[Congressional Record (Bound Edition), Volume 146 (2000), Part 7]
[House]
[Pages 9862-9869]
[From the U.S. Government Publishing Office, www.gpo.gov]



                       ELIMINATING THE ESTATE TAX

  The SPEAKER pro tempore (Mr. Gary Miller of California). Under the 
Speaker's announced policy of January 6, 1999, the gentleman from 
Illinois (Mr. Crane) is recognized for 60 minutes as the designee of 
the majority leader.
  Mr. CRANE. Mr. Speaker, I rise today to address the tax that is one 
of the most obscene, unfair, and immoral of all taxes. The estate tax, 
or what is commonly referred to as the death tax, since it is generally 
triggered only by one's removal from productive life, has outlived its 
usefulness. Later this week, this body will be voting on legislation to 
eliminate the death tax, and I think it is past time to bury the death 
tax once and for all.
  Mr. Speaker, I am submitting for the Record an article by William 
Beach from the Heritage Foundation entitled ``Time to Eliminate the 
Costly Death Tax.''

                 Time To Eliminate the Costly Death Tax

        (Published by William W. Beach, the Heritage Foundation)

       The U.S. House of Representatives is once again poised to 
     vote on repealing the federal death tax. In view of the 
     strong support that death tax repeal receives from the 
     general public, the House debate should be firmly grounded in 
     what an increasingly large percentage of voters already know: 
     Death taxes adversely affect many times the number of

[[Page 9863]]

     people who pay the tax collector. The Death Tax Elimination 
     Act (H.R. 8), sponsored by Representatives Jennifer Dunn (R-
     WA) and John Tanner (D-TN), is a response to this growing 
     understanding and offers the House its second opportunity in 
     an many years to eliminate this onerous tax.
       Death taxes most often burden the very people that tax 
     policy is intended to help. For example:
       Women and minorities are very often owners of small and 
     medium-sized businesses. After sacrificing daily to build 
     their businesses by reinvesting their profits, they soon 
     realize that the financial legacy of their hard work, which 
     they hoped to pass on to their children, instead will fall 
     victim to confiscatory taxation and liquidation.
       Farmers often face losing their farms, but this is not so 
     much because of competition from wealthy agribusinesses or 
     capitalist ``robber barons.'' More often, it is because the 
     federal government heavily taxes the estates of people who 
     invested most of their earnings back into their farms and had 
     only meager liquid savings.
       Workers suffer when they lose their jobs because many small 
     and medium-sized businesses are liquidated to pay death taxes 
     and because high capital costs depress the number of new 
     businesses that could offer them a job.
       Low-income people are harmed--not only because the general 
     economy is weakened by the death tax's rapacious appetite for 
     family-owned businesses, but also because the death tax 
     discourages savings by encouraging consumption.
       Specifically:
       Death taxes hurt small businesses. Investing in a business 
     is one of the many ways to save for the future. For most 
     small firms, every available dollar goes into the business--
     the dry cleaning firm, the restaurant, the trucking company--
     to ensure that it sustains an income for the owners's family 
     and is an asset to pass on to children. Women with children 
     often find self-employment to be the only entry-level work 
     available. Minorities, many of whom wish to raise their 
     families in ethnic communities, understand well the virtues 
     and promises of self-employment. Yet the financial security 
     that family-owned and small businesses provide these 
     Americans is put at risk if the owner dies with a taxable 
     estate.
       In an important 1995 study of how minority business owners 
     perceive the estate tax, Joseph Astrachan and Craig Aronoff, 
     economists of Kennesaw State University in Georgia, found 
     that:
       Some 90 percent of the surveyed minority businesses know 
     they might be subject to the federal estate tax;
       Although 67 percent of these businesses have taken steps 
     (gifts of stock, restructuring ownership, purchasing life 
     insurance, and buy-sell agreements) to shelter their assets 
     from estate taxes, over 50 percent of them indicate that they 
     would not have taken these steps had there been no estate 
     tax; and
       Some 58 percent of all respondents in the survey anticipate 
     business failure or great difficulty maintaining the business 
     after their death.
       Death taxes are more ``affordable'' as income rises. 
     Taxpayers who cannot pay tax-planning fees frequently lose 
     more of their estates to death taxes. Thus, what appears to 
     be a progressive tax contains a regressive dimension. Experts 
     on the death tax continually are struck by the number of 
     taxpayers who are insufficiently prepared to pay the death 
     tax and by the high correlation of these types of people with 
     those who have not had the benefit of high-priced legal and 
     accounting advice. Indeed, legal avoidance of high death tax 
     liabilities is closely related to the amount of fees 
     taxpayers are able to pay for expensive tax-planning advice.
       Death taxes undermine savings and investment. Not only do 
     death taxes reduce potential employment opportunities and 
     undermine the promise that hard, honest labor will be 
     rewarded, but they also encourage consumption and undermine 
     savings. What can be said generally about income taxes can be 
     stated emphatically about death taxes: Accumulation of more 
     wealth will lead to more taxes, while consumption of income 
     will result in relatively lighter taxation. In other words, 
     it makes more tax-planning sense to buy vacations in Colorado 
     or a painting by Rubens than to invest in new production 
     equipment or expand a business.
       Death taxes are costly to collect. The economic effects of 
     the disincentive to save and invest are striking, especially 
     in light of the relatively small amount of federal revenue 
     raised by death taxes. A 1996 Heritage Foundation analysis of 
     death taxes using the WEFA Group U.S. Macroeconomic Model and 
     the Washington University Macro Model, for example, found 
     that, if the estate tax had been repealed in 1996, then over 
     the next nine years: The U.S. economy would average as much 
     as $11 billion per year in extra output; an average of 
     145,000 additional new jobs could be created; personal income 
     could rise by an average of $8 billion per year above current 
     projections; and the extra tax revenue generated by extra 
     growth would more than compensate for the meager revenue 
     losses stemming from the repeal.
       The death tax is not even a good value for the government. 
     Federal death taxes probably are the most expensive taxes to 
     pay and collect. Death taxes raise just slightly more than 1 
     percent of total federal revenues, but according to one 1994 
     analysis, total compliance costs (including economic 
     disincentives) amount to about 65 cents for every dollar 
     collected. Other studies, which subtract disincentives and 
     examine only direct outlays by taxpayers to comply with 
     estate tax law, put the compliance cost at about 31 cents per 
     dollar. This additional cost means that the $27.8 billion 
     collected in federal death taxes last year actually cost 
     taxpayers $36.4 billion.

