[Congressional Record (Bound Edition), Volume 147 (2001), Part 4]
[House]
[Pages 5372-5379]
[From the U.S. Government Publishing Office, www.gpo.gov]



                       ELIMINATING THE ESTATE TAX

  The SPEAKER pro tempore (Mr. Cantor). Under the Speaker's announced 
policy of January 3, 2001, the gentleman from South Dakota (Mr.

[[Page 5373]]

Thune) is recognized for 60 minutes as the designee of the majority 
leader.
  Mr. THUNE. Mr. Speaker, when I came to Congress a little over 4 years 
ago, I came here with some very specific objectives in mind as well. 
And since coming to Congress, we have achieved a lot of the things that 
I sought to do in working with the House and our brethren in the Senate 
and the administration. For the 4th year in row we have balanced the 
Federal budget. We are actually paying down the publicly held debt. We 
have done that. This year it will be over $600 billion.
  We have protected Social Security and Medicare. We cut taxes back in 
1997, something that had not happened in a very long time. In fact, the 
truth is the budget being balanced for the first time 4 years ago was 
the first time since 1969 when I was 8 years old. All my formative 
years all I heard about was deficits, deficits, deficits. And so 
finally we have gotten the fiscal house in order here in the United 
States Congress.
  It is sort of ironic that our colleagues on the other side under 
whose stewardship the debt ballooned and spending ballooned now have 
this new-found sense of fiscal responsibility which in the previous 40 
years as these things were going on, they did not seem to abide that 
same compulsion toward constraint.
  As a result, we spent and spent and spent to the point to where our 
children's future was very much in jeopardy and we piled up more and 
more debt. We are in a position now, Mr. Speaker, where we actually 
have gotten to the point that the Federal Government is taking in more 
money than it takes to run the cost of government. That means that the 
people in this country are overtaxed.
  I would like to read for my colleagues something that a newspaper in 
my home State of South Dakota wrote recently. It says,

       For the first time in recent memory, someone in Washington 
     is looking the American people in the eye and stating the 
     obvious. The Federal Government taxes too much and spends too 
     much. It is refreshing to hear someone in Washington, D.C. 
     state candidly that reducing the growth of spending is not a 
     cut and that the source of deficits is unrestrained growth in 
     spending. For Bush's budget plan to work as advertised, 
     Members of Congress, the people who actually write the 
     spending bills, have to listen to Bush's message. We hope 
     they heard what the rest of us heard: ``You're taxing us too 
     much and spending too much of our money.''

That is from the Rapid City Journal dated February 28, 2001.
  Tomorrow, Mr. Speaker, we take up yet another piece of the tax plan 
that will allow the American people to keep more of their hard-earned 
dollars. We have for several weeks now been working in a systematic way 
here in the House to lessen the tax burden on working families in this 
country, to put some fairness and equity back into the Tax Code as it 
pertains to married couples who are penalized in the form of higher 
taxes because they chose to get married.
  We are trying to bring some much needed tax relief to people who are 
raising families by increasing the per child tax credit and a number of 
other things, marginal rate reductions which affects everybody contrary 
to what our colleagues and our opponents of this legislation are 
suggesting, actually benefits everybody who pays income taxes in this 
country by lowering of rates.
  The other thing is, Mr. Speaker, it actually brings tax reform to the 
Tax Code. Not only are we talking about tax relief, but about making 
the Tax Code more fair and reforming it in a way that makes it more 
equitable for the American people who pay all the taxes.
  Tomorrow we pick up another piece. We start a debate, a debate which 
is long overdue, a debate which we have held here before this in this 
body. And on previous occasions have actually passed legislation that 
would eliminate the death tax, but unfortunately it ran into a veto pen 
at the other end of Pennsylvania Avenue.
  Tomorrow we will take that legislation up again, very important 
legislation, and what I would like to visit about here in just a 
moment, and that is the death tax. It impacts farmers and ranchers and 
small businesspeople, the people who are the heart and soul of South 
Dakota's economy and I daresay of economies all over this country, 
particularly in rural areas of America.
  We have some gentlemen on the floor this evening who are going to 
join in this discussion, one of whom is a Member of the Committee on 
Ways and Means and who had the privilege last week, I believe, of 
actually reporting out of that committee the legislation that we will 
be acting on tomorrow. I think it is important to note as we get into 
this debate again that this is a tax which is fundamentally unfair 
because after the Federal Government taxes and taxes and taxes people 
throughout the course of their lifetime on their earnings, on their 
work, on their accumulation of wealth and everything else, when it 
comes time to actually pass on to the next generation some of that hard 
work, the Federal Government comes in again and says, ``I'm sorry, you 
can't do that. We want our fair share.'' It just so happens the Federal 
Government and their fair share takes in some cases about 55 percent of 
that estate. Now, that hits farmers and ranchers and small 
businesspeople right between the eyes because in many cases if you do 
not have the cash flow that is necessary to pay the tax, you have to 
liquidate the very assets that are producing in this country, adding to 
our economic growth and creating jobs.
  Mr. Speaker, this evening I would first like to yield to the 
gentleman from Arizona, a distinguished member of the Committee on Ways 
and Means who was instrumental and had a hand in writing that 
legislation that we will be acting upon tomorrow.
  Mr. HAYWORTH. I thank my colleague from South Dakota for taking this 
time, Mr. Speaker. We are joined by our colleague from Pennsylvania. 
Again we give thanks for the opportunity to come to this Chamber as a 
free people, holding opinions and living out notions that may be 
diametrically opposed.
  Mr. Speaker, I could not help but notice the vision of America 
proffered by my friend from Oregon in the preceding hour. It seems we 
have a fundamental difference of opinion. He believes the highest and 
best use of a citizen's money is by the Washington bureaucracy. There 
is an element of thought here that everyday Americans should surrender 
more and more and more and more of their hard-earned money to the 
Federal Government through taxation because Washington can somehow do a 
better job with that money. Mr. Speaker, I would simply say to those 
who join us tonight, I think we have come to understand certainly in 
the last half of the preceding century that that notion is exactly 
backwards.
  Mr. Speaker, I would suggest that for years my friends on the other 
side have offered that outmoded notion that your family should 
sacrifice more so that Washington can do more, when instead we embrace 
the fundamental notion that Washington should make some sacrifices and 
be a good steward of the people's money so that families across America 
can have more. That is the crux of what we are discussing tonight.
  Indeed, when you look throughout our history, and I am so glad we are 
joined by a friend from the Commonwealth of Pennsylvania. Seeing him 
here on the floor, I am reminded of another great Pennsylvanian who one 
biographer calls really the First American, Dr. Benjamin Franklin, a 
noted scientist, statesman and a humorist. As a publisher in Poor 
Richard's Almanac, it was Dr. Franklin who observed there were only two 
certainties in life, death and taxes. But even with his prescience, 
even with his foresight, I doubt very seriously, Mr. Speaker, that Dr. 
Franklin could envision the day that the constitutional republic which 
he helped to found would literally tax Americans on the day of their 
death. Yet that is the spectacle we see today.
  My colleague from South Dakota stated the problem accurately. For so 
many family-held businesses, for so many family farms and ranches, for 
indeed, Mr. Speaker, virtually the bulk of American commerce in rural 
areas, this death tax is especially egregious.

