[Congressional Record (Bound Edition), Volume 147 (2001), Part 4]
[House]
[Pages 5424-5458]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 5424]]

                   DEATH TAX ELIMINATION ACT OF 2001

  Mr. THOMAS. Mr. Speaker, pursuant to House Resolution 111, I call up 
the


bill (H.R. 8) to amend the Internal Revenue Code of 1986 to phase out 
the estate and gift taxes over a 10-year period, and for other 
purposes, and ask for its immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore (Mr. Linder). Pursuant to House Resolution 
111, the bill is considered read for amendment.
  The text of H.R. 8 is as follows:

                                 H.R. 8

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Death Tax Elimination Act''.

    TITLE I--REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING TAXES.

     SEC. 101. PHASEOUT OF ESTATE AND GIFT TAXES.

       (a) Repeal of Estate and Gift Taxes.--Subtitle B of the 
     Internal Revenue Code of 1986 (relating to estate and gift 
     taxes) is repealed effective with respect to estates of 
     decedents dying, and gifts made, after December 31, 2010.
       (b) Phaseout of Tax.--Subsection (c) of section 2001 of 
     such Code (relating to imposition and rate of tax) is amended 
     by adding at the end the following new paragraph:
       ``(3) Phaseout of tax.--In the case of estates of decedents 
     dying, and gifts made, during any calendar year after 2000 
     and before 2011--
       ``(A) In general.--The tentative tax under this subsection 
     shall be determined by using a table prescribed by the 
     Secretary (in lieu of using the table contained in paragraph 
     (1)) which is the same as such table; except that--
       ``(i) each of the rates of tax shall be reduced (but not 
     below zero) by the number of percentage points determined 
     under subparagraph (B), and
       ``(ii) the amounts setting forth the tax shall be adjusted 
     to the extent necessary to reflect the adjustments under 
     clause (i).
       ``(B) Percentage points of reduction.--

                                                          The number of
``For calendar year:                              percentage points is:
  2001...........................................................5 ....

  2002..........................................................10 ....

  2003..........................................................15 ....

  2004..........................................................20 ....

  2005..........................................................25 ....

  2006..........................................................30 ....

  2007..........................................................35 ....

  2008..........................................................40 ....

  2009..........................................................45 ....

  2010..........................................................50.....

       ``(C) Coordination with paragraph (2).--Paragraph (2) shall 
     be applied by reducing the 55 percent percentage contained 
     therein by the number of percentage points determined for 
     such calendar year under subparagraph (B).
       ``(D) Coordination with credit for state death taxes.--
     Rules similar to the rules of subparagraph (A) shall apply to 
     the table contained in section 2011(b) except that the number 
     of percentage points referred to in subparagraph (A)(i) shall 
     be determined under the following table:

                                                          The number of
``For calendar year:                              percentage points is:
  2001......................................................1\1/2\ ....

  2002...........................................................3 ....

  2003......................................................4\1/2\ ....

  2004...........................................................6 ....

  2005......................................................7\1/2\ ....

  2006...........................................................9 ....

  2007.....................................................10\1/2\ ....

  2008..........................................................12 ....

  2009.....................................................13\1/2\ ....

  2010........................................................15.''....

       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2000.

        TITLE II--INCREASE IN UNIFIED ESTATE AND GIFT TAX CREDIT

     SEC. 201. INCREASE IN UNIFIED ESTATE AND GIFT TAX CREDIT.

       (a) In General.--The table in subsection (c) of section 
     2010 of the Internal Revenue Code of 1986 (relating to 
     applicable credit amount) is amended to read as follows:

``In the case of estates of decedentThe applicable exclusion amount is:
    2001 or thereafter......................................$1,300,000 

       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2000.

     SEC. 202. REPEAL OF ESTATE TAX BENEFIT FOR FAMILY-OWNED 
                   BUSINESS INTERESTS.

       (a) In General.--Section 2057 of the Internal Revenue Code 
     of 1986 (relating to family-owned business interests) is 
     hereby repealed.
       (b) Conforming Amendments.--
       (1) Paragraph (10) of section 2031(c) of such Code is 
     amended by inserting ``(as in effect on the day before the 
     date of the enactment of the Death Tax Elimination Act)'' 
     before the period.
       (2) The table of sections for part IV of subchapter A of 
     chapter 11 of such Code is amended by striking the item 
     relating to section 2057.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2000.

      TITLE III--MODIFICATIONS OF GENERATION-SKIPPING TRANSFER TAX

     SEC. 301. DEEMED ALLOCATION OF GST EXEMPTION TO LIFETIME 
                   TRANSFERS TO TRUSTS; RETROACTIVE ALLOCATIONS.

       (a) In General.--Section 2632 of the Internal Revenue Code 
     of 1986 (relating to special rules for allocation of GST 
     exemption) is amended by redesignating subsection (c) as 
     subsection (e) and by inserting after subsection (b) the 
     following new subsections:
       ``(c) Deemed Allocation to Certain Lifetime Transfers to 
     GST Trusts.--
       ``(1) In general.--If any individual makes an indirect skip 
     during such individual's lifetime, any unused portion of such 
     individual's GST exemption shall be allocated to the property 
     transferred to the extent necessary to make the inclusion 
     ratio for such property zero. If the amount of the indirect 
     skip exceeds such unused portion, the entire unused portion 
     shall be allocated to the property transferred.
       ``(2) Unused portion.--For purposes of paragraph (1), the 
     unused portion of an individual's GST exemption is that 
     portion of such exemption which has not previously been--
       ``(A) allocated by such individual,
       ``(B) treated as allocated under subsection (b) with 
     respect to a direct skip occurring during or before the 
     calendar year in which the indirect skip is made, or
       ``(C) treated as allocated under paragraph (1) with respect 
     to a prior indirect skip.
       ``(3) Definitions.--
       ``(A) Indirect skip.--For purposes of this subsection, the 
     term `indirect skip' means any transfer of property (other 
     than a direct skip) subject to the tax imposed by chapter 12 
     made to a GST trust.
       ``(B) GST trust.--The term `GST trust' means a trust that 
     could have a generation-skipping transfer with respect to the 
     transferor unless--
       ``(i) the trust instrument provides that more than 25 
     percent of the trust corpus must be distributed to or may be 
     withdrawn by one or more individuals who are non-skip 
     persons--

       ``(I) before the date that the individual attains age 46,
       ``(II) on or before one or more dates specified in the 
     trust instrument that will occur before the date that such 
     individual attains age 46, or
       ``(III) upon the occurrence of an event that, in accordance 
     with regulations prescribed by the Secretary, may reasonably 
     be expected to occur before the date that such individual 
     attains age 46;

       ``(ii) the trust instrument provides that more than 25 
     percent of the trust corpus must be distributed to or may be 
     withdrawn by one or more individuals who are non-skip persons 
     and who are living on the date of death of another person 
     identified in the instrument (by name or by class) who is 
     more than 10 years older than such individuals;
       ``(iii) the trust instrument provides that, if one or more 
     individuals who are non-skip persons die on or before a date 
     or event described in clause (i) or (ii), more than 25 
     percent of the trust corpus either must be distributed to the 
     estate or estates of one or more of such individuals or is 
     subject to a general power of appointment exercisable by one 
     or more of such individuals;
       ``(iv) the trust is a trust any portion of which would be 
     included in the gross estate of a non-skip person (other than 
     the transferor) if such person died immediately after the 
     transfer;
       ``(v) the trust is a charitable lead annuity trust (within 
     the meaning of section 2642(e)(3)(A)) or a charitable 
     remainder annuity trust or a charitable remainder unitrust 
     (within the meaning of section 664(d)); or
       ``(vi) the trust is a trust with respect to which a 
     deduction was allowed under section 2522 for the amount of an 
     interest in the form of the right to receive annual payments 
     of a fixed percentage of the net fair market value of the 
     trust property (determined yearly) and which is required to 
     pay principal to a non-skip person if such person is alive 
     when the yearly payments for which the deduction was allowed 
     terminate.

     For purposes of this subparagraph, the value of transferred 
     property shall not be considered to be includible in the 
     gross estate of a non-skip person or subject to a right of 
     withdrawal by reason of such person holding a right to 
     withdraw so much of such property as does not exceed the 
     amount referred to in section 2503(b) with respect to any 
     transferor, and it shall be assumed that powers of 
     appointment held by non-skip persons will not be exercised.
       ``(4) Automatic allocations to certain gst trusts.--For 
     purposes of this subsection, an indirect skip to which 
     section 2642(f ) applies shall be deemed to have been made 
     only at the close of the estate tax inclusion period. The 
     fair market value of such transfer shall be the fair market 
     value of the trust property at the close of the estate tax 
     inclusion period.
       ``(5) Applicability and effect.--

[[Page 5425]]

       ``(A) In general.--An individual--
       ``(i) may elect to have this subsection not apply to--

       ``(I) an indirect skip, or
       ``(II) any or all transfers made by such individual to a 
     particular trust, and

       ``(ii) may elect to treat any trust as a GST trust for 
     purposes of this subsection with respect to any or all 
     transfers made by such individual to such trust.
       ``(B) Elections.--
       ``(i) Elections with respect to indirect skips.--An 
     election under subparagraph (A)(i)(I) shall be deemed to be 
     timely if filed on a timely filed gift tax return for the 
     calendar year in which the transfer was made or deemed to 
     have been made pursuant to paragraph (4) or on such later 
     date or dates as may be prescribed by the Secretary.
       ``(ii) Other elections.--An election under clause (i)(II) 
     or (ii) of subparagraph (A) may be made on a timely filed 
     gift tax return for the calendar year for which the election 
     is to become effective.
       ``(d) Retroactive Allocations.--
       ``(1) In general.--If--
       ``(A) a non-skip person has an interest or a future 
     interest in a trust to which any transfer has been made,
       ``(B) such person--
       ``(i) is a lineal descendant of a grandparent of the 
     transferor or of a grandparent of the transferor's spouse or 
     former spouse, and
       ``(ii) is assigned to a generation below the generation 
     assignment of the transferor, and
       ``(C) such person predeceases the transferor,

     then the transferor may make an allocation of any of such 
     transferor's unused GST exemption to any previous transfer or 
     transfers to the trust on a chronological basis.
       ``(2) Special rules.--If the allocation under paragraph (1) 
     by the transferor is made on a gift tax return filed on or 
     before the date prescribed by section 6075(b) for gifts made 
     within the calendar year within which the non-skip person's 
     death occurred--
       ``(A) the value of such transfer or transfers for purposes 
     of section 2642(a) shall be determined as if such allocation 
     had been made on a timely filed gift tax return for each 
     calendar year within which each transfer was made,
       ``(B) such allocation shall be effective immediately before 
     such death, and
       ``(C) the amount of the transferor's unused GST exemption 
     available to be allocated shall be determined immediately 
     before such death.
       ``(3) Future interest.--For purposes of this subsection, a 
     person has a future interest in a trust if the trust may 
     permit income or corpus to be paid to such person on a date 
     or dates in the future.''.
       (b) Conforming Amendment.--Paragraph (2) of section 2632(b) 
     of such Code is amended by striking ``with respect to a 
     direct skip'' and inserting ``or subsection (c)(1)''.
       (c) Effective Dates.--
       (1) Deemed allocation.--Section 2632(c) of the Internal 
     Revenue Code of 1986 (as added by subsection (a)), and the 
     amendment made by subsection (b), shall apply to transfers 
     subject to chapter 11 or 12 made after December 31, 1999, and 
     to estate tax inclusion periods ending after December 31, 
     1999.
       (2) Retroactive allocations.--Section 2632(d) of the 
     Internal Revenue Code of 1986 (as added by subsection (a)) 
     shall apply to deaths of non-skip persons occurring after 
     December 31, 1999.

     SEC. 302. SEVERING OF TRUSTS.

       (a) In General.--Subsection (a) of section 2642 of the 
     Internal Revenue Code of 1986 (relating to inclusion ratio) 
     is amended by adding at the end the following new paragraph:
       ``(3) Severing of trusts.--
       ``(A) In general.--If a trust is severed in a qualified 
     severance, the trusts resulting from such severance shall be 
     treated as separate trusts thereafter for purposes of this 
     chapter.
       ``(B) Qualified severance.--For purposes of subparagraph 
     (A)--
       ``(i) In general.--The term `qualified severance' means the 
     division of a single trust and the creation (by any means 
     available under the governing instrument or under local law) 
     of two or more trusts if--

       ``(I) the single trust was divided on a fractional basis, 
     and
       ``(II) the terms of the new trusts, in the aggregate, 
     provide for the same succession of interests of beneficiaries 
     as are provided in the original trust.

       ``(ii) Trusts with inclusion ratio greater than zero.--If a 
     trust has an inclusion ratio of greater than zero and less 
     than 1, a severance is a qualified severance only if the 
     single trust is divided into two trusts, one of which 
     receives a fractional share of the total value of all trust 
     assets equal to the applicable fraction of the single trust 
     immediately before the severance. In such case, the trust 
     receiving such fractional share shall have an inclusion ratio 
     of zero and the other trust shall have an inclusion ratio of 
     1.
       ``(iii) Regulations.--The term `qualified severance' 
     includes any other severance permitted under regulations 
     prescribed by the Secretary.
       ``(C) Timing and manner of severances.--A severance 
     pursuant to this paragraph may be made at any time. The 
     Secretary shall prescribe by forms or regulations the manner 
     in which the qualified severance shall be reported to the 
     Secretary.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to severances after December 31, 1999.

     SEC. 303. MODIFICATION OF CERTAIN VALUATION RULES.

       (a) Gifts for Which Gift Tax Return Filed or Deemed 
     Allocation Made.--Paragraph (1) of section 2642(b) of such 
     Code (relating to valuation rules, etc.) is amended to read 
     as follows:
       ``(1) Gifts for which gift tax return filed or deemed 
     allocation made.--If the allocation of the GST exemption to 
     any transfers of property is made on a gift tax return filed 
     on or before the date prescribed by section 6075(b) for such 
     transfer or is deemed to be made under section 2632 (b)(1) or 
     (c)(1)--
       ``(A) the value of such property for purposes of subsection 
     (a) shall be its value as finally determined for purposes of 
     chapter 12 (within the meaning of section 2001(f )(2)), or, 
     in the case of an allocation deemed to have been made at the 
     close of an estate tax inclusion period, its value at the 
     time of the close of the estate tax inclusion period, and
       ``(B) such allocation shall be effective on and after the 
     date of such transfer, or, in the case of an allocation 
     deemed to have been made at the close of an estate tax 
     inclusion period, on and after the close of such estate tax 
     inclusion period.''.
       (b) Transfers at Death.--Subparagraph (A) of section 
     2642(b)(2) of such Code is amended to read as follows:
       ``(A) Transfers at death.--If property is transferred as a 
     result of the death of the transferor, the value of such 
     property for purposes of subsection (a) shall be its value as 
     finally determined for purposes of chapter 11; except that, 
     if the requirements prescribed by the Secretary respecting 
     allocation of post-death changes in value are not met, the 
     value of such property shall be determined as of the time of 
     the distribution concerned.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers subject to chapter 11 or 12 of the 
     Internal Revenue Code of 1986 made after December 31, 1999.

     SEC. 304. RELIEF PROVISIONS.

       (a) In General.--Section 2642 of such Code is amended by 
     adding at the end the following new subsection:
       ``(g) Relief Provisions.--
       ``(1) Relief from late elections.--
       ``(A) In general.--The Secretary shall by regulation 
     prescribe such circumstances and procedures under which 
     extensions of time will be granted to make--
       ``(i) an allocation of GST exemption described in paragraph 
     (1) or (2) of subsection (b), and
       ``(ii) an election under subsection (b)(3) or (c)(5) of 
     section 2632.

     Such regulations shall include procedures for requesting 
     comparable relief with respect to transfers made before the 
     date of the enactment of this paragraph.
       ``(B) Basis for determinations.--In determining whether to 
     grant relief under this paragraph, the Secretary shall take 
     into account all relevant circumstances, including evidence 
     of intent contained in the trust instrument or instrument of 
     transfer and such other factors as the Secretary deems 
     relevant. For purposes of determining whether to grant relief 
     under this paragraph, the time for making the allocation (or 
     election) shall be treated as if not expressly prescribed by 
     statute.
       ``(2) Substantial compliance.--An allocation of GST 
     exemption under section 2632 that demonstrates an intent to 
     have the lowest possible inclusion ratio with respect to a 
     transfer or a trust shall be deemed to be an allocation of so 
     much of the transferor's unused GST exemption as produces the 
     lowest possible inclusion ratio. In determining whether there 
     has been substantial compliance, all relevant circumstances 
     shall be taken into account, including evidence of intent 
     contained in the trust instrument or instrument of transfer 
     and such other factors as the Secretary deems relevant.''.
       (b) Effective Dates.--
       (1) Relief from late elections.--Section 2642(g)(1) of the 
     Internal Revenue Code of 1986 (as added by subsection (a)) 
     shall apply to requests pending on, or filed after, December 
     31, 1999.
       (2) Substantial compliance.--Section 2642(g)(2) of such 
     Code (as so added) shall apply to transfers subject to 
     chapter 11 or 12 of the Internal Revenue Code of 1986 made 
     after December 31, 1999. No implication is intended with 
     respect to the availability of relief from late elections or 
     the application of a rule of substantial compliance on or 
     before such date.

         TITLE IV--EXTENSION OF TIME FOR PAYMENT OF ESTATE TAX

     SEC. 401. INCREASE IN NUMBER OF ALLOWABLE PARTNERS AND 
                   SHAREHOLDERS IN CLOSELY HELD BUSINESSES.

       (a) In General.--Paragraphs (1)(B)(ii), (1)(C)(ii), and 
     (9)(B)(iii)(I) of section 6166(b) of the Internal Revenue 
     Code of 1986 (relating to definitions and special rules) are 
     each amended by striking ``15'' and inserting ``75''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2000.


[[Page 5426]]


  The SPEAKER pro tempore. The amendment printed in the bill is 
adopted.
  The text of H.R. 8, as amended, is as follows:

                                 H.R. 8

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This Act may be cited as the ``Death Tax 
     Elimination Act of 2001''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--

Sec. 1. Short title; etc.

     TITLE I--REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING TAXES

Sec. 101. Repeal of estate, gift, and generation-skipping taxes.

   TITLE II--REDUCTIONS OF ESTATE AND GIFT TAX RATES PRIOR TO REPEAL

Sec. 201. Additional reductions of estate and gift tax rates.

    TITLE III--UNIFIED CREDIT REPLACED WITH UNIFIED EXEMPTION AMOUNT

Sec. 301. Unified credit against estate and gift taxes replaced with 
              unified exemption amount.

 TITLE IV--CARRYOVER BASIS AT DEATH; OTHER CHANGES TAKING EFFECT WITH 
                                 REPEAL

Sec. 401. Termination of step-up in basis at death.
Sec. 402. Treatment of property acquired from a decedent dying after 
              December 31, 2010.

                    TITLE V--CONSERVATION EASEMENTS

Sec. 501. Expansion of estate tax rule for conservation easements.

      TITLE VI--MODIFICATIONS OF GENERATION-SKIPPING TRANSFER TAX

Sec. 601. Deemed allocation of GST exemption to lifetime transfers to 
              trusts; retroactive allocations.
Sec. 602. Severing of trusts.
Sec. 603. Modification of certain valuation rules.
Sec. 604. Relief provisions.

         TITLE VII--EXTENSION OF TIME FOR PAYMENT OF ESTATE TAX

Sec. 701. Increase in number of allowable partners and shareholders in 
              closely held businesses.

     TITLE I--REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING TAXES

     SEC. 101. REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING 
                   TAXES.

       (a) In General.--Subtitle B is hereby repealed.
       (b) Effective Date.--The repeal made by subsection (a) 
     shall apply to the estates of decedents dying, and gifts and 
     generation-skipping transfers made, after December 31, 2010.

   TITLE II--REDUCTIONS OF ESTATE AND GIFT TAX RATES PRIOR TO REPEAL

     SEC. 201. ADDITIONAL REDUCTIONS OF ESTATE AND GIFT TAX RATES.

       (a) Maximum Rate of Tax Reduced to 50 Percent.--
       (1) In general.--The table contained in section 2001(c)(1) 
     is amended by striking the two highest brackets and inserting 
     the following:

$1,025,800, plus 50% of the excess over $2,500,000.''..................

       (2) Phase-in of reduced rate.--Subsection (c) of section 
     2001 is amended by adding at the end the following new 
     paragraph:
       ``(3) Phase-in of reduced rate.--In the case of decedents 
     dying, and gifts made, during 2002, the last item in the 
     table contained in paragraph (1) shall be applied by 
     substituting `53%' for `50%'.''.
       (b) Repeal of Phaseout of Graduated Rates.--Subsection (c) 
     of section 2001 is amended by striking paragraph (2) and 
     redesignating paragraph (3), as added by subsection (a), as 
     paragraph (2).
       (c) Additional Reductions of Rates of Tax.--Subsection (c) 
     of section 2001, as so amended, is amended by adding at the 
     end the following new paragraph:
       ``(3) Phasedown of tax.--In the case of estates of 
     decedents dying, and gifts made, during any calendar year 
     after 2003 and before 2011--
       ``(A) In general.--Except as provided in subparagraph (C), 
     the tentative tax under this subsection shall be determined 
     by using a table prescribed by the Secretary (in lieu of 
     using the table contained in paragraph (1)) which is the same 
     as such table; except that--
       ``(i) each of the rates of tax shall be reduced by the 
     number of percentage points determined under subparagraph 
     (B), and
       ``(ii) the amounts setting forth the tax shall be adjusted 
     to the extent necessary to reflect the adjustments under 
     clause (i).
       ``(B) Percentage points of reduction.--

                                                        The number of  
    ``For calendar year:                          percentage points is:
      2004........................................................ 1.0 
      2005........................................................ 2.0 
      2006........................................................ 3.0 
      2007........................................................ 5.0 
      2008........................................................ 7.0 
      2009........................................................ 9.0 
      2010........................................................11.0.

       ``(C) Coordination with income tax rates.--The reductions 
     under subparagraph (A)--
       ``(i) shall not reduce any rate under paragraph (1) below 
     the lowest rate in section 1(c) applicable to the taxable 
     year which includes the date of death (or, in the case of a 
     gift, the date of the gift), and
       ``(ii) shall not reduce the highest rate under paragraph 
     (1) below the highest rate in section 1(c) for such taxable 
     year.
       ``(D) Coordination with credit for state death taxes.--
     Rules similar to the rules of subparagraph (A) shall apply to 
     the table contained in section 2011(b) except that the 
     Secretary shall prescribe percentage point reductions which 
     maintain the proportionate relationship (as in effect before 
     any reduction under this paragraph) between the credit under 
     section 2011 and the tax rates under subsection (c).''.
       (d) Effective Dates.--
       (1) Subsections (a) and (b).--The amendments made by 
     subsections (a) and (b) shall apply to estates of decedents 
     dying, and gifts made, after December 31, 2001.
       (2) Subsection (c).--The amendment made by subsection (c) 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2003.

    TITLE III--UNIFIED CREDIT REPLACED WITH UNIFIED EXEMPTION AMOUNT

     SEC. 301. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES 
                   REPLACED WITH UNIFIED EXEMPTION AMOUNT.

       (a) In General.--
       (1) Estate tax.--Subsection (b) of section 2001 (relating 
     to computation of tax) is amended to read as follows:
       ``(b) Computation of Tax.--
       ``(1) In general.--The tax imposed by this section shall be 
     the amount equal to the excess (if any) of--
       ``(A) the tentative tax determined under paragraph (2), 
     over
       ``(B) the aggregate amount of tax which would have been 
     payable under chapter 12 with respect to gifts made by the 
     decedent after December 31, 1976, if the provisions of 
     subsection (c) (as in effect at the decedent's death) had 
     been applicable at the time of such gifts.
       ``(2) Tentative tax.--For purposes of paragraph (1), the 
     tentative tax determined under this paragraph is a tax 
     computed under subsection (c) on the excess of--
       ``(A) the sum of--
       ``(i) the amount of the taxable estate, and
       ``(ii) the amount of the adjusted taxable gifts, over
       ``(B) the exemption amount for the calendar year in which 
     the decedent died.
       ``(3) Exemption amount.--For purposes of paragraph (2), the 
     term `exemption amount' means the amount determined in 
     accordance with the following table:

                                                       ``IThe exemption
                                                         caleamount is:
    2002 and 2003.............................................$700,000 
    2004......................................................$850,000 
    2005......................................................$950,000 
    2006 or thereafter......................................$1,000,000.