  Mr. CRANE. Mr. Speaker, I would now yield to our distinguished 
colleague, the gentleman from Arizona (Mr. Hayworth), a member of the 
Committee on Ways and Means.
  Mr. HAYWORTH. Mr. Speaker, I thank my colleague, the gentleman from 
Illinois (Mr. Crane), the distinguished chairman of the Subcommittee on 
Trade of the Committee on Ways and Means here in the House of 
Representatives.
  Mr. Speaker, later this week we will come to this floor to vote on 
putting at long last the death tax to death, and we will be offered a 
clear choice. Some in this chamber will embrace the politics of envy, 
but, Mr. Speaker, I believe a bipartisan majority will embrace the 
principles of fairness, hope and opportunity, for that is what we seek.
  As my good friend from Illinois just pointed out, there is no tax 
more unfair than this death tax. Stop and think about it. Think back to 
the very foundations of our Nation, to one of our founders, Benjamin 
Franklin, who had a gifted and diverse career, who indeed won much 
public acclaim and a fair amount of his fortune as a social commentator 
in Poor Richard's Almanac when he observed, ``There are only two 
certainties in life, death and taxes.'' But even Dr. Franklin, with all 
his wisdom, with his ability to seemingly see into the future, not even 
a person as impressive as Dr. Franklin do I believe would realize that 
one day the constitutional republic that he helped to found would 
literally tax its citizens upon the day of their death.
  The rallying cry is simple, my colleagues. The American people 
instinctively understand it. No taxation without respiration. And here 
is why. This vast Federal Government, accumulating revenue in much the 
same way as I, before I went on my diet, would go to a buffet line kind 
of piling it up, searching for it in every nook and cranny, this 
ravenous Washington bureaucracy seeking revenue, when all is said and 
done, picks up precisely 1 percent of its revenue through the death 
tax, and yet three-quarters of that 1 percent is spent badgering widows 
and children and survivors of those who embraced the American Dream, 
who built up small businesses, who fed and clothed Americans on farms 
and ranches.
  Indeed, my colleagues, perhaps nowhere is it more dramatic a dilemma 
than on the family farm or on the family ranch across the width and 
breadth of our great Nation. This is a classic dilemma. Those who have 
the family farm could be accurately called cash poor and land rich. 
When there is a death, it is quite simple, Uncle Sam comes to the 
survivors and says, here is an expensive tax bill, pay it. How then is 
it paid? Well, the family farm is sold.
  And one of my friends who chooses to embrace the politics of envy, 
who preceded me in this well, claimed there were no statistics to offer 
on this. Well, I know that there are those who long for the soul of the 
accountant in all of these transactions, but I do not want to besmirch 
the profession of accountancy. I simply want to point out that 
especially my colleagues from suburban and urban districts might be 
compelled to realize that there is life outside the major metropolises; 
that power does not come from a light switch; that milk does not come 
from the corner market; that America's farmers provide these things, 
and the death tax absolutely pummels rural communities and family farms 
and ranches.
  We feel that acutely in the Sixth Congressional District of Arizona, 
a district in square mileage almost the size of the Commonwealth of 
Pennsylvania, from the small hamlet of Franklin in Southern Greenlee 
County, north

[[Page 9864]]

