Congressional Record, Volume 152 Issue 72 (Thursday, June 8, 2006)

[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

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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.

____________________