       ``(4) Adjusted taxable gifts.--For purposes of paragraph 
     (2), the term `adjusted taxable gifts' means the total amount 
     of the taxable gifts (within the meaning of section 2503) 
     made by the decedent after December 31, 1976, other than 
     gifts which are includible in the gross estate of the 
     decedent.''.
       (2) Gift tax.--Subsection (a) of section 2502 (relating to 
     computation of tax) is amended to read as follows:
       ``(a) Computation of Tax.--
       ``(1) In general.--The tax imposed by section 2501 for each 
     calendar year shall be the amount equal to the excess (if 
     any) of--
       ``(A) the tentative tax determined under paragraph (2) for 
     such calendar year, over
       ``(B) the aggregate amount of tax that would have been 
     payable under this chapter with respect to gifts made by the 
     donor in preceding calendar periods if the tax had been 
     computed under the provisions of section 2001(c) as in effect 
     for such calendar year.
       ``(2) Tentative tax.--For purposes of paragraph (1), the 
     tentative tax determined under this paragraph for a calendar 
     year is a tax computed under section 2001(c) on the excess 
     of--
       ``(A) the aggregate sum of the taxable gifts for such 
     calendar year and for each of the preceding calendar periods, 
     over
       ``(B) the exemption amount under section 2001(b)(3) for 
     such calendar year.''.
       (b) Repeal of Unified Credits.--
       (1) Section 2010 (relating to unified credit against estate 
     tax) is hereby repealed.
       (2) Section 2505 (relating to unified credit against gift 
     tax) is hereby repealed.
       (c) Conforming Amendments.--
       (1)(A) Subsection (b) of section 2011 is amended--
       (i) by striking ``adjusted'' in the table; and
       (ii) by striking the last sentence.
       (B) Subsection (f) of section 2011 is amended by striking 
     ``, reduced by the amount of the unified credit provided by 
     section 2010''.
       (2) Subsection (a) of section 2012 is amended by striking 
     ``and the unified credit provided by section 2010''.
       (3) Subparagraph (A) of section 2013(c)(1) is amended by 
     striking ``2010,''.
       (4) Paragraph (2) of section 2014(b) is amended by striking 
     ``2010, 2011,'' and inserting ``2011''.
       (5) Clause (ii) of section 2056A(b)(12)(C) is amended to 
     read as follows:
       ``(ii) to treat any reduction in the tax imposed by 
     paragraph (1)(A) by reason of the credit allowable under 
     section 2010 (as in effect on the

[[Page 5427]]

     day before the date of the enactment of the Death Tax 
     Elimination Act of 2001) or the exemption amount allowable 
     under section 2001(b) with respect to the decedent as a 
     credit under section 2505 (as so in effect) or exemption 
     under section 2501 (as the case may be) allowable to such 
     surviving spouse for purposes of determining the amount of 
     the exemption allowable under section 2501 with respect to 
     taxable gifts made by the surviving spouse during the year in 
     which the spouse becomes a citizen or any subsequent year,''.
       (6) Subsection (a) of section 2057 is amended by striking 
     paragraphs (2) and (3) and inserting the following new 
     paragraph:
       ``(2) Maximum deduction.--The deduction allowed by this 
     section shall not exceed the excess of $1,300,000 over the 
     exemption amount (as defined in section 2001(b)(3)).''.
       (7) Subsection (b) of section 2101 is amended to read as 
     follows:
       ``(b) Computation of Tax.--
       ``(1) In general.--The tax imposed by this section shall be 
     the amount equal to the excess (if any) of--
       ``(A) the tentative tax determined under paragraph (2), 
     over
       ``(B) a tentative tax computed under section 2001(c) on the 
     amount of the adjusted taxable gifts.
       ``(2) Tentative tax.--For purposes of paragraph (1), the 
     tentative tax determined under this paragraph is a tax 
     computed under section 2001(c) on the excess of--
       ``(A) the sum of--
       ``(i) the amount of the taxable estate, and
       ``(ii) the amount of the adjusted taxable gifts, over
       ``(B) the exemption amount for the calendar year in which 
     the decedent died.
       ``(3) Exemption amount.--
       ``(A) In general.--The term `exemption amount' means 
     $60,000.
       ``(B) Residents of possessions of the united states.--In 
     the case of a decedent who is considered to be a nonresident 
     not a citizen of the United States under section 2209, the 
     exemption amount under this paragraph shall be the greater 
     of--
       ``(i) $60,000, or
       ``(ii) that proportion of $175,000 which the value of that 
     part of the decedent's gross estate which at the time of his 
     death is situated in the United States bears to the value of 
     his entire gross estate wherever situated.
       ``(C) Special rules.--
       ``(i) Coordination with treaties.--To the extent required 
     under any treaty obligation of the United States, the 
     exemption amount allowed under this paragraph shall be equal 
     to the amount which bears the same ratio to the exemption 
     amount under section 2001(b)(3) (for the calendar year in 
     which the decedent died) as the value of the part of the 
     decedent's gross estate which at the time of his death is 
     situated in the United States bears to the value of his 
     entire gross estate wherever situated. For purposes of the 
     preceding sentence, property shall not be treated as situated 
     in the United States if such property is exempt from the tax 
     imposed by this subchapter under any treaty obligation of the 
     United States.
       ``(ii) Coordination with gift tax exemption and unified 
     credit.--If an exemption has been allowed under section 2501 
     (or a credit has been allowed under section 2505 as in effect 
     on the day before the date of the enactment of the Death Tax 
     Elimination Act of 2001) with respect to any gift made by the 
     decedent, each dollar amount contained in subparagraph (A) or 
     (B) or the exemption amount applicable under clause (i) of 
     this subparagraph (whichever applies) shall be reduced by the 
     exemption so allowed under section 2501 (or, in the case of 
     such a credit, by the amount of the gift for which the credit 
     was so allowed).''.
       (8) Section 2102 is amended by striking subsection (c).
       (9)(A) Paragraph (1) of section 2107(a) is amended by 
     striking ``the table contained in''.
       (B) Paragraph (1) of section 2107(c) is amended to read as 
     follows:
       ``(1) Exemption amount.--For purposes of subsection (a), 
     the exemption amount under section 2001 shall be $60,000.''
       (C) Paragraph (3) of section 2107(c) is amended by striking 
     the second sentence.
       (D) The heading of subsection (c) of section 2107 is 
     amended to read as follows:
       ``(c) Exemption Amount and Credits.--''.
       (10) Paragraph (1) of section 6018(a) is amended by 
     striking ``the applicable exclusion amount in effect under 
     section 2010(c)'' and inserting ``the exemption amount under 
     section 2001(b)(3)''.
       (11) Subparagraph (A) of section 6601(j)(2) is amended to 
     read as follows:
       ``(A) the amount of the tentative tax which would be 
     determined under the rate schedule set forth in section 
     2001(c) if the amount with respect to which such tentative 
     tax is to be computed were $1,000,000, or''.
       (12) The table of sections for part II of subchapter A of 
     chapter 11 is amended by striking the item relating to 
     section 2010.
       (13) The table of sections for subchapter A of chapter 12 
     is amended by striking the item relating to section 2505.
       (d) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying and gifts made 
     after December 31, 2001.

 TITLE IV--CARRYOVER BASIS AT DEATH; OTHER CHANGES TAKING EFFECT WITH 
                                 REPEAL

     SEC. 401. TERMINATION OF STEP-UP IN BASIS AT DEATH.

       Section 1014 (relating to basis of property acquired from a 
     decedent) is amended by adding at the end the following new 
     subsection:
       ``(f) Termination.--This section shall not apply with 
     respect to decedents dying after December 31, 2010.''.

     SEC. 402. TREATMENT OF PROPERTY ACQUIRED FROM A DECEDENT 
                   DYING AFTER DECEMBER 31, 2010.

       (a) General Rule.--Part II of subchapter O of chapter 1 
     (relating to basis rules of general application) is amended 
     by inserting after section 1021 the following new section:

     ``SEC. 1022. TREATMENT OF PROPERTY ACQUIRED FROM A DECEDENT 
                   DYING AFTER DECEMBER 31, 2010.

       ``(a) In General.--Except as otherwise provided in this 
     section--
       ``(1) property acquired from a decedent dying after 
     December 31, 2010, shall be treated for purposes of this 
     subtitle as transferred by gift, and
       ``(2) the basis of the person acquiring property from such 
     a decedent shall be the lesser of--
       ``(A) the adjusted basis of the decedent, or
       ``(B) the fair market value of the property at the date of 
     the decedent's death.
       ``(b) Basis Increase for Certain Property.--
       ``(1) In general.--In the case of property to which this 
     subsection applies, the basis of such property under 
     subsection (a) shall be increased by its basis increase under 
     this subsection.
       ``(2) Basis increase.--For purposes of this subsection--
       ``(A) In general.--The basis increase under this subsection 
     for any property is the portion of the aggregate basis 
     increase which is allocated to the property pursuant to this 
     section.
       ``(B) Aggregate basis increase.--In the case of any estate, 
     the aggregate basis increase under this subsection is 
     $1,300,000.
       ``(C) Limit increased by unused built-in losses and loss 
     carryovers.--The limitation under subparagraph (B) shall be 
     increased by--
       ``(i) the sum of the amount of any capital loss carryover 
     under section 1212(b), and the amount of any net operating 
     loss carryover under section 172, which would (but for the 
     decedent's death) be carried from the decedent's last taxable 
     year to a later taxable year of the decedent, plus
       ``(ii) the sum of the amount of any losses that would have 
     been allowable under section 165 if the property acquired 
     from the decedent had been sold at fair market value 
     immediately before the decedent's death.
       ``(3) Decedent nonresidents who are not citizens of the 
     united states.--In the case of a decedent nonresident not a 
     citizen of the United States--
       ``(A) paragraph (2)(B) shall be applied by substituting 
     `$60,000' for `$1,300,000', and
       ``(B) paragraph (2)(C) shall not apply.
       ``(c) Additional Basis Increase for Property Acquired by 
     Surviving Spouse.--
       ``(1) In general.--In the case of property to which this 
     subsection applies and which is qualified spousal property, 
     the basis of such property under subsection (a) (as 
     increased, if any, under subsection (b)) shall be increased 
     by its spousal property basis increase.
       ``(2) Spousal property basis increase.--For purposes of 
     this subsection--
       ``(A) In general.--The spousal property basis increase for 
     property referred to in paragraph (1) is the portion of the 
     aggregate spousal property basis increase which is allocated 
     to the property pursuant to this section.
       ``(B) Aggregate spousal property basis increase.--In the 
     case of any estate, the aggregate spousal property basis 
     increase is $3,000,000.
       ``(3) Qualified spousal property.--For purposes of this 
     subsection, the term `qualified spousal property' means--
       ``(A) outright transfer property, and
       ``(B) qualified terminable interest property.
       ``(4) Outright transfer property.--For purposes of this 
     subsection--
       ``(A) In general.--The term `outright transfer property' 
     means any interest in property acquired from the decedent by 
     the decedent's surviving spouse.
       ``(B) Exception.--Subparagraph (A) shall not apply where, 
     on the lapse of time, on the occurrence of an event or 
     contingency, or on the failure of an event or contingency to 
     occur, an interest passing to the surviving spouse will 
     terminate or fail--
       ``(i)(I) if an interest in such property passes or has 
     passed (for less than an adequate and full consideration in 
     money or money's worth) from the decedent to any person other 
     than such surviving spouse (or the estate of such spouse), 
     and
       ``(II) if by reason of such passing such person (or his 
     heirs or assigns) may possess or enjoy any part of such 
     property after such termination or failure of the interest so 
     passing to the surviving spouse, or
       ``(ii) if such interest is to be acquired for the surviving 
     spouse, pursuant to directions of the decedent, by his 
     executor or by the trustee of a trust.

     For purposes of this subparagraph, an interest shall not be 
     considered as an interest which will terminate or fail merely 
     because it is the ownership of a bond, note, or similar 
     contractual obligation, the discharge of which would not have 
     the effect of an annuity for life or for a term.
       ``(C) Interest of spouse conditional on survival for 
     limited period.--For purposes of this paragraph, an interest 
     passing to the surviving spouse shall not be considered as an 
     interest which will terminate or fail on the death of such 
     spouse if--

[[Page 5428]]

       ``(i) such death will cause a termination or failure of 
     such interest only if it occurs within a period not exceeding 
     6 months after the decedent's death, or only if it occurs as 
     a result of a common disaster resulting in the death of the 
     decedent and the surviving spouse, or only if it occurs in 
     the case of either such event; and
       ``(ii) such termination or failure does not in fact occur.
       ``(5) Qualified terminable interest property.--For purposes 
     of this subsection--
       ``(A) In general.--The term `qualified terminable interest 
     property' means property--
       ``(i) which passes from the decedent, and
       ``(ii) in which the surviving spouse has a qualifying 
     income interest for life.
       ``(B) Qualifying income interest for life.--The surviving 
     spouse has a qualifying income interest for life if--
       ``(i) the surviving spouse is entitled to all the income 
     from the property, payable annually or at more frequent 
     intervals, or has a usufruct interest for life in the 
     property, and
       ``(ii) no person has a power to appoint any part of the 
     property to any person other than the surviving spouse.

     Clause (ii) shall not apply to a power exercisable only at or 
     after the death of the surviving spouse. To the extent 
     provided in regulations, an annuity shall be treated in a 
     manner similar to an income interest in property (regardless 
     of whether the property from which the annuity is payable can 
     be separately identified).
       ``(C) Property includes interest therein.--The term 
     `property' includes an interest in property.
       ``(D) Specific portion treated as separate property.--A 
     specific portion of property shall be treated as separate 
     property. For purposes of the preceding sentence, the term 
     `specific portion' only includes a portion determined on a 
     fractional or percentage basis.
       ``(d) Definitions and Special Rules for Application of 
     Subsections (b) and (c).--
       ``(1) Property to which subsections (b) and (c) apply.--
       ``(A) In general.--The basis of property acquired from a 
     decedent may be increased under subsection (b) or (c) only if 
     the property was owned by the decedent at the time of death.
       ``(B) Rules relating to ownership.--
       ``(i) Jointly held property.--In the case of property which 
     was owned by the decedent and another person as joint tenants 
     with right of survivorship or tenants by the entirety--

       ``(I) if the only such other person is the surviving 
     spouse, the decedent shall be treated as the owner of only 50 
     percent of the property,
       ``(II) in any case (to which subclause (I) does not apply) 
     in which the decedent furnished consideration for the 
     acquisition of the property, the decedent shall be treated as 
     the owner to the extent of the portion of the property which 
     is proportionate to such consideration, and
       ``(III) in any case (to which subclause (I) does not apply) 
     in which the property has been acquired by gift, bequest, 
     devise, or inheritance by the decedent and any other person 
     as joint tenants with right of survivorship and their 
     interests are not otherwise specified or fixed by law, the 
     decedent shall be treated as the owner to the extent of the 
     value of a fractional part to be determined by dividing the 
     value of the property by the number of joint tenants with 
     right of survivorship.

       ``(ii) Revocable trusts.--The decedent shall be treated as 
     owning property transferred by the decedent during life to a 
     revocable trust to pay all of the income during the 
     decedent's life to the decedent or at the direction of the 
     decedent.
       ``(iii) Powers of appointment.--The decedent shall not be 
     treated as owning any property by reason of holding a power 
     of appointment with respect to such property.
       ``(iv) Community property.--Property which represents the 
     surviving spouse's one-half share of community property held 
     by the decedent and the surviving spouse under the community 
     property laws of any State or possession of the United States 
     or any foreign country shall be treated for purposes of this 
     section as owned by, and acquired from, the decedent if at 
     least one-half of the whole of the community interest in such 
     property is treated as owned by, and acquired from, the 
     decedent without regard to this clause.
       ``(C) Property acquired by decedent by gift within 3 years 
     of death.--
       ``(i) In general.--Subsections (b) and (c) shall not apply 
     to property acquired by the decedent by gift or by inter 
     vivos transfer for less than adequate and full consideration 
     in money or money's worth during the 3-year period ending on 
     the date of the decedent's death.
       ``(ii) Exception for certain gifts from spouse.--Clause (i) 
     shall not apply to property acquired by the decedent from the 
     decedent's spouse unless, during such 3-year period, such 
     spouse acquired the property in whole or in part by gift or 
     by inter vivos transfer for less than adequate and full 
     consideration in money or money's worth.
       ``(D) Stock of certain entities.--Subsections (b) and (c) 
     shall not apply to--
       ``(i) stock or securities a foreign personal holding 
     company,
       ``(ii) stock of a DISC or former DISC,
       ``(iii) stock of a foreign investment company, or
       ``(iv) stock of a passive foreign investment company unless 
     such company is a qualified electing fund (as defined in 
     section 1295) with respect to the decedent.
       ``(2) Fair market value limitation.--The adjustments under 
     subsection (b) and (c) shall not increase the basis of any 
     interest in property acquired from the decedent above its 
     fair market value in the hands of the decedent as of the date 
     of the decedent's death.
       ``(3) Allocation rules.--
       ``(A) In general.--The executor shall allocate the 
     adjustments under subsections (b) and (c) on the return 
     required by section 6018.
       ``(B) Changes in allocation.--Any allocation made pursuant 
     to subparagraph (A) may be changed only as provided by the 
     Secretary.
       ``(4) Inflation adjustment of basis adjustment amounts.--
       ``(A) In general.--In the case of decedents dying in a 
     calendar year after 2011, the $1,300,000, $60,000, and 
     $3,000,000 dollar amounts in subsections (b) and (c)(2)(B) 
     shall each be increased by an amount equal to the product 
     of--
       ``(i) such dollar amount, and
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, determined by 
     substituting `2010' for `1992' in subparagraph (B) thereof.
       ``(B) Rounding.--If any increase determined under 
     subparagraph (A) is not a multiple of--
       ``(i) $100,000 in the case of the $1,300,000 amount,
       ``(ii) $5,000 in the case of the $60,000 amount, and
       ``(iii) $250,000 in the case of the $3,000,000 amount,

     such increase shall be rounded to the next lowest multiple 
     thereof.
       ``(e) Property Acquired From the Decedent.--For purposes of 
     this section, the following property shall be considered to 
     have been acquired from the decedent:
       ``(1) Property acquired by bequest, devise, or inheritance, 
     or by the decedent's estate from the decedent.
       ``(2) Property transferred by the decedent during his 
     lifetime in trust to pay the income for life to or on the 
     order or direction of the decedent, with the right reserved 
     to the decedent at all times before his death--
       ``(A) to revoke the trust, or
       ``(B) to make any change in the enjoyment thereof through 
     the exercise of a power to alter, amend, or terminate the 
     trust.
       ``(3) Any other property passing from the decedent by 
     reason of death to the extent that such property passed 
     without consideration.
       ``(f) Coordination With Section 691.--This section shall 
     not apply to property which constitutes a right to receive an 
     item of income in respect of a decedent under section 691.
       ``(g) Certain Liabilities Disregarded.--In determining 
     whether gain is recognized on the acquisition of property--
       ``(1) from a decedent by a decedent's estate or any 
     beneficiary, and
       ``(2) from the decedent's estate by any beneficiary,

     and in determining the adjusted basis of such property, 
     liabilities in excess of basis shall be disregarded.
       ``(h) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''.
       (b) Information Returns, Etc.--
       (1) In general.--Subpart C of part II of subchapter A of 
     chapter 61 is amended to read as follows:

   ``Subpart C--Returns Relating to Transfers During Life or at Death

``Sec. 6018. Returns relating to large transfers at death.
``Sec. 6019. Returns relating to large lifetime gifts.

     ``SEC. 6018. RETURNS RELATING TO LARGE TRANSFERS AT DEATH.

       ``(a) In General.--If this section applies to property 
     acquired from a decedent, the executor of the estate of such 
     decedent shall make a return containing the information 
     specified in subsection (c) with respect to such property.
       ``(b) Property to Which Section Applies.--
       ``(1) Large transfers.--This section shall apply to all 
     property (other than cash) acquired from a decedent if the 
     fair market value of such property acquired from the decedent 
     exceeds the dollar amount applicable under section 
     1022(b)(2)(B) (without regard to section 1022(b)(2)(C)).
       ``(2) Transfers of certain gifts received by decedent 
     within 3 years of death.--This section shall apply to any 
     appreciated property acquired from the decedent if--
       ``(A) subsections (b) and (c) of section 1022 do not apply 
     to such property by reason of section 1022(d)(1)(C), and
       ``(B) such property was required to be included on a return 
     required to be filed under section 6019.
       ``(3) Nonresidents not citizens of the united states.--In 
     the case of a decedent who is a nonresident not a citizen of 
     the United States, paragraphs (1) and (2) shall be applied--
       ``(A) by taking into account only--
       ``(i) tangible property situated in the United States, and
       ``(ii) other property acquired from the decedent by a 
     United States person, and
       ``(B) by substituting the dollar amount applicable under 
     section 1022(b)(3) for the dollar amount referred to in 
     paragraph (1).
       ``(4) Returns by trustees or beneficiaries.--If the 
     executor is unable to make a complete return as to any 
     property acquired from or passing from the decedent, the 
     executor shall include in the return a description of such 
     property and the name of every person holding a legal or 
     beneficial interest therein. Upon notice from the Secretary 
     such person shall in like manner make a return as to such 
     property.
       ``(c) Information Required To Be Furnished.--The 
     information specified in this subsection with respect to any 
     property acquired from the decedent is--

[[Page 5429]]

       ``(1) the name and TIN of the recipient of such property,
       ``(2) an accurate description of such property,
       ``(3) the adjusted basis of such property in the hands of 
     the decedent and its fair market value at the time of death,
       ``(4) the decedent's holding period for such property,
       ``(5) sufficient information to determine whether any gain 
     on the sale of the property would be treated as ordinary 
     income,
       ``(6) the amount of basis increase allocated to the 
     property under subsection (b) or (c) of section 1022, and
       ``(7) such other information as the Secretary may by 
     regulations prescribe.
       ``(d) Property Acquired From Decedent.--For purposes of 
     this section, section 1022 shall apply for purposes of 
     determining the property acquired from a decedent.
       ``(e) Statements To Be Furnished to Certain Persons.--Every 
     person required to make a return under subsection (a) shall 
     furnish to each person whose name is required to be set forth 
     in such return (other than the person required to make such 
     return) a written statement showing--
       ``(1) the name, address, and phone number of the person 
     required to make such return, and
       ``(2) the information specified in subsection (c) with 
     respect to property acquired from, or passing from, the 
     decedent to the person required to receive such statement.

     The written statement required under the preceding sentence 
     shall be furnished not later than 30 days after the date that 
     the return required by subsection (a) is filed.

     ``SEC. 6019. RETURNS RELATING TO LARGE LIFETIME GIFTS.

       ``(a) In General.--If the value of the aggregate gifts of 
     property made by an individual to any United States person 
     during a calendar year exceeds $25,000, such individual shall 
     make a return for such year setting forth--
       ``(1) the name and TIN of the donee,
       ``(2) an accurate description of such property,
       ``(3) the adjusted basis of such property in the hands of 
     the donor at the time of the gift,
       ``(4) the donor's holding period for such property,
       ``(5) sufficient information to determine whether any gain 
     on the sale of the property would be treated as ordinary 
     income, and
       ``(6) such other information as the Secretary may by 
     regulations prescribe.
       ``(b) Exceptions.--Subsection (a) shall not apply to--
       ``(1) Cash.--Any gift of cash.
       ``(2) Gifts to charity.--Any gift to an organization 
     described in section 501(c) and exempt from tax under section 
     501(a) but only if no interest in the property is held for 
     the benefit of any person other than such an organization.
       ``(3) Waiver of certain pension rights individual waives, 
     before the death of a participant, any survivor benefit, or 
     right to such benefit, under section 401(a)(11) or 417, 
     subsection (a) shall not apply to such waiver.
       ``(4) Reporting elsewhere.--Any gift required to be 
     reported to the Secretary under any other provision of this 
     title.
       ``(c) Statements To Be Furnished to Certain Persons.--Every 
     person required to make a return under subsection (a) shall 
     furnish to each person whose name is required to be set forth 
     in such return a written statement showing--
       ``(1) the name, address, and phone number of the person 
     required to make such return, and
       ``(2) the information specified in subsection (a) with 
     respect to property received by the person required to 
     receive such statement.

     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the calendar year for which the return under 
     subsection (a) was required to be made.''
       (2) Time for filing section 6018 returns.--
       (A) Returns relating to large transfers at death.--
     Subsection (a) of section 6075 is amended to read as follows:
       ``(a) Returns Relating to Large Transfers at Death.--The 
     return required by section 6018 with respect to a decedent 
     shall be filed with the return of the tax imposed by chapter 
     1 for the decedent's last taxable year or such later date 
     specified in regulations prescribed by the Secretary.''
       (B) Returns relating to large lifetime gifts.--
       (i) The heading for section 6075(b) is amended to read as 
     follows:
       ``(b) Returns Relating to Large Lifetime Gifts.--''.
       (ii) Paragraph (1) of section 6075(b) is amended by 
     striking ``(relating to gift taxes)'' and inserting 
     ``(relating to returns relating to large lifetime gifts)''.
       (iii) Paragraph (3) of section 6075(b) is amended--

       (I) by striking ``estate tax return'' and inserting 
     ``section 6018 return'', and
       (II) by striking ``(relating to estate tax returns)'' and 
     inserting ``(relating to returns relating to large transfers 
     at death)''.

       (3) Penalties.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by adding at 
     the end the following new section:

     ``SEC. 6716. FAILURE TO FILE INFORMATION WITH RESPECT TO 
                   CERTAIN TRANSFERS AT DEATH AND GIFTS.

       ``(a) Information Required To Be Furnished to the 
     Secretary.--Any person required to furnish any information 
     under section 6018 or 6019 who fails to furnish such 
     information on the date prescribed therefor (determined with 
     regard to any extension of time for filing) shall pay a 
     penalty of $10,000 ($500 in the case of information required 
     to be furnished under section 6018(b)(2) or 6019) for each 
     such failure.
       ``(b) Information Required To Be Furnished to 
     Beneficiaries.--Any person required to furnish in writing to 
     each person described in section 6018(e) or 6019(c) the 
     information required under such section who fails to furnish 
     such information shall pay a penalty of $50 for each such 
     failure.
       ``(c) Reasonable Cause Exception.--No penalty shall be 
     imposed under subsection (a) or (b) with respect to any 
     failure if it is shown that such failure is due to reasonable 
     cause.
       ``(d) Intentional Disregard.--If any failure under 
     subsection (a) or (b) is due to intentional disregard of the 
     requirements under sections 6018 and 6019, the penalty under 
     such subsection shall be 5 percent of the fair market value 
     (as of the date of death or, in the case of section 6019, the 
     date of the gift) of the property with respect to which the 
     information is required.
       ``(e) Deficiency Procedures Not To Apply.--Subchapter B of 
     chapter 63 (relating to deficiency procedures for income, 
     estate, gift, and certain excise taxes) shall not apply in 
     respect of the assessment or collection of any penalty 
     imposed by this section.''
       (4) Clerical amendments.--
       (A) The table of sections for part I of subchapter B of 
     chapter 68 is amended by adding at the end the following new 
     item:

``Sec. 6716. Failure to file information with respect to certain 
              transfers at death and gifts.''

       (B) The item relating to subpart C in the table of subparts 
     for part II of subchapter A of chapter 61 is amended to read 
     as follows:

``Subpart C. Returns relating to transfers during life or at death.''

       (c) Exclusion of Gain on Sale of Principal Residence Made 
     Available to Heir of Decedent in Certain Cases.--Subsection 
     (d) of section 121 (relating to exclusion of gain from sale 
     of principal residence) is amended by adding at the end the 
     following new paragraph:
       ``(9) Property acquired from a decedent.--The exclusion 
     under this section shall apply to property sold by--
       ``(A) the estate of a decedent, and
       ``(B) any individual who acquired such property from the 
     decedent (within the meaning of section 1022),

     determined by taking into account the ownership and use by 
     the decedent.''
       (d) Transfers of Appreciated Carryover Basis Property To 
     Satisfy Pecuniary Bequest.--
       (1) In general.--Section 1040 (relating to transfer of 
     certain farm, etc., real property) is amended to read as 
     follows:

     ``SEC. 1040. USE OF APPRECIATED CARRYOVER BASIS PROPERTY TO 
                   SATISFY PECUNIARY BEQUEST.

       ``(a) In General.--If the executor of the estate of any 
     decedent satisfies the right of any person to receive a 
     pecuniary bequest with appreciated property, then gain on 
     such exchange shall be recognized to the estate only to the 
     extent that, on the date of such exchange, the fair market 
     value of such property exceeds such value on the date of 
     death.
       ``(b) Similar Rule for Certain Trusts.--To the extent 
     provided in regulations prescribed by the Secretary, a rule 
     similar to the rule provided in subsection (a) shall apply 
     where--
       ``(1) by reason of the death of the decedent, a person has 
     a right to receive from a trust a specific dollar amount 
     which is the equivalent of a pecuniary bequest, and
       ``(2) the trustee of a trust satisfies such right with 
     property.
       ``(c) Basis of Property Acquired in Exchange Described in 
     Subsection (a) or (b).--The basis of property acquired in an 
     exchange with respect to which gain realized is not 
     recognized by reason of subsection (a) or (b) shall be the 
     basis of such property immediately before the exchange 
     increased by the amount of the gain recognized to the estate 
     or trust on the exchange.''
       (2) The item relating to section 1040 in the table of 
     sections for part III of subchapter O of chapter 1 is amended 
     to read as follows:

``Sec. 1040. Use of appreciated carryover basis property to satisfy 
              pecuniary bequest.''