to Four Corners, west to Flagstaff, and south again to Florence, really 
all the way south to San Manuel, site of the largest underground mine 
in North America. Hard working people who play by the rules and a 
multitude of small towns are ravaged by this death tax. Because those 
who have spent their time building businesses, who helped provide for 
the farmers and ranchers, are forced to sell those businesses.
  Perhaps my colleagues have seen it in their communities. Perhaps 
those in larger cities would see it if they could take off their 
blinders and resist for a time the politics of envy. Perhaps they too 
could realize that, yes, more often than not, when a family loses 
control of a business, there is a reassessment and, yes, long-time 
valued employees are let go. Under new management often means faithful 
employees are out the door.
  And even as we champion new economic opportunities, why add to 
uncertainty? What crime have these families committed that would prompt 
the Federal Government to say to them, ``Sell your business; pay Uncle 
Sam.'' They have committed to crime. But under our curiously misguided 
Tax Code, as it stands today, they have committed an offense in the 
eyes of those who always embrace the radical redistribution of wealth. 
Mr. Speaker, those folks worked hard and succeeded and they are being 
punished for succeeding. And it is wrong and it has cost America too 
many family farms, too many family ranches, and too many small 
businesses.
  No matter the platitudes of the left and those who preach the 
politics of envy, it is common sense, Mr. Speaker. Across the width and 
breadth of the Sixth Congressional District I have held many town 
meetings. My colleagues who join me tonight will attest to the fact 
that there is no greater thrill than meeting with constituents and 
listening to what is on their minds. And how many times have I heard 
the story of a family ranch being sold to satisfy the tax man.
  Indeed, Mr. Speaker, we hear these stories even as we return to this 
capitol, ofttimes referred to as the crossroads of America because we 
meet so many people from so many other places. A gentleman stopped me 
just last night, told me the story of his 83-year-old mother who, some 
years ago, upon the death of his father, was told by the Washington 
bureaucrats, ``You have a tax bill of over $800,000. We don't care how 
you pay it, you just pay it.'' And, just like that, the family business 
was gone, Mr. Speaker.
  Now, some of my friends in accounting might say, oh, that lady had 
the assets to sit down with a tax attorney or an accountant. Certainly 
she could have provided some sort of means to hold on to the family 
business. She is to blame for not doing so. No, Mr. Speaker. No, the 
blame is not on that lady in her 80s, now forced to subsist on Social 
Security. The fault lies in a Tax Code that punishes people for 
succeeding, that deprives other Americans of jobs, that inhibits the 
very free market principles and the notion of rewarding ambition and 
success and prosperity upon which this country was built and upon which 
this country can prosper. But we can change that this Friday when we 
put this death tax to death.
  I mentioned a second ago, Mr. Speaker, town hall meetings. Another 
thrill we have, those of us who are honored to serve in the Congress of 
the United States, comes on those occasions when we are able to appoint 
young men and women to our military academies. I was in Winslow, 
Arizona, where two young men who aspired to attend one of those 
military academies received permission from their high school principal 
to leave during the lunch hour and join us at city hall for a town hall 
meeting. And there in Winslow, Arizona, the farmers, the ranchers, and 
the small business people were lamenting this death tax. And one of 
those young men, just really the epitome of all that is good in young 
people wanting to serve their country, one of those young men stood 
ramrod straight and said, ``Congressman, sir, do you mean to tell me 
the Federal Government taxes you when you die?''
  Now, initially, there was laughter among the older members of that 
audience in that town hall meeting. But then, upon further reflection, 
my constituents decided that really was not funny; that it epitomized 
just what was so unfair, just what was so unjust, just what was so 
unproductive about continuing to punish people for succeeding and 
trying to pass on their businesses, their dreams, to their heirs.
  Now, again, my colleagues, we have a choice. There will be those who 
continue to propagate the fiction that we should rely on the politics 
of envy, but a bipartisan majority will emerge this Friday saying we 
embrace the policies of hope. And the first step we take to do that is 
to put this unfair, unjust death tax to death.
  Mr. Speaker, I yield back to my colleague from Illinois.
  Mr. CRANE. Mr. Speaker, I congratulate our colleague for his 
insightful observations on this immoral Tax Code that we are speaking 
about tonight. And I now would like to yield to our distinguished 
colleague, the gentleman from Montana (Mr. Hill).
  Mr. HILL of Montana. Mr. Speaker, I thank the gentleman for yielding 
to me tonight to join with him and others to talk about the repeal and 
the elimination of the death tax.
  As the gentleman knows, the strength of our Nation's economy rests in 
its small businesses, small farms, and small ranches. That is where new 
jobs are created. That is where the economic vitality of this country 
is. I am proud of the fact that I represent, I think, the largest 
constituency of small businesses, over 25,000 small businesses in my 
district, over 40,000 farms and ranches.
  One of the characteristics of every one of these businesses is that 
the owners plow almost all the cash flow that they generate, almost all 
the dollars they earn back into those enterprises and those businesses. 
Early on, it is usually to pay off the debt that it takes in order to 
get started in that business. Then, later on, they will use that money 
to add to inventory or to add new equipment or machinery to expand the 
business and to make it grow or to put new people to work.
  Now, these family farmers and these family ranchers and these small 
business owners usually make very little. In the case of the farmers 
and ranchers, they will accumulate a thousand acres or so, perhaps, and 
100 critters or so, but they have relatively little cash flow to show 
for it. They often have little to show for it. Almost always they have 
no savings account, no retirement account. Sometimes they will have an 
old pickup truck or an old car or an old farm vehicle.

                              {time}  2100

  As my colleague the gentleman from Arizona (Mr. Hayworth) said, these 
people become asset rich and cash poor. But eventually for all of us 
retirement comes, and it is at this point that these folks have a 
really big problem. Because they have little in savings and little in 
retirement, the only thing they can rely upon is the asset, the farm or 
the ranch or the small business that they accumulated. So, in order to 
retire, they usually have to sell this business or part of this 
business to their kids or to other people.
  Now, until the Republican Congress reduced the capital gains tax, if 
we added the Federal tax and the State tax together, that owner of that 
business had to give a third of whatever they got for that business in 
taxes. But that was not the whole story. If they sold that business to 
their kids, their kids would have to pay 40 percent income tax on those 
payments, as well.
  So, in order to transfer that family farmer business, if they sold it 
to their kids, they would have to pay 70 to 80 percent taxes on that 
transaction. Very few businesses could generate that kind of income.
  We reduced the capital gains tax, and now it is down perhaps with 
State and local tax to 25 percent. But if they sell part of this 
business to retire to have some cash flow and leave the rest of it to 
their kids, they are going to pay 60 percent tax on what they sell to 
them and 56 percent tax on what they give to them.

[[Page 9865]]