[[Page 5374]]

  And we stand united tonight, Mr. Speaker, to reassure the American 
people that we offer a variation, a departure that rings out with 
echoes of the past. Our new slogan might be, ``No taxation without 
respiration.'' It is fundamentally unfair to ask an American family to 
visit the undertaker and the tax collector on the same day. We have 
seen time after time small businesses, Mr. Speaker, what I would 
instead suggest are more accurately described as essential business 
because we know they employ more Americans than the major corporations 
in our society, but we see small businesses, essential businesses, 
family-owned enterprises snatched away by the hand of government and 
this excessive tax. We see ranches and farms, the proverbial land rich 
but cash poor circumstance because so many of those who literally make 
their livings off the land, pump their energy and their hearts and 
their very being not to mention what liquidity, what cash they have, 
back into the land, back into the farm, back into the ranch and when 
the holder of the estate dies, to liquidate, to come up with the cash 
to pay an extensive and expensive tax bill, the farm or the ranch is 
sold or divided up, subdivided, what some might suggest is the plague 
of urban sprawl.
  So we come to this Chamber with a respectfully different approach 
than those on the other side who believe the highest and best use of 
your money is by Washington bureaucrats. We believe every American 
family should hang on to more of their hard-earned money and send less 
of it here to Washington. That is why our colleague from South Dakota 
outlined the fact that just last week, we decided to say good-bye to 
the marriage penalty. We decided to raise the per child tax credit an 
extra $100 this year to $600 retroactive, eventually up to double what 
it was, to a full $1,000.
  We went back earlier as my colleague outlined and reduced the tax 
rates, the margins for every American paying income tax because we 
realized to reduce the tax bill, that is an important step. And now we 
come to this juncture, where last week the Committee on Ways and Means 
on the same day when on this floor we voted to get rid of the marriage 
penalty, we voted to increase the per child tax credit, we voted for 
common sense, family-friendly policies. We went back last week into 
committee and passed out of committee and will bring to the floor here 
tomorrow another common sense piece of legislation to put the death tax 
to death, because it is fundamentally unfair.
  It is a job killer. It is a business killer. It drives a stake 
through the heart of family-owned enterprises. And it is patently 
wrong. How wrong? Simply stated, for all the headaches, for all the 
hassles, for all the heartaches, for all the turmoil, when you take a 
look at the vast expanse of Federal revenues, Mr. Speaker, the death 
tax brings into our Treasury about 1 percent of the total take from 
American citizens in terms of taxation. Yet three-quarters of that 1 
percent is spent in hot pursuit of those families who are grieving, of 
those families who are trying to deal with the estates, of those 
families who are trying to come to grips with a fundamental change in 
circumstance, and that leads to the unfairness.
  Mr. Speaker, for these reasons and several others, the death tax 
deserves to be put to death. We will take a very important step here 
tomorrow in that action.
  Mr. THUNE. Mr. Speaker, I recognize my colleague from Pennsylvania, 
someone who came to this Chamber at the same time I did and a 
distinguished member of the Committee on Appropriations and someone who 
also has been a leader on this issue and someone who I believe probably 
has a good number of people in his fine State just like in my fine 
State who are impacted day in and day out, the people who are creating 
the jobs and helping create economic activity in this country and who 
are feeling the penalty of this very punitive tax.
  And it is costing not only in terms of the tax itself and the people 
that it affects directly but the people day in and day out who take 
steps and spend dollars and spend time trying to figure out ways to 
avoid the tax, planning for the estate. It has become a cottage 
industry.
  Frankly, it is hard to factor in and to quantify in specific terms 
all of the dollars that are affected here, all the dollars that are 
taken, soaked out of the economy, not just by the death tax and the 
loss of jobs it has created when a small business or a family farm has 
to sell assets in order to pay that tax but also in the cost of 
avoiding the tax. That, too, I think robs our economy in a big way of 
much of the productivity that it could otherwise generate.
  I yield to the gentleman from Pennsylvania for his observations as 
well about this important legislation and what we can do to further 
improve the plight of small businesses and farmers and ranchers in this 
country, many of which I know live in his district.
  Mr. PETERSON of Pennsylvania. I am pleased to follow the gentleman 
from Arizona and my friend from South Dakota. I bring a background of 
being a small businessman myself. I owned and operated a supermarket 
for 26 years. I built it from scratch. I right now find that those who 
say this is about taxes for the rich do not have any idea what they are 
talking about. Because real rich people do not pay this tax. They use 
the complications of the tax system and the way they shield their 
resources, they are not the ones that pay it. Let me tell you who does. 
In the next 2 weeks, most of our small businesses that employ the vast 
majority of Americans are paying their income tax. They pay a lot of 
that, too, because they are the ones that pay the high rate. If you 
have a local business that has 100 employees and makes a decent profit, 
they are paying a lot of taxes and they are creating a lot of growth 
and wealth for our communities.