       (e) Anti-Abuse Rules.--Section 7701 is amended by 
     redesignating subsection (n) as subsection (o) and by 
     inserting after subsection (m) the following new subsection:
       ``(n) Purported Gifts May Be Disregarded.--For purposes of 
     subtitle A, the Secretary may treat a transfer which purports 
     to be a gift as having never been transferred if, in 
     connection with such transfer--
       ``(1)(A) the transferor (or any person related to or 
     designated by the transferor or such person) has received 
     anything of value in connection with such transfer from the 
     transferee directly or indirectly, or
       ``(B) there is an understanding or expectation that the 
     transferor (or such person) will receive anything of value in 
     connection with such transfer from the transferee directly or 
     indirectly, and
       ``(2) the Secretary determines that such treatment is 
     appropriate to prevent avoidance of tax imposed by subtitle 
     A.''
       (f) Miscellaneous Amendments Related to Carryover Basis.--
       (1) Recognition of gain on transfers to nonresidents.--

[[Page 5430]]

       (A) Subsection (a) of section 684 is amended by inserting 
     ``or to a nonresident not a citizen of the United States'' 
     after ``or trust''.
       ``(B) Subsection (b) of section 684 is amended by striking 
     ``any person'' and inserting ``any United States person''.
       (C) The section heading for section 684 is amended by 
     inserting ``AND NONRESIDENT ALIENS'' after ``ESTATES''.
       (D) The item relating to section 684 in the table of 
     sections for subpart F of part I of subchapter J of chapter 1 
     is amended by inserting ``and nonresident aliens'' after 
     ``estates''.
       (2) Capital gain treatment for inherited art work or 
     similar property.--
       (A) In general.--Subparagraph (C) of section 1221(a)(3) 
     (defining capital asset) is amended by inserting ``(other 
     than by reason of section 1022)'' after ``is determined''.
       (B) Coordination with section 170.--Paragraph (1) of 
     section 170(e) (relating to certain contributions of ordinary 
     income and capital gain property) is amended by adding at the 
     end the following: ``For purposes of this paragraph, the 
     determination of whether property is a capital asset shall be 
     made without regard to the exception contained in section 
     1221(a)(3)(C) for basis determined under section 1022.''.
       (3) Definition of executor.--Section 7701(a) (relating to 
     definitions) is amended by adding at the end the following:
       ``(47) Executor.--The term `executor' means the executor or 
     administrator of the decedent, or, if there is no executor or 
     administrator appointed, qualified, and acting within the 
     United States, then any person in actual or constructive 
     possession of any property of the decedent.''.
       (4) Certain trusts.--Subparagraph (A) of section 4947(a)(2) 
     is amended by inserting ``642(c),'' after ``170(f)(2)(B),''.
       (5) Other amendments.--
       (A) Section 1246 is amended by striking subsection (e).
       (B) Subsection (e) of section 1291 is amended--
       (i) by striking ``(e),'', and
       (ii) by striking ``; except that'' and all that follows and 
     inserting a period.
       (C) Section 1296 is amended by striking subsection (i).
       (6) Clerical amendment.--The table of sections for part II 
     of subchapter O of chapter 1 is amended by inserting after 
     the item relating to section 1021 the following new item:

``Sec. 1022. Treatment of property acquired from a decedent dying after 
              December 31, 2010.''.

       (g) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to estates of 
     decedents dying after December 31, 2010.
       (2) Purported gifts, etc.--The amendments made by 
     subsections (e) and (f)(1) shall apply to transfers after 
     December 31, 2010.
       (3) Section 4947.--The amendment made by subsection (f)(4) 
     shall apply to deductions for taxable years beginning after 
     December 31, 2010.
       (h) Study.--The Secretary of the Treasury or the 
     Secretary's delegate shall conduct a study of--
       (1) opportunities for avoidance of the income tax, if any, 
     and
       (2) potential increases in income tax revenues,
     by reason of the enactment of this Act. The study shall be 
     submitted to the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate 
     not later than December 31, 2002.

                    TITLE V--CONSERVATION EASEMENTS

     SEC. 501. EXPANSION OF ESTATE TAX RULE FOR CONSERVATION 
                   EASEMENTS.

       (a) Where Land Is Located.--Clause (i) of section 
     2031(c)(8)(A) (defining land subject to a conservation 
     easement) is amended--
       (1) by striking ``25 miles'' each place it appears and 
     inserting ``50 miles''; and
       (2) striking ``10 miles'' and inserting ``25 miles''.
       (b) Clarification of Date for Determining Value of Land and 
     Easement.--Section 2031(c)(2) (defining applicable 
     percentage) is amended by adding at the end the following new 
     sentence: ``The values taken into account under the preceding 
     sentence shall be such values as of the date of the 
     contribution referred to in paragraph (8)(B).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     2000.

      TITLE VI--MODIFICATIONS OF GENERATION-SKIPPING TRANSFER TAX

     SEC. 601. DEEMED ALLOCATION OF GST EXEMPTION TO LIFETIME 
                   TRANSFERS TO TRUSTS; RETROACTIVE ALLOCATIONS.

       (a) In General.--Section 2632 (relating to special rules 
     for allocation of GST exemption) is amended by redesignating 
     subsection (c) as subsection (e) and by inserting after 
     subsection (b) the following new subsections:
       ``(c) Deemed Allocation to Certain Lifetime Transfers to 
     GST Trusts.--
       ``(1) In general.--If any individual makes an indirect skip 
     during such individual's lifetime, any unused portion of such 
     individual's GST exemption shall be allocated to the property 
     transferred to the extent necessary to make the inclusion 
     ratio for such property zero. If the amount of the indirect 
     skip exceeds such unused portion, the entire unused portion 
     shall be allocated to the property transferred.
       ``(2) Unused portion.--For purposes of paragraph (1), the 
     unused portion of an individual's GST exemption is that 
     portion of such exemption which has not previously been--
       ``(A) allocated by such individual,
       ``(B) treated as allocated under subsection (b) with 
     respect to a direct skip occurring during or before the 
     calendar year in which the indirect skip is made, or
       ``(C) treated as allocated under paragraph (1) with respect 
     to a prior indirect skip.
       ``(3) Definitions.--
       ``(A) Indirect skip.--For purposes of this subsection, the 
     term `indirect skip' means any transfer of property (other 
     than a direct skip) subject to the tax imposed by chapter 12 
     made to a GST trust.
       ``(B) GST trust.--The term `GST trust' means a trust that 
     could have a generation-skipping transfer with respect to the 
     transferor unless--
       ``(i) the trust instrument provides that more than 25 
     percent of the trust corpus must be distributed to or may be 
     withdrawn by one or more individuals who are non-skip 
     persons--

       ``(I) before the date that the individual attains age 46,
       ``(II) on or before one or more dates specified in the 
     trust instrument that will occur before the date that such 
     individual attains age 46, or
       ``(III) upon the occurrence of an event that, in accordance 
     with regulations prescribed by the Secretary, may reasonably 
     be expected to occur before the date that such individual 
     attains age 46;

       ``(ii) the trust instrument provides that more than 25 
     percent of the trust corpus must be distributed to or may be 
     withdrawn by one or more individuals who are non-skip persons 
     and who are living on the date of death of another person 
     identified in the instrument (by name or by class) who is 
     more than 10 years older than such individuals;
       ``(iii) the trust instrument provides that, if one or more 
     individuals who are non-skip persons die on or before a date 
     or event described in clause (i) or (ii), more than 25 
     percent of the trust corpus either must be distributed to the 
     estate or estates of one or more of such individuals or is 
     subject to a general power of appointment exercisable by one 
     or more of such individuals;
       ``(iv) the trust is a trust any portion of which would be 
     included in the gross estate of a non-skip person (other than 
     the transferor) if such person died immediately after the 
     transfer;
       ``(v) the trust is a charitable lead annuity trust (within 
     the meaning of section 2642(e)(3)(A)) or a charitable 
     remainder annuity trust or a charitable remainder unitrust 
     (within the meaning of section 664(d)); or
       ``(vi) the trust is a trust with respect to which a 
     deduction was allowed under section 2522 for the amount of an 
     interest in the form of the right to receive annual payments 
     of a fixed percentage of the net fair market value of the 
     trust property (determined yearly) and which is required to 
     pay principal to a non-skip person if such person is alive 
     when the yearly payments for which the deduction was allowed 
     terminate.

     For purposes of this subparagraph, the value of transferred 
     property shall not be considered to be includible in the 
     gross estate of a non-skip person or subject to a right of 
     withdrawal by reason of such person holding a right to 
     withdraw so much of such property as does not exceed the 
     amount referred to in section 2503(b) with respect to any 
     transferor, and it shall be assumed that powers of 
     appointment held by non-skip persons will not be exercised.
       ``(4) Automatic allocations to certain gst trusts.--For 
     purposes of this subsection, an indirect skip to which 
     section 2642(f) applies shall be deemed to have been made 
     only at the close of the estate tax inclusion period. The 
     fair market value of such transfer shall be the fair market 
     value of the trust property at the close of the estate tax 
     inclusion period.
       ``(5) Applicability and effect.--
       ``(A) In general.--An individual--
       ``(i) may elect to have this subsection not apply to--

       ``(I) an indirect skip, or
       ``(II) any or all transfers made by such individual to a 
     particular trust, and

       ``(ii) may elect to treat any trust as a GST trust for 
     purposes of this subsection with respect to any or all 
     transfers made by such individual to such trust.
       ``(B) Elections.--
       ``(i) Elections with respect to indirect skips.--An 
     election under subparagraph (A)(i)(I) shall be deemed to be 
     timely if filed on a timely filed gift tax return for the 
     calendar year in which the transfer was made or deemed to 
     have been made pursuant to paragraph (4) or on such later 
     date or dates as may be prescribed by the Secretary.
       ``(ii) Other elections.--An election under clause (i)(II) 
     or (ii) of subparagraph (A) may be made on a timely filed 
     gift tax return for the calendar year for which the election 
     is to become effective.
       ``(d) Retroactive Allocations.--
       ``(1) In general.--If--
       ``(A) a non-skip person has an interest or a future 
     interest in a trust to which any transfer has been made,
       ``(B) such person--
       ``(i) is a lineal descendant of a grandparent of the 
     transferor or of a grandparent of the transferor's spouse or 
     former spouse, and
       ``(ii) is assigned to a generation below the generation 
     assignment of the transferor, and
       ``(C) such person predeceases the transferor,

     then the transferor may make an allocation of any of such 
     transferor's unused GST exemption to any previous transfer or 
     transfers to the trust on a chronological basis.
       ``(2) Special rules.--If the allocation under paragraph (1) 
     by the transferor is made on a gift tax return filed on or 
     before the date prescribed by section 6075(b) for gifts made 
     within the calendar year within which the non-skip person's 
     death occurred--

[[Page 5431]]

       ``(A) the value of such transfer or transfers for purposes 
     of section 2642(a) shall be determined as if such allocation 
     had been made on a timely filed gift tax return for each 
     calendar year within which each transfer was made,
       ``(B) such allocation shall be effective immediately before 
     such death, and
       ``(C) the amount of the transferor's unused GST exemption 
     available to be allocated shall be determined immediately 
     before such death.
       ``(3) Future interest.--For purposes of this subsection, a 
     person has a future interest in a trust if the trust may 
     permit income or corpus to be paid to such person on a date 
     or dates in the future.''.
       (b) Conforming Amendment.--Paragraph (2) of section 2632(b) 
     is amended by striking ``with respect to a prior direct 
     skip'' and inserting ``or subsection (c)(1)''.
       (c) Effective Dates.--
       (1) Deemed allocation.--Section 2632(c) of the Internal 
     Revenue Code of 1986 (as added by subsection (a)), and the 
     amendment made by subsection (b), shall apply to transfers 
     subject to chapter 11 or 12 made after December 31, 2000, and 
     to estate tax inclusion periods ending after December 31, 
     2000.
       (2) Retroactive allocations.--Section 2632(d) of the 
     Internal Revenue Code of 1986 (as added by subsection (a)) 
     shall apply to deaths of non-skip persons occurring after 
     December 31, 2000.

     SEC. 602. SEVERING OF TRUSTS.

       (a) In General.--Subsection (a) of section 2642 (relating 
     to inclusion ratio) is amended by adding at the end the 
     following new paragraph:
       ``(3) Severing of trusts.--
       ``(A) In general.--If a trust is severed in a qualified 
     severance, the trusts resulting from such severance shall be 
     treated as separate trusts thereafter for purposes of this 
     chapter.
       ``(B) Qualified severance.--For purposes of subparagraph 
     (A)--
       ``(i) In general.--The term `qualified severance' means the 
     division of a single trust and the creation (by any means 
     available under the governing instrument or under local law) 
     of two or more trusts if--

       ``(I) the single trust was divided on a fractional basis, 
     and
       ``(II) the terms of the new trusts, in the aggregate, 
     provide for the same succession of interests of beneficiaries 
     as are provided in the original trust.

       ``(ii) Trusts with inclusion ratio greater than zero.--If a 
     trust has an inclusion ratio of greater than zero and less 
     than 1, a severance is a qualified severance only if the 
     single trust is divided into two trusts, one of which 
     receives a fractional share of the total value of all trust 
     assets equal to the applicable fraction of the single trust 
     immediately before the severance. In such case, the trust 
     receiving such fractional share shall have an inclusion ratio 
     of zero and the other trust shall have an inclusion ratio of 
     1.
       ``(iii) Regulations.--The term `qualified severance' 
     includes any other severance permitted under regulations 
     prescribed by the Secretary.
       ``(C) Timing and manner of severances.--A severance 
     pursuant to this paragraph may be made at any time. The 
     Secretary shall prescribe by forms or regulations the manner 
     in which the qualified severance shall be reported to the 
     Secretary.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to severances after December 31, 2000.

     SEC. 603. MODIFICATION OF CERTAIN VALUATION RULES.

       (a) Gifts for Which Gift Tax Return Filed or Deemed 
     Allocation Made.--Paragraph (1) of section 2642(b) (relating 
     to valuation rules, etc.) is amended to read as follows:
       ``(1) Gifts for which gift tax return filed or deemed 
     allocation made.--If the allocation of the GST exemption to 
     any transfers of property is made on a gift tax return filed 
     on or before the date prescribed by section 6075(b) for such 
     transfer or is deemed to be made under section 2632 (b)(1) or 
     (c)(1)--
       ``(A) the value of such property for purposes of subsection 
     (a) shall be its value as finally determined for purposes of 
     chapter 12 (within the meaning of section 2001(f)(2)), or, in 
     the case of an allocation deemed to have been made at the 
     close of an estate tax inclusion period, its value at the 
     time of the close of the estate tax inclusion period, and
       ``(B) such allocation shall be effective on and after the 
     date of such transfer, or, in the case of an allocation 
     deemed to have been made at the close of an estate tax 
     inclusion period, on and after the close of such estate tax 
     inclusion period.''.
       (b) Transfers at Death.--Subparagraph (A) of section 
     2642(b)(2) is amended to read as follows:
       ``(A) Transfers at death.--If property is transferred as a 
     result of the death of the transferor, the value of such 
     property for purposes of subsection (a) shall be its value as 
     finally determined for purposes of chapter 11; except that, 
     if the requirements prescribed by the Secretary respecting 
     allocation of post-death changes in value are not met, the 
     value of such property shall be determined as of the time of 
     the distribution concerned.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers subject to chapter 11 or 12 of the 
     Internal Revenue Code of 1986 made after December 31, 2000.

     SEC. 604. RELIEF PROVISIONS.

       (a) In General.--Section 2642 is amended by adding at the 
     end the following new subsection:
       ``(g) Relief Provisions.--
       ``(1) Relief from late elections.--
       ``(A) In general.--The Secretary shall by regulation 
     prescribe such circumstances and procedures under which 
     extensions of time will be granted to make--
       ``(i) an allocation of GST exemption described in paragraph 
     (1) or (2) of subsection (b), and
       ``(ii) an election under subsection (b)(3) or (c)(5) of 
     section 2632.

     Such regulations shall include procedures for requesting 
     comparable relief with respect to transfers made before the 
     date of the enactment of this paragraph.
       ``(B) Basis for determinations.--In determining whether to 
     grant relief under this paragraph, the Secretary shall take 
     into account all relevant circumstances, including evidence 
     of intent contained in the trust instrument or instrument of 
     transfer and such other factors as the Secretary deems 
     relevant. For purposes of determining whether to grant relief 
     under this paragraph, the time for making the allocation (or 
     election) shall be treated as if not expressly prescribed by 
     statute.
       ``(2) Substantial compliance.--An allocation of GST 
     exemption under section 2632 that demonstrates an intent to 
     have the lowest possible inclusion ratio with respect to a 
     transfer or a trust shall be deemed to be an allocation of so 
     much of the transferor's unused GST exemption as produces the 
     lowest possible inclusion ratio. In determining whether there 
     has been substantial compliance, all relevant circumstances 
     shall be taken into account, including evidence of intent 
     contained in the trust instrument or instrument of transfer 
     and such other factors as the Secretary deems relevant.''.
       (b) Effective Dates.--
       (1) Relief from late elections.--Section 2642(g)(1) of the 
     Internal Revenue Code of 1986 (as added by subsection (a)) 
     shall apply to requests pending on, or filed after, December 
     31, 2000.
       (2) Substantial compliance.--Section 2642(g)(2) of such 
     Code (as so added) shall apply to transfers subject to 
     chapter 11 or 12 of the Internal Revenue Code of 1986 made 
     after December 31, 2000. No implication is intended with 
     respect to the availability of relief from late elections or 
     the application of a rule of substantial compliance on or 
     before such date.

         TITLE VII--EXTENSION OF TIME FOR PAYMENT OF ESTATE TAX

     SEC. 701. INCREASE IN NUMBER OF ALLOWABLE PARTNERS AND 
                   SHAREHOLDERS IN CLOSELY HELD BUSINESSES.

       (a) In General.--Paragraphs (1)(B)(ii), (1)(C)(ii), and 
     (9)(B)(iii)(I) of section 6166(b) (relating to definitions 
     and special rules) are each amended by striking ``15'' and 
     inserting ``45''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     2001.

  The SPEAKER pro tempore. After 1 hour of debate on the bill, as 
amended, it shall be in order to consider a further amendment printed 
in House Report 107-39, if offered by the gentleman from New York (Mr. 
Rangel) or his designee, which shall be considered read, and shall be 
debatable for 60 minutes, equally divided and controlled by the 
proponent and an opponent.
  The gentleman from California (Mr. Thomas) and the gentleman from New 
York (Mr. Rangel) each will control 30 minutes of debate on the bill.
  The Chair recognizes the gentleman from California (Mr. Thomas).
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, as my colleagues and I get into this discussion of H.R. 
8 and the Democratic substitute, we ought not to lose sight of the 
fundamentals in this debate. H.R. 8 repeals the estate or death tax; 
and the Democratic substitute does not.
  I was interested in the minority leader's discussion under the rule 
in which he quoted David Stockman, a former Member, Chief of the Office 
of Management and Budget under President Reagan, in his book Triumph of 
Politics. I found it interesting because I was in the minority at the 
time, and the minority leader was in the majority. I was mentioned in 
Mr. Stockman's book, and so I am very familiar with the context and the 
times in which that took place. The one point that I think needs to be 
referenced was the fact that it was a Democratically-controlled House 
and a Republican Presidency. Mr. Speaker, that is entirely different 
than the situation that we find here today with a Republican House and 
a Republican President.
  Mr. Speaker, then-Speaker Tip O'Neill ordered his lieutenants, 
chairman of the Committee on Ways and Means Danny Rostenkowski and 
others, to win at any cost was the approach to legislating. It was to 
make sure that you are not second in spending or in tax cuts.
  Mr. Speaker, when you have that kind of a climate of win at any cost, 
it is no wonder that we had an enormous increase in spending and 
significant

[[Page 5432]]

tax cuts at the same time. That was the problem from the early 1980s. 
And the reason I say that historical reference is absolutely useless 
today is because we have a Republican House and a Republican President.
  Contrast the win-at-any-cost strategy of then-Speaker O'Neill to the 
current strategy under the gentleman from Illinois (Speaker Hastert), 
and that is orderly movement of the President's program through the 
Committee on Ways and Means, that I am privileged to chair, onto the 
floor and off the floor, at the same time that we just passed the 
budget, which was prudent in the way in which it allowed discretionary 
spending to increase at about 4 percent a year.
  Mr. Speaker, we are now at the stage of presenting to you a piece of 
legislation which passed the House with significant bipartisan support 
last year. The argument will continue to be we cannot do it, it is too 
much, the future is not clear, do not do it.
  Not once did the majority use that argument when they were in the 
majority, enormously increasing spending and increasing tax cuts, when, 
in fact, we were in a deficit structure. Now that we are in a surplus, 
those words ring rather hollow, unless, of course, your argument is 
defeat at any cost, which apparently appears to be the approach the 
Democrats are taking today.
  What we saw last week on the floor with the marriage penalty 
reduction and child credit is that it just does not work because, I am 
pleased to say, most of the Members look at the content of the 
legislation and make up their minds.
  Mr. Speaker, that is the way that decisions ought to be made in the 
House of Representatives, and I hope that is going to be the case on 
this piece of legislation. If Members look at the fact that H.R. 8 
repeals the estate or death tax, and the Democrat substitute does not, 
at the end of the day what you will see is a bipartisan vote, a 
majority bipartisan vote, in favor of H.R. 8.
  Mr. Speaker, I ask unanimous consent that the gentlewoman from 
Washington (Ms. Dunn) control the balance of my time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, if I understand the gentleman from California (Mr. 
Thomas), the chairman of the Committee on Ways and Means' explanation 
of the bill, it is somehow that he was forced to sit in the back of the 
plane during the time that Speaker O'Neill was here and Dan 
Rostenkowski was chairman, and now he is going to get even.
  As relates to the legislation before us, my colleague says just read 
it, because he certainly did not attempt to explain it. The gentleman 
did say, however, that this is basically the same bill that passed the 
House in the last session. That is very, very, very strange, because 
the Joint Committee on Taxation said if the same bill was to go into 
effect this year, it would cost us in revenue $662 billion. Now, I 
looked at the President's $1.6 trillion tax cut, and already they have 
spent $958 billion for rate reductions, another $400 billion for 
marriage penalty and child credit, so I wondered how they were going to 
fit $662 billion tax cut and estate repeal into the last wedge that 
only left $200 billion; and they did it. By God, they did it.
  Mr. Speaker, the only thing is that they are saying that their 
legislation does not take effect for another 10 years. When you are 70 
years old like I am, those other 10 years, that is a long way away; but 
I think it is the Republican health plan. Do not die in the next 10 
years if you want to protect your kids and your estate.
  Mr. Speaker, why do you not do this; why do you not support the 
Democratic plan today? We bring about instant relief, at least for most 
of the people who have estates less than $5 million. And then maybe in 
10 years you can come back again and see who is it that you left 
behind. In other words, we cannot have legislation for estates that 
leave no billionaire behind; we cover everybody, darn near, except 
about 6,300 people. So why do you not do the right thing by farmers and 
business people?
  If they read the legislation like the gentleman from California (Mr. 
Thomas) suggested, you will see that we are on the right side. Read the 
editorials and tax analysis. They know this is the right thing to do. 
Do not hold hostage all of the smaller estates only because you want to 
get everybody instant relief 10 years from now. Give them relief today 
and vote for the Democratic substitute.

                              {time}  1230

  Mr. Speaker, I hope we do have a bipartisan solution to this real 
problem that we face. I hope that this is not a continuation of what 
the Republicans call class warfare. I hope we are able to say that we 
are going to be responsible with a tax cut that fits into at least some 
type of a budgetary restraint. I reserve the balance of my time to just 
sit back and listen as to how they are going to get this size 12 foot 
into a size 6 shoe.
  Mr. Speaker, I reserve the balance of my time.
  Ms. DUNN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, only in America are we confronted with a certificate at 
birth, a license at marriage, and a bill at death. I rise today in 
support of H.R. 8, the Death Tax Elimination Act. Americans spend most 
of their adult lives paying taxes in various forms. We have an 
opportunity today to do something good for American businesses and 
families by ending the practice of paying a tax that is triggered only 
by death.
  Why do we talk about repeal instead of about the exemption level that 
the gentleman from New York (Mr. Rangel) has suggested? The reason is 
that if you do not repeal this tax, it will grow back. This tax began 
in 1916. A Democrat President, Woodrow Wilson, started this tax. It was 
the fourth time in history this tax existed. Before, always for fewer 
than 8 years to fund a war and then it was phased out. This time, the 
government got its hand in the people's pocket and it never took it 
out. I will tell you one other thing, Mr. Speaker. From 1916 to now if 
you calculated today's dollars and the exemption level in 1916, you 
would come out at $9 million in 1916. So our substitute is very, very 
unfair to people who are trying to do the right thing by providing for 
their retirement.
  Critics of repeal often ask, why not just increase the exemption? The 
Democratic bill raises the exemption to $2 million. This is an 
arbitrary number. It rewards winners and losers arbitrarily. It is 
especially harmful to businesses that are capital rich and cash poor. 
Trucking companies, grocery stores, hardware stores, family-held 
newspapers and family farms would all easily exceed the $2 million 
exemption. In fact, a recent study of black-owned businesses found that 
60 percent of black-owned firms are valued at over $2 million. The 
opposition claims that only 2 percent of Americans who die pay this 
tax. It does not begin to take into consideration the cost of 
compliance during the lives of those people, the cost of paying for 
life insurance policies and estate plans, or it does not take into 
consideration how many of those businesses sell off before the owner 
dies because they cannot afford to pay the death tax.
  What about providing a special exemption for small businesses and 
farms? Our experience with the current exemption proves this to be a 
very poor choice. It is too complicated. It is too onerous. In fact, we 
tried with the best of intentions in 1997 to provide such an exemption. 
It was so complicated to be able to reflect family relationships in 
legislative language that only 3 to 5 percent of family businesses were 
able to qualify for this exemption.
  Not only is this a repeal that we can afford, it is a repeal that 
will boost economic growth. A recent study by economist Allen Sinai 
shows that if the death tax were repealed, GDP could increase by $150 
billion over 10 years and lead to 165,000 new jobs.
  And it makes sense. The dollars that are being used to pay estate 
taxes and pay for compliance could be used to hire more people or 
provide health benefits. The assumption is confirmed by a