  Now, if they can possibly generate the money that is necessary to pay 
those kinds of taxes, what it means is there are no dollars to 
modernize that business to cause that business to grow and to expand; 
and the result of that is that the lion's share of those businesses 
fail because of the huge debt that they have to take on because of 
estate tax.
  Virtually every farm group in this country, virtually every advocate 
for small business in this country will tell us that the greatest 
threat to these family enterprises, farms and ranches and small 
businesses, is the death tax. It is not low commodity prices. It is not 
competition. It is this unfair tax. Farmers and ranchers just simply 
cannot generate the cash flow they need to create a living for the 
people that work and operate that farm or ranch or business and to pay 
this tax.
  So what ends up happening as an alternative? Well, what ends up 
happening as an alternative is they will sell out to celebrities, for 
example, in my State. Ranch after ranch are being bought by Hollywood 
types or people who have earned their income from somewhere else who 
buy their ranches or farms for recreation. The result of that is that 
they are no longer productive farms and ranches, they no longer add to 
the vitality of these small rural communities, and it is destroying the 
economy of these rural communities.
  Worse yet, many times the farmer or the rancher will subdivide the 
land, divide it into 20- or 30- or 40-acre parcels, and sell one parcel 
or two parcels a year to generate enough money to retire on. In the 
end, they replace a ranch with a bunch of ranchettes. What happens then 
is we lose all the wildlife habitat, we lose the open spaces and the 
greenbelts that so many people advocate for in this Congress.
  Now, the sad thing about all this is that the very wealthy do not pay 
this tax. They use trusts, family trusts and charitable trusts, and all 
kinds of mechanisms to avoid paying these taxes for generation after 
generation. They avoid this tax.
  But, my colleagues, 40 percent of the death taxes that are collected 
by this Government are collected on estates of less than a million. 
These are estates where there are family enterprises. They are the ones 
that pay this tax.
  It is not a fair tax. It is not good for our economy. It is not good 
for our environment. It is eliminating green spaces and greenbelts. It 
is destroying the economy of rural America. It is eliminating the 
visual relief that so many of our city dwellers want to see when they 
pass into the farm country. But passing this bill to repeal the death 
tax, the Death Tax Elimination Act is essential for keeping agriculture 
and families, for maintaining these family farms and these family 
ranches, and to continue these family businesses.
  I am proud to be a cosponsor of H.R. 8. On Friday I know we are going 
to have a strong bipartisan vote. I am confident the Senate will pass 
it and the President will sign it. I urge my colleagues to support the 
bill.
  Mr. CRANE. Mr. Speaker, I yield to our distinguished colleague, the 
gentleman from Nebraska (Mr. Terry).
  Mr. TERRY. Mr. Speaker, I rise in support of the efforts that we are 
going to do for American families this week and eliminate the unfair 
death tax.
  Some of us like to talk about this issue in terms of numbers and 
percentages and policy. And really what this does is it protects our 
families. This is a family bill, but let us talk about it in the sense 
of overall policy. And that is that, in my generation, we have done 
well in either running the family business or even starting our own; 
and our fathers, the greatest generation, have done well, as well.
  So we have to figure out, in continuing prosperity and trying to 
widen and deepen prosperity so it touches even more, if we are going to 
continue policies of the Government usurping and taking money out of 
the private sector and, therefore, stalling or risking future 
prosperity for our children, then that is one policy we can take as 
this next generation transfers their assets to the next generation.
  Or we can do the right thing and allow that money to transfer to the 
next generation, where it will be put back into the economy, where it 
will be spent to expand, to recapitalize the family businesses. Or, God 
forbid, they spend it on other things and continue to stimulate our 
economy and ensure prosperity for our children when they graduate from 
school that they will have opportunities for good jobs.
  But we can talk about it in the policy sense and how it is the right 
thing to do. But what I want to do is just talk about the impact on the 
families in Nebraska, because I am here to fight for those families. 
Because what this does, when we eliminate the death tax, what we are, 
in essence, doing is protecting the culture, the history and the 
heritage of families.
  Yesterday in our office we had the Farm Wives Association. What was 
their number one issue? It was elimination of the death tax. They want 
to try to pass their family farm, many of which their grandfathers 
staked out, they want to pass it to their sons and their daughters. But 
they cannot.
  The average farm size in Nebraska is about 840 acres. That is well 
over the limit before we even get to the machinery and the value that 
the IRS would place on that business. But it is a cash poor business. 
They have no choice but to sell that farm instead of passing it to the 
next generation. They have to sell it to pay their IRS tax bills. They 
have to. They have no other choice.
  So, as we are talking about protecting the history and the culture of 
our small family farmer, it is our IRS policy that is forcing the 
consolidation. It is these families that are selling out to the Ted 
Turners who own tens of thousands of acres in Nebraska.
  But let us talk about in Omaha, Nebraska, where I was born and 
raised. Let us talk about the Omaha Printing Company, a third-
generation company. It is a small business. They employ about 30 or 40 
folks. Yet, they have several really impressive machines when I took 
the tour of it, and each of those machines run well over $500,000 to 
$600,000. They have three of them right there that is putting them to 
the limit before we get to all the other assets of that business and 
the valuation.
  The father that is currently operating that business is going to have 
a choice to make. Sure, they have paid the lawyers and the accountants 
to try to comply with this tax code and trying to pass it to the next 
generation, but they are realizing that they are probably going to have 
to spend about 40 percent to 50 percent of the assets of that business 
to try and keep it in the family.
  What about in south Omaha, the great and colorful cultural area of 
our town, with the Jocobo's grocery store and tortilla plant. They have 
got a couple of taco shell and tortilla shell machines in the back, 
just a couple of them. But the value of their inventory and the value 
of the machines itself puts them over before we get to the valuation. 
And Carlos, who is in his early 40s and has a young family that he 
would like to pass the grocery store on to, he may not have that 
opportunity.
  Mr. Jocobo emigrated from Mexico several years ago, 40 years ago, and 
established a small south Omaha business. It is really the center and 
the hub of this colorful Hispanic community that is so vibrant in south 
Omaha.
  I just hope that we do the right thing, Mr. Speaker, for that 
Hispanic owned grocery store and small business in a colorful part of 
my district. We have an historic opportunity to protect, to work, and 
fight for families and their history and their culture. Let us not miss 
this opportunity.
  Mr. CRANE. I now yield, Mr. Speaker, to our distinguished colleague 
from California (Mr. Bilbray). I was going to say Australia.
  Mr. BILBRAY. Mr. Speaker, I thank the gentleman very much for 
yielding.
  For the record, my mother is from Australia, but she is an American 
who is from Australia.
  Mr. Speaker, I just wanted to sort of echo the issue that when we 
talk about the death tax, I think too often we talk about the families 
that have to give up their businesses and give up their homes and their 
farms and the way that it breaks up the hard work and the sweat of 
parents, their ability to pass it on to their children, but I think

