[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[Senate]
[Pages 18202-18203]
[From the U.S. Government Publishing Office, www.gpo.gov]



                         ESTATE TAX LEGISLATION

  Mr. ALLARD. Mr. President, recently, President Clinton vetoed 
legislation that would have repealed the estate tax, legislation that I 
strongly supported. I fundamentally oppose the estate tax. I call it 
the ``death tax.'' This has been a concern of mine for some time now. 
In fact, I have previously introduced legislation that would do away 
with this unfair tax.
  Congress has clearly demonstrated its support for easing this burden. 
The Taxpayer Relief Act of 1997 gradually increases the exemption. Last 
year, Congress decided that further action was needed and passed a bill 
that would have eliminated the federal estate tax. Unfortunately, the 
President chose to veto that bill.
  The United States has one of the highest estate taxes in the world. 
While income tax rates have declined in recent decades, estate taxes 
have remained high. Today, the death tax is imposed on estates with 
assets of more than $675,000. The rates begin at 37% and very rapidly 
rise to 55%. Some estates even pay a marginal rate of 60%!
  This issue really hits home for me. Family farms and small businesses 
are two of the groups most affected by the estate tax. I grew up on my 
family's farm in Colorado, and I owned a small business before I came 
to Washington. So, I truly understand the concerns of those who live in 
fear of the impact that this tax will have on their legacy to their 
children.
  The estate tax has resulted in the loss of family farms and family 
businesses across the nation. Many people work their entire lives to 
build a business that they can pass on to their children. When these 
hard-working businessmen and farmers pass away, their families are 
often forced to sell off the business to pay the estate tax. I see this 
as an affront to those who try to pass on the fruits of their lives' 
work to their children.
  The people affected by this tax are not necessarily wealthy. Many 
small businesspeople are cash poor, but asset rich. For example, the 
owner of a small restaurant might have $800,000 of assets, but not much 
cash on hand. Her children will still have to pay an excessive tax on 
the assets. The beer wholesaler, who has invested all of his revenue in 
trucks and storage, might have more than $675,000 in assets. That does 
not make him a cash-wealthy man. Yet, he is still subject to this so-
called ``tax on the wealthy.''
  The death tax also impacts employment and the economy. When a family-
owned farm or a small business closes, the workers lose their jobs. 
Conversely, leaving resources in the economy can create jobs. A recent 
George Mason study found that if the estate tax were phased out over 
five years, the economy would create 198,895 more jobs, and grow by an 
additional $509 billion over a ten-year period.
  Additionally, the estate tax is a disincentive for Americans to save 
their earnings. The government has created a number of tax breaks and 
other incentives for those who save their money: 401(k)s and IRA's--to 
name a few. Yet, the estate tax sends a contradictory message. 
Basically, it says, ``If you don't spend all your savings by the time 
you die, the government will penalize you.'' This tax is no small 
penalty, either. We are talking about some very high tax rates.
  The death tax also represents an unjust double taxation. The savings 
were taxed initially when they were earned. Then, when the saver passes 
away, the government comes along and takes a second cut. There is no 
good reason for the current system--other than the government's desire 
to make a profit at the already trying time of the death of a dear one.
  The current death tax law has a greater effect on the lower end of 
the scale than the higher. Wealthy people can afford lawyers and 
planners to help them plan their estate. Those at the lower end of the 
estate tax scale are often unable to afford sophisticated estate 
planning. So the current law also makes the tax somewhat regressive, 
which is not fair.
  Planning and compliance with the estate tax can consume substantial 
resources. In 1995, the Gallup organization surveyed family firms. 
Twenty-three percent of owners of companies valued over $10 million 
said that they pay more than $50,000 per year in insurance premiums on 
policies to help them pay the eventual bill. To plan for the estate 
tax, the firms also spent an

[[Page 18203]]

average of $33,000 on lawyers, accountants and financial planners, over 
a period of several years. This is money that could have been better 
spent to expand the business and create new jobs--rather than dealing 
with the death tax.
  The estate tax only raises one percent of federal revenue, yet it 
costs farms, businesses and jobs. No American family should lose their 
farm or business because of the federal government. I support full 
repeal of the federal estate tax.

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