[[Page 5433]]

recent survey of women business owners where 60 percent of the 
respondents indicated that the death tax will hurt expansion plans. 
Minority business owners recognize the death tax as a bad tax. It is a 
threat to their legacy. They say, and this is why it is endorsed by the 
Black Chamber of Commerce, that it takes about three generations to 
build a family business, to allow them to have a standing and a 
foothold in their community. They say that the death tax is an enemy, 
an obstacle that will keep these fledgling businesses from being able 
to survive. That is why the Black Chamber of Commerce and the Hispanic 
Chamber of Commerce supports our bill on the floor today.
  People who oppose repeal like to claim that it will only benefit the 
rich. We know this is untrue. This is a tax that punishes good behavior 
and savings. It is a tax on virtue. It is a tax on the people who work 
hard, pay attention to their savings, provide for themselves so they do 
not have to lean on the government during their retirement and in most 
cases have already paid taxes once, maybe two times.
  We need to promote business growth and not limit it. We need to 
encourage savings. I ask my colleagues to support the repeal of this 
tax.
  Mr. Speaker, I reserve the balance of my time.
  Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Stark), a senior member of the Committee on Ways and 
Means.
  Mr. STARK. I thank the distinguished ranking member for yielding me 
this time.
  Mr. Speaker, I would like to point out, to my children and to anybody 
who is paying attention to this debate, that the Republican leadership 
is doing it once again. They would rather give a substantial tax break 
to America's wealthiest than provide a Medicare drug benefit for all 
seniors. This is a package of irresponsible, excessive tax breaks. 
Worse than that, it is a hoax. Little happens for 10 years.
  Actually, we gave the Republicans on the Committee on Ways and Means 
a chance to put their votes where their mouths are and vote to make 
this effective this year. The gentlewoman from Washington (Ms. Dunn), 
the gentleman from California (Mr. Thomas), the gentleman from Florida 
(Mr. Shaw), the gentlewoman from Connecticut (Mrs. Johnson), the 
gentleman from Pennsylvania (Mr. English), and all of the Republicans 
voted no. They had a chance to make this effective right now. Instead, 
they wait for 10 years and then the cost clocks in just at a time when 
we will have baby boomers needing Medicare and Social Security and just 
at a time when that money will not be available.
  It is interesting, and I have got to warn those who expect that next 
year their estates will be exempted, because they are in for a big 
surprise. Forty-three thousand Americans, less than 1 percent of all 
the taxpayers, will benefit from this Republican hoax. Forty million 
elderly and disabled are not going to get a drug benefit under Medicare 
because of this wasteful bill. Ninety percent of the beneficiaries of 
the estate tax cut make over $190,000 a year and our typical Medicare 
beneficiary has an annual income of less than $15,000 a year. A 
thousand times more people would be helped under this plan if Members 
vote for the Democratic alternative.
  Ms. DUNN. Mr. Speaker, I yield myself 15 seconds. In response to the 
gentleman, I think it is important that we hear people talking about 
this is going to decimate the future of the children. We are talking 
about a tax that will phase out over 10 years and will hardly at the 
very end be more than 1 percent of the budget.
  Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. 
Crane), the chairman of the Subcommittee on Trade of the Committee on 
Ways and Means.
  Mr. CRANE. I thank the gentlewoman for yielding me this time.
  Mr. Speaker, I am pleased to be able to support the bill put forward 
today to reduce and eventually repeal the estate tax. As many people 
know, I believe the estate tax is a tax that is one of the most unfair, 
obscene and immoral of all taxes. The estate tax, or the commonly 
referred to death tax since it is triggered solely by death, has 
outlived any worthwhile purpose and the time has come for us to put an 
end to it. No American, no matter his or her income, should be forced 
to pay 55 percent of his or her savings, business, or farm in taxes 
when he or she dies. Clearly, no American should have the IRS follow 
him or her to the funeral home. The last thing that a family grieving 
over the loss of a loved one should have to worry about is losing the 
family business or farm to the Internal Revenue Service because of an 
archaic law intended to raise money for wars that have long since 
ended. But when a person dies in this country, an outrageous tax of 37 
to 55 percent kicks in on the poor soul's estate.
  I am pleased that the House of Representatives is taking up the issue 
to repeal this unfair tax so that family businesses can be passed on to 
children and grandchildren and family farms can continue to exist. Less 
than half of all the family-owned businesses survive the death of a 
founder and only about 5 percent survive to the third generation. Under 
the tax laws that we currently have, it is cheaper for someone to sell 
a business before dying and pay the capital gains tax than it is to 
pass it on to his children. This is a grave injustice that must be 
corrected.
  It has been said that only in America can one be given a certificate 
at birth, a license at marriage and a bill at death. The death tax is 
contrary to the freedom and free market principles on which this Nation 
was founded. We should be encouraging businesses, especially small 
businesses, not creating obstacles for their existence.
  The Republican Congress has a track record of being pro-family and 
pro-business. We take family businesses very seriously. When mom-and-
pop shops are closing up because of an outdated tax policy, it requires 
leadership and determination to remedy the situation. I am pleased to 
be a part of this effort.
  Mr. RANGEL. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Texas (Mr. Edwards).
  Mr. EDWARDS. Mr. Speaker, I rise in opposition to the Republican bill 
which actually raises estate taxes on many family farms and businesses 
with capital gains and maintains a 40 percent death tax until the year 
2009.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
California (Mr. Matsui), a senior member of the Committee on Ways and 
Means.
  Mr. MATSUI. I thank the ranking Democrat, the gentleman from New York 
(Mr. Rangel), for yielding me this time.
  Mr. Speaker, I have to say that this bill here that is on the floor 
today that my Republican colleagues have offered, it really will not 
become effective until the year 2011, 10 years from now. The Democratic 
substitute which will be offered in a little while provides immediate 
relief, up to $2 million per person, $4 million per couple. This would 
give almost 99 percent of the farmers, 99 percent of the small 
businesses in America immediate relief. We do also provide a 
continuation of the stepped-up basis.
  What is very interesting is that you do not hit $2 million on the 
Republican bill until the year 2011. In fact, you do not even get a 
million dollars' worth of relief until the year 2006 in the Republican 
bill. Why is it that it phases in? It phases in because they cannot be 
sure of these surpluses.
  The fact of the matter is that the Congressional Budget Office has 
said that there will be $5.6 trillion worth of surpluses over the next 
10 years. They also say in that same document that for a 5-year 
projection, they are only 50 percent accurate and for the 10-year 
projection they are basically saying it is not yet possible to assess 
its accuracy. We are really playing with speculation at this particular 
point in time. The reality is that we do not know what these surpluses 
will be.
  At the other side of the table, if you add up every bill that the 
Republicans have passed since January of this year till now, it totals 
about $2 trillion with the loss of interest. At the same time, and this 
is the astonishing number, this is absolutely astonishing, the top 1

[[Page 5434]]

percent of the taxpayers that average $1.1 million a year will get 43 
percent of these benefits. I have to say that a good part, about 50 
percent, believe it or not, 50 percent of this $5.7 trillion 
speculative surplus is payroll taxes, payroll taxes that the average 
American wage earner pays.

                              {time}  1245

  So we are going to have middle-income people pay essentially for the 
tax cut for those people that make over $1 million a year. That is not 
fair. That is not equitable. Actually, that is absolutely 
unconscionable.
  As a result of that, I hope my colleagues come to their senses and 
realize that what we are seeing here right now is not a whole issue of 
fairness. This is a whole issue of unfairness to the average American 
at a time when the market is failing, when unemployment will probably 
go up because the President is not paying attention to the economy of 
the United States.
  Ms. DUNN. Mr. Speaker, I yield 3 minutes to the gentleman from Ohio 
(Mr. Traficant).
  Mr. TRAFICANT. Mr. Speaker, I want to commend the gentlewoman from 
Washington (Ms. Dunn) for her work, and the gentleman from Tennessee 
(Mr. Tanner).
  Mr. Speaker, once again, it is rich versus poor, the class warfare 
that continues to divide America. It is ridiculous, and I would like to 
put this in another perspective. Two men buy a $20,000 annuity program. 
One man becomes rich and successful. The other man just barely 
survives. Are there those that say because the man was successful and 
rich he now, even though he paid the premiums, does not need the 
$20,000 so he should not get it, but the man who just survived should 
get it?
  Mr. Speaker, this sounds like socialism to me. This is socialism. 
This Tax Code reeks of socialism. It is my philosophy that Americans 
that feather their nests should not be discriminated against; they 
should be rewarded and incentivized in the United States of America.
  This whole tax business is out of control. We are taxed from the womb 
to the tomb, the stork to the undertaker. The tax man is Roto-Rootering 
our assets daily, year after year, picking our pockets; and we here in 
Congress are continuing to support them and give them more money. Beam 
me up.
  I finally figured it out. Count Dracula still lives. Dracula lives in 
the form of the IRS sucking our very blood year after year, making 
American taxpayers undead because if they are dead they are going to 
pay, if they are successful, a huge tax.
  I want all the money people to stay in America, not to move to 
Switzerland; and I think it is time to abolish this tax. I think the 
Republicans do it in a manner of time that makes it compatible with an 
economic policy.
  I want to commend the chairwoman and say that I support the bill.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Michigan (Mr. Levin), a senior member of the Committee on Ways and 
Means.
  Mr. LEVIN. Mr. Speaker, the gentleman from California (Mr. Thomas) 
referred to ``at any cost,'' and the truth of the matter is the 
Republicans here in the House have determined to pass tax legislation 
at any cost, even if it costs fiscal discipline; even if it costs the 
future of Medicare and potentially Social Security; and even if it 
costs the chance for meaningful prescription drug programs.
  In a word, the House Republicans are on automatic pilot, and no 
warning signal apparently will deter them. The fact that the repeal 
does not fit into a 10-year projection, so what do they do? They just 
push a good portion of it out to the year eleven. And we are talking 
then about a proposal that could cost over $600 billion?
  It does not matter apparently that the Democrats proposed an 
alternative that provides more relief sooner and relieves essentially 
the estate tax for all farm families and individual businesses. The 
talk of bipartisanship really has such a hollow ring under those 
circumstances. For those of us on the Committee on Ways and Means, when 
it comes to tax legislation, the amount of bipartisanship, zilch.
  The only redeeming factor here is that the Senate will not follow 
suit. This bill does not fit. We should do better. The Senate hopefully 
will slow down this plane before it crashes, and we will have another 
look at it.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Maryland (Mr. Cardin), a member of the Committee on Ways and Means.
  Mr. CARDIN. Mr. Speaker, let me thank the gentleman from New York 
(Mr. Rangel) for yielding me this time.
  Mr. Speaker, we are being asked today to approve a tax cut so 
blatantly irresponsible that the authors have had, in effect, to white 
out the costs. Those are not my words. That is the words of the 
Washington Post in their lead editorial today, and I agree with the 
editors of the Washington Post.
  As the gentleman from New York (Mr. Rangel) pointed out, if this bill 
was fully implemented immediately, the cost would be much, much higher 
than the $200 billion that has been put on this bill by the Joint 
Committee on Taxation. In fact, when it is fully phased in, it is about 
$70 billion of loss of revenue under the estate tax revenues, plus 
additional losses under the income tax; for when the estate tax is 
repealed, it is very difficult to figure out the base of property that 
is later sold, and there is transfer of property during life under the 
gift tax exclusions that would also lose revenue.
  We have a choice, Mr. Speaker. We can have the Republican bill that 
tells our constituents in 2011 that we will not have an estate tax, or 
we can support the Democratic substitute which tells our constituents 
immediately that they can have a $4 million exclusion per family. That 
will take care of 99.4 percent of all of the estates that will be 
exempt from Federal estate tax. Then we can take care of almost all of 
the problems of family farmers or family-owned businesses. We can do 
that by supporting the Democratic substitute.
  It is interesting, Mr. Speaker. I have had a large number of my 
constituents lobbying me on this issue. They came to my office to ask 
my support for the Republican bill. I showed them the Republican bill, 
and I told them they have a choice. They can believe that in the next 
five elections of Congress we will allow a repeal bill to take effect 
through three more administrations, or we can give them an immediate $4 
million exemption. What would they prefer, $4 million today or take a 
bet on what is going to happen 10 years from now when the repeal would 
go into effect?
  By the way, during the next 10 years, if they fall into the estate 
tax, they still need their life insurance; they still need their estate 
planning.
  I must say the people who have come to my office to support the 
repeal tell me, give me the $4 million; I will take that. I will take 
the Democratic substitute because it is fairer; it is immediate and we 
know that we can count on that relief as we plan how to deal with our 
family business or we plan how to deal with our personal estates.
  Let us reform the estate tax. We can do that in a bipartisan way. We 
can do that in a fiscally responsible way. By the way, we can also pay 
down the national debt. We can protect Social Security and Medicare. We 
can deal with high-priority programs, such as education, because it 
fits within the revenues that are available.
  We do not try to do more than we promise. I urge my colleagues to 
support the Democratic substitute, reject the Republican bill.
  Ms. DUNN. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Cox).
  Mr. COX. Mr. Speaker, today we will repeal the death tax. We will 
send it to the President for the third time, but this time to a 
President who will sign it.
  We hear arguments about why punitive confiscatory taxes on the after-
tax life savings of hard-working Americans are somehow justifiable or 
somehow wise. The death tax is perhaps the most complicated part of the 
Internal Revenue Code, 88 pages. If one has ever seen a death tax 
return or, worse yet, if their family has had to fill one out,

[[Page 5435]]

they know how extraordinarily complex and complicated it is. It is 
unfair and it is inefficient.
  Even if one accepts the revenue analyses of the minority, which posit 
that there are no compliance costs and no collateral effects associated 
with this very damaging tax, it raises but 1 percent of our total 
revenues. In fact, according to the Joint Economic Committee, the costs 
that the death tax imposes on the economy more than offset its 
collections, so that this tax is actually costing not only our economy 
and workers money but the United States Treasury, and income taxes, 
income tax collections, are depressed as a result of maintaining the 
death tax on the books.
  The death tax falls heaviest on people who have no money, because 
even though it is included in the income tax, one does not have to have 
any income in order to own it. All they have to have is property. It is 
really a property-tax levy and these property-tax levies are placed on 
the shoulders of people who have accumulated assets over their entire 
lives. When they sell the property, usually a small business, to pay 
the tax man, the workers who used to have jobs at that small business, 
at that ranch or that farm, are laid off. The death tax imposed on an 
unemployed worker is 100 percent.
  The Democrat substitute would maintain a 55 percent highly-
confiscatory rate punishing small businesses, ranches, and farms. The 
bill on the floor will repeal the death tax. It is time for the death 
tax to die.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would just like to say one can search the Internal 
Revenue Code all they want and they will find no provision labeled the 
``death tax.''
  Mr. Speaker, I yield 3 minutes to the gentleman from Wisconsin (Mr. 
Kleczka), my friend on the Committee on Ways and Means.
  Mr. KLECZKA. Mr. Speaker, the previous speaker indicated today we are 
going to repeal the estate tax. Did everyone hear that? Today we are 
going to repeal the estate tax. That is not accurate.
  In fact, the bill before us, Mr. Speaker, is a fraud. It is a fraud 
on the American public. First of all, we are told, or it is indicated, 
that it is going to be paid. Only the wealthiest 2 percent in the 
country ever pay an estate tax.
  Republicans say this is for the family farm and for the small 
businesspeople. That is not accurate, either. This bill is for the 
billionaires. Just last week, Wednesday, the Republicans had a little 
dinner in town knowing this bill would come up; and at that dinner, Mr. 
Speaker, they raised $7 million. Who does one think was there? The 
people who are going to benefit from this so-called bill that repeals 
the estate tax.
  Let us look and see what the bill does. Here is the current estate 
tax. The bill before us takes the rate down to this point, costing $200 
billion, and then five Congresses from now and three Republican, or 
three Presidents, and God forbid Republican Presidents, the rate falls 
from here to zero. This costs $200 billion for 10 years. This in 1 year 
costs $90 to $100 billion.
  Does one think the sitting Congress at that point will be able to 
take that shock to the Treasury? Clearly not. So what will the Congress 
do? That Congress will then further extend it; and we are going to see 
at that point, over the next 10 years, the rate go down some more and 
then finally in the year 2031 the death tax or the estate tax will 
maybe be repealed.
  So my advice to the Bill Gateses of the world and those who think 
this relief is on the way, do not die until the year 2031.
  What does our bill do? Our bill raises the exemption immediately to 
$4 million. How many folks in the gallery are worth more than $4 
million? I do not see any hands go up.
  That is the relief that small business and farmers need today. That 
relief costs about $40 billion, not $200 billion.

                              {time}  1300

  So this bill is not for the Ma and Pa business people or the farmers; 
it is for those who were there at that dinner last Wednesday when my 
Republican colleagues raised $7 million in one 2- to 3-hour period. 
That is what this debate is all about, make no mistake about it.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Linder). Members are reminded that 
during debate, persons in the gallery are not to be referred to or 
engaged.
  Ms. DUNN. Mr. Speaker, I yield 3 minutes to the gentleman from 
Florida (Mr. Shaw), the chairman of the Subcommittee on Social 
Security.
  Mr. SHAW. Mr. Speaker, I thank the gentlewoman for yielding me this 
time. I want to congratulate her on the wonderful job and effort that 
she has been doing year after year in order to bring about the 
realization of the elimination of the death tax.
  My colleagues on the other side of the aisle will argue that all we 
need is targeted reform to fix any hardships caused by the current 
death tax. History shows, however, that they are wrong. They are dead 
wrong.
  Originally enacted in 1916, the death tax was used as a sporadic and 
temporary way to finance the First World War. The original death tax 
provided an exemption of $50,000. That is about $11 million in terms of 
today's dollars. The top rate was 10 percent, and it was applied to 
estates over $5 million, which in today's terms would be $1 billion, or 
in excess of $1 billion.
  From the 1920s through the 1950s, death tax became a weapon in the 
liberal arsenal to redistribute wealth. Estates were taxed at rates up 
to 77 percent. Congress then tried to address the hardship imposed by 
the death tax on farmers and small businesses, as we are today.
  In 1976 and in 1981, the exemptions were increased and the rates were 
reduced to remove smaller estates from the tax rolls. But after that, 
the search for revenue to close budget deficits led to a decade of 
bills that largely increased the estate taxes.
  The truth of the matter is that the existence of any death tax 
infrastructure would make it easier for future Congresses to expand the 
impact of the death tax system should, for example, revenue pressures 
demand such a course of action.
  However, Mr. Speaker, we no longer have a deficit. Compliance and tax 
planning costs the taxpayers more than the revenue that the estate tax 
raises. Let me repeat that. Compliance and tax planning costs taxpayers 
more than the revenue that the estate tax raises. That is simply wrong.
  Because the death tax falls on assets, it reduces incentives to save 
and invest, and, therefore, it hampers growth. Is that fairness? An 
individual works, pays taxes on his or her earnings, invests their 
earnings and again pays taxes on the income from the investments. 
Double taxation. When a person dies, the assets are then taxed again. I 
say to my colleagues, that is triple taxation.
  With a maximum income rate of 39.6 percent and a maximum death tax 
rate of 55 percent, the combined rate can be readily seen as 73 
percent. I ask again, is that fairness? But the most important reason 
to repeal the death tax is simply that Americans should not be taxed 
when they die. Imposing a tax on some Americans but not on others 
merely because of their death is wrong, and it is time now to put this 
tax to death.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume to 
note that it is so unfair to talk about repealing the estate tax when 
we do not even intend to do it for 10 years. It is really misleading.
  Mr. Speaker, I yield 2 minutes to the gentleman from Massachusetts 
(Mr. Neal), a member of the Committee on Ways and Means.
  Mr. NEAL of Massachusetts. Mr. Speaker, I thank the gentleman for 
yielding me this time.
  The gentleman from Ohio (Mr. Traficant) indicated earlier that this 
was a debate about the rich versus the poor. That is simply not true. 
The debate today is about doing something for the living as opposed to 
doing something for the dead.
  We could well afford in this institution today to provide a 
prescription drug benefit that was fixed for Medicare recipients. 
Instead, we are coming to this floor today to assist those who really 
do not need it.

[[Page 5436]]

  Let me, if I can, quote again the editorial from the Washington Post 
that appeared this morning. ``The House will be asked today to approve 
a tax cut so blatantly irresponsible that the authors have, in effect, 
had to white out the cost.'' In other words, the phase-in of the estate 
tax repeal is so slow that the $660 billion cost of immediate repeal 
has been reduced to $185 billion. That was the point of an amendment 
offered last week in the Committee on Ways and Means.
  But there is even a more fundamental point here. It is that the 
committee majority could not figure out how to handle the true cost of 
repeal, given their other priorities, so they manipulated the budget 
rules to make it fit the 10-year window. Under the rules here, it is 
perfectly legitimate, but it is very questionable in terms of 
governance. There are tax proposals that should be phased in over a few 
years for policy reasons; others are phased in over a few years to save 
costs. But moving the bulk of the revenue loss out into the 11th year 
because we cannot figure out how to pay for this repeal is, as they 
say, a horse of a different color.
  This is what it means. We cannot deal with it now. We cannot deal 
with it now because nobody knows what the real revenue estimate is. We 
do not know how to repeal the estate tax and make it affordable, but we 
intend to hold out and hold on to the notion that the estate tax will 
be repealed because we have a political commitment out there that we 
intend to honor, at least for the moment.
  Mr. Speaker, I think that we missed a grand opportunity today. What a 
missed moment when we could have offered a solid compromise that would 
have taken care of 1 percent of the 2 percent who pay the estate tax in 
America. The Democratic substitute is preferable today. Vote for our 
alternative.
  Ms. DUNN. Mr. Speaker, I yield 2 minutes to the gentleman from Texas 
(Mr. Sam Johnson).
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I thank the gentlewoman for 
yielding me this time.
  Mr. Speaker, we are hearing a lot of rhetoric in here today, but the 
key is our bill is to repeal, and the Democrat substitute is not. There 
are 65 Democrats and 213 Republicans who supported the death tax repeal 
last June. I wonder if those people will stand up today. Last year 65 
Democrats crossed party lines, ending one of the most unfair taxes 
today, the death tax, and those 65 Democrats, I wonder if they will 
vote to end this onerous tax now that they know the President will sign 
the bill?
  For those who do not know, the death tax confiscates up to 55 percent 
of a family farm or business when a loved one passes away. It is just 
plain wrong for Uncle Sam to start taking up a collection while 
families are still grieving at the funeral home.
  Furthermore, according to the National Federation of Independent 
Business, one-third of small business owners today will have to sell 
outright or liquidate part of their business just to pay death taxes, 
and half of those that liquidate to pay the IRS will have to eliminate 
30 or more jobs. In today's chilling economy, that statistic is 
horrifying. Couple that with the fact that 60 percent of small business 
owners report that they would create new jobs in this year if the death 
taxes were eliminated.
  J.C. Penney, which is headquartered in my district, has laid off more 
than 5,000 employees. If this death tax repeal goes through, those 
folks without jobs could go to work for small businesses who want to 
hire more people.
  Mr. Speaker, this Congress has got to stop the IRS from taxing 
families to death, and we need to do it now. The death tax is just 
plain wrong. Let us vote for death tax repeal.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume 
just to note that the gentleman did not mean we need to do it now; the 
gentleman from Texas means he means to do it 10 years from now.
  Mr. Speaker, I yield 2 minutes to the gentleman from Tennessee (Mr. 
Tanner), a member of the Committee on Ways and Means.
  Mr. TANNER. Mr. Speaker, I would like to thank the gentlewoman from 
Washington (Ms. Dunn), whom I have worked with on this issue, as well 
as the gentleman from New York (Mr. Rangel) for his, I think, 
outstanding work in fashioning a substitute.
  Look, I came to this issue from the standpoint of agriculture and 
small business. The Democratic substitute is very attractive from the 
standpoint of immediate, substantial relief to those sorts of 
individuals, small businesses and family farms. The Democratic 
substitute, in my judgment, is weak in terms of addressing what I 
consider to be rates that are exorbitant, 55 percent. I do not believe 
in taking over half of anything by the government from the people. So 
we have that situation, but we have immediate and substantial relief.
  We have in the Republican bill almost no immediacy, but we have an 
addressing of the exorbitant rate I spoke about.
  I may be like many Members here in that I want something to happen 
this year. Nothing happened last year. I want it to happen not just in 
legislation, but to people, real people who have small businesses and 
family farms. That is the shortcoming of the underlying bill that I am 
a sponsor of.
  So I do not believe that the two ideas are necessarily mutually 
exclusive. I think this is a work in progress, and I think we can 
fashion something if we could somehow figure out how to work together 
here to do something both on an immediate relief from the current code 
of $675,000 credit, and also something on the rate. We have not been 
able to put those two together. I was not consulted on the chairman's 
mark in the committee, but nonetheless, I think we have an opportunity 
somewhere down the line, a window of opportunity, to actually make 
something good happen in this area of tax law.
  Ms. DUNN. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from 
Georgia (Mr. Bishop).
  Mr. BISHOP. Mr. Speaker, I thank the gentlewoman for yielding me this 
time.
  Let me also commend the gentleman from California (Mr. Thomas), the 
Chairman of the Committee on Ways and Means, and the gentleman from New 
York (Mr. Rangel), the ranking member, along with the gentlewoman from 
Washington (Ms. Dunn) and the gentleman from Tennessee (Mr. Tanner) for 
an extraordinary job in working this issue.
  When America's families lose a loved one, their grief is often 
compounded by the loss of a farm or business, or other assets that have 
been held and nurtured for many generations and were expected to be 
passed along to future generations. For many families, this is what the 
unfair, confiscatory death tax does; it robs them of investments of a 
lifetime and their hopes and their dreams for the future.
  Studies show that one in every three family businesses and farms lack 
the liquid capital to pay the death taxes, which can amount to 55 
percent of the estate's value. It will either have to be sold or 
liquidated, even more loss in an area like mine where family farms and 
small businesses are such a big part of the economic base. It is not 
only the families that suffer, but it is the employees of those 
businesses that suffer.
  I can cite many examples from my area of southwest Georgia, and in 
Georgia, the mom-and-pop service station that a couple struggled 40 
years to establish and their three sons would run after they died, or 
the Atlanta Daily World newspaper, or the southwest Georgia newspaper, 
or countless funeral homes that have been passed down for one and two 
and three generations that could be threatened if this tax stays in 
effect.
  All segments of society are hit by the death tax, but none harder 
than minorities. More than 1 million minority-owned businesses are 
believe to be jeopardized by the tax.
  I have listened to both sides of the debate, and no one has explained 
what is fair about it; a tax that is levied on income that has already 
been taxed, that penalizes hard work and success, that encourages 
compliance costs that almost wipe out the relatively small

[[Page 5437]]

amount of revenue it raises, and that robs families of their heritage.
  Mr. Speaker, I urge my colleagues today to vote to eliminate this 
burden on America's families.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Texas (Mr. Doggett), a member of the Committee on Ways and Means.
  Mr. DOGGETT. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  I believe that the question that our Republican friends joined by one 
of my colleagues from Georgia just now need to answer, is if they are 
so much against the so-called death tax, why is it that this morning 
they are so modest, so timid, indeed so fearful of providing relief now 
to the small businesses and the family farms? The real problem with 
their ``repeal'' is that it does not actually repeal anything any time 
soon.
  I heard just now my colleague refer to service stations and funeral 
homes. How much relief do all of these supporters of the repeal of the 
death tax provide for such enterprises? Well, I heard the 55 percent 
tax described as confiscatory, and under their repeal, what relief do 
all of those people get next year that have been coming around, that 
have been stirred up by all of these Republican lobby groups to repeal 
the death tax?
  Well, they certainly do not get repeal. Anyone who dies next year, 
they are going to get an amazing amount of relief. The confiscatory 55 
percent tax will be lowered all the way down to 53 percent. That is the 
amount of relief that these timid supporters of ``repeal'' of the death 
tax are offering for next year. How about carrying it on down a few 
years to 2006. Well, by that time, these timid supporters of the 
``repeal'' of the death tax are still not repealing any tax for 
anybody, instead, they are only lowering it for all to 46 percent.
  Mr. Speaker, they do not repeal the death tax for a single American 
next year.