[[Page 9866]]

that we do not talk about the bigger picture.
  I want to articulate something. The fight against the death tax 
should not be a fight for the taxpayer. It should not even be for the 
small farmer or the small business owner. The fight against the death 
tax should be a fight for a civilized, decent society, and that is it.
  Now, my colleagues may say how can I tie the death tax to the concept 
of decency? Well, Mr. Speaker, I always try to think about what will 
history say about us as a society.
  There is this movie out ``The Gladiator'' about this great 
civilization called Rome. But how can they be a great civilization when 
they had the kind of blood letting they had? And history has damned the 
Romans for that.
  What I worry about is what will history say of the greatest nation in 
the history of the world, the United States of America? What will they 
say about us a thousand years from now? And will they say about us, oh, 
they were a great nation, but they taxed their dead? How are we going 
to justify ourselves to history?
  Now, there is a bigger picture here that I think we have got to 
address, and that is the fact that this tax does not just impact 
individuals and businesses but it is impacting us as a society.
  I think those of us on the Republican and the Democratic side will 
say one of the biggest concerns we have is watching multinational 
corporations come into the United States and absorb and digest and 
consume small entrepreneurial family businesses such as farms and 
businesses. And we will hear those on both sides of the aisle talk 
about how multinational corporations are getting so big and they are 
basically getting the monopoly because the little guy is being gobbled 
up. And it is right.
  The true defender of the consumer is not government. The true enemy 
of big business is not big government. It is little business that 
competes and gives the consumer an alternative than the big business 
corporations and the multinational corporations that we hear our 
liberal friends always yelling about. But our tax laws, my colleagues, 
are subsidizing and encouraging and at many times mandating the selling 
out of small entrepreneurial businesses to the multinational 
corporations.
  I will give my colleagues one example. Roll Construction in San Diego 
is a family-built construction business and they have come to the 
conclusion that when mom dies, the only way for them to be able to pay 
the death tax is to sell out to a major multinational corporation.

                              {time}  2115

  This is what it really comes down to. Are we for the little guy? Are 
we truly for the taxpayer? Are we truly for the American? Or are we so 
hell-bent to get our pound of flesh that we are willing to not only tax 
the dead, sell the farm, sell the business, but also subsidize the big 
corporate interests? That is something that we do not hear a lot of 
talk about here. I think that we need to talk about it. Because I think 
that we have got to understand that this will not only impact and help 
the corporate but when the consumer is looking for competition, when 
the consumer needs the break, the consumer will not have the little 
entrepreneurial business to be able to beat the big guy because he is 
not going to be around because the United States government has taxed 
them into nonexistence. And so I think that when we talk about the 
death tax, I want to ask our colleagues on both sides of the aisle, 
think about what you really care about. And if you are so hell-bent to 
try to get the rich guy, remember what happened in 1898 when this 
government said we are going to get the rich guy by taxing the rich 
guy's phones because everyone knows that the little guy and the working 
class does not have phones. History has proved this year, we realized 
what a huge mistake that politics of envy and of hate generate in the 
tax code. The working class got nailed the worst of anybody 
proportionately.
  Remember in the early 1990s when they said we are going to tax the 
rich and get their boats because that is a luxury by the rich. Who got 
hurt? Who got hurt was the working class that were building those 
boats. They were out of work. The business left the country. I think we 
all remember the concept of the income tax was to really tax those who 
made about $800,000 in today's dollars. It was only going to be 1 
percent. Who would care? We are only taxing the rich. I think every 
working-class family today now realizes what goes around comes around.
  Mr. Speaker, I just think that we have got to say if we believe in 
capitalism, if we believe in a free economy, if we believe in 
government not subsidizing major world corporations, if we believe in 
the fact that the family unit has the right to serve a community as a 
family unit, as a business and a farm, then the death tax has to go.
  I will close with one last example. There is a Latino family in my 
district whose father immigrated here back in the 1950s, who has raised 
a family and the sisters and the brothers and the mother and the father 
and the uncles work in that print shop. They have grown their business 
in printing. The fact is, though, they came to me and said, ``If 
anything happens to mom and dad, we have to sell out.'' Who will they 
sell out to? To the people who have the money to buy them out, the big 
corporate interests that do not want to see those small entrepreneurial 
immigrants competing with them. I would just ask us to consider that 
and let us not talk about and cry about the fact that big companies are 
getting bigger unless you are willing to stand up and say, okay, there 
are some things we cannot control in the private sector but this is one 
we can. Government, for God sakes, quit subsidizing the major national 
corporations and start it here first by not forcing small family 
businesses to sell out to them. We hear a lot of talk about that, about 
not subsidizing corporate business, on both sides of the aisle. That 
should be right. But the death tax is the major force of making them 
sell out. You can see every study in the world what breaks the back of 
the family business.
  So I ask my colleagues a thousand years from now, what will 
historians say about this Congress and this society and this Nation? 
Will they say that we taxed the dead and taxed their citizens to death 
or will they say they recognized the wrong, they recognized the 
injustice, they recognized the immorality of their tax code and they 
did the right thing and killed the death tax.
  Mr. CRANE. I commend my distinguished colleague from California.
  Mr. Speaker, I yield to the distinguished gentleman from Tennessee 
(Mr. Duncan).
  Mr. DUNCAN. I want to first of all to say that I rise in very strong 
support of this legislation to eliminate the death taxes in this 
country. This is something that I have cosponsored for several years. I 
want to thank the gentleman from Illinois for yielding. First of all I 
want to commend him for putting together this very important special 
order and for leading the charge in this battle as he has on so many 
other things over the years in this Congress.
  I first got to know the gentleman from Illinois (Mr. Crane) when he 
came to speak to a very small group of conservative students at the 
University of Tennessee in 1966. Then I think it was about 1972, I had 
him come speak to the George Washington University Law School to a 
packed audience. I think he put those students into shock because with 
the lack of true academic freedom that we have on the college campuses 
in this country, many of those students at George Washington Law School 
had never really heard a truly conservative speaker such as the 
gentleman from Illinois. I am proud to call him a friend. I think he is 
one of the finest men that I have ever known in my life.
  Mr. Speaker, let me just say that today, and many people do not 
realize this, the average person pays almost 40 percent of his or her 
income in taxes of all types, State, Federal and local, sales, 
property, income, gas, excise, Social Security, all of the other types 
of taxes, and the estate or death taxes. Then it is estimated that 
consumers pay another 10 percent in regulatory costs that are passed on 
to the consumer in the form of higher prices. A

