. 
America's family businesses lose and so do the workers they hire and 
the communities they support. A vote for cloture is a vote to protect 
these family traditions. It is a vote for what is right, for simple 
fairness.
  We will turn to the vote in just a few moments. Again, this is a vote 
on the motion to proceed to allow debate. It will require 60 votes on 
this very important issue. If we get 60 votes--and I hope we do get 
those 60 votes--I expect we will see a cloture motion on the underlying 
bill. If that underlying bill is not successful, I would think that we 
would need to gather together to have compromise legislation, and I 
would expect a vote on that as well.
  I yield the floor.
  The PRESIDING OFFICER. Under the previous order, pursuant to rule 
XXII, the Chair lays before the Senate the pending cloture motion, 
which the clerk will report.
  The assistant legislative clerk read as follows:

                             Cloture Motion

       We, the undersigned Senators, in accordance with the 
     provisions of rule XXII of the Standing Rules of the Senate, 
     do hereby move to bring to a close debate on the motion to 
     proceed to Calendar No. 84, H.R. 8: to make the repeal of the 
     estate tax permanent.
         Bill Frist, Jon Kyl, Jim Bunning, Conrad Burns, Richard 
           Burr, Tom Coburn, Wayne Allard, Craig Thomas, George 
           Allen, Judd Gregg, Johnny Isakson, David Vitter, John 
           Thune, Mike Crapo, Jeff Sessions, John Ensign, Rick 
           Santorum.

  The PRESIDING OFFICER. By unanimous consent the mandatory quorum call 
has been waived.
  The question is, Is it the sense of the Senate that debate on the 
motion to proceed to H.R. 8, an act to make repeal of the estate tax 
permanent, shall be brought to a close? The yeas and nays are mandatory 
under the rule. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from West Virginia (Mr. 
Rockefeller) and the Senator from New York (Mr. Schumer) are 
necessarily absent.
  The PRESIDING OFFICER (Mr. Ensign). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 57, nays 41, as follows:

                      [Rollcall Vote No. 164 Leg.]

                                YEAS--57

     Alexander
     Allard
     Allen
     Baucus
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Chambliss
     Coburn
     Cochran
     Coleman
     Collins
     Cornyn
     Craig
     Crapo
     DeMint
     DeWine
     Dole
     Domenici
     Ensign
     Enzi
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Isakson
     Kyl
     Lincoln
     Lott
     Lugar
     Martinez
     McCain
     McConnell
     Murkowski
     Nelson (FL)
     Nelson (NE)
     Roberts
     Santorum
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Sununu
     Talent
     Thomas
     Thune
     Vitter
     Warner

                                NAYS--41

     Akaka
     Bayh
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carper
     Chafee
     Clinton
     Conrad
     Dayton
     Dodd
     Dorgan
     Durbin
     Feingold
     Feinstein
     Harkin
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Menendez
     Mikulski
     Murray
     Obama
     Pryor
     Reed
     Reid
     Salazar
     Sarbanes
     Stabenow
     Voinovich
     Wyden

                             NOT VOTING--2

     Rockefeller
     Schumer
       
  The PRESIDING OFFICER. On this vote, the yeas are 57, the nays are 
41. Three-fifths of the Senators duly chosen and sworn not having voted 
in the affirmative, the motion is rejected.
  Mr. DORGAN. I move to reconsider the vote.
  Mr. LAUTENBERG. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. KOHL. Mr. President, I rise to explain to the people of Wisconsin 
my vote this morning on the estate tax.
  The arguments surrounding estate tax repeal are muddled, and I 
believe there are important clarifications to make. First, small 
businesses and farms rarely--if ever--are forced to sell off assets or 
close up shop to pay the tax. Under the current exemption, roughly 99 
percent of estates owe nothing in estate taxes. When the exemption 
expands to $2.5 million, 99.9 percent of all estates won't owe a dime. 
According to a report by the Tax Policy Center, in 2011, with a $3.5 
million exemption, only two of every 100,000 people who die that year 
would be subject to the estate tax.
  The second explanation is of what the Senate voted on today. Today's 
vote was on a motion to proceed to a bill to repeal the estate tax. Not 
to proceed to a compromise or any other deal--but to full repeal.
  I oppose full repeal of the estate tax. Our Nation can no longer 
afford this tax break for the very well off. I supported the 2001 tax 
bill because we were in a time of surplus. That is not the case today. 
Now we face huge deficits, deficits amplified by the war on terror and 
reconstructing the gulf coast. According to the non-partisan Center on 
Budget and Policy Priorities, permanently repealing the estate tax 
would add about $1 trillion to our national debt from 2011 to 2021. We 
cannot afford, at this time, these kinds of costs.
  Nevertheless, I do support estate tax reform, and I will work with my 
colleagues towards that end. Responsible

[[Page S5629]]

estate tax reform is possible and necessary. We must work to find an 
exemption level coupled with a tax rate that will provide significant 
relief, while not adding nearly a trillion dollars to the next 
generation's tab.

                          ____________________