                              {time}  1315

  Indeed, they do not repeal the death tax during the entire decade, 
for a single American.
  All these groups, these service stations, funeral homes, family 
farms, family enterprises that have been so concerned, that have been 
stirred up by all the Republican rhetoric, they do not get any repeal 
of the death tax next year or during the next decade.
  The only hope that family enterprises have for repeal under the 
Republican proposal occurs a decade from now, in 2011, at the very time 
that the baby boomers are placing the greatest demands on Social 
Security and Medicare. If at that time we have, and it seems 
inconceivable, but if, at that time, we have a Congress that is as 
fiscally irresponsible as the current one, and it remains willing to 
repeal the tax from the billionaires, from the super rich in this 
country, then, and only then, perhaps relief will trickle down to 
family enterprises.
  Today House Republicans say that Teddy Roosevelt, a great Republican 
who first advocated the inheritance tax, that he was all wrong and that 
inherited wealth is no longer a problem, inherited economic power that 
concentrates more and more of the wealth in this country in the hands 
of a few super-rich billionaires; that that is okay, that we do not 
need to worry about it, that it does not threaten our democracy.
  But in the meantime, the small businesses and the family farms, and 
all of the tearful stories that we have heard here this morning, those 
people are being held hostage. They will have to pay a tax for the next 
decade because the Republicans are fearful of repealing it for them.
  Our Democratic substitute repeals that tax for the first $2 million 
for an individual, $4 million for a couple. It repeals it for 77 
percent of the estates that pay taxes today and does so promptly, in 
January, not in future decades.
  Ms. DUNN. Mr. Speaker, I yield myself 15 seconds.
  Mr. Speaker, the gentleman fails to mention that his proposal to 
increase the exemption does not tell the story that on the first dollar 
after that exemption, taxpayers will be paying at a rate of 49 percent, 
as opposed to the 18 percent in the bill that we propose.
  Mr. Speaker, I yield 2 minutes to the gentleman from Arizona (Mr. 
Hayworth).
  Mr. HAYWORTH. Mr. Speaker, I thank my colleague, the gentlewoman from 
Washington, for yielding time to me.
  Mr. Speaker, it is very interesting, and part of the necessity, I 
guess, of those who say no in every circumstance, to embellish remarks. 
In the interest of making a valid point here, to my friend, the 
gentleman from Texas, one point he assiduously ignored in his litany of 
alleged shortcomings was this: Under the plan of my friends, the 
minority, the death tax is never eliminated.
  That points up a basic disagreement. Our friends on the other side, 
with the exception of some folks who understand the commonsense reality 
of trying to get rid of this tax and put it to death within the current 
budgetary constraints we face, a lot of my friends over there believe 
no how, no way should we rid ourselves of this confiscatory tax.
  Simultaneously, they argue every side of the issue, and suggest that 
we can relieve it to a certain point, but if one makes one dollar more, 
that is too much success and therefore that person exists to be 
punished.
  It is a simple question, really, one of fairness: Is it fairness to 
eventually put this death tax to death for every American, and say it 
is wrong to punish those who succeed, or is it better to drive a wedge 
in the American people; to play upon the politics of envy, rather than 
the realities of fairness?
  Today we stand, in a bipartisan way, which may add to the 
consternation on the other side, and say, no taxation without 
respiration. The policy may not be achieved in a day, but as my 
constituents tell me in Arizona, it will be achieved, and we invite our 
friends to put aside this mindless class envy and to join with us; to 
say to every American, no family should have to visit the undertaker 
and the tax collector on the same day. Support the legislation.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Washington (Mr. McDermott), a member of the committee.
  Mr. McDERMOTT. Mr. Speaker, we are here for act III of the tax 
follies of the year 2001. It is interesting. We have heard everyone 
say, and I do not need to repeat the fact, that there is no tax relief 
for 10 years. It is simply that they want the headline--they want the 
commercial with the line in it that says, ``I voted to repeal the 
estate tax.'' What they will not put in there is, ``I voted to repeal 
the estate tax in 2011.''
  We are setting up commercials here today. No one seriously believes 
on either side of the aisle that the Senate is as crazy as to adopt 
this particular law. The reasons are very obvious. If we take a serious 
look at what laughingly is called the President's budget or the House's 
budget, there is no money in there to stabilize Social Security. There 
is no money in there to deal with what everybody admits is going to be 
the problem in 2010, when the baby boomers come into the Medicare 
system.
  Everybody out there listening to this who is 55 years old now and in 
10 years will be 65, and is counting on that Social Security, and is 
counting on Medicare for the security it gives one economically ought 
to be listening to this debate and wondering, where are these people 
going to get $660 billion in 2010 to deal with those issues?
  I think the people on the other side must think the Americans are 
asleep or stupid or something. I do not know how one could think that 
the American people cannot see that in 10 years, when they count on 
Medicare, that they are suddenly going to be shovelling out the door 
$660 billion having done nothing in the intervening 10 years to prepare 
for what is undoubtedly going to be a catastrophe.
  We all know that. Everybody approaches it. Everybody waves their arms 
and talks about it, but we do not do anything about.

[[Page 5438]]

  What we are being subjected to here today is what I call a perfect 
example of the big lie. If people say a lie enough times, people start 
to believe it. People actually believe there is a death tax. I have 
people call me up on the phone who have not got two nickels to rub 
together telling me that I have to repeal this death tax, like when one 
dies they come and tax one right in the funeral parlor. My father died 
2 years ago. Nobody came to collect any death tax, and it is not going 
to happen. It is a lie.
  Ms. DUNN. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Herger), the author of the lockbox that sets aside all 
dollars for Social Security and Medicare.
  Mr. HERGER. Mr. Speaker, I thank the gentlewoman for yielding time to 
me.
  Mr. Speaker, Americans are taxed all their lives: when they get a 
job; when they are married; and yes, even when they die.
  Today we are considering legislation to end the destructive death tax 
once and for all. The death tax is wrong and it is bad policy.
  First, the death tax is double taxation. Every dollar invested in a 
family farm and small business or a household has already been taxed or 
will be taxed in the future.
  Secondly, the death tax has its hardest impact on middle-income 
Americans, not the super wealthy, but individuals and families who have 
invested their life's savings into small businesses and are often 
asset-rich but cash-poor.
  For this reason, the death tax is the leading cause of dissolution of 
most small businesses. One-third of small business owners today will 
have to sell or liquidate their small business to pay the estate tax. 
Half of those who do liquidate will have to eliminate 30 or more jobs. 
Is it any wonder that 70 percent of all businesses never make it past 
the first generation and 87 percent do not make it to the third?
  Finally, the death tax collects only a small percentage of Federal 
revenues. The death tax actually comprises just 1\1/2\ percent of total 
Federal revenues. With as much as $2.5 trillion in non-Social Security 
surpluses being projected over the next 10 years, surely Washington can 
afford to return a penny on the dollar of the surplus to the American 
taxpayers who created it.
  Mr. Speaker, it is time to do the right thing. It is time to end the 
unfair and destructive death tax.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from South 
Carolina (Mr. Spratt), the ranking member of the Committee on the 
Budget.
  Mr. SPRATT. Mr. Speaker, I rise in favor of total repeal of the 
estate tax now for 99.5 percent of all estates; all Americans who may 
die, 99.5 percent. This means repeal today, not 10 years from now.
  That means the family businessmen, the family farmer for whom they 
profess so much concern, they bring them forth when they present their 
case, will be exonerated, sheltered from estate tax; and not only that, 
he or she will get stepped-up basis on all of the assets. The heirs 
will take the assets with an investment basis equal to the value at 
date of death, which means when they settle that value, there will be 
no capital gains. Under the Republicans' bill, all assets over $1.3 
million will have a carryover basis; not a stepped-up basis, a 
carryover basis.
  On both scores, this bill, this substitute, is manifestly, 
unquestionably better for the people they are professing so much 
concern for, small business people and family farmers. This is the way 
to vote: Total repeal for 99.5 percent of all decedents.
  Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Waxman), a distinguished Member.
  Mr. WAXMAN. Mr. Speaker, last week I gave out the first of what will 
be a series of Golden Jackpot Awards to the mining industry and the 
EPA, the Environmental Protection Agency, and administrator Christine 
Todd Whitman, for the incomprehensible decision to allow more arsenic 
in drinking water.
  We are going to be giving this award whenever we are confronted with 
decisions that exemplify amazing feats of lobbying that result in 
outrageous windfalls to special interests.
  Today we have a new winner. I am awarding this week's award to 
President Bush and Vice President Cheney on behalf of the entire Bush 
cabinet for their plan to completely repeal the estate tax. By 
insisting on total repeal and by passing today's Republican bill, the 
President and Vice President would share in as much as $50 million in 
benefits. Let me repeat that, they will share in $50 million in 
benefits. That is just for the Bush and Cheney families.
  This is not a bill that just helps the President and Vice President. 
Repealing the estate tax would provide as much as an average of $19 
million for members of the Bush cabinet. Of course, Members of Congress 
are not being left behind, because under the Republican bill we will 
soon vote on the richest 50 Members of Congress getting $1 billion in 
benefits. That is $1 billion with a ``B.'' That is better than any pay 
raise I have seen proposed for Members of Congress.
  The breathtaking self-interest and enrichment in the Bush proposal is 
the very essence of the Golden Jackpot Award, and this award I am going 
to bestow on this administration for the jackpot that many of the 
members of the cabinet are going to hit if this repeal of the estate 
tax becomes law. It seems to me that we ought to recognize the enormous 
windfall that this special interest provision, this special interest 
bill, would have.
  I urge that we vote against the Republican proposal.
  Ms. DUNN. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from 
Iowa (Mr. Nussle).
  Mr. NUSSLE. Mr. Speaker, I thank the gentlewoman for yielding time to 
me, and for her leadership on this measure.
  The arguments are very interesting, particularly when we hear them in 
context. I have tried to document the arguments that our friends on the 
other side have made about our budget and about our taxes. It really 
puts it in perspective for me, because what we have come forward with 
today is a tax bill that fits. It fits within our tax priorities, but 
it also fits within the overall priorities of our budget, which is an 
important thing for us to consider here today. Their bill does not fit 
within that budget. It does not meet those commitments.
  But this is not a new argument for our friends on the other side. 
They have been making arguments about our budget and about our tax 
relief for Americans for quite a few years. Let me just highlight a few 
of them, because I think they are interesting.
  First, they said we cannot have tax relief for Americans because we 
do not have a balanced budget.

                              {time}  1330

  My colleagues said we cannot do both. We did both. We balanced the 
budget. We provided a tax relief. Now my colleagues say, or then my 
colleagues said, we cannot do it unless we put Social Security in a 
lock box. So we put Social Security in a lock box. Then my colleagues 
said we cannot do it unless we put Medicare in a lock box. So we put 
Medicare in a lock box. We balanced the budget and put Social Security 
in a lock box.
  Then my colleagues said we cannot do it unless we fund some very 
important priorities. So we funded priorities, such as education, the 
environment, health care, health research, a number of very important 
priorities, plus added defense and agriculture to them.
  They said we still cannot have tax relief, because it is the wrong 
process. It is too fast. So we slowed things down, passed a budget; and 
still my colleagues said it is the wrong time, because now the tax bill 
is actually too big.
  Okay. Then we have proven that this tax bill fits within the budget 
that we just passed, that the Senate is working on. Now, believe it or 
not, all of those arguments have been refuted, and now they come to the 
floor with a bill that they say is not big enough. They say our tax 
bill is not big enough, that it is not fast enough.

[[Page 5439]]

  First, they said it was too slow; now it is too fast. Now it is too 
big; now it is too small. When are my colleagues going to understand 
you have run out of excuses? We are able to balance the budget, fund 
our priorities, provide the needed tax relief for our American families 
and small businesses and farms, do it in a responsible way that fits 
within the budget that we just voted on and passed, and do it at the 
same time we pay down our national debt and fund all of the priorities 
of our government.


  I think it is important for us to remember these arguments in 
context. H.R. 8 is a good bill that fits within the budget, and it 
deserves our support.
  Mr. BLAGOJEVICH. Mr. Speaker, I rise in opposition to H.R. 8, an 
effort to phase-out the estate and gift taxes over a 10-year period. I 
support eliminating the burden that the estate tax imposes on family 
farms and small businesses, and I have voted in the past to remove that 
burden. I have joined with many of my Republican colleagues to support 
legislation to end the estate tax. However, the bill before us today, 
as amended by the House Ways & Means Committee, would prevent the vast 
majority of family farms and businesses from seeing any significant 
relief for ten years.
  Had the Ways & Means Committee been content with the bill as 
introduced, I could confidently cast my vote for a bill which would 
reduce rates substantially for people who truly need estate tax relief. 
But the Committee has chosen to present the House with a very different 
bill--a bill which provides immediate relief for billionaires, and 
makes family farms and businesses wait ten years.
  The Democratic alternative shows there is a different way. By 
immediately raising the estate tax exclusion to $4 million, the 
alternative offered by my Democratic colleagues immediately repeals the 
estate tax for the vast majority of families faced with this burden. 
This effort alone would make sure that 99.4 percent of all small 
businesses and farms will never have to worry about the estate tax. 
Instead, the Ways & Means Committee has decided to delay relief for 
small business and farmers in order to immediately provide a tax cut 
for the wealthiest Americans.
  As the growth of our economy slows, we here in Congress need to be 
absolutely sure that we are doing the job our constituents sent us to 
do--to make sure that the federal budget stays balanced. No one wants 
to return to the days when budget deficits forced interest rates 
through the roof, making it harder for businesses and families to 
balance their own budgets. I will continue to work for meaningful tax 
relief within the context of a balanced budget. But I cannot vote for a 
deeply flawed bill that will immediately benefit billionaires and make 
small business owners and farmers wait a decade for real relief.
  The Senate still needs to add its voice to this debate, and I am 
hopeful that when the two Houses meet in conference, they can produce a 
bill that provides genuine estate tax relief. I look forward to voting 
for a conference report that will free family businesses from estate 
taxes--not a decade from now, but immediately.
  Mr. SANDLIN. Mr. Speaker, today the House of Representatives votes to 
loosen the noose of estate taxes that choke many small-businesses, 
family farms, and ranches. As a nation of entrepreneurs and small 
businessmen, where multigenerational businesses form the backbone of 
many communities, the estate tax is too often an insurmountable 
obstacle to those who wish to carry on their families' way of life. As 
an original cosponsor of legislation designed to repeal the estate tax, 
I understand the despair of families faced with selling portions of a 
farm or business to settle the estate of a deceased family member. By 
voting to phase out this tax, Congress is removing an obstacle faced by 
thousands of East Texas businesses, farmers, and families.
  Eliminating the federal estate tax is a top priority, because this 
tax is a burden on small businesses, family farmers, and growing 
families who can least afford the sting of additional taxes. Back in 
1997, during my first term in Congress, I introduced legislation 
intended to eliminate the estate tax. My desire to eliminate the estate 
tax was sparked during my travels throughout East Texas and the 
conversations I had with the family farmers and small businesses facing 
ruin at the hands of this measure. Two years later, after the people of 
the First District of Texas decided I deserved a second term, I again 
introduced legislation that would completely repeal this tax. Today, as 
I begin my third term in Congress, we are prepared to phase-out the 
estate tax and protect multigenerational businesses and families from 
unfair taxation.
  Today's action, however, is only a partial victory for those 
subjected to this tax. In a perfect world, Congress would vote to 
repeal the estate tax effective this year. Instead we are passing a 
modified, multi-year phase-out plan that won't be fully effective until 
2011. Earlier this year, Congress had an opportunity to speed up the 
pace of estate tax repeal. However, the Republican leadership muscled 
through an irresponsible tax rate cut plan that drains a substantial 
portion of the predicted surplus. By pushing through a tax cut skewed 
largely to the rich, the Republican leadership is now forced to offer 
an estate tax bill that does not provide for complete repeal until 
2011. Therefore, I will also support the Democratic alternative. This 
alternative provides substantial tax relief by raising the effective 
exclusion to $2 million per person effective in 2002. Although the 
Democratic alternative does not completely repeal the estate tax, the 
legislation does provide relief from the estate tax faster than the 
Republican alternative. By joining several of my colleagues in voting 
for both bills, I hope to send the message that both sides must work 
together in crafting a bipartisan product that completely and quickly 
eliminates the estate tax.
  Mr. Speaker, today Congress is taking the first step in removing 
barriers to multigenerational businesses and farms that are an 
important part of my community. I sincerely hope that in the coming 
months, Congress can work together in a bipartisan manner to pass fair 
and effective tax relief that benefits working families, small 
businesses, and family farmers. By repealing the estate tax, Congress 
is taking an important first step to carry out this goal.
  Mr. MOORE. Mr. Speaker, I rise in support of H.R. 8, legislation that 
would provide for the eventual repeal of the estate and gift tax. I 
have long been a supporter of providing estate tax relief to American 
families, small business owners, and farmers who have worked their 
entire lives to transfer a portion of their estates upon their death.
  While H.R. 8 is the vehicle that the House leadership wishes to 
pursue to achieve this goal, I believe there is a better way to provide 
relief and maintain our commitments to paying down the national debt, 
protecting Social Security and Medicare, and providing for our other 
priorities. This is why I will also be supporting the substitute to 
H.R. 8.
  The alternative will increase the estate tax exclusion for all 
estates to $4 million, exempting two-thirds of all estates that would 
have to pay tax under current law and 99.4 percent of all farms that 
would otherwise have to pay the estate tax. All of these changes will 
be made immediately, instead of delaying relief to the small businesses 
and family farmers who truly need relief for several years as H.R. 8 
would do, giving more estate tax relief to estates of less than $10 
million than H.R. 8 through 2008.
  H.R. 8 does not repeal the estate tax for 10 years; rather, it slowly 
phases-down the marginal tax rates and provides no increase in the 
exclusion. This will delay estate tax relief to the small businesses 
and farms that truly need it. H.R. 8 uses a phase-in period to hide its 
real effects. While the first 10 years cost only $192 billion, I have 
deep concerns about the fact that the true costs of this legislation 
fall outside the 10-year budget window, when they explode to above $100 
billion in year 11 and up to $1.3 trillion in the second 10 years.
  Mr. Speaker, I serve on the Budget Committee and offered an amendment 
before both the Budget and Rules Committees to require the effects of 
revenue-reducing bills to be fully phased-in within the 10 year budget 
window. The bill before us today does not meet this criterion and I 
believe that is a serious mistake.
  We've heard time and time again about the uncertainty of long-term 
budget forecasts and the necessity to urge caution in using projected 
surpluses. Indeed, most of the surpluses we're talking about--two-
thirds to be exact--will not be realized until years 6 through 10. This 
also happens to be the time period in which the bulk of relief under 
H.R. 8 is phased-in, a time period that produces less reliable budget 
projections. I believe that the fiscally responsible thing to do is to 
develop policy under a framework where forecast figures are more 
reliable--if these surpluses do indeed materialize in the out years, 
then we can and should contemplate larger tax cuts.
  I believe the practice of hiding the true costs of the legislation we 
pass is deceitful and irresponsible and we should put it to a stop. The 
President and many members of this Congress have indicated that they 
want tax cuts of $1.6 trillion--no more, no less. While we can argue 
the merits of this number, what we cannot and should not argue is the 
fact that those tax cuts, all $1.6 trillion should be accounted for 
within the 10-year budget window.
  I am concerned about recent comments by Chairman of the Ways and 
Means Committee Mr. Thomas that this Congress will somehow fit ``1\1/2\ 
pounds of sugar into a 1 pound bag.''

[[Page 5440]]

I infer from his comments that this House intends to pass tax cuts 
larger than $1.6 trillion--at least beyond the 10-year window. Make no 
mistake, this bill today achieves that goal by pushing its true costs 
beyond our agreed upon budget window.
  Simply, H.R. 8 would have the American people believe that they will 
receive immediate and substantial estate tax relief. This bill delays a 
full repeal, which will have budget implications that this country 
simply cannot afford. With over one trillion dollars in lost revenue, 
this has the potential to put this country back on the wrong fiscal 
track of increased deficit spending and an exploding national debt.
  Although the majority claims to support retiring the publicly held 
debt, they have begun the session by scheduling several tax bills 
funded by the projected budget surplus without giving any consideration 
to the impact that the bills will have on our ability to retire our 
$5.7 trillion national debt. These tax cuts have been predicated on the 
notion that the projected budget surpluses of $5.6 trillion over the 
next 10 years will somehow materialize.
  Mr. Speaker, I submit that the likelihood of these projections 
actually materializing is extremely slim. We are all aware of the 
recent $3.7 trillion loss in the equity market. This slowdown will 
undoubtedly have a negative effect on revenues and produce lower 
overall budget projections--how much lower is anybody's guess and we 
should not bet the farm on tax or spending programs that are based on 
circumstances that no one can accurately predict.
  I am concerned, that the total costs of this bill, fully phased-in, 
could exceed not only the $1.6 trillion number that ``fits'' within 
current projections, but may actually result in Congress returning to 
deficit spending. This is why I intend to support the fiscally 
responsible substitute which provides immediate estate tax relief 
targeted to farmers and small businesses while protecting other urgent 
priorities such as paying down the debt and shoring up the long-term 
future of Social Security and Medicare.
  I will also support, however, final passage of H.R. 8 because it is 
the only vehicle the leadership will allow to provide estate tax 
relief. I will not obstruct that vehicle; however, I hope the Senate 
and the conference committee consider carefully compromise language 
that provides substantial, immediate relief, and that is fiscally 
responsible.
  Mr. HOLT. Mr. Speaker, the estate tax. It is unfair and punitive and 
hurts family-owned small businesses and farms.
  Last year, I visited the DePalma Farm, 85 beautiful acres in Holmdel, 
New Jersey. This property is one of the largest parcels of undeveloped 
land in my central New Jersey Congressional District. The DePalma farm 
survived two World Wars . . . the Great Depression . . . and the advent 
of the technological revolution and the factory farm. But today, 
because of the estate tax, family members had to make difficult 
decisions about whether to sell the property to developers just to pay 
the estate tax. This is true even though some wanted to keep the land 
in the family or preserve it as open space.
  When a government policy robs families of their heritage and forces 
communities to develop land instead of preserving it, something needs 
to be changed.
  Some people say that the estate tax is something that only affects 
the wealthy. But any community that has lost a lumber yard, a jewelry 
store or a family grocery to the estate tax knows better. These losses 
can forever change the character of a town. In boroughs and townships 
across New Jersey, businesses and families are going through financial 
gymnastics to avoid being bankrupted by this punitive tax.
  I am proud to be a cosponsor of bipartisan legislation introduced by 
Representatives Tanner and Dunn to phase out the estate tax.
  The legislation before us today provides $186 billion in tax relief 
by phasing in a repeal of estate, gift, and generation-skipping taxes. 
Beginning next year, the unified credit, currently applied to the first 
$675,000 of property, will be converted to an exemption so that the 
lowest statutory rates will apply to the value of an estate exceeding 
the exemption amount.
  The bill expands conservation easements by modifying the distance 
requirements from metropolitan areas. Under the bill, maximum distance 
of eligible land from a metropolitan area, national park, or wilderness 
area is doubled. In an area like central New Jersey, where land values 
are skyrocketing, these provisions are important.
  It is clear that simply raising the size of an estate exempted from 
the tax won't truly solve the problem. In central New Jersey, where the 
price of an acre of land runs into many, many of dollars, simply 
increasing the exemption would only help a minority, not a majority, of 
farms. Because wages, equipment, and the cost of living is higher in 
New Jersey than in other states, such a change would be unlikely to 
help most small businesses, too.
  As an environmentalist and a fiscal conservative, I believe that 
Federal tax policy should not make it more difficult for families to 
retain the businesses or farms on which they have worked for their 
lifetimes.
  And it should not give wealthy developers an unfair advantage over 
those who want to preserve open space for their community.
  Central New Jersey supports eliminating the estate tax for family-
owned farms and business. I urge my colleagues to pass responsible 
estate tax relief.
  Mrs. MINK of Hawaii. Mr. Speaker, last year I voted to override the 
President's veto of the estate tax bill. I said at that time that it 
was necessary for both parties to develop an effective and sensible 
estate tax reform bill. The Democrats accepted my advice. 
Unfortunately, the Republicans did not.
  On February 27, 2001, I introduced H.R. 759, immediately raising the 
estate tax exemption to all estates up to $5 million. That exemption 
would exempt virtually all estates from any estate tax. Consider 
estates in Hawaii, for example. In 1998 there were about 8,000 deaths 
in Hawaii. Only 196 estates had any estate tax liability. With a $5 
million exemption, 184 of those estates, 94 percent of those that were 
taxed, would pay no tax. Only 12 estates would have had any tax 
liability.
  The Democratic alternative contains a $5 million per couple 
exemption. I support the Democratic substitute because it exempts 75 
percent of all estates and provides immediate relief. That is far 
better than the Republican plan which does not fully go into effect 
until after 2011.
  The Republican estate tax bill is part of the excessive Republican 
tax plan. It offers no margin of error to avoid plunging the budget 
into deficit and leaves no amounts of any substance for education, 
Medicare or prescription drugs.
  I urge support for the Democratic estate tax substitute.
  Ms. KILPATRICK. Mr. Speaker, today I rise in strong opposition to 
H.R. 8, the Estate Tax Elimination Act. I say this with reservation, 
because I am not against tax relief for our nations small farmers and 
small businesses. In fact, our Democratic leadership on the Ways and 
Means Committee has drafted a more sensible estate tax relief bill. I 
am, however against the measure offered here on the floor. The 
Republican bill is simply too costly, it fails to stimulate a fragile 
economy and it fails to address the priorities of the America people.
  This bill would cost the American people $662 billion if the estate 
tax was immediately repealed. However, in order to hide this fact, the 
Republican majority has stretched the measure out over 11 years. This 
bill finally repeals the estate tax in 2011. When added to the two 
other tax measures passed earlier in this house, the price tag of the 
President's tax cut will skyrocket to $2.9 trillion.
  Once again, we are dealing with a tax measure directed at the very 
few. Today we are dealing with a tax that, according to the Joint 
Committee on Taxation, applied to only 2 percent of all estates based 
on IRS data from 1998. So America, we now operate in a time where 2 
percent of estate control the legislative agenda of the U.S. House of 
Representatives. The first thing this measure does--I repeat, the first 
thing done in this measure . . . is the removal of the current surtax 
for estates larger than $10 million. It appears that while the 
President and some members of his Cabinet will receive significant 
benefits, our Nation's family-farms and small businesses are instructed 
to hold for tax relief until an unspecified future date.
  On the other hand, our Democratic leadership on the Ways and Means 
Committee has crafted an estate tax relief measure that goes to those 
estates that need it most. The Democratic substitute, once fully phased 
in, provides a $2.5 million exclusion per individual and a $5 million 
exclusion per couple. Most significantly, the bill, effective January 
1, 2002, would increase the current estate tax exclusion from $675,000 
to $2 million providing immediate relief to our farmers and small 
businesses.
  I have said it before, and I will say it again. Why are we here 
debating this massive tax cut? If my memory serves me correctly, the 
President, during the campaign, stated over and over again, that his 
first priority in office was the issue of education reform. We have 
been in session for 4 months now and we have yet to consider any 
substantive education measure. As Democrats, and at least half of the 
American public that voted for Al Gore feared, the President does not 
seem to be able to, or simply has chosen not to use his position of 
influence to move education in the Congress.