[[Page 9867]]

Member of the other body our good friend Senator Thompson from 
Tennessee, I remember a couple of years ago he had ads on television 
which said today one spouse works to support the family while the other 
spouse has to work to support the government. There are some of us in 
this Congress, in fact many of us in this Congress and I think an even 
greater majority across the country that think that basically half of 
the average family's income going to support government is not only 
enough, it is far, far too much. This legislation to eliminate the 
death tax I am told will put over $20 billion back into the pockets of 
average Americans. It probably, as the gentleman from California (Mr. 
Bilbray) has just pointed out, is the most important single thing that 
we can do to help small business and to help small family farmers in 
this country.
  It has been a regular thing since World War II to have White House 
conferences on small business. In almost every one of those 
conferences, the number one or number two issue for these small 
businesses has been the effort to try to eliminate the estate or death 
taxes. It has been I think one of the very top issues for the American 
Farm Federation and other farm organizations. It is something that is 
long, long overdue. The gentleman from Pennsylvania (Mr. Peterson) told 
me that it takes $12 billion just to collect this tax. And so the 
government really does not make that much but it takes a lot of money 
away from families and small businesses in this country. As the 
gentleman from California did such a great job just a few minutes ago 
pointing out, this is probably the best thing that we could do to help 
small business, if we all decry the fact and worry and show concern 
about the fact that every industry seems to be going to the big giants, 
the big keep getting bigger and the small keep going by the wayside 
because they cannot survive, they have to merge and they have to keep 
growing and get bigger and bigger to survive or merge or sell out. And 
so if somebody wants to really help the big giants in almost every 
industry and if you want to help, as the gentleman from California 
said, the big multinational corporations, probably one of the best 
things you could do is support keeping these death taxes in effect. But 
if you want to see family farms survive and if you want to see small 
businesses survive, then you will support this legislation to eliminate 
these death taxes that I think we will have on the floor on Friday.
  I remember several years ago, quite a few years ago I went with a 
friend to see the University of Tennessee play Georgia in a football 
game. We were in Atlanta and had breakfast with these two accountants 
who specialized in buying businesses. They told us that most of the 
businesses they bought, they bought from second-generation owners 
because they said it was hard to buy from a first-generation owner 
because the business was usually that person's dream. But they said 
that if they ever found a business that was in a third-generation 
ownership, they thought they had hit the jackpot. But they told us, do 
you realize how rare it is, how extremely unusual it is that a business 
makes it into the third generation of ownership? And I think one of the 
main reasons that so few businesses make it into the third generation 
of ownership is because of these death or estate taxes that have forced 
so many families to sell out to bigger businesses or bigger 
corporations.
  We started several years ago when control of this Congress changed 
trying to bring Federal spending and the Federal Government under a 
little bit of control. The first 6 years I was in this Congress, we 
were just routinely voting 12, 15, 18 percent increases for every 
department and agency out there. Mr. Speaker, to show how bad it had 
gotten, Alice Rivlin who was the President's head of the OMB and is now 
in the Federal Reserve put out a memo that said if we did not make some 
changes, this was a few months after President Clinton came in, we were 
going to have yearly deficits or yearly losses of over $1 trillion a 
year by the year 2010 and between 4 and $5 trillion a year by the year 
2030. If we had sat around and allowed that to happen, I think 
everybody knew the whole economy would crash. Since the control of the 
Congress changed, we at least have brought Federal spending under some 
type of control so it is basically just rising at the rate of 
inflation. But we have not cut nearly as much, and we really have not 
cut at all like some people think. About 3 months ago, Robert Samuelson 
in Newsweek wrote a column, and he is not considered to be a 
conservative columnist at all, he wrote a column and he said, 
``Government is slowly getting bigger because paradoxically we think it 
is getting smaller.'' That is what Robert Samuelson wrote in Newsweek 
about 3 months ago. ``Government is slowly getting bigger because 
paradoxically we think it is getting smaller.'' Government keeps 
getting bigger and taking more and more from the people of this country 
and there are many of us who think that the average person in this 
country knows better how to spend his or her own money than Federal 
bureaucrats in Washington know how to spend it for them. That is the 
philosophy behind this legislation to eliminate the death taxes. There 
is very little legislation that can do more to help the economy and to 
help small business and small family farms and to give a little money 
back to the people of this country so that they can use it on their own 
families rather than have the Federal Government just continue to waste 
it and waste it and waste it. I rise in strong support of this 
legislation.
  Mr. CRANE. I thank the gentleman for his kind remarks. I would remind 
colleagues I had the distinct privilege of serving with his father who 
was also our chairman of the Committee on Ways and Means. We are all 
honored that the gentleman has had the opportunity to succeed his 
father and represent the good folks down in Tennessee.
  Mr. Speaker, I yield to the distinguished gentleman from Tennessee 
(Mr. Wamp).
  Mr. WAMP. I thank the gentleman for yielding very much. I did not 
intend to come to the floor and speak tonight but I was watching this 
discussion on television and decided to come and share just a couple of 
points I think that are important. About 3 years ago, we passed the 
Balanced Budget Act of 1997. It had a lot of good things in it and a 
few bad things in it. As we oftentimes have to do, you have to weigh 
the good versus the bad and make a judgment call. I think a lot of good 
came out of that. But very few people out there realize that at the 
very last minute of the negotiations of the Balanced Budget Act of 
1997, which really have set in place the framework of the balanced 
budget and the spending caps that have kept the budget balanced and I 
think stimulated the markets and given investors confidence and helped 
this economy thrive over these last 3 years, but at the very last 
minute, one of the biggest disappointments that I have had in the last 
6 years that I have been here was that they changed their plans with 
respect to the elimination of the death tax or the lifting of the 
exemption of the death tax, because the negotiations centered around 
doubling the exemption back in 1997 for the estate tax, the death tax 
so that when people die, a certain percentage of what they have is not 
taxable.