                              {time}  2100

  If you are building a community, what kind of a business do you want? 
Would you choose some global corporation that would put 500 jobs in 
your community or would you take five local companies that would put 
100 jobs in your community where the families live there and work in 
the communities and serve on local governments and serve on boards and 
agencies and do all of those things that make communities good places 
to live?
  I think we would all choose those five employers that have 100 
people, because they are not going to be moving to Mexico; they are not 
going to move the plant to another State because this is their 
community.
  If you want to talk about growing your community, I have come from a 
part of Pennsylvania that has been hit hard with companies closing. We 
have been hit hard for a lot of things that are no fault of the 
workforce and no fault of our area.
  When you lose the local ownership of a company, the large global 
corporations may take a look at one of the businesses that have been in 
your community for years and has grown to 400 or 500 jobs and has a 
good workforce and a good product line, and let a death in the family 
come and that is the chance to buy that business and make it part of 
their global corporation.
  Now, I am not against global corporations but when you lose that 
local ownership to the global corporation, it is never the same, 
because 5 years from now that business could be on a little bit of a 
hard time and it is very easy to take those machines and move them down 
the road or another country, and those jobs are gone.
  The backbone of our communities is independent business, and this tax 
hits them really hard. This is the tax that forces them to make that 
decision, because they cannot borrow that much money and still make the 
business profitable, and the only economic choice they have is to sell 
it.
  I think that is the part that people must realize. This is the 
backbone of our communities, independent businesses that are growing 
and prospering. They pay that tax on January the 15th, this year, next 
year, the year after. They build this nest egg. They do not have huge 
Keoghs and huge IRAs. They have their resources in the business, in the 
building, in the inventory, in the

[[Page 5375]]