[[Page 5441]]

  America, I challenge you to keep an eye on this President. If there 
were any doubts as to where his loyalties are, if there were any doubts 
about his sincerity about being bipartisan, if there are any doubts on 
whether or not he would represent all Americans--those doubts should be 
no more. His loyalties are to business and the wealthy, his policy has 
been extremely partisan, and he has chosen not to represent the least 
in our society.
  To my colleagues, I urge you to vote against H.R. 8 and support the 
Democratic alternative.
  Mrs. CLAYTON. Mr. Speaker, I rise today in support of estate tax 
relief for farmers and working Americans. I come from a rural district 
where a great many of my constituents make their livelihoods from 
farming. On paper, they look wealthy. In reality, they may not have $50 
in their pocket or $1,000 in the bank. It is time for Congress to fix 
the estate tax so that it doesn't affect the livelihoods of these 
hardworking people. However, while the estate tax should not affect 
farmers and small businesspeople, it must be considered within the 
context of a larger tax debate. Only the larger debate can answer the 
question of basic fairness.
  I want to see farmers, small business people, and working Americans 
treated fairly. That is why I will vote for the Democratic alternative. 
The Democratic alternative provides estate tax relief for those who 
need it, and sooner. It also exempts 99 percent of farms. The 
alternative allows for fiscal prudence and recognizes that America has 
other pressing needs. Fairness means providing sensible tax relief for 
working Americans. Fairness means giving our Nation's farmers the same 
support that they have given to us.
  Because I seek fairness, I must continue to question the entire 
package of tax plans that the majority has sent to the floor. Taken as 
a whole the package is unfair, regressive, and unwise. Let us consider 
tax relief guided by the principle of fairness, rather than by no 
principles at all.
  Mr. UDALL of Colorado. Mr. Speaker, I cannot support this bill--but 
not because I oppose estate-tax relief, and not because I am sticking 
with my party leadership on a partisan basis.
  First, I do not think taxes should be a simple partisan issue. For 
example, last week, I joined in supporting a Republican-authored 
proposal to eliminate the marriage penalty and increase the child 
credit.
  And, I do support reducing estate taxes for everyone, and especially 
for family-owned ranches and farms as well as other small businesses.
  I definitely think we should act to make it easier for everyone to 
pass their estates--including lands and businesses--on to future 
generations. This is important for the whole country, of course, but it 
is particularly important for Coloradans who want to help keep ranch 
lands in open, undeveloped condition by reducing the pressure to sell 
them to pay estate taxes.
  Since I have been in Congress, I have been working toward that goal. 
I am convinced that it is something that can be achieved--but it should 
be done in a reasonable, fiscally responsible way and in a way that 
deserves broad bipartisan support.
  That means it should be done in a better way than by enacting this 
Republican bill--a bill that is even less balanced, even less 
responsible than the one that President Clinton vetoed last year.
  That is why I voted for the Democratic alternative.
  That alternative bill would have provided real, effective relief 
without the excesses of the Republican bill. It would have raised the 
estate tax's special exclusion to $2 million for each and every 
person's estate--meaning to $4 million for a couple--and would have 
done so immediately.
  So, under that alternative, a married couple--including but not 
limited to the owners of a ranch or small business--could pass on an 
estate worth up to $4 million could pass it on intact with no estate 
tax whatsoever.
  Once you look closely at the Republican leadership's bill, you can 
see that the Democratic alternative actually would be much more helpful 
to everyone who might be affected by the estate tax.
  That's because the Democratic alternative would have taken effect 
immediately--it would not have been phased in over a decade, like the 
Republican leadership's bill.
  Further, the Democratic alternative would immediately apply equally 
to every estate--unlike the Republican bill, which would start by 
reducing estate tax rates for the very largest estates, and only fully 
apply to all estates 10 years from now.
  In other words, under the Republican bill a couple passing on their 
estate in the near future would avoid more tax under the Democratic 
plan than under the Republican bill. They would not have to hope to 
live long enough to see the benefits of the Republican bill.
  Further, the Republican bill actually has the potential to greatly 
increase taxes for many people, because it revises the rules for 
valuing assets that people inherit. Should that become law, it will 
mean, first, a great increase in the record-keeping and paperwork 
burden for many people and, second, higher capital-gains taxes for many 
heirs.
  Evidently, those provisions--like the bill's very slow phase in--were 
included to make the bill appear to fit within the overall size of the 
President's tax plan.
  But the result is that this bill's name--estate tax ``repeal''--is an 
empty slogan, a pretty label that disguises the reality.
  The Democratic alternative was much more substantive--real reform, 
not just rhetoric.
  And, the Democratic alternative was much more fiscally responsible. 
It would not run the same risks of weakening our ability to do what is 
needed to maintain and strengthen Social Security and Medicare, provide 
a prescription drug benefit for seniors, invest in our schools and 
communities, and pay down the public debt.
  The net cost of the Democratic bill would be $40 billion over 10 
years. In contrast, the Republican bill's 10-year revenue reduction 
will be $193 billion, with 45 percent of that coming in just the last 2 
years. But that is far from the whole story. Because of the way the 
bill is phased in, its true cost is cleverly hidden and does not show 
up until after the 10-year budget window.
  That means the full effects of the Republican bill will come just at 
the time when we will have to face budget pressures because my own 
``baby boom'' generation is starting to retire. And if we feel we need 
to ``phase in'' H.R. 8 because we cannot afford the full repeal now, 
how are we ever going to afford it 10 years from now?
  We do not need to engage in this fiscal overkill.
  According to the Treasury Department, under current law only 2 
percent of all decedents have enough wealth to be subject to the estate 
tax at all.
  To be more specific, Treasury Department data show that in 1998 the 
estates of only 743 Coloradans were subject to paying federal estate 
taxes.
  Under the Democratic alternative, that number would have been even 
smaller. That's because the average Colorado gross estate for which an 
estate tax return was filed was $1.87 million--an amount that would be 
completely exempted by the Democratic bill for which I voted.
  And I would support going even further. I have joined in sponsoring a 
bill--H.R. 759, introduced by Representative Patsy Mink from Hawaii--
that would fully exempt estates of $5 million or less from estate 
taxes. Based on Treasury Department data, in 1998 that would have 
exempted all but 45 Colorado estates from paying any federal estate tax 
at all.
  Of course, all these numbers only relate to the cases in which an 
estate tax was actually paid. Clearly, in many other cases families 
have taken actions to forestall the estate tax. But just as clearly, 
the Democratic bill would have greatly reduced the pressure that 
prompted some of those actions.
  Mr. Speaker, I am very disappointed with the evident determination of 
the Republican leadership to insist on bringing this bill forward and 
to reject any attempt to shape a bill that could be supported by all 
Members.
  Since I was first elected, I have sought to work with our colleagues 
on both sides of the aisle on this issue to achieve realistic and 
responsible reform of the estate tax.
  I initially voted for an estate-tax bill in the last Congress, 
although it was far from what I would have preferred, hoping that as 
the legislative process continued it would be improved to the point 
that it deserved enactment. Unfortunately, that did not occur and the 
final bill was vetoed, as it should have been. And now the Republican 
leadership is insisting on going forward with this bill, which is even 
less balanced and responsible than that vetoed bill of the last 
Congress.
  I cannot support that, and I cannot vote for this bill.
  Mr. OTTER. Mr. Speaker, I rise today to urge my colleagues to join me 
in voting for H.R. 8, the ``Death Tax Elimination Act of 2001.'' As a 
cosponsor of this bill, I fully support eliminating the death tax. This 
bill keeps our promise to pass death tax relief as part of President 
Bush's budget plan.
  The Death Tax Elimination Act of 2001 will eliminate the death tax 
over 10 years, without harming the surplus or raiding Social Security. 
In fact, the Heritage Foundation estimates that repealing the death tax 
will create 145,000 additional jobs in the 9 years after the tax is 
repealed. These employment gains will come,

[[Page 5442]]

not just from the additional businesses that stay open because they 
don't have to be liquidated to pay tax, but also from the effect 
repealing the estate tax will have on keeping interest rates low.
  The death tax is an egregious and punitive part of our Tax Code for 
every American, but it is especially hurtful to rural areas. The death 
tax forces farmers to sell land that has been in their families since 
pioneer days, and forces small businessmen to sell the companies that 
are often the only providers of their service in a community. Often 
these services are then filled, not from within the same community, but 
from providers in cities literally hundreds of miles away. To make 
matters worse, the capital generated from these sales flows out of the 
rural communities into large city banks and markets. In short, every 
dime wrenched out of rural Idaho by the estate tax causes many dollars 
worth of suffering.
  I am glad that we will pass the death tax repeal today. It will 
provide a much needed stimulus for our economy, encourage family 
farming and small business formation, and restore much needed fairness 
to our Tax Code. I urge my colleagues to join me in voting for H.R. 8.
  Mr. CRENSHAW. Mr. Speaker, as an original cosponsor of H.R. 8, I rise 
in strong support of this full repeal of the estate tax.
  It has been discouraging, Mr. Speaker, to see this debate degenerate 
into a sort of class warfare. This is not about rich and poor. It is 
not about whether rich people deserve a tax break. It is not even about 
who pays the most in taxes. It is about fairness, plain and simple.
  It is just unfair that any one should pay a 55-percent tax on their 
business, their home, or their farm. It is still more unfair that this 
enormous burden be placed on families just at the moment a loved one 
passes on. There is no time for bereavement, no time for grief. The 
taxman comes to the door of the funeral home and, as my local paper 
sees it, steals the pennies off a dead man's eyes.
  We ought to be able to pass along more than just memories to our 
children. We work a lifetime to build a home, a business, a legacy that 
we can leave for our children. With the death tax, our children are 
forced to sell a part of that inheritance just to be able to afford the 
other part. And, Mr. Speaker, inheritance should not be a dirty word.
  This is not for the wealthy few, as some would have us believe. 
According to the Treasury Department, 45,000 families paid estate taxes 
in 1999, and it is estimated that twice as many sold off their legacy 
before they died so that their families would not be saddled with this 
burden. That is just too much time and effort put into keeping our 
family businesses in the family.
  I have spoken to many constituents who own small businesses in my 
district and want their children to carry on those enterprises in the 
future. These are the mom and pop shops that form the backbone of Main 
Street, America. What right have we to stand in their way with this 
unfair tax?
  I urge my colleagues to support these businesses and to vote for this 
bill. Today, we will once and for all fully repeal the death tax.
  Mr. GILMAN. Mr. Speaker, I rise today in strong support of H.R. 8, 
the Death Tax Elimination Act of 2001 and I urge my colleagues to lend 
this measure their support.
  The estate tax is an outmoded policy that has long outlived its 
usefulness. Alternatively known as the death tax, this tax was 
instituted in 1916 to prevent too much wealth from congregating with 
the wealthy capitalist families in early 20th century America. 
Regrettably, the law failed in its original purpose, as the truly 
wealthy are always able to shelter their income with the help of tax 
attorneys which the middle-class cannot afford.
  It has been estimated that the estate tax has been responsible for 
the demise of 85 percent of American small business by the third 
generation. Furthermore, countless number of farms have had to be sold 
in order to pay an outrageously high estate tax, ranging as high as 55 
percent of the farms assessed value.
  By forcing the sale of such farmland to outside buyers, often 
commercial developers, the estate tax has been a substantial 
contributor to suburban sprawl and unchecked growth in many parts of 
the country.
  The most indefensible point about the estate tax, however, is the 
cost associated with enforcing and collecting it. Estimates cited in a 
Joint Committee on Taxation report issued last year placed the cost of 
collecting estate taxes at 65 cents out of every dollar taken in.
  Considering this cost, as well as the fact that the assets taxed 
under the estate tax have often already been taxed several times, it 
makes no sense to continue this nonsensical practice. Family-owned 
small business certainly would do better without the estate tax, as 
would family farms that still operate from generation to generation.
  Accordingly, I urge my colleagues to join in supporting this 
legislation.
  Ms. BALDWIN. Mr. Speaker, I oppose H.R. 8, the Death Tax Elimination 
Act. While I support reform of the estate tax, full repeal provides 
benefits only to the wealthiest in our society. The vast majority of 
the people I represent will receive no benefit from this tax cut at 
all. According to the bi-partisan congressional Joint Tax Committee, 
fewer than two percent of all estates (about 48,000) pay the estate 
tax. In Wisconsin, only 828 estates had any estate tax liability in 
1998.
  I strongly believe it is time to deliver estate tax relief to 
Wisconsin family farms and small businesses. However, H.R. 8 isn't the 
way to do it. H.R. 8 would repeal the estate tax gradually over ten 
years at a cost of $192 billion. This legislation reduces the rates on 
the largest estates first while providing no tax relief to the majority 
of smaller estates. Estates of less than $2.5 million get no relief 
until 2004.
  I support the Democratic alternative that provides estate tax relief 
targeted to family farms and small businesses. This alternative would 
cost a reasonable $40 billion over ten years, and includes an immediate 
$2 million exclusion from estate taxes ($4 million per couple) 
increasing to $2.5 million by 2010 ($5 million per couple). Two-thirds 
of all estates that pay tax under current law would be exempt, and 99.4 
percent of all farms would also be exempt. H.R. 8 makes small 
businesses and family farmers wait for ten years.
  I support this fiscally sensible alternative that targets relief to 
farmers and small businesspeople while protecting our ability to pay 
down the debt and shore up the long-term solvency of Social Security 
and Medicare.
  Mr. BEREUTER. Mr. Speaker, this Member rises today to express his 
conditional support for H.R. 8, the ``Estate Tax Elimination Act.'' 
This Member's vote today for H.R. 8 is based only on his desire to move 
the inheritance tax reform process forward, for the current legislation 
is at worst a faulty product and at best only a shadow of what could be 
beneficially done to reduce the inheritance tax burden on most 
Americans who now and in the future are actually subject to such taxes. 
Don't be confused, in its current form H.R. 8 is not the Bush tax cut 
plan! Supporters will argue it is, but that is emphatically not the 
case. Many of this Member's small business, farm, and ranch families 
would be better off with no bill, as if H.R. 8, in its current form, is 
passed into law, then they would end-up paying more taxes than if H.R. 
8 had not been passed into law at all.
  However, this Member does not support the complete repeal of the 
Federal inheritance tax. Nor does this Member support the focus of H.R. 
8, as amended by the Ways and Means Committee, which is now 
concentrated initially on eliminating the top estate tax rates above 50 
percent and only subsequently on lowering the marginal tax rates by 
only a few percentage points each year. Rather this Member believes 
that the only way to ensure that his Nebraska and all American small 
business, farm and ranch families benefit from estate tax reform is to 
dramatically and immediately increase the Federal inheritance tax 
exemption level.
  This Member is a long-term advocate of inheritance tax reduction, 
especially in regard to protecting small businesses and family farms 
and ranches. This Member believes that inheritance taxes unfortunately 
do adversely and inappropriately affect Nebraskan small business and 
family farmers and ranchers when they attempt to pass this estate from 
one generation to the next.
  Accordingly, to demonstrate this Member's very real support for 
inheritance tax reform, this Member on January 3, 2001, the first day 
of the 107th Congress, introduced the Estate Tax Relief Act (H.R. 42). 
This Member introduced this legislation, which currently has 28 
cosponsors, after consulting with different Nebraska farm and business 
groups. This measure would provide immediate, essential Federal estate 
tax relief by immediately increasing the Federal estate tax exclusion 
to $10 million effective upon enactment. (With some estate planning, a 
married couple could double the value of this exclusion to $20 million. 
As a comparison, under the current law for year 2001, the estate tax 
exclusion is only $675,000.) In addition, H.R. 42 would adjust this $10 
million exclusion for inflation thereafter. The legislation would 
decrease the highest Federal estate tax rate from 55 percent to 39.6 
percent effective upon enactment, as 39.6 percent is currently the 
highest Federal income tax rate. Under the bill, the value of an estate 
over $10 million would be taxed at the 39.6 percent rate. Under current 
law, the 55 percent estate tax bracket begins for estates over $3 
million. Finally, H.R. 42 would continue to apply the stepped-up 
capital gains basis to the estate, which is provided in current law.

[[Page 5443]]

  Since this Member believes that H.R. 42 or similar legislation is the 
only way to provide true estate tax reduction for our nation's small 
business, farm and ranch families, this Member is also voting in 
support of the Rangel Substitute. This Member is supporting the 
Substitute for the following two reasons:
  First, the Substitute provides an immediate increase in the exclusion 
from $675,000 to $2 million, or $4 million per couple with a modicum of 
estate planning, and phases-in a $2.5 million exclusion by 2002 (in 
$100,000 increments every other year);
  Second, and very important, the Substitute retains current law which 
provides for a ``stepped-up basis,'' whereby the value of property 
transferred to an heir is based on its fair-market value at the time of 
the deceased's death, not at the time the deceased acquired the 
property. This allows an individual who inherits property to avoid 
paying capital gains taxes on the increased value of inherited property 
that occurred during the lifetime of the decedent.
  At this point it should be noted that under H.R. 8, beginning in 
2011, the ``stepped-up basis'' is eliminated (with two exceptions) such 
that the value of inherited assets would be ``carried-over'' from the 
deceased. Therefore, H.R. 8 could result in unfortunate tax 
consequences for some heirs as the heirs would have to pay capitals 
gains taxes on any increase in the value of the property from the time 
the asset was acquired by the deceased until it was sold by the heirs--
resulting in a higher capital gain and larger tax liability for the 
heirs than under the current ``stepped-up'' basis law.
  This Member also believes it would be a great political error and 
controversy to eliminate the inheritance tax on billionaires or mega-
millionaires. Also, the very negative impact on the largest of the 
charitable contributions and the establishment of charitable 
foundations cannot be underestimated. The benefits of these foundations 
to American society are invaluable. Our universities and colleges, too, 
would see a very marked reduction in the gifts they receive if the 
inheritance tax on the wealthiest Americans was totally eliminated.
  In a recent Congressional Research Service (CRS) Report to Congress, 
entitled, Estate and Gift Taxes: Economic Issues, it is noted that 
``One group that benefits from the presence of an estate and gift tax 
is the non-profit sector, since charitable contributions can be given 
or bequeathed without paying tax.'' Furthermore, the CRS report notes 
that ``over 6 percent of assets of those filing estate tax returns are 
left to charities; 15 percent of the assets of the highest wealth class 
are left to charity.'' The CRS report also cites the results of a study 
by David Joulfaian, Estate Taxes and Charitable Bequests by the Wealth, 
National Bureau of Economic Research Working Paper 7663, April 2000, 
which found that charitable bequests are very responsive to the estate 
tax, and indeed that the charitable deduction is ``target efficient'' 
in the sense that it induces more charitable contributions than it 
loses in revenue.
  Despite the legal talents the super-rich can afford, such an 
inheritance tax change would have major consequences. The total 
elimination of the inheritance tax is a bad idea.
  Again, this Member's vote today for this legislation should be 
regarded only as a demonstration of his desire to move the inheritance 
tax reform process forward and of this Member's strong conviction that 
only by increasing dramatically and immediately the exemption level to 
the Federal inheritance tax will real estate tax reform be realized for 
middle class Americans.
  Finally, Mr. Speaker, if H.R. 8 passes the House today, it goes to an 
uncertain future in the Senate. However, if the Senate does indeed pass 
H.R. 8 in its current form or similarly defective and damaging 
legislation and subsequently a conference report comes back to the 
House in that form, my responsibilities to represent my constituents 
and my moral responsibility will cause this Member to vote against it.
  Ms. HARMAN. Mr. Speaker, today I am voting for two bills to revise 
the estate tax. Neither is a perfect answer, and my votes signify my 
eagerness to work with both parties to craft a bipartisan solution.
  I support tax relief in the context of a responsible budget that 
``spends'' our surplus wisely. Estate tax relief should be part of this 
budget.
  The present estate tax system hurts small businesses and hard-working 
families in the South Bay and elsewhere and it needs to change.
  We need immediate relief--not the promise of relief in 11 years, 
which is the essence of H.R. 8. We need a higher exemption--up to $4 
million--which is the subject of a bipartisan letter I signed to 
President Bush. We should also consider the notion in H.R. 8 to subject 
appreciated property to capital gains tax--but we should do it in a way 
that does not impose new burdens on those presently exempt from estate 
tax.
  This is a work in progress. I reserve judgment on the final product. 
Today, my votes signify my willingness to engage the conversation.
  Mr. CASTLE. Mr. Speaker, I strongly support tax relief for all 
Americans. Broad based-tax relief this year should include 
significantly reducing the estate tax. Today, I am voting for immediate 
reform of the estate tax to protect families, small businesses and 
family farms. This plan would cut the estate tax by immediately 
increasing the exemption from $675,000 to $2 million for an individual 
and $4 million per couple in 2002 and increasing it to $2.5 million for 
an individual and $5 million per couple by 2010. I am voting for 
immediate relief from estates taxes to all those affected by it. This 
reform would exempt most Americans from any estate taxes.
  We must act to continue to reduce the estate tax to protect small 
businesses and family farms. Yet, today's proposal to completely repeal 
the tax is not the best approach. First, we can provide immediate and 
broad relief from the estate tax to more Americans affected by 
exempting more families without completely repeal. Second, attempting 
to enact complete repeal at this time makes it more difficult to 
provide other tax relief for more Americans, including small 
businesses. The President's plan calls for $1.62 trillion in tax cuts 
in the next 10 years. This estate repeal proposal could jeopardize the 
entire tax relief and balanced budget plan.
  This year I have voted with strong majorities in this House to reduce 
income tax rates for all Americans, provide marriage penalty relief, 
and increase the child tax credit. I want to provide more tax relief to 
Americans by allowing them to save more in IRA's, 401(k)a and other 
pensions. In addition, there are worthwhile proposals to reduce taxes 
by allowing more Americans to deduct their charitable contributions, 
increase education IRAs, expand deductibility of health care costs, and 
provide businesses with permanent credit for investing in research and 
development. It will be much more difficult to address these issues 
within our balanced budget plan if we insist on total repeal of the 
estate tax now. The current approach to estate tax repeal leaves far 
too little--only $70 billion over ten years--to cut taxes for millions 
of other Americans.
  We should provide tax relief as soon as possible. As currently 
constructed, H.R. 8 would not repeal the estate tax until 2011. Until 
that time, the top estate tax rate will still be over 50 percent. We 
would help more families right away by increasing the estate tax 
exemption to $2.5 million for individuals and $5 million for a couple. 
We should also reduce the top rate. Unfortunately, today, we have a 
weaker proposal that delays repeal for ten years. Instead of a weak 
repeal proposal, we could have a plan that provides immediate relief 
within our budget limits.
  All tax relief should help as many Americans as possible while 
maintaining our ability to pay down the debt and balance the budget. 
Today's proposal for complete repeal does not meet this test. It makes 
it more difficult to provide other tax relief and it would have a 
tremendous negative impact on the budget in 2011, just at the time we 
will need additional resources for the retiring Baby Boom generation.
  Fortunately, today's debate is just one step in the legislative 
process. We can reduce the estate tax this year. I hope the political 
jockeying will end soon so we get down to negotiating a balanced tax 
relief plan that cuts the estate tax and that can pass Congress and be 
signed into law.
  Mr. COYNE. Mr. Speaker, I support--and have voted in support of--
estate tax relief, but I cannot support repeal of the estate tax. 
Moreover, even if my colleagues favor repeal of the estate tax, they 
should oppose H.R. 8. This is an irresponsible, inequitable, and 
misleading piece of legislation.
  This bill is irresponsible because of the impact it will have on the 
federal budget. This legislation repeals the estate tax over time--over 
a long time. The repeal of the estate tax provided for in H.R. 8 
doesn't fully phase in until 2011--about the time that the federal 
government's non-Social Security surpluses are projected to end. Does 
it make sense to cut federal receipts by over $60 billion a year just 
when the government is expected to run massive deficits--as the number 
of senior citizens on Social Security, Medicare, and Medicaid is 
expected to double and expenditures on those programs explode?
  Obviously, it goes without saying that a tax cut that is not fully 
phased in for ten years will do little to stimulate the economy in the 
short term. The Democratic alternative--which I support, but which was 
rejected on a party-line

[[Page 5444]]

vote in the Ways and Means Committee--would, in contrast, provide 
immediate relief to farmers and small family businesses.
  And that brings me to another important point. H.R. 8, by phasing in 
repeal of the estate tax over such a long period of time, conceals the 
actual cost of repealing the estate tax. I consider this to be a fairly 
dishonest tactic, but it is of a piece with the Republican plan for 
enacting President Bush's tax cut plan. By breaking the larger package 
of tax cuts into smaller, less threatening bills, and passing them 
before we ever see the spending cuts that President Bush will propose 
to pay for them, the Administration and Congressional Republicans are, 
in my opinion, being deceptive, dishonest, and irresponsible. As I have 
mentioned in my previous floor statements on H.R. 3 and H.R. 6, I 
support fair and responsible reductions in marginal tax rates, as well 
as legislation to fix the marriage penalty. And I support estate tax 
relief for family farms and small businesses. But I believe that such 
major changes in tax law should not be considered piecemeal, but rather 
in the context of thoughtful, comprehensive, and honest debate on 
federal spending and tax policy in the coming decades. I believe that 
the intent behind the long phase-in of the estate tax repeal--like the 
phase-ins in the other Republican tax cut bills--is to conceal the true 
cost of these tax cuts and obscure the trade-offs that enactment of 
these tax cuts will require.
  Finally, I want to explain why I oppose repeal of the estate tax. As 
it is currently structured, the estate tax affects only the most 
affluent 2 percent of households--and when the changes in the estate 
tax that Congress passed with my support in 1997 are fully phased in, 
the estate tax will only affect taxpayers with more than $1 million in 
assets and married couples with more than $2 million in assets. Repeal 
of the estate tax would seriously reduce the progressivity of the 
federal tax code, which already places as much of a burden on middle 
class families as it does on the wealthiest families in America. I see 
such an outcome as fundamentally unfair. I believe that if Congress is 
going to pass a $200 billion tax relief bill today, it should provide 
tax relief to the families that are most in need of tax relief--
families with incomes of $15,000, $25,000, or $40,000--not 
millionaires.
  Consequently, I must oppose this legislation, and I will support the 
Democratic alternative for estate tax relief--a smaller, more 
responsible package of tax cuts that would help the small family farms 
and businesses that the Republicans always mention when arguing for 
estate tax relief. The Democratic alternative does more to help farmers 
and family businesses over the next 5 years than the Republican bill. I 
urge my colleagues to support this alternative.
  Mr. MANZULLO. Mr. Speaker, I rise in strong support of today's bill, 
the ``Death Tax Elimination Act'', H.R. 8.
  This bill would end one of the most burdensome taxes in the federal 
tax code-the death tax, by repealing estate and gift taxes over the 
next ten years. The death tax stifles growth, kills jobs, discourages 
savings, drains resources, and ruins small and family businesses and 
farms.
  In effect, the death tax punishes small entrepreneurs for their hard 
work. Millions of Americans spend a lifetime working and investing in a 
small business or family farm for their families and for their 
communities--only to have the IRS confiscate more than half of it away 
at their death. This is a terrible injustice. Unreasonably steep death 
taxes force families to sell or break up small ventures and farms or to 
liquidate assets.
  Two examples in my district alone include the Beuth and Hall 
families. Richard and Judy Beuth of Seward, Illinois almost lost the 
family farm three years ago when Richard's father died and the IRS hit 
them with a huge $185,000 death tax bill. Similarly, the Hall family in 
Ogle County had to sell equipment, sell part of their land, and take 
out huge loans to pay a whopping $2.7 million death tax bill they 
received shortly after their father died in 1996.
  Unambiguously, the death tax is hurting middle-class Americans. The 
great irony of this tax is that it encourages frivolous, selfish 
spending and discourages savings and investment. Over 80% of small 
businesses must spend costly resources to protect against the death tax 
so they can pass something on to their children. This hurts women-owned 
and minority-owned small businesses the hardest.
  According to the Center for the Study of Taxation, 70% of family 
businesses don't survive through the second generation and nearly 90% 
do not make it through the third. Worse, 9 out of 10 successors whose 
family business failed within three years of the death of the original 
owner said difficulty paying the death tax played a major role in that 
failure. It's time to end this immoral and counterproductive tax.
  I urge all my colleagues to support small business by supporting this 
common sense, bipartisan legislation.
  Mr. GRAVES. Mr. Speaker it is time that we kill the death tax. Many 
of my colleagues and many in the media have argued that this tax is 
justified because it only affects the wealthy--well, Mr. Speaker, that 
is wrong. The victims who are hit the hardest by this tax are the 
family members of middle-class, hard-working Americans--small business 
owners and employees, family farmers and ranchers. The Death tax 
penalizes the sons and daughters of the local hardware store owners, 
farmers, and grocers the most. The Death Tax punishes those who spend 
their lifetime building a small business or running a farm in the 
sincere hope that they will be able to leave the fruits of that labor 
to their children and grandchildren.
  When a small business owner of farmer passes, too often the business 
or farm must be divided, sold, or shut down, because the tax penalty is 
so great. The loss of that small business is devastating to the 
employees and to the local community.
  For the small businesses and family farmers in the 6th District of 
Missouri, I am proud to support the Death Tax Elimination Act. The 
Death Tax is not an issue of politics or partisanship, but rather, it 
is an issue of fairness, family, community and keeping the American 
Dream alive for the children and grandchildren of this nation.
  Mr. LANGEVIN. Mr. Speaker, I rise today in strong opposition to H.R. 
8, the Death Tax Elimination Act. However, as a member of the Small 
Business Committee, I am aware of the tax burden under which many 
entrepreneurs and working families must operate, which is why I plan to 
vote for the Democratic substitute. I support efforts to protect small 
business owners and will work to ensure that they are not forced to 
sell businesses that have remained in their families for generations in 
order to pay estate taxes.
  Unfortunately, H.R. 8 does not effectively target the small 
businesses and family farms that are in greatest need of assistance. It 
would allow the wealthiest two percent of our population to pass wealth 
to their heirs without taxation, while hard working families would 
continue to be taxed on every dollar earned. It would also have a 
devastating impact on charities, foundations, universities and other 
philanthropic organizations. This legislation would cause enormous 
revenue losses and threaten our ability to address national priorities 
like extending the solvency of Social Security and Medicare, reducing 
our national debt, implementing a prescription drug benefit for seniors 
and improving education and health care.
  As the third installment of President Bush's $1.6 trillion tax cut 
package, H.R. 8 would gradually reduce and then fully repeal the estate 
tax over a 10-year period. The Joint Committee on Taxation has 
estimated that this measure would reduce revenues by more than $192 
billion over the next decade. Moreover, repealing the estate tax will 
cost states about $6 billion annually, possibly forcing them to make up 
the revenue through other tax or fee increases. Perhaps most important 
of all, the benefit of H.R. 8 to my constituents would be minimal.
  Based on Internal Revenue Service data for 1998, estimates show that 
of 10,000 deaths in my home state, only 361 Rhode Island decedents 
filed estate tax returns and only 187 returns resulted in an estate tax 
liability. In a similar study that same year, the IRS also found that 
only two percent of decedents nationwide--or 47,483 estates--were 
impacted by the federal estate tax. In fact, 3,000 of the most affluent 
individuals in the country paid more than half of all the estate taxes 
that year.
  If we are truly concerned about the small business owners and family 
farmers who are adversely affected by the estate tax, we should pass 
the Democratic substitute. This sensible reform would immediately 
exclude over 75 percent of estates by increasing the exemption to $2 
million per individual and $4 million per couple. As a result, only \1/
2\ of one percent of all decedents would pay the estate tax. 
Additionally, 99 percent of all farms would be exempt. Under our 
proposal, those eligible middle-income families, small business owners 
and family farmers truly in need would receive estate tax relief. 
Furthermore, they would receive the benefit now, rather than waiting 
years for relief, as required under the Republican plan.
  This measure, included with the tax cut plan and budget resolution 
already passed by the House, would exceed the projected budget surplus 
and require deep cuts in non-defense discretionary funding. Therefore, 
I urge my colleagues to vote against this fiscally irresponsible 
measure and support the Democratic substitute. It ensures that small 
businesses and family farms can be preserved

[[Page 5445]]

from one generation to the next, while retaining some of our budget 
surplus to pay down the debt, ensure the solvency of Social Security 
and Medicare, and allocate critical funding for our national 
priorities.