                              {time}  2130

  And it was a great disappointment at the 11th hour back in 1997 when, 
instead of doubling the exemption for the death tax, they came back and 
put just an annual index on it. So it gradually goes up.
  That was a big disappointment, because back home in Tennessee, where 
I live and spend time with my family and the people that I represent, 
there are a lot of stories about regular people, hard-working small 
business people that are affected by this unfair tax at death, where 
the taxman comes, when a family member dies, and asks for the money 
very soon after death, within 6 months, and you have to pay up. You 
have to find the money to pay up.
  In Washington, we went through an appropriation's markup today. There 
is a lot of rhetoric from the other side of

[[Page 9868]]

the aisle about this whole tax proposal to eliminate the death tax over 
time and to raise the exemptions and to give death tax relief to small 
business people and individuals out there.
  There is a lot of talk that this is a tax plan for the top \1/10\ of 
1 percent of the wealthiest Americans. Let me tell you what my 
experience is: This is all about doing what is fair for people in this 
country. Some of them, yeah, they were in business. Some of them are 
family farmers, but a lot of them are just grassroots small business 
people that find themselves in a position that they have to pay the 
taxman when maybe their parent passes away.
  I just want to tell a story, without naming names, about a young man, 
a young family in my Sunday School class at Red Bank Baptist in 
Chattanooga, Tennessee. This young man is in business with his father. 
He lost his mother just a few years ago. When his mother passed away, 
he analyzed the situation being in business with his father, because it 
really hit him like a ton of bricks that he needed to have some tax 
professionals look at his situation. He found that if something were to 
happen to his father, he would owe the taxman large sums of money and, 
effectively, be forced to sell his business.
  Now, this is not some kind of big business. Let me tell you. This is 
small business. I am talking about old buildings. I am talking about a 
lot of maintenance. I am talking about very few employees, less than 
10. I am talking about a very small family business, yet, over time, 
they built up enough momentum and enough assets that at death this 
individual, if his father passed on, would have an enormous and 
immediate tax bite.
  Frankly, all that money that has been generated for this family 
business over this generation has already been taxed, yet, the 
government in this country at a time where we have a budget surplus, 
where we do have a good economy and consumer confidence, this is the 
time where WE say what are the most unfair taxes and let us eliminate 
them; what are the taxes that will give the most economic stimulus, and 
let us cut them.
  This is a time where you can return some of the money to the people 
that pull the wagon in this country, and that is what I found. My 
friend needs this tax relief. He is not wealthy. He needs this tax 
relief so if something happens to his father, he is not forced to sell 
that business.
  We have to have some generational equity in this country again, where 
families work and invest and hand down and pass down the fruits of 
their labor. We cannot have let us take it all out, we have to have, 
you know, a culture that says let us invest and save and pass down. 
That is the American dream. This legislation will shore up that 
American dream.
  In closing, let me say this, our free enterprise system is what 
people in Eastern Europe and the Soviet Union were willing to risk 
their lives to have. We run all over it. We take it for granted. We 
mistreat it. We overtax it. We overregulate it. We overlitigate it. It 
is the goose that lays the golden egg of American opportunity, and that 
is our free enterprise system.
  It is precious. This piece of legislation is the next great example 
of the difference between the two approaches of whether we hold up 
profit as a good word and the free enterprise system as really the 
anchor of our society. The free enterprise system; yes, you can go into 
business in this country; yes, you can make a profit. Greed is a bad 
word. Profit is a good word.
  Let us quit treating profit like it is a bad word. The free 
enterprise system is what the other folks want to have. Let us treat it 
fairly. Let us give it what it needs. Let us treat these small business 
people with dignity, and let us lift this estate tax exemption as much 
as we can. I would say over time, let us just wipe it out, but let us 
take this next first step on Friday, and let us not let the demagogues 
win.
  This is not about tax breaks for the wealthy. This is about working 
people that pay the taxes that pull the wagon, and we have to give them 
some help and get the government off their backs.
  Mr. Speaker, I thank the gentleman from Illinois (Mr. Crane) for 
everything he has done over the years in this institution in the 
Committee on Ways and Means. I appreciate what he has done for the free 
enterprise system in this country. I wish him all the best. I am proud 
of him for what he has done in his personal life. It is outstanding. I 
appreciate the opportunity.
  Mr. CRANE. Mr. Speaker, I thank the gentleman from Tennessee (Mr. 
Wamp). I deeply appreciate his comments.
  Mr. Speaker, I yield to our distinguished colleague, the gentleman 
from Pennsylvania (Mr. Peterson).
  Mr. PETERSON of Pennsylvania. Mr. Speaker, I thank the gentleman from 
Illinois (Mr. Crane), the chairman, for putting this together tonight 
and for bringing this issue to this Congress.
  I guess a year or two ago, we heard the demagogues say that the 
capital gains tax did not need to be cut; that it was going to cost 
necessary revenues for this country to run off. It was going to cause 
all kinds of economic chaos.
  What happened when we cut the capital gains tax from 28 percent to 20 
percent? It released capital. People began to sell properties and sell 
stocks and sell things that they paid capital gains on, because that 28 
percent tax had been reduced to 20 percent. They were willing to pay 20 
percent where they were not willing to pay 28 percent.
  What happened the first year? $38 billion of additional revenue came 
into the Federal Government. It did not cost to cut that tax. I think 
if we would have cut it to 15 percent last year as we talked, we 
probably would have increased revenues again. We certainly would have 
helped the growth of business.
  Today and this week we are going to be dealing with the death tax, 
the estate tax. We are going to hear the same arguments, we heard it 
tonight, that it is about billionaires. It is not about billionaires. 
It is about small business, small farmers, small sawmills, small 
manufacturers, supermarket operators, locally-owned ones, locally-owned 
hardware stores, the people that are in our communities that serve on 
our borough councils, that serve on our local advisory boards, that 
serve in the recreations commission that give back to their community.
  It is not corporate America. It is the local business people. We 
heard that it was about billionaires. Well, here are the numbers. 53 
percent are 1 million or less, 39 percent are 1 million to 2\1/2\ 
million, 7 percent from 2\1/2\ million to 5 million, and 3.7 percent of 
the cases are over 5 million.
  You do not have to have a very big business today to have a couple 
million dollar business. You can have 4 machines in a building, a 
couple of trucks and some other office equipment, and you have a 
several million dollar business. Let us say it is a family business and 
the children are involved. Oftentimes, the children helped grow the 
business.
  It was a partnership between fathers and sons and mothers and 
daughters, and as they made this business grow and the parents passed 
on, the only way they could protect themselves was to spend a lot of 
capital and buy insurance to pay the taxes, and some do that. It takes 
money that they might need to buy another machine to expand to grow the 
business.
  This tax is not about large corporations. The public-held 
corporations do not pay this tax. And where is the future of America? 
The future of America is small business. The strength and growth of our 
economy has been new businesses. The record of new businesses is not 
always real good. Indirectly small business owners, the major producers 
of most new jobs are forced to hire fewer workers than they desire 
because of the high capital costs associated with death taxes.
  Likewise, with death of a small business owner, many employees lose 
their jobs when relatives of the deceased owners are forced to 
liquidate the business to pay the death taxes. This occurrence is not 
rare; 70 percent of all businesses never make it past the first 
generation. 87 percent do not make it to the third generation, and only 
1 percent make it to the fourth generation. One of the major reasons 
for this phenomenon appears to be the death tax.