machines. That is their family nest egg, and maybe the funds have 
helped grow the business and they have worked like troopers to grow 
this business and create more jobs in the community; and the father or 
the parent dies and the business has to be sold because there is not 
enough equity left after you pay the estate taxes.
  Whether it is farmers, whether it is a local supermarket, whether it 
is a local manufacturer, a local processor, whatever, it is local 
employers that make our communities good places in which to live, and 
the estate tax is the greatest threat to local jobs of any part of our 
tax package. That accumulation of wealth by buying more machines and 
adding on to the building and all of that, that is out of profits that 
they have paid their taxes on. This is not through some cheating or 
somehow taking money out of the business. This is taking the profits, 
paying their taxes, taking what is left and putting it back into the 
business and hiring 5 more people. That is what America is all about. 
That is where we are better than most any part of the world. The free 
market system allowed someone like me, when I started my business, to 
borrow against my father's home. Now, today banks will not do that.
  I knew one thing, though. I knew that I could not fail, I could not 
jeopardize my mother's and father's home. I had to pay that loan back, 
but that is how I got started in business because I didn't have any 
cash of my own. My father mortgaged his home and some land he owned so 
I could go into a little small, corner grocery store and I grew it into 
a supermarket that served the community for more than 2 decades.
  That is the future of America, the ability of individuals with a new 
idea, a new concept, to grow business, and the estate tax or the death 
tax is one of the greatest threats for that business staying in your 
community, staying in the next generation.
  There are very few businesses, because of the estate tax, that last 
to the third generation, a small fraction. There is a myth, a Federal 
estate tax is an efficient way to distribute wealth. Well, the reality 
is, and the gentleman said it very similarly, the Joint Economic 
Committee found that the cost of collection and compliance, and that 
includes the litigation and disputes between the IRS and taxpayers, 
makes it a wash. So the government really does not benefit from all the 
money they spend collecting the estate taxes. It is a wash. But at the 
same time those 500 jobs, those 300 jobs, those 50 jobs, those 40 jobs 
from our communities are gone forever.
  It is the second and third tax on the same income, and it just should 
not be.
  Mr. THUNE. If the gentleman would yield back, I could not agree more. 
I think, unfortunately, the gentleman hit it exactly on the head. If 
you are talking about a small town environment, a rural area like the 
one I come from, oftentimes it is. I mean, the only economic activity, 
the only hope for jobs and that sort of thing in some of those small 
communities, really is those small independent businesses. If those 
people cannot stay in business because the Federal Government insists 
on taxing them, as you said, over and over and over again and then when 
it comes time to expire they get taxed again, there is only so much 
that those small businesses can abide and still continue to do what 
they do, and that is provide the jobs and provide not only the jobs but 
the benefits to their employees.
  What the gentleman is talking about here again is the cost of 
compliance with the estate tax and everything else. It robs dollars 
that otherwise could be put into things like providing health care for 
their employers.
  Now we have a gentleman with us here this evening, and I would note 
that there is a famous gentleman from Illinois, from his home State, 
who once said, and I quote Abraham Lincoln, ``It is not the years in 
your life that count. It is the life in your years.''
  Unfortunately, there are thousands of hard working business owners 
and family farmers who have a difficult time enjoying the life in the 
years with the shadow of the estate tax looming over them.
  The gentleman from Illinois (Mr. Shimkus) is with us this evening on 
the floor. He is someone who as a member of the Committee on Commerce 
and someone who as well also has a number of small businesses and 
people in his district who are affected by the death tax, and someone 
who I might add whose in-laws live in South Dakota so he has an extra 
special reason to be interested in this because my constituents care 
very deeply about this. I would be happy to yield to the gentleman from 
Illinois (Mr. Shimkus).
  Mr. SHIMKUS. Mr. Speaker, I came over on this side because I know 
tomorrow we will have a lot of our friends on the Democrat side of the 
aisle who are going to come and join us in support. I am speaking on 
behalf of my constituents and also for all my friends on this side who 
again I know will join us.
  I will try to be brief. I cannot match the eloquence of the folks 
down here.
  Yesterday, some interest groups took opposition with my support of 
the death tax. One of the comments was made, well, only one in 20 farms 
actually have to be sold. And my point to them was, well, obviously it 
is not your farm. If there is one in 20 farms, which we know is not a 
good measure, it is definitely not their farm that has to get sold, and 
we can give countless cases in the 20th District of Illinois of farms 
being sold.
  I have one in Christian County that was just devastating, but I would 
like to talk especially about the agricultural economy as was addressed 
by my colleague from Pennsylvania, the compliance costs, because we 
know that we are in one of the lowest periods of commodity prices since 
the Depression.
  Part of farm income, income on the balance and income statement, you 
have revenue and you have expenses. Well, people fail to understand the 
compliance cost to save the farm from the death tax is an added cost of 
doing business, which in these low commodity prices makes it very, very 
difficult to make ends meet. So in eliminating the death penalty, what 
you do is you are going to help the farm income of the family farm in 
the 20th District and throughout the country.
  The second thing I want to mention, I have two cases both in Quincy, 
Illinois. One was back in 1969, Rich Neimann, who when his father 
passed away, and he is the chairman and CEO of Neimann Foods, 
Incorporated, of Quincy, Illinois, when Richard's father passed away 
suddenly in 1969 the family was faced with an estate tax bill of 
several hundred thousand dollars which was due, by law, within 9 
months. The Neimann family had to use all the resources from the sale 
of the company's wholesale operations to pay the estate tax bill. In 
essence, they sold the wholesale operation of their business to provide 
funds to pay the death tax. That was in 1969.
  More recently, 17 months ago, a good friend of mine, a small business 
owner from Quincy, Illinois, Mike Nobis, his brothers and sisters lost 
their parents 17 months ago when there was a travel accident involving 
their motor home, and both the mother and his father passed away.
  The parents left behind a family printing business and estate tax 
bill of more than $370,000. To prevent this tax burden from destroying 
the family business, listen to what they did, the company put off 
buying capital expenses, which you would expect. They also got the 45 
employees to agree, so they could keep their jobs, to double as much as 
they pay in health insurance. The employees agreed to double the amount 
that they paid in health insurance to keep the business in operation.
  This is not just a burden on the small business. This is a burden on 
the working men and women who are employed by these small businesses. I 
just think it is a compelling story that in small town USA that these 
employees would go to bat for the employer and suck it up to keep the 
business in operation.
  Two last points I want to make to the super wealthy who think this is 
unnecessary, there is a simple solution; and I challenge them. All they 
have to do is gift it to the Federal Government, just get out their 
checkbook. We will take it. We will put it in the Treasury. We will use 
it to pay down debt. If they want to turn over that money, I think we 
would welcome it.

[[Page 5376]]

  The last point I want to talk about is just ideology. I think 
ideology is so important, and as a former government teacher sometimes 
we get lost in the view of government. The death tax really speaks to 
the debate on ideology, conservative versus liberal. It really 
addresses a point of who controls after-taxed wealth in America. And 
that is what, for me, this debate is all about. It is very simple. Who 
controls after-taxed wealth that has already been created after it has 
already been taxed?
  My friends, the liberals, would say, well, government ought to 
control it because government has plans to redistribute that wealth 
throughout the country.
  We would say that is an award and a benefit for taking the capital 
risk and creating jobs and keeping our economy going and if you want 
other people to go back to small town America to create five to 10 to 
15 jobs, you ought to make sure that they can pass on their after-taxed 
wealth, after-taxed wealth, to their family.
  So I appreciate the gentleman scheduling this hour to talk about 
this. It is very timely with our vote tomorrow. I know I have a lot of 
friends on this side that are going to be very supportive. I look 
forward to the debate and I look forward to casting the votes. It is a 
pleasure to join my colleagues down on the floor.
  Mr. THUNE. Mr. Speaker, I would simply say in echoing the remarks of 
the gentleman that if we think about the way that this impacts people, 
okay, yes, obviously they are going to talk about and we are going to 
hear a lot of rhetoric on the floor tomorrow and a lot of propaganda 
and demagoguery about how this is going to help the really mega rich in 
this country, but the reality is it affects people, average people, who 
are investing, who are taking that risk, who are using the market 
system that we have in this country, to create a better life for 
themselves and their families, but also to create jobs and a better 
quality of life for the people who are working for them and to build 
their communities.
  There is not a small businessperson in a small town who is not the 
one who gets asked to support every single charity, every single 
activity that is going on, whether it is the local baseball team or 
whatever, and they are there to step up and to support those many 
activities, and it is part of our community life.
  I am going to give an example. I want to read a short letter here 
that I received from a constituent in South Dakota. This is a family 
farmer and this is again a direct impact not on the super rich but on 
the family farmer, ``Eleven years after my mother died and 7 years 
after my father passed away, I still cannot be sure that the estate is 
settled. We sold off 480 acres of the family farm to pay the taxes, but 
I do not have a final signed letter from the IRS stating that the 
estate and the audit are officially closed. My wife and I have to meet 
with an estate planning team on a regular basis to try to keep our 
children from experiencing the same estate tax problems we have had.''
  Those are the words of a South Dakota farmer who has been hit hard by 
this death tax. Surprisingly enough, he considers himself one of the 
lucky ones. He actually survived the death tax and he can still farm 
after selling a quarter of his land, land that has been in his family 
for generations.