     Amendment In the Nature of a Substitute Offered by Mr. Rangel

  Mr. RANGEL. Mr. Speaker, I offer an amendment in the nature of a 
substitute.
  The SPEAKER pro tempore (Mr. LaHood). The Clerk will designate the 
amendment in the nature of a substitute.
  The text of the amendment in the nature of a substitute is as 
follows:

       Amendment in the nature of a substitute offered by Mr. 
     Rangel:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. AMENDMENT OF 1986 CODE.

       Except as otherwise expressly provided, whenever in this 
     Act an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of the Internal Revenue Code of 1986.

     SEC. 2. INCREASE IN EXEMPTION EQUIVALENT OF UNIFIED CREDIT.

       (a) In General.--Subsection (c) of section 2010 (relating 
     to applicable credit amount) is amended by striking the table 
     and inserting the following new table:

``In the case of estates of decedentThe applicable exclusion amount is:
      2002..................................................$2,000,000 
      2003 and 2004.........................................$2,100,000 
      2005 and 2006.........................................$2,200,000 
      2007 and 2008.........................................$2,300,000 
      2009..................................................$2,400,000 
      2010 or thereafter..................................$2,500,000.''

       (b) Repeal of Special Benefit for Family-Owned Business 
     Interests.--
       (1) Section 2057 is hereby repealed.
       (2) Paragraph (10) of section 2031(c) is amended by 
     inserting ``(as in effect on the day before the date of the 
     enactment of this parenthetical)'' before the period.
       (3) The table of sections for part IV of subchapter A of 
     chapter 11 is amended by striking the item relating to 
     section 2057.
       (c) Correction of Technical Error Affecting Largest 
     Estates.--Paragraph (2) of section 2001(c) is amended by 
     striking ``$10,000,000'' and all that follows and inserting 
     ``$10,000,000. The amount of the increase under the preceding 
     sentence shall not exceed the sum of the applicable credit 
     amount under section 2010(c) and $359,200.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2001.

     SEC. 3. CREDIT FOR STATE DEATH TAXES REPLACED WITH DEDUCTION 
                   FOR SUCH TAXES.

       (a) Repeal of Credit.--Section 2011 (relating to credit for 
     State death taxes) is hereby repealed.
       (b) Deduction for State Death Taxes.--Part IV of subchapter 
     A of chapter 11 is amended by adding at the end the following 
     new section:

     ``SEC. 2058. STATE DEATH TAXES.

       ``(a) Allowance of Deduction.--For purposes of the tax 
     imposed by section 2001, the value of the taxable estate 
     shall be determined by deducting from the value of the gross 
     estate the amount of any estate, inheritance, legacy, or 
     succession taxes actually paid to any State or the District 
     of Columbia, in respect of any property included in the gross 
     estate (not including any such taxes paid with respect to the 
     estate of a person other than the decedent).
       ``(b) Period of Limitations.--The deduction allowed by this 
     section shall include only such taxes as were actually paid 
     and deduction therefor claimed within 4 years after the 
     filing of the return required by section 6018, except that--
       ``(1) If a petition for redetermination of a deficiency has 
     been filed with the Tax Court within the time prescribed in 
     section 6213(a), then within such 4-year period or before the 
     expiration of 60 days after the decision of the Tax Court 
     becomes final.
       ``(2) If, under section 6161 or 6166, an extension of time 
     has been granted for payment of the tax shown on the return, 
     or of a deficiency, then within such 4-year period or before 
     the date of the expiration of the period of the extension.
       ``(3) If a claim for refund or credit of an overpayment of 
     tax imposed by this chapter has been filed within the time 
     prescribed in section 6511, then within such 4-year period or 
     before the expiration of 60 days from the date of mailing by 
     certified mail or registered mail by the Secretary to the 
     taxpayer of a notice of the disallowance of any part of such 
     claim, or before the expiration of 60 days after a decision 
     by any court of competent jurisdiction becomes final with 
     respect to a timely suit instituted upon such claim, 
     whichever is later.

     Refund based on the deduction may (despite the provisions of 
     sections 6511 and 6512) be made if claim therefor is filed 
     within the period above provided. Any such refund shall be 
     made without interest.''
       (c) Conforming Amendments.--
       (1) Subsection (a) of section 2012 is amended by striking 
     ``the credit for State death taxes provided by section 2011 
     and''.
       (2) Subparagraph (A) of section 2013(c)(1) is amended by 
     striking ``2011,''.
       (3) Paragraph (2) of section 2014(b) is amended by striking 
     ``, 2011,''.
       (4) Sections 2015 and 2016 are each amended by striking 
     ``2011 or''.
       (5) Subsection (d) of section 2053 is amended to read as 
     follows:
       ``(d) Certain Foreign Death Taxes.--
       ``(1) In general.--Notwithstanding the provisions of 
     subsection (c)(1)(B) of this section, for purposes of the tax 
     imposed by section 2001, the value of the taxable estate may 
     be determined, if the executor so elects before the 
     expiration of the period of limitation for assessment 
     provided in section 6501, by deducting from the value of the 
     gross estate the amount (as determined in accordance with 
     regulations prescribed by the Secretary) of any estate, 
     succession, legacy, or inheritance tax imposed by and 
     actually paid to any foreign country, in respect of any 
     property situated within such foreign country and included in 
     the gross estate of a citizen or resident of the United 
     States, upon a transfer by the decedent for public, 
     charitable, or religious uses described in section 2055. The 
     determination under this paragraph of the country within 
     which property is situated shall be made in accordance with 
     the rules applicable under subchapter B (sec. 2101 and 
     following) in determining whether property is situated within 
     or without the United States. Any election under this 
     paragraph shall be exercised in accordance with regulations 
     prescribed by the Secretary.
       ``(2) Condition for allowance of deduction.--No deduction 
     shall be allowed under paragraph (1) for a foreign death tax 
     specified therein unless the decrease in the tax imposed by 
     section 2001 which results from the deduction provided in 
     paragraph (1) will inure solely for the benefit of the 
     public, charitable, or religious transferees described in 
     section 2055 or section 2106(a)(2). In any case where the tax 
     imposed by section 2001 is equitably apportioned among all 
     the transferees of property included in the gross estate, 
     including those described in sections 2055 and 2106(a)(2) 
     (taking into account any exemptions, credits, or deductions 
     allowed by this chapter), in determining such decrease, there 
     shall be disregarded any decrease in the Federal estate tax 
     which any transferees other than those described in sections 
     2055 and 2106(a)(2) are required to pay.
       ``(3) Effect on credit for foreign death taxes of deduction 
     under this subsection.--
       ``(A) Election.--An election under this subsection shall be 
     deemed a waiver of the right to claim a credit, against the 
     Federal estate tax, under a death tax convention with any 
     foreign country for any tax or portion thereof in respect of 
     which a deduction is taken under this subsection.
       ``(B) Cross reference.--

  ``See section 2014(f) for the effect of a deduction taken under this 
paragraph on the credit for foreign death taxes.''

       (6) Subparagraph (A) of section 2056A(b)(10) is amended--
       (A) by striking ``2011,'', and
       (B) by inserting ``2058,'' after ``2056,''.
       (7)(A) Subsection (a) of section 2102 is amended to read as 
     follows:
       ``(a) In General.--The tax imposed by section 2101 shall be 
     credited with the amounts determined in accordance with 
     sections 2012 and 2013 (relating to gift tax and tax on prior 
     transfers).''
       (B) Section 2102 is amended by striking subsection (b) and 
     by redesignating subsection (c) as subsection (b).
       (C) Section 2102(b)(5) (as redesignated by subparagraph 
     (B)) and section 2107(c)(3) are each amended by striking 
     ``2011 to 2013, inclusive,'' and inserting ``2012 and 2013''.
       (8) Subsection (a) of section 2106 is amended by adding at 
     the end the following new paragraph:
       ``(4) State death taxes.--The amount which bears the same 
     ratio to the State death taxes as the value of the property, 
     as determined for purposes of this chapter, upon which State 
     death taxes were paid and which is included in the gross 
     estate under section 2103 bears to the value of the total 
     gross estate under section 2103. For purposes of this 
     paragraph, the term `State death taxes' means the taxes 
     described in section 2011(a).''
       (9) Section 2201 is amended--
       (A) by striking ``as defined in section 2011(d)'', and
       (B) by adding at the end the following new flush sentence:

     ``For purposes of this section, the additional estate tax is 
     the difference between the tax imposed by section 2001 or 
     2101 and the amount equal to 125 percent of the maximum 
     credit provided by section 2011(b), as in effect before its 
     repeal by the Tax Reduction Act of 2001.''
       (10) Paragraph (2) of section 6511(i) is amended by 
     striking ``2011(c), 2014(b),'' and inserting ``2014(b)''.
       (11) Subsection (c) of section 6612 is amended by striking 
     ``section 2011(c) (relating to refunds due to credit for 
     State taxes),''.

[[Page 5446]]

       (12) The table of sections for part II of subchapter A of 
     chapter 11 is amended by striking the item relating to 
     section 2011.
       (13) The table of sections for part IV of subchapter A of 
     chapter 11 is amended by adding at the end the following new 
     item:

``Sec. 2058. State death taxes.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     2001.

     SEC. 4. VALUATION RULES FOR CERTAIN TRANSFERS OF NONBUSINESS 
                   ASSETS; LIMITATION ON MINORITY DISCOUNTS.

       (a) In General.--Section 2031 (relating to definition of 
     gross estate) is amended by redesignating subsection (d) as 
     subsection (f) and by inserting after subsection (c) the 
     following new subsections:
       ``(d) Valuation Rules for Certain Transfers of Nonbusiness 
     Assets.--For purposes of this chapter and chapter 12--
       ``(1) In general.--In the case of the transfer of any 
     interest in an entity other than an interest which is 
     actively traded (within the meaning of section 1092)--
       ``(A) the value of any nonbusiness assets held by the 
     entity shall be determined as if the transferor had 
     transferred such assets directly to the transferee (and no 
     valuation discount shall be allowed with respect to such 
     nonbusiness assets), and
       ``(B) the nonbusiness assets shall not be taken into 
     account in determining the value of the interest in the 
     entity.
       ``(2) Nonbusiness assets.--For purposes of this 
     subsection--
       ``(A) In general.--The term `nonbusiness asset' means any 
     asset which is not used in the active conduct of 1 or more 
     trades or businesses.
       ``(B) Exception for certain passive assets.--Except as 
     provided in subparagraph (C), a passive asset shall not be 
     treated for purposes of subparagraph (A) as used in the 
     active conduct of a trade or business unless--
       ``(i) the asset is property described in paragraph (1) or 
     (4) of section 1221(a) or is a hedge with respect to such 
     property, or
       ``(ii) the asset is real property used in the active 
     conduct of 1 or more real property trades or businesses 
     (within the meaning of section 469(c)(7)(C)) in which the 
     transferor materially participates and with respect to which 
     the transferor meets the requirements of section 
     469(c)(7)(B)(ii).

     For purposes of clause (ii), material participation shall be 
     determined under the rules of section 469(h), except that 
     section 469(h)(3) shall be applied without regard to the 
     limitation to farming activity.
       ``(C) Exception for working capital.--Any asset (including 
     a passive asset) which is held as a part of the reasonably 
     required working capital needs of a trade or business shall 
     be treated as used in the active conduct of a trade or 
     business.
       ``(3) Passive asset.--For purposes of this subsection, the 
     term `passive asset' means any--
       ``(A) cash or cash equivalents,
       ``(B) except to the extent provided by the Secretary, stock 
     in a corporation or any other equity, profits, or capital 
     interest in any entity,
       ``(C) evidence of indebtedness, option, forward or futures 
     contract, notional principal contract, or derivative,
       ``(D) asset described in clause (iii), (iv), or (v) of 
     section 351(e)(1)(B),
       ``(E) annuity,
       ``(F) real property used in 1 or more real property trades 
     or businesses (as defined in section 469(c)(7)(C)),
       ``(G) asset (other than a patent, trademark, or copyright) 
     which produces royalty income,
       ``(H) commodity,
       ``(I) collectible (within the meaning of section 401(m)), 
     or
       ``(J) any other asset specified in regulations prescribed 
     by the Secretary.
       ``(4) Look-thru rules.--
       ``(A) In general.--If a nonbusiness asset of an entity 
     consists of a 10-percent interest in any other entity, this 
     subsection shall be applied by disregarding the 10-percent 
     interest and by treating the entity as holding directly its 
     ratable share of the assets of the other entity. This 
     subparagraph shall be applied successively to any 10-percent 
     interest of such other entity in any other entity.
       ``(B) 10-percent interest.--The term `10-percent interest' 
     means--
       ``(i) in the case of an interest in a corporation, 
     ownership of at least 10 percent (by vote or value) of the 
     stock in such corporation,
       ``(ii) in the case of an interest in a partnership, 
     ownership of at least 10 percent of the capital or profits 
     interest in the partnership, and
       ``(iii) in any other case, ownership of at least 10 percent 
     of the beneficial interests in the entity.
       ``(5) Coordination with subsection (b).--Subsection (b) 
     shall apply after the application of this subsection.
       ``(e) Limitation on Minority Discounts.--For purposes of 
     this chapter and chapter 12, in the case of the transfer of 
     any interest in an entity other than an interest which is 
     actively traded (within the meaning of section 1092), no 
     discount shall be allowed by reason of the fact that the 
     transferee does not have control of such entity if the 
     transferee and members of the family (as defined in section 
     2032A(e)(2)) of the transferee have control of such entity.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers after the date of the enactment of 
     this Act.

     SEC. 5. EXPANSION OF ESTATE TAX RULE FOR CONSERVATION 
                   EASEMENTS.

       (a) Repeal of Location Requirement.--Subparagraph (A) of 
     section 2031(c)(8) (defining land subject to a conservation 
     easement) is amended by striking clause (i) and redesignating 
     clauses (ii) and (iii) as clauses (i) and (ii), respectively.
       (b) Clarification of Date for Determining Value of Land and 
     Easement.--Section 2031(c)(2) (defining applicable 
     percentage) is amended by adding at the end the following new 
     sentence: ``The values taken into account under the preceding 
     sentence shall be such values as of the date of the 
     contribution referred to in paragraph (8)(B).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     2000.
       Amend the title so as to read: ``A bill to amend the 
     Internal Revenue Code of 1986 to provide estate tax 
     relief.''.

  The SPEAKER pro tempore. Pursuant to House Resolution 111, the 
gentleman from New York (Mr. Rangel) and the gentleman from California 
(Mr. Thomas) each will control 30 minutes.
  The Chair recognizes the gentleman from New York (Mr. Rangel).
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from Texas 
(Mr. Green).
  Mr. GREEN of Texas. Mr. Speaker, I thank the gentleman from New York 
(Mr. Rangel) for yielding the time to me.
  Mr. Speaker, I thought it was appropriate that our colleague from 
California (Mr. Waxman) talked about this, that what we are talking 
about today is the people's money, and it is the gold.
  Mr. Speaker, I rise in opposition to H.R. 8 and in support of the 
substitute. And like my colleagues, I am troubled by the stories that 
families have to sell their farms and businesses because they cannot 
afford the estate tax; but we must reform it now, and not 10 years from 
now. We must continue the long-standing American tradition of families 
passing their businesses on from generation to generation.
  We can do this in a financially responsible manner that alleviates 
the burden for most of those small businesses and farms now instead of 
10 years from now. Again, my Republican colleagues would have us repeal 
the estate tax 10 years from now.
  They support this bill we are talking about today. There is an east 
Texas saying that says it is called a wink, a prayer and a promise that 
is 10 years from now. That is all this is, Mr. Speaker.
  In 10 years, this bill would provide tax relief for still less than 2 
percent of the people. Let us have a tax cut for the other 98 percent 
of Americans not 10 years from now.
  Mr. THOMAS. Mr. Speaker, I yield myself 1 minute.
  Mr. Speaker, I listened carefully to my colleague from California 
(Mr. Waxman), who has come up with a clever idea of awarding a pot 
painted gold, for whatever particular reason, that he believes serves 
his particular purposes.
  However, what I did hear the gentleman say, though, was that he rose 
in opposition to the Republican measure. I am sure the gentleman, who 
is not on the floor now, was probably not on the floor earlier when the 
cosponsor of H.R. 8, a Democrat, spoke in opposition to that.
  There are a number of other Democrats who are interested in the 
repeal of the estate or death tax, not in some modification.
  Mr. Speaker, to make sure that Members understand that this is a 
bipartisan proposal, I yield 2\1/2\ minutes to the gentleman from 
Hawaii (Mr. Abercrombie).
  Mr. ABERCROMBIE. Mr. Speaker, for those who do not think about this 
every day when they get up, this debate may seem rather esoteric and a 
bit almost beside the point; but for those of our constituents who are 
concerned about this issue, let me tell my colleagues, they think about 
it every day. They think about it all the time. They think about it in 
terms that are very, very personal to them.
  I do not think that I have ever involved myself with a domestic issue 
that has had the same kind of impact personally, psychologically, and 
emotionally as this issue has had with my

[[Page 5447]]

constituents. People that I have known personally in the islands for 
the better part of four decades, many of whom have not agreed with me 
philosophically, ideologically in terms of politics are united around 
this issue. And the fact that it may not provide every aspect, every 
element that they would like to see in terms of immediacy; the fact 
that they will have to come to grips with capital gains taxation that 
they might not otherwise have anticipated; and the fact that they 
understand that this bill is in a process of becoming that what passes 
today is unlikely to be the final answer, that some of the immediacy 
that is involved in the substitute that the gentleman from New York 
(Mr. Rangel) and others have put together in good faith may become part 
of the equation.
  Those facts, yes, enter into it; but fundamentally, what they want is 
the passage of this bill, and they want to be able to see and say who 
is on their side on this. And I am afraid that our substitute, the 
amendment, as such, despite its good intentions, will not measure in 
that regard.
  The other aspect of this that is very, very important and what hit me 
so hard is that this is a jobs bill. We tend not to look at that aspect 
of it. Businesses which have to be sold in order to meet the estate tax 
burden involve dozens, sometimes hundreds of people whose jobs, whose 
welfare, whose obligations, whose responsibilities are put in jeopardy. 
I do not think we can do that.
  This is involved with families. This is involved in a way that people 
have a tremendous emotional commitment to, and I think as Democrats and 
Republicans we need to respond to it with an overwhelming vote in favor 
of the estate tax repeal.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I think the gentleman from California (Mr. Thomas), 
chairman of my Committee on Ways and Means, is right. There are some 
Republicans, some Democrats that are emotionally involved with the 
concept of repeal, even if it does take place a decade from now, but 
the gentleman should know that a handful of donkeys running with a herd 
of elephants does not make a bipartisan bill.
  Mr. Speaker, I yield 1 minute to the distinguished gentlewoman from 
California (Ms. Eshoo).
  Ms. ESHOO. Mr. Speaker, I want to thank the gentleman from New York 
(Mr. Rangel), our distinguished ranking member, for yielding the time 
to me.
  Mr. Speaker, I support estate tax relief, and I think the American 
people deserve it, and they deserve it now.
  The substitute is practical. It is immediate, and it is fiscally 
responsible at $40 billion over 10 years. It includes a $4 million 
exclusion for couples; and in California this eliminates the estate tax 
on all but 7 percent of California estates.
  The Republican plan does not provide any real tax relief for 10 
years, and I do not think people want to wait. Forty-five percent of 
the estate tax cut will not arrive until 2010 and 2011. At $200 
billion, it is outrageously expensive.
  When combined with the tax cuts already rammed through the House, we 
are already over $2 trillion in spending just on tax cuts alone. Where 
is the money to pay down the national debt, shore up our 
responsibilities for Social Security and Medicare and improve our 
Nation's schools?
  Finally, and perhaps the biggest poison in the Republican plan, is 
that it will actually increase taxes for many families by adding a 
capital gains tax upon the inheritance of assets. This is the wrong way 
to go.
  We should have it today. We should have it now. It should be 
affordable. That is exactly what this plan is.
  Mr. THOMAS. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from 
Texas (Mr. Brady), a member of the Committee on Ways and Means, who 
wants to have repeal of the estate tax rather than something less.
  Mr. BRADY of Texas. Mr. Speaker, I want to thank the gentleman from 
California (Mr. Thomas), chairman of the Committee on Ways and Means, 
for yielding the time to me.
  My Democratic colleagues are right, we do not immediately start 
repeal of the death tax. This repeal is very graduated. It starts 
fairly slow, and it grows as we pay down more and more of the debt and 
as our surpluses grow; that is the responsible way to provide tax 
relief, while keeping our budget in order and keeping our economy 
growing.
  The fact of the matter is there are a lot of reasons to support 
repeal of the death tax. Let me tell my colleagues one of mine. In my 
district, I had a local nursery come to me here in my office in 
Washington; they traveled all the way up here from Texas. They have 
three children. In the nursery, two of them have worked there ever 
since their parents founded it.
  They sat down just at a desk around a table, just worked through the 
numbers on how the death tax and how the tax affected them; and as we 
worked through it, it became clear what happens with this tax and how 
it affects our small businesses and our family farms. Basically, when 
the numbers were finished, they showed that if they could afford enough 
life insurance on their parents and if they could get a bank loan, they 
might be able to keep their own family business.
  Mr. Speaker, think about what they are saying. If we can make enough 
money off of our parents' death and if we can go back in to debt, which 
they had worked their whole life to get out of, they might be able to 
keep their own family business.
  The death tax is wrong. It has been ruining lives for four 
generations in America, and it is time to stop it. There is a 
difference, though, between the Democratic proposal and the 
Republicans. Ours goes with the principles that it is flat wrong. 
Theirs keeps it and keeps it for another principle, that Washington 
should pick winners and losers in our Tax Code.
  In their bill, we say to some family farms, you are our type, you 
win; but to others and to the family grocery store in the same 
community, you lose.
  They say to the print shop in the community that is family owned, you 
win; but to the family newspaper right next to it, you lose. You are 
not our type.
  Washington has been picking winners and losers for far too long. We 
need to be at the least fair, and that is why complete responsible 
repeal of the death tax is the right thing to do.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from Texas 
(Mr. Bentsen).
  Mr. BENTSEN. Mr. Speaker, I rise in support of the Rangel substitute 
and opposition to the underlying bill. We have heard a lot of rhetoric 
on both sides about this and about the repeal.
  The bottom line is we can make a decision today that is a practical 
public policy decision, or we can make a political decision. The 
political decision would be to pass H.R. 8 and hope that in 10 years or 
11 years that the estate tax will be repealed; and the reason that is 
being put forth is because the repeal of the estate tax costs far more 
than the President thought it would, far more than our Republicans 
colleagues thought it would; and to make their budget work, they had to 
shoehorn this bill in.
  Mr. Speaker, on the other hand, we can pass immediate relief today, 
raise the exemption to $4 million for most families going up by 2010 to 
$5 million, but $4 million beginning January 1, that will exempt down 
to 1 percent of all estates subject to any estate tax as opposed to the 
2 percent of all estates that are subject to any estate tax.
  I have to say to my colleague from Hawaii (Mr. Abercrombie), I 
appreciate the fact of what family businesses have to go through; but 
there are 98 percent of other Americans who wake up every day trying to 
figure out how they are going to pay the bills, and we ought to think 
about them as well.
  Mr. Speaker, I rise in strong opposition to H.R. 8, an ill-conceived, 
extraordinarily back-loaded measure that sacrifices fiscal prudence for 
political gains. We can fix the estate and gift tax while maintaining 
fiscal responsibility, and we should. But H.R. 8 is not the way to do 
it.
  First of all, I would note that the proponents of H.R. 8 have been 
incredibly successful at convincing a great number of Americans that

[[Page 5448]]

their estates will be taxed upon their death. Actually, as a result of 
existing exemptions, the estate tax only applies to fewer than 2% of 
all estates annually, according to the Joint Committee on Taxation 
(JCT). Current law exempts from federal tax all estates valued up to 
$675,000 in 2000. This exemption will rise to $1,000,000 by 2006, with 
any federal estate tax applying only to the current value in excess of 
this amount. For closely-held businesses and farms, this exemption is 
$2.6 million. Additionally, family farms are exempt from any tax for 
ten years if the heirs continue to operate the farm. Estates passed 
onto a spouse are not subject to tax.
  Even with the small number of estates subjected to the estate tax, I 
agree and have consistently voted to significantly raise the exemption 
and eliminate the estate tax against most estates currently subject to 
such taxes. And, today the House can do just that by supporting not 
H.R. 8, but rather the Rangel substitute. In fact, by adopting the 
Rangel substitute the House could provide more relief to more estates, 
more quickly and more fairly than H.R. 8. Unlike H.R. 8, which is more 
of a charade than a solution, the Rangel substitute would immediately 
increase the exemption for all estates to $4 million in January 1, 2002 
and raise the exemption to $5 million in 2010. Furthermore, unlike H.R. 
8, the Rangel alternative would maintain the ``step up'' basis to 
preclude capital gains taxes from being applied.
  Alternatively, H.R. 8 would do little, if anything, for estate tax 
relief until 2012. This bill is part of an elaborate charade supporting 
the Majority's budget folly which is driven by politics rather than 
policy. Between 2001 and 2011, H.R. 8 does not increase the exemption 
more than current law and only modestly cuts rates. When repeal is 
finally achieved in 2012, the bill would also repeal the ``step up'' 
basis, subjecting many estates, particularly non-liquid estates such as 
farms and small businesses, to large capital gains taxes and, in some 
cases, more than the estate tax owed under current law.
  Mr. Speaker, H.R. 8 not only falsely-promises relief but its back-
loaded nature camouflages the true costs of repealing the estate tax. 
As a result of its delayed repeal, the cost of the bill would jump from 
zero in 2002 and $13 billion in 2006 to $35 billion in 2010 and $52 
billion in 2011, which is still well below the full cost. Further, 
because under the H.R. 8, the cost of repeal would not occur until the 
very end of the initial ten-year period, the $193 billion revenue loss 
resulting from the bill over the first ten years includes little of the 
revenue loss resulting from income tax avoidance that would ultimately 
occur.
  During the second ten years (2012 to 2021), H.R. 8 would result in 
revenue losses totaling approximately $1.3 trillion, six times greater 
than the $193 billion cost in the first ten years. Looked at another 
way, the cost of H.R. 8 would nearly triple between the fifth and ninth 
years, jump another 50 percent between the ninth and tenth years, and 
continue growing after the tenth year. It is interesting to note that 
if H.R. 8 was to take effect this year, the JCT projects that the ten-
year cost of the bill would be a whopping $662 billion. Thus, over 
twenty years, the total cost of H.R. 8, including extra interest, will 
be more than $1.5 trillion. Where does the Majority propose to make up 
the difference? How do they propose to pay for other priorities like 
Medicare, Social Security and improvements to education? It is fiscally 
irresponsible to enact this measure without identifying how these lost 
revenues will be recouped.
  Mr. Speaker, I, therefore, urge those of my colleagues who are 
committed to providing immediate estate tax relief, particularly for 
small businesses and farms, to reject H.R. 8 and support the Rangel 
alternative. By supporting the Rangel substitute, you will be voting to 
not only double the exemption to $4 million now, not in 2012. You will 
be voting to maintain the ``step up'' basis and protect decedents from 
high capital gains taxes. And you will be voting for tax relief which 
is both fair and prudent without endangering our commitment to fiscal 
responsibility.
  Mr. THOMAS. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from 
New York (Mr. Houghton), a member of the Committee on Ways and Means.
  Mr. HOUGHTON. Mr. Speaker, no bill is perfect; and we always have 
ways of trying to change legislation. I hate to be an ``aginner,'' and 
I do not mean to be a nitpicker, but every so often something just does 
not feel right, so I tend to vote not only against H.R. 8, but also 
against the Democratic substitute; and what I would like to do is 
explain why.
  I think the eradication of the estate tax is wrong. I am sort of the 
camp of mend it, do not end it. And by ending it, what we do is we 
bring down upon ourselves, I think, a lot of unseen conveniences.
  Let me give you an example. What are the incentives to giving to 
churches? What are the incentives of giving to educational 
institutions? What are the incentives of our total giving that is so 
intertwined with the concept of our taxation system the way we have it 
now?
  Also when you buy a life insurance policy, you are looking for 
certainty; you are looking for predictability. The changes in that 
could be really horrendous.
  Also, I really feel that it is not within the spirit of the Founding 
Fathers to develop sort of a leisure class, people with little 
incentive to work because you pass money down from one generation to 
the other to another, absolutely whole cloth.
  While H.R. 8 is overkill, I feel a Democratic substitute is not right 
because it does not take into account the reduction in rates.