[[Page 9869]]

  A recent survey conducted by Prince & Associates demonstrated that 90 
percent of successors to family-owned businesses that were forced to 
liquidate within 3 years of the original owner's death claiming that 
paying death taxes was one of the major culprits of the company's 
demise.
  Now, when you stop and look at our individual communities, the 
backbone of our communities are not the national corporations, though 
we are fortunate if we have a plant there, or if they have businesses 
there, but the real strength of our communities are the local 
entrepreneurs, the local businesses, the local sawmill, the local 
hardware store, people who have lived their life there, who are vitally 
a part of that community.
  Yes, one third of small business owners today will have to sell or 
liquidate part of their business to pay estate taxes. Half of those who 
liquidate to pay death taxes will have to eliminate 30 or more jobs. So 
if we want job growth, this is a tax that prohibits businesses from 
continuing the growth cycle they are on. Mr. Speaker, maybe they were a 
business that had two restaurants and were ready to go to number three, 
and one of the parents die, and suddenly they have to sell one of the 
restaurants to pay the death taxes.
  They stop the growth cycle whenever they were going to go to 
restaurant number 4 or restaurant number 5, or they were going to add 
machine number 5 or machine number 6 that would have employed three 
more people, one more for each shift, and more people for the office 
and more people to truck the goods in and out.
  It is a tax that makes no economic sense. It is also one that is not 
easy to collect. It costs considerable. It is 65 percent of the tax, 65 
percent of the tax that is collected is costs of collection. That is 
not a very efficient tax. And when you want less of something, tax it 
heavily.
  When you tax something 37 percent to 55 percent, you are going to 
have a whole lot less of it, and that is what we are doing to 
successful businesses in this country. We are taxing them 37 percent to 
55 percent when they want to transfer that business from the parents at 
their death to the children. There is nothing right about that.
  A study by George Mason University Professor Richard Wagner showed 
that eliminating the death tax would have a substantial impact on 
lowering the costs of capital and thus increase the health of the 
economy. Wagner found that within 8 years of eliminating the death tax, 
the gross domestic product would be $80 billion larger than expected, 
resulting in the creation of 250,000 additional jobs and $640 billion 
larger capital stock.
  Ladies and gentlemen, cutting this tax will not lose revenue for this 
country. In the long run, it will be a stimulus to our country. It will 
help the small businesses who are competing with the large corporate 
entities of this world. The future lies with the Bill Gates' of the 
future who may start in their garage, who may start in a little 
warehouse someplace in the corner of it and start to grow a new 
business, providing new service, with a new concept, a new idea, and 
when suddenly that generation passes on, the next generation can 
continue.
  Yes, even liberals support this. A University of Southern California 
Law Professor Edward McCaffrey, a self-described liberal, stated in 
testimony before the Senate Committee on Finance recently, the death 
tax discourages behavior that a liberal democratic society ought to 
like. It discourages work. It discourages savings. It discourages 
bequests, and it encourages behavior that such a society ought to 
suspect, the large scale consumption, leisure, giving of the very rich. 
It is a tax on working and savings without consumption. It is a tax on 
thrift, on long-term savings.
  There is no reason, even a liberal populace supports it. The current 
gift and estate tax does not work. It is a deep tension with liberal 
ideals and lacks strong popular or political support; that is from a 
liberal.
  Ladies and gentlemen, it is time for us to do away with the death 
tax. It will have a positive economic impact on the future growth of 
America. It will grow new jobs. It will inspire our economy to grow, 
and it is time we eliminate it.

                              {time}  2145

  Mr. CRANE. Mr. Speaker, I thank my distinguished colleague for his 
remarks. In conclusion, I would simply like to pay tribute to our 
colleagues, the gentlewoman from Washington (Ms. Dunn) and the 
gentleman from Tennessee (Mr. Tanner) who are cosponsors of H.R. 8. It 
has had bipartisan cosponsorship from the outset, and I look forward to 
good, strong bipartisan support on Friday when we finally eliminate 
this obscene component of our Tax Code.

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