                              {time}  2115

  His family farm narrowly survived, even though he was hit 3 times. 
Not only did he and his family pay the Federal estate tax, he paid 
nearly $71,000 in State inheritance taxes and he had to shell out at 
least $30,000 in legal fees to settle the estate. Now, his children, of 
course, stand to face the same problem if we do not do something about 
repealing this tax.
  Unfortunately, this farmer's story is all too common in rural 
America. The death tax literally can destroy family-owned farms and 
ranches by forcing farmers and ranchers to sell off land, buildings and 
equipment just so that they can pay Uncle Sam.
  Make no mistake about it. Despite the rhetoric we are going to hear 
here tomorrow, when farms and ranches disappear, the rural economy 
suffers. We are seeing people move out of rural areas into more 
populated areas of this country. If we want to preserve the fabric and 
the bedrock values of this country and make it strong by allowing 
family farming to survive, we have to do something about this death 
tax.
  Mr. Speaker, I yield to the gentleman from Arizona (Mr. Hayworth).
  Mr. HAYWORTH. Mr. Speaker, I thank the gentleman from South Dakota, 
and I would say to the gentleman from Illinois, he sells himself short, 
Mr. Speaker, when he supposed a lack of eloquence on his part, because 
nothing is more eloquent than the real-life experiences of fellow 
citizens that he outlined for us. The gentleman from South Dakota has 
followed suit. Then, of course, we have the gentleman from Pennsylvania 
here who built a business, a grocery store in his hometown, employing 
local folks. Talking about the local perspective is so vital.
  Mr. Speaker, I would note that the gentleman in the chair, the 
Speaker pro tempore, from the first district of Arizona, we can claim a 
unique vantage point because the Speaker pro tempore hails really from 
the 6th congressional district, the town of Snowflake, named for the 
founding families, the Snow family and the eponymously named Flake 
family. Yes, Mr. Speaker, we understand how this affects rural and 
small town America. But as we have seen in Arizona, with the incredible 
growth and, indeed, over the last 10 years, the equivalent of the State 
of Nebraska has moved to Arizona; we have growing urban areas, we have 
people coming in from all over the United States.
  One lady stopped me in one of our cities the other day and she talked 
of the experience of her father who was a milkman in post-World War II 
America. He got up every day very early, ran his route, saved what he 
could, invested wisely, and built what some would call a nest egg, but 
what the Federal Government calls a substantial estate in the millions 
of dollars. The lady who stopped me, Mr. Speaker, said, you would never 
have thought that. My father was a hard-working man, but even he said 
about his profession that he was blessed to live in America and to have 
those opportunities, but in much the same way our colleague from 
Illinois outlined the problems, in much the same way our colleague from 
South Dakota read of the plight of a farmer in his home State, so this 
was this suburban housewife, the beneficiary, if you will, of her 
father's estate, having to grapple with this incredible problem. She 
and her siblings were bearing the brunt of liquidating their father's 
estate. His hard work, the wages on which he had been taxed, his very 
success was being penalized.
  My colleague from Illinois had it right when he talked about a grand 
debate, a fundamental difference of vision. When it comes to the notion 
of wealth, there are those in this chamber who honestly believe, as 
difficult as it is for most Americans to grasp this, they honestly 
believe that the Federal Government, that the Washington bureaucracy 
should have first dibbs on your money, and that death is a watershed 
event, and that the family should pay up, oftentimes in excess of 50 
percent.
  My friend from Illinois brought up another topic that bears 
amplification because, Mr. Speaker, in this town, there is the 
punditocracy. There are special interest groups who step forward with 
the most curious ideas, and the irony we have seen of the mega rich 
stepping forward to say that this death tax should be enforced deserves 
some comment. The gentleman from Illinois, Mr. Speaker, was exactly 
right. If our friends who are mega rich, billionaires and in some slang 
gazillionaires, if they believe that their progeny would receive the 
fruit of their labors as some ill-gotten gains, if they honestly 
believe that sending their wealth to the Federal Government is the 
highest and best use of their funds, then by all means, Mr. Speaker, 
they should find their attorneys, they should prepare their estates or 
perhaps have the check ready right now to hand over the bulk and 
entirety of

[[Page 5377]]

their estates to the Federal Government. But for the milkman who passed 
away, whose daughter, the proverbial soccer mom is having to deal with 
this real problem, to the family rancher in the 6th district of 
Arizona, to the small business owner in the town of Snowflake, I 
respectfully say, let us restore some fairness. Is it fair to expect 
those people who survive to liquidate assets and send over 50 percent 
to the Federal Government? No, that is wrong.
  Mr. Speaker, the fact is, tomorrow we will take steps to address this 
fundamental issue of fairness when we take the steps to eventually put 
this death tax to death.
  Mr. THUNE. Mr. Speaker, I would just say that many opponents of the 
Federal estate tax, including me, I criticized it as being a death tax; 
it is a death tax, there is no question about it, and I believe it is 
fundamentally unfair, as the gentleman just noted, to tax death. But 
again, characterizing the death tax as only taking effect when someone 
dies does not paint the full picture of this thing, and it is a 
misguided policy. Because the estate tax does not just rear its ugly 
head when someone dies; as Abraham Lincoln said, it is not just the 
years of your life that count, it is the life of your years. It is 
present through the life of our years, and this fact can be plainly 
demonstrated by looking at the arguments being made by those who are 
opposed to its repeal, because they talk a lot about targeting tax 
relief by increasing the small business and family farm exemption 
already found in the Tax Code. This is, again, of how the IRS, how much 
paperwork it takes to maintain this Tax Code, the exemption consumes 
nearly 13 pages in the Tax Code. Now, ironically, it is so narrow and 
so complex that it only applies to roughly 3 percent of small 
businesses and family farms. So in order to qualify for that exemption, 
taxpayers have to start planning while they are alive in order to meet 
the rigorous adjusted gross estate value and material participation 
requirements that are in that Tax Code. We talk about it as a death 
tax, and it is that, but it is also a tax during people's lives that 
they have to plan for over and over, again and again, depriving the 
resources, the time, the investment that could be put to much more 
productive use.
  Incidentally, I just want to mention too, because I think the 
gentleman from Pennsylvania noted earlier how often it is that actually 
a family farm or small business or operation gets passed on to the next 
generation, and the numbers I have here in front of me say that 80 
percent of small employers spend the costly resources to protect their 
families from the death tax and in spite of that, in spite of that, 
they still often fail, because 70 percent of small and family-owned 
businesses do not survive through the second generation, and 87 percent 
do not make it to the third generation. So 9 out of every 10 successors 
whose family business failed within 3 years of the owner's death said 
death taxes played a major role in that company's demise.
  So if we think about the impact this has on the transfer of the 
economic engine in this economy for the next generation and what we are 
doing, which is, in effect, making it even more difficult than it is, 
and it is difficult enough to make that happen. So again, this is a tax 
on death, it is a tax on life; it is something that is so costly to 
comply with and something which literally deprives one generation of 
Americans who have worked very, very hard for the benefit of passing 
that hard work on to the next generation.
  So I just think again, we have an opportunity to do something about 
this and we have tried and tried and tried, as the gentleman from 
Arizona always says, to get this done, and yet despite our best efforts 
in the last couple of years, because again we met the veto pen at the 
other end of Pennsylvania Avenue; this year it is different. There is a 
new sheriff in town and we have an opportunity to do what is right by 
family farmers and ranchers and small business people, not just in the 
rural areas of the country, but in the more populated areas, like the 
gentleman from Arizona where he lives.
  I might add that a lot of people from my State like to go down there 
because it is a little warmer climate than what we have had to deal 
with, but there are a lot of us who like to live in South Dakota in 
spite of the climate because of the quality of life, and part of the 
quality of life hinges upon having an active economy and making sure 
that the government is not making more out of that economy than is 
necessary and allowing it to continue to grow and provide jobs. So 
there are a lot of young people who want to live in South Dakota when 
they grow up to have that opportunity.
  Mr. Speaker, this is important work that we are doing. I yield to the 
gentleman from Pennsylvania who again spoke so eloquently earlier about 
his personal experience with this issue.
  Mr. PETERSON of Pennsylvania. Mr. Speaker, if you want less of 
something, tax it another way, another time; if you want more of 
something, do not tax it. Any time we can remove an impediment from 
businesses succeeding, we ought to be about it.
  I am going to diverse just for a moment, because Bill Gates has said 
this 3 or 4 times in my presence and it has made a big impact on me. He 
said, as he travels around the world, because he is one of the leaders 
of the technology revolution that has brought about the strong economy 
in this country, he says, everywhere he goes, he will go to Japan and 
he said, why did it not happen here first? Why did it happen in the 
States? He will go to Germany and Europe and other countries, and he 
will say, why did it not happen here? We are smart people. And he said 
the reason it did not happen there and that it happened here is we have 
the most economic freedom. We have the least bureaucracy. We have the 
least power in the bureaucracy to control and regulate.
  Now, a lot of us think we have too much, but we do not have as much 
as they do. He said, they could not have brought about the changes that 
were necessary to implement this. This technology was around a while 
before it took off, before it became this spur to our economy. I just 
want to say that, because it is that economic freedom of this country 
that we must defend.
  The difference in America from anywhere else in the world, and our 
future, in my opinion, depends on the ability of any individual that 
has a process, a manufacturing process or a commodity to market that 
process or that commodity or manufacture that product and compete 
against the big boys. Now, when I was in the food business, I was an 
independent supermarket. I had to fight the chains. Now, I do not 
dislike the chains. They are large, they are powerful, they have 
hundreds of stores and the power of buying, and I had to compete with 
them. But that is what America is about, allowing little people with 
big ideas and lots of intense hard work to build a business. We never 
know when we have an employer of 50 people that can suddenly bust out 
and be 500 people, 5,000 people. I have seen it happen, where somebody 
started in a garage and then moved into a vacant building and the next 
thing we know, they are building new factories and they are employing 
hundreds, if not thousands, of people.

                              {time}  2130

  We do not want to do anything to trip those people up on their way, 
because that is what makes America different: It is a land of 
opportunity. It is a land of economic freedom. When we tax two and 
three times and take that power of earnings away from people and cause 
families to lose that whole thrust, they may salvage the business, but 
for the next 5 to 10 years they are paying interest on this debt that 
they have accumulated to pay the taxes.
  If we add up the money that is spent in this country avoiding this 
tax, I would not be surprised if this tax, what it costs people and 
businesses and what it costs the government to collect it, that it is 
an absolute loser. It is not time to tinker with it, it is time to get 
it out of the way as an impediment to growing successful businesses in 
this country. It is one less impediment for families and hard-working 
people.
  Most people who own a business do not work 8 hours a day, they work 
double shift, triple shift, whatever it takes

[[Page 5378]]

to make the business work, to pay the bills. Those people should not be 
threatened and have the problem of spending all their resources and 
time trying to salvage the family business.
  It is time to put the death tax to bed. It is time to just remove it 
and get it out of the way as something that really is not in the best 
interests of our economic future.
  Mr. THUNE. Mr. Speaker, I thank the gentleman from Pennsylvania.
  I also recognize on the floor right now a new addition to the 
Congress, the gentleman from Missouri (Mr. Akin), who has joined us 
this year. He also, I think, represents a good number of people who 
probably care very deeply about this issue.
  He has come to this Congress I think intent, like many of us have, on 
making a change for the better to try and create an environment in this 
country where the American people get to keep more of what they earn, 
and where we are distributing power out of Washington, getting more 
power back into the economy and back into the hands of individuals and 
families and less in the hands of Washington bureaucrats.
  Mr. Speaker, I yield to the gentleman from Missouri (Mr. Akin).
  Mr. AKIN. Mr. Speaker, I thank the gentleman for yielding to me.
  One of the things we could comment on here is the timeliness of this 
measure that is before us. One of the things we are aware of is that 
the economy has not been as strong as it might be. There is no 
coincidence that we are dealing with the repeal of the death tax.
  I think people sometimes do not understand the connection, though. I 
think that the connection is rather straightforward when we consider 
where is it that people are employed in America. What we find is, and 
it is not intuitively obvious, I do not think, is that about 80 percent 
of our jobs are in small businesses. Those small businesses, many of 
them are started either by some individual or the parent of some 
individual.
  Those small businesses, with the death tax the way it is now, stand 
at risk. Because if we take a lot of those businesses and all of a 
sudden we have to tax that asset at a 55 percent rate, we basically 
close the business down and send those jobs somewhere else. I do not 
think that is what we want to be doing with this economy.
  Mr. Speaker, the whole point of getting rid of the death tax really 
has a lot to do with keeping jobs in this country and really helping, 
because if we take a look, all of our big corporations which we 
consider to be national assets, they all started at one time as a small 
business somewhere. So protecting those small businesses, allowing them 
to remain solvent, allowing those jobs to remain in this country and 
not closing down the family farm, those are the kinds of things that 
affect our economy.
  So this I would say, gentlemen, is a particularly timely measure, and 
it is well past due that we get rid of the tax on widows and orphans 
known as the death tax.
  Mr. THUNE. Mr. Speaker, I thank the gentleman for his comments.
  I think just as a matter of fundamental tax policy and principle in 
this country, we have said this before and it is true, when a family 
member dies the family should not have to deal with the undertaker and 
the IRS at the same time. That is in effect what we have created with 
the Tax Code in this country.
  As we again move into this debate tomorrow, we are going to hear a 
lot of arguments from the other side which will range in all kinds of 
ways. I cannot even envision, imagine, and contemplate at this point 
what we might hear in terms of opposition to this, but I can imagine a 
lot of it will center on the fact that this is going to help those who 
are particularly affluent and wealthy in this country.
  The fact of the matter is they will use examples like Bill Gates and 
others. Those are people who have done well in this country. Yet, the 
people that I represent in the State of South Dakota are not the Bill 
Gateses, Steve Forbeses, Donald Trumps, they are hard-working American 
men and women who are trying to make ends meet, and who are trying to 
raise their kids and educate them, and create a better quality of life 
for themselves and their families and their communities.
  Someone said earlier, I think the gentleman from Illinois when he was 
here on the floor, that only one in 20 farms is lost in this country or 
has to be sold to pay the death tax.
  If we think about that, in my State of South Dakota there are 32,000, 
in round numbers, family farmers. If we lose one in 20, that is 5 
percent. That is 1,600 farms.
  Mr. Speaker, one does not have to be a real serious mathematician 
over time to look at what happens as far as a trend line. We will see 
in a very short order that what is the backbone of the economy in rural 
areas, and that is our family farmers, are very much at risk, very much 
imperiled, and very much in jeopardy if we do not take the steps that 
are necessary, not only to increase prices and to reduce the cost of 
production, two issues that are separate issues, but also to lessen the 
tax and regulatory burden on many of these people.
  So again, I think this is a timely debate. I hope this is an issue 
that we will see broad bipartisan support for.
  I am happy to yield to the gentleman from Arizona (Mr. Hayworth).
  Mr. HAYWORTH. Mr. Speaker, I thank the gentleman, and welcome my 
friend, the gentleman from Missouri, to this Chamber and to service in 
the United States House.
  My friends from Missouri often say, Show me. Sadly, the Federal 
government has taken a slogan that Hollywood popularized a few years 
ago, show me the money, and taken it from family enterprises.
  It has been noted before, Mr. Speaker, that the power to tax is the 
power to destroy. Mr. Speaker, nowhere have we seen it with a more 
egregious impact, with a more unfair specter, with a fundamental 
departure from our values and ethics, than we have seen with this death 
tax.
  Yes, for years it was called an estate tax, offering this type of 
placid, pastoral recognition. But what it is in reality is the death 
tax: the destroyer of jobs, the destroyer of economic opportunity, the 
destroyer of communities and a way of life.
  Some have come to service on this Hill offering a slogan and a 
written word, It takes a village. Well, Mr. Speaker, I think it is fair 
to ask, what happens when we tax the businesses and farms and ranchers 
in said village literally to death? What happens when we abandon the 
notion of basic fairness and penalize people whose only offense is to 
succeed?
  Why punish those who have worked to establish a growing business, an 
agricultural or economic enterprise creating jobs, generating wealth, 
and not coincidentally, Mr. Speaker, paying taxes on those funds even 
as they are accumulated? Why then turn around and tax the survivors, 
and destroy the businesses or drive them into arcane policies where 
time and money is drained from job creation in the conventional sense, 
instead to go to lawyers and accountants, and to drain the productivity 
of the economic enterprise?
  Now, Mr. Speaker, we will have those who come to the floor, and we 
should acknowledge the fact, as my colleague from Illinois and now 
Missouri has done standing on that side of the aisle, there will be 
those who will join with us in a bipartisan way tomorrow, but there 
will be others who say, ``Yes, this tax is unfair, but we cannot vote 
to do this now;'' or, ``not this way;'' or maybe, ``There is a cheaper 
way to do this,'' for political advantage or partisan embarrassment.
  Mr. Speaker, I would simply say to the American people on the eve of 
this historic debate, accept no cheap substitutions. Join with us to 
put this death tax to death, because the power to tax has in this 
instance for too many families, for too many farms and ranches and 
small towns and essential businesses, become the destroyer of their 
worlds and their vision and their very livelihoods.
  Mr. THUNE. Mr. Speaker, I thank the gentleman from Arizona for 
stating

[[Page 5379]]

in very eloquent and concise terms really what this debate is about, 
because on a fundamental level, inasmuch as we talk sometimes about 
these issues in abstract terms, this really is another issue, and we 
have discussed many of them as we have talked about the President's 
agenda, that affects very real people in a very real and personal way.
  As we move through trying to implement an agenda which, because of 
these good economic times and because of the hard work of the American 
people, has generated more money in the Federal Treasury than is 
necessary to run the cost of government, the American people, I 
believe, and the President, asked for it when he spoke right here 
behind us in this Chamber, the American people want and deserve a 
refund.
  I think that if we look at the marriage penalty, which in my State 
affects 75,000 couples, if we talk about the per child tax credit which 
we acted on last week, which affects 119,000 children in South Dakota 
and their parents, it is about taking the dollars thata are coming in 
here that are more than necessary to run the cost of government, 
protecting and walling off Social Security, addressing the long-term 
needs to reform Medicare, paying down the Federal debt in historic 
levels, levels never before seen; certainly not seen in the last 40 
years, when our colleagues on the other side ran this Chamber. I do not 
know when the last time is when we have had substantial paydown of the 
Federal debt.
  But we have had an opportunity to allow the American people to keep 
some of this surplus which is theirs in the first place. The President 
has said it, it is the people's money. We need not forget that.
  So whether it is the marriage penalty or the per child tax credit, 
the death tax, reducing marginal rates, it is important that the 
American people understand that they have overpaid the cost of 
government, very simply, very fundamentally. When that happens, just in 
the same way as when they go into the store to buy a pair of shoes and 
they hand the clerk a $100 bill for an $80 pair of shoes, they don't 
say, ``Keep the change.'' They have overpaid the cost of the Federal 
government.
  This is where the American people I think really need to be tuned 
into this debate, because it is their money we are talking about. We 
all know that if it stays here in Washington, it is going to get spent 
on more and bigger government programs.
  It all comes back to the basic question, somebody talked about 
ideology earlier of who has the power: Does Washington, D.C. have the 
power, or does the American family have the power?
  We happen to believe as a matter of principle that when we have an 
opportunity to allow the American people in this country to keep more 
of their hard-earned dollars, they have more power and more control 
over their lives to make decisions that are in the best interests of 
themselves, their families and their communities. That really is what 
this debate is all about.
  Tomorrow is another chapter in that debate. We take up the death tax. 
Again, I hope that we can successfully piece together a tax relief 
package that incorporates principles that not only provide tax relief, 
but tax reform and tax fairness to the American people.
  The interesting thing about this is that our friends on the other 
side, they will complain and holler, but they are coming along. They 
have already agreed to more tax relief than this President vetoed last 
year when we acted upon it.
  They are now rolling out alternatives, all kinds of alternatives. 
They may not like exactly the way we are doing it, but they understand 
what the American people understand. That is that this is their money, 
the Americans' money, and we need to make sure they are able to keep 
it.
  I appreciate the gentleman from Arizona joining us this evening, and 
the gentleman from Missouri, for their thoughtful comments and 
observations. I expect the gentleman will be engaged in that debate 
tomorrow as it gets under way as a member of the Committee on Ways and 
Means. We thank the gentleman for his efforts to lead the charge to 
eliminate not only the death tax but a lot of the other inequities in 
the Tax Code.
  I would say to the gentleman from Missouri, again, I appreciate the 
chance to conduct this discussion this evening. Hopefully we will get 
the debate under way. The debate is joined.

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