                              {time}  1345

  If we are really going to help the small farmers or the small 
businessmen or the people who are working, we have to reduce those 
rates. So I reluctantly oppose both bills.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from 
Indiana (Mr. Roemer), an outstanding Member of the House of 
Representatives.
  Mr. ROEMER. Mr. Speaker, I thank my good friend, the gentleman from 
New York, for yielding me this time.
  Mr. Speaker, I think the death tax is unwise, it is unfair, and 
really it is un-American. We need to reform it, but we need to do it 
now, and we need to do it fairly.
  Under the proposal by the Republicans, the death tax would be phased 
out in the year 2011. Now, that means President Bush would have to 
finish out this term, his next term, get a constitutional amendment, 
and in the third year of his third term, the death tax might be gone. 
Members of Congress will have to run five times in order to tell their 
constituents by the year 2011 the death tax is finally gone.
  Secondly, I voted last week for a bipartisan repeal of the marriage 
penalty and for a doubling of the child tax credit. I am for tax cuts 
that will fit in the package of responsible tax relief. We need to do 
it by giving relief to our farmers and small businesses, not to Ted 
Turner and Bill Gates.
  I encourage my colleagues as a start to vote for the Rangel bill 
that, though not perfect, is a step in the right direction toward 
reform of the death tax.
  Mr. THOMAS. Mr. Speaker, I yield myself 30 seconds. I wish to tell my 
friend from Indiana that I ran 10 times before I was given the ability 
to vote on a measure to repeal the death tax. So it took us a long time 
to get here. I might say it also required a change in the majority in 
the House of Representatives to reach this point.
  I also want to note for the record that the Chronicle of Philanthropy 
found that the elimination of the death tax would result in a 63 
percent increase in charitable giving because people would be willing 
to donate more if the tax man took less.
  Mr. Speaker, I yield 2 minutes to the gentleman from Kentucky (Mr. 
Fletcher).
  Mr. FLETCHER. Mr. Speaker, I appreciate the opportunity to speak on 
this very important measure. We have two quite diverse views here. We 
have a side that presents here a substitute bill, and while we are glad 
to see that they are finally coming around to realize that the death 
tax is wrong, unfortunately they have not quite seen the fact that our 
bill is based not just on how much money are we going to be able to 
keep in Washington, but, rather, on the principle that taxing someone 
twice, and their families after they have passed away, is wrong.
  What we see on the other side is not a sincere interest, I believe, 
in whole of relieving this problem that we have, this unfairness in the 
Tax Code, but rather posturing themselves politically. Unfortunately, 
there is a lot of that done here. But, Mr. Speaker, though it is not a 
perfect bill that we have, H.R. 8, I would like to phase it in more 
quickly, we are working on a responsible way of phasing it in.

[[Page 5449]]

  What is it about? It is, as the gentleman said, about jobs, and it is 
also about green space. We have a lot of beautiful farms in Kentucky, 
and every time one generation passes it on to the next, there is a 
large tax that requires them often to sell that farm for development.
  There is a small family in a county that is a small county, a poor 
county, Nicholas County in Kentucky, where the community has lost half 
their industrial jobs this last year. A small Democratic family started 
a small business a few years ago with computerized lathe technology and 
machinists and has developed quite a company. What will happen to that 
company, if we keep the death tax the way it is, is that when he tries 
to pass that on to his children Lynn and Lee, they will have to sell 
the assets of that company. That company will then probably be moved to 
where most of the machinist work is done, in Cincinnati or Cleveland.
  Please, vote down this substitute. Vote for H.R. 8 so we are able to 
keep the jobs, the green space, and to promote the politics of 
fairness.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from 
Indiana (Mr. Hill).
  Mr. HILL. Mr. Speaker, I would agree with my good friend from 
Kentucky that that bill is not a perfect bill. It is not even close to 
being a perfect bill.
  I would ask the American people, or I would ask my constituents if 
they want tax relief now or they want tax relief 10 years from now? My 
guess is the constituents in my district would want that estate tax 
relief now.
  Now, there are not many multimillionaires in my district in southern 
Indiana, but there are many family farmers and small business owners 
who have enough land and equipment and buildings to make them liable 
for the estate tax, and they want estate tax relief now, not like the 
Republican Party wants to give 10 years from now.
  The Republicans give Indiana farmers and small business owners very 
little help if they die between now and the year 2011, but by raising 
the tax exemption to $4 million, like we want to do, my constituents 
and the American people get estate tax relief now. And I think that is 
what they want.
  Mr. THOMAS. Mr. Speaker, I yield myself 30 seconds.
  I note that the gentleman, in his exuberance, might have left a false 
impression that under the Democrat substitute every American has a $4 
million exemption in their bill. That is not the case. In fact, it is 
far from it.
  In addition to that, the gentleman apparently left the impression 
that we do not do anything about easing the relief of the death tax 
during the 10-year phase-down period. The gentleman knows full well 
that is not the case either. So as we carry on our discussions, I do 
hope that, to the best of our ability, we stick to the facts.
  Mr. Speaker, I yield 2 minutes to the gentleman from Florida (Mr. 
Weldon).
  Mr. WELDON of Florida. Mr. Speaker, I rise in opposition to this 
substitute and in strong support of the underlying bill.
  Mr. Speaker, I want to tell you about a family in my congressional 
district in Kissimmee, the Sextons. They had a floral shop. Their uncle 
had a busy floral shop. He passed away and willed his shop to them. 
They had 17 employees, and the IRS came calling. They sold off as many 
assets as they could, but ultimately they had to take out a bank loan 
of $100,000 to pay off the IRS. What did they do to handle that? They 
had 17 employees, they laid off 5 permanently. They went to the 12 
remaining employees and said, you will have to take up the slack for 
the other five employees that have left, which those 12 people did do. 
Then they completely ended all of their programs of donating money to 
local charities in the community. With that, they have been able to get 
through.
  Now, the substitute, I will point out, might provide some more 
immediate relief, but in 10 years with inflation, we are going to be 
back where we are today. This is a very punitive tax, the inheritance 
tax. It is morally wrong to tax somebody at death after they have paid 
taxes their whole lifetime. The money in those estates has been 
generated after tax, and it is a double taxation at the time of death, 
and that is morally wrong. It costs jobs. It costs jobs in Kissimmee, 
Florida. It causes ranches and family farms to be cut up and sold off 
for development. That is why we have the environmentalists supporting 
our bill.
  Mr. Speaker, I encourage all of my colleagues to vote no on the 
substitute, and vote for the underlying bill.
  Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Florida (Mrs. Thurman).
  Mrs. THURMAN. Mr. Speaker, I would ask the gentleman from Florida 
(Mr. Weldon), based on the story he just told us, to support our 
substitute. Otherwise, in fact, my colleague is going to have many more 
of those same stories ahead of him between now and 2011, because the 
fact of the matter is that flower shop, based upon the liability talked 
about, was about $1 million. If my colleague joined us today, they 
would have relief immediately, not in 2011, which is important.
  Mr. Speaker, let me just give some statistics about Florida that I 
think my colleagues will find very interesting.
  In 1998, there were 155,000 deaths in Florida. Of that, there were 
8,886 estate tax returns that were filed. Of that, only 4,144 had an 
estate tax liability. Had this bill been in place, and it would have 
been signed by President Clinton last year, that flower shop owner 
would not be having that problem, because the fact of the matter is 
only 657 Florida estates would have even owed an estate tax.
  What I find so amusing about this debate today, this debate started 
with the idea we have got to do something about the family farmers. We 
have got to do something about the small businesses. Well, you know 
what, the only bill that is going to take care of that today, right 
now, is the Rangel bill that is before us.
  Mr. WELDON of Florida. Mr. Speaker, will the gentlewoman yield for a 
question?
  Mrs. THURMAN. I yield to the gentleman from Florida.
  Mr. WELDON of Florida. Mr. Speaker why is the Rangel bill not indexed 
for inflation?
  Mrs. THURMAN. Because we go up by 2.5, which is more than we have 
ever done in estate tax over the last several years.
  Mr. RANGEL. Mr. Speaker, I yield 5 seconds to the gentleman from 
Florida (Mr. Weldon), if he has another question.
  Mr. WELDON of Florida. Mr. Speaker, my concern is if my colleagues on 
the other side of the aisle do not eliminate the death tax, that this 
is just going to be another problem in 10 years; that is all.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would say to my colleagues on the other side of the 
aisle, if they are concerned about young people, they have 10 years to 
wait for relief.
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, it might be useful to put on the record that in a single 
year alone, in 1998, the people of Florida lost $2.7 billion to the 
death tax. Multiply by 10, it goes away. Under the Democratic proposal, 
it does not.
  Mr. Speaker, I yield 2 minutes to the gentleman from Oklahoma (Mr. 
Largent).
  Mr. LARGENT. Mr. Speaker, I want to say to my colleagues on the other 
side of the aisle, they cannot come up to the podium and say that they 
think that the death tax is unfair, they think that the death tax is 
un-American, let us reform it. If it is un-American, let us get rid of 
it. Mr. Speaker, that is exactly what H.R. 8 does. Otherwise it is a 
disingenuous argument that my colleagues make.
  Mr. Speaker, it has been said there are two things that are certain 
in life: death and taxes. And with the estate tax, Washington has 
figured out a way to marry these two certainties. The government taxes 
Americans when they work, when they save, when they get married; and in 
case we miss something, we tax them when they die. There is no tax more 
offensive or immoral than that levied on the deceased and their 
families.

[[Page 5450]]

  Mr. Speaker, the estate tax does not need to be modified or tinkered 
with; it needs to be repealed. Dying should never be a taxable event. 
It is a horrible social policy, and even worse economic policy. The 
effects of the death tax results in nothing less than the killing of 
the American dream. So many people in America wake up every morning and 
work hard with the hope that one day their children will have a better 
quality of life than they did. These folks are not the Rockefellers or 
the Gates, they just want to pass something on to their children.
  Estate tax prevents grandparents and parents from passing on the 
family business or farms to their children. Families should be allowed 
to keep what they have earned throughout their lives. Generational 
transfer of wealth is a good thing and has helped make this such a 
prosperous Nation.
  Mr. Speaker, I urge my colleagues to support H.R. 8 and end the 
tyranny of the death tax.
  The SPEAKER pro tempore (Mr. LaHood). The Chair would announce that 
the gentleman from California (Mr. Thomas) has 15 minutes remaining. 
The gentleman from New York (Mr. Rangel) has 22\1/2\ minutes remaining.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Maryland (Mr. Hoyer), my distinguished colleague.
  Mr. HOYER. Mr. Speaker, with this estate tax bill, the Republican 
leadership would light the fuse of a fiscal time bomb that would go off 
in 2011.
  As The Washington Post said this morning, the slow fuse makes the 
proposal seem affordable; nearly cost-free, in fact, because only the 
cost of the first 10 years of any legislation is estimated.

                              {time}  1400

  But we all know the real costs of this bill do not start showing up 
until 2011. There is no need for us to jeopardize our fiscal future, 
Mr. Speaker. A great majority of Members on both sides of the aisle 
support a reduction in the estate tax. Bill Clinton would have signed a 
compromise estate tax bill covering 99.5 percent of all the estates in 
America. The tone may have changed but the substance has not. ``Do it 
my way or no way.''
  The Democratic alternative would give us relief now. It immediately 
would raise the estate tax exclusion to $4 million for couples and 
would gradually raise that to $5 million. In 1999, that would have 
exempted more than three-quarters of all the estates that incurred any 
tax liability. I am not talking about all the estates. Of any estate 
that incurred a tax liability. And it would cost a fiscally responsible 
$40 billion. But the Republican leadership has rejected bipartisan 
compromise once again.
  It is at least consistent. Instead, the GOP's great tax gurus have 
proposed a bill that would cost $193 billion over the next decade while 
concealing its true cost. The Joint Committee on Taxation estimates 
that if complete repeal took effect today, the real cost of this 
legislation would be $660 billion over the next 10 years. The majority 
will not admit that, of course. It would be an explicit admission that 
the President's $1.6 trillion tax plan actually will cost closer to $3 
trillion. The real danger to our country and to our people is that the 
cost of the legislation will be borne at the worst possible time, just 
as the baby boomers begin to retire and become eligible for Social 
Security and Medicare. With our uncertain projected budget surpluses, 
is that fiscally responsible to do? I think not.
  Let us provide immediate relief for small business owners, for 
farmers, and let us defuse the fiscal time bomb before it threatens to 
blow a hole in our budget.
  Mr. Speaker, we can do something real for 99.5 percent of the 
taxpayers. Yes, their bill will continue the old song, ``The rich get 
richer and the poor get poorer, but in the meantime don't we 
Congressmen and Congresswomen have fun?''
  Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Sherman).
  Mr. SHERMAN. Mr. Speaker, the gentleman from California criticizes 
the numbers saying we do not provide $4 million of immediate tax 
relief. We do, to every couple. $2 million to every individual.
  If Members are concerned about the 98 percent of Americans that do 
not pay the estate tax at all, they need to vote for the Democratic 
substitute because it is far more fiscally responsible. It will assure 
that we are able to pay down the national debt, provide for low 
interest costs and allow for people who are barely able to make their 
car payments to make them at a lower interest rate.
  But say you happen to represent Malibu, as I do, and you are 
concerned with those who are the richest 2 percent as is my obligation. 
Well, the vast majority of the folks in Malibu will actually do better 
under the Democratic alternative.
  First, we provide immediate tax relief. Their plan provides that if 
you cannot manage to live to 2011 and you have an estate of several 
million dollars, you are going to pay a big tax. Ours says $4 million a 
couple: no tax. And if you are able to make it to 2011: $5 million a 
couple, no tax.
  In the long term, their plan provides no estate tax but a higher 
capital gains tax on the upper-upper middle class. Estates of $3, $4, 
$5, and $6 million will be virtually tax exempt under the Democratic 
plan and the heirs will get relief from capital gains tax. Under their 
plan, those estates do not get relief from capital gains tax.
  The result is this: Unless you are focused on the wealthiest two-
tenths of 1 percent, unless you are focused not just on the ordinary 
people of Malibu but on those with $10 million to $100 million estates, 
the Democratic plan means lower taxes. If you believe in lower taxes 
for those with under $10 million in assets, vote for the Democratic 
alternative.
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  I tell the gentleman from the State that we shared in 1998, $4.1 
billion those families did not get because of the failure to repeal the 
death tax.
  Mr. Speaker, it is my pleasure to yield 2 minutes to the gentlewoman 
from Illinois (Mrs. Biggert).
  Mrs. BIGGERT. Mr. Speaker, I rise today to oppose the Democrat 
substitute and in strong support of the underlying bill, the Death Tax 
Elimination Act. This unfair tax has long outlived its usefulness.
  We are here in Congress to make things better for the American 
people. When more than 70 percent of small businesses do not make it to 
the second generation, something is wrong and must be made better. I 
know that my colleagues on the other side of the aisle feel that their 
proposal will make things better, but the fact is that the Democrat 
substitute does not go far enough. Here is why. I met with 
representatives from the Illinois Lumbermen's Association yesterday. 
They are owners and operators of independently owned retail lumber 
stores. I asked them whether they would be affected by the death tax if 
the Democrat substitute passed. After thinking for a minute or two, 
they said that while a $2 million exemption or a $5 million exemption 
sounds like a lot of money, they would still be subject to the tax. 
Lumber dealers need land and they need a lot of it. It is a simple fact 
of their business. Because they own land in the Chicago area, it will 
appreciate and push the value of their estate above that exemption and 
they are right back to where we started from. These lumber dealers are 
the very definition of small businessmen. They put their hearts and 
souls into their businesses, making a living, creating jobs and hoping 
to pass something on to their children. But a larger exemption is still 
not enough. They need a full phase-out. They need the Death Tax 
Elimination Act.
  I urge all my colleagues to oppose the Democrat substitute and to 
support the Death Tax Elimination Act. The time is now to once and for 
all put an end to the death tax.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
  It just seems to me under that last example that appreciated property

[[Page 5451]]

under the Republican bill will be exposed to capital gains tax for the 
next 10 years.
  Mr. Speaker, I yield 3 minutes to the gentleman from North Dakota 
(Mr. Pomeroy), a member of the committee.
  Mr. POMEROY. I thank the gentleman for yielding me this time.
  Mr. Speaker, this is about very real tax relief now to deal with 
those 2 percent of American households that may have estate tax issues 
to deal with versus a promise of tax relief 10 years to come.
  This chart shows what happens under the majority bill: Very 
substantial estate tax collection for a decade, then nothing. Are the 
American people really to believe that the next 2\1/2\ presidential 
terms, the next five Congresses will not revisit this issue? We cannot 
commit what will happen one decade from now. We are best off dealing 
with the substitute, real relief now.
  This chart shows the significant difference in providing meaningful 
estate tax relief by moving to the substitute, effectively $4 million 
estate tax exclusion for a couple phased in to $5 million after 5 
years. Estates with a value below $10 million do better under the 
minority substitute than the majority plan. In addition, there is a 
very insidious feature to the majority bill which will actually cause 
taxes to rise for a substantial number of households. By repealing the 
step-up basis and moving in the carryover basis, they hurt exactly some 
of the same people they talk so much about helping, farmers and small 
businesses. An estate that presently is not taxable because of a 
significant level of debt that passes at the time of the estate could 
become very definitely taxable for capital gains under the majority 
proposal. The specific application of the capital gains carryover 
change advanced in the majority bill would hurt farmers, is very bad 
public policy, and damage small businesses.
  I represent more production acres than any other Member of this 
House. The family farms that I see are much more threatened, and I have 
seen a lot more farms lost to the ruinous cost of nursing homes than I 
have had application of Federal estate tax liability. The majority on 
the other hand does nothing to address the cost of nursing homes, 
nothing to address the very real present cost to these estates. 
Instead, they offer a plan that does not take meaningful effect for a 
full decade and then takes effect in such a way as to raise capital 
gains tax exposure for family farms, for small businesses, for 
literally thousands of families that today have no estate tax 
difficulties.
  This is the kind of proposal that should be defeated. Support the 
minority substitute.
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  I thank my friend from North Dakota for clarifying the issue for us. 
It is now very clear. They want reduction. We want repeal.
  Mr. Speaker, it is my pleasure to yield 3 minutes to the gentleman 
from Texas (Mr. DeLay), the majority whip.
  Mr. DeLAY. Mr. Speaker, I thank the gentleman for yielding me this 
time and I thank the gentleman for bringing this bill to the floor. The 
gentleman from California is absolutely right. The other difference is 
we have credibility. They have no credibility. The last time they were 
in the majority and offered a tax cut was when Jack Kennedy was 
President of the United States.
  Mr. Speaker, Members should oppose the Democrat substitute amendment 
because it denies the across-the-board tax relief that the American 
people want and demand. The Democrats dangle partial relief but we 
repeal the death tax. Let us set aside those specific dates and figures 
that confuse Members to examine the very underlying dispute in this 
debate. And we should look beneath the surface, because the reason our 
parties disagree on this proposal stems from our core convictions. 
Republicans support the repeal of the death tax because we believe that 
the Federal Government has no legitimate right to tax income twice. We 
believe that families are entitled to keep what they earn over the 
years. Those families have already paid taxes on their assets and 
taxing them twice is wrong. All the Democrat objections flow from one 
single motivation, the desperate desire to preserve taxes for a stream 
of revenue. Democrats oppose the death tax repeal because it would cut 
off a source of revenue so they can have big government.
  The Democrat substitute is compromised by a flawed understanding that 
stubbornly refuses to accept this fundamental point: Tax dollars belong 
to the people who earn them, not the Federal Government. The Democrats 
are terrified by the prospect of foreclosing any source of taxation. We 
want to let people keep more of what they earn. The bottom line is 
this: Without full repeal, any death tax relief measure is no more than 
a placebo. To cure the death tax, you have got to kill it by ending it 
once and for all.
  The only plausible reason for opposing death tax repeal is the 
unstated ambition to one day restore the death tax in its current 
aggressive form. We want to let American families keep what they have 
earned but the Democrat leadership has designs for those tax dollars. 
That is why they do not and will not support death tax repeal.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
  You may want to repeal it but it is taking you 10 years to get there.
  Mr. Speaker, I yield 2 minutes to the gentleman from Massachusetts 
(Mr. Delahunt).
  Mr. DELAHUNT. Mr. Speaker, I thank the ranking member for yielding me 
this time. I also thank him for crafting a very intelligent substitute.
  Last year, I was one of those Democrats who joined with my colleagues 
across the aisle to support legislation to repeal the Federal estate 
tax. I did so because I believed that the tax unfairly burdened small 
businesses and family farms which often had to be sold at below-market 
values because of liquidity issues.

                              {time}  1415

  In other words, the heirs did not have the cash to pay the tax.
  Well, I still believe that; and that is why I am going to vote for 
the Rangel substitute rather than the committee bill, because if we 
adopt the substitute, many of those who are now required to pay the 
estate tax will have the cash under the Rangel bill.
  Secondly, and others have addressed this issue, under the committee 
bill many Americans would never reap the promised benefits even upon 
full repeal in 10 years. As others have suggested, currently, inherited 
property is assessed for valuation purposes at the time of death; but 
the committee bill, the Republican bill, would carry over for tax 
purposes a property's original value from the date of acquisition, from 
the date of purchase.
  It will undoubtedly increase capital gains tax upon sale and 
disposition; again, forcing heirs to experience the same liquidity 
issues upon sale that we are trying to address now. So I think for 
these reasons and for so many others that have already been 
articulated, it makes sense to support the Rangel substitute and to 
defeat the bill.
  Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
the District of Columbia (Ms. Norton).
  Ms. NORTON. Mr. Speaker, I thank the gentleman from New York (Mr. 
Rangel) for yielding me this time. I especially thank him for the 
thoughtful substitute he has put forward because what he has done is to 
listen to the people who have estate tax problems and responded 
directly to them.
  Mr. Speaker, the substitute has relief for small businesses, for 
farmers, and for people who have worked hard to accumulate modest 
wealth. In other words, for those who need it.
  Mr. Speaker, I never thought I would hear Americans argue for 
heredity wealth. That, I thought, was the major difference between the 
Old World and the new, between Europe and America. I am bemused by the 
notion of a dead man paying twice. People who inherit wealth have not 
paid once. The children of the rich, who get the lion's share of the 
benefits from this bill, have not paid a dime of money they have worked 
for.
  This bill, the majority bill, turns progressive taxation, the 
hallmark of the Federal Tax Code, on its head. We hear about 
transferring wealth from the

[[Page 5452]]

rich to the poor. The majority's bill transfers funds from the poor to 
the rich. The majority has tried to get away with having Americans 
believe that they are or could be helped by estate tax repeal.
  The whistle has been blown on the majority bill, thanks to some very 
principled rich folks who got up and told the truth about who would get 
the benefits and said that it should not be them but people far poorer 
than them. They exploded the leading myth behind this bill.
  The fact is, Mr. Speaker, almost no one would benefit from the 
majority bill. That is a lot of money to give to no one.
  Mr. THOMAS. Mr. Speaker, I yield 3 minutes to the gentleman from 
Oklahoma (Mr. Watts), the conference chairman of the Republican 
Conference.
  Mr. WATTS of Oklahoma. Mr. Speaker, this is a common sense plan to 
strengthen family-owned businesses and farms and to secure our 
children's future. Furthermore, nobody should be forced to visit the 
undertaker and the IRS in the same day.
  Let me explain the problem with this death tax situation. Families 
are working longer and harder than they ever have, and Washington 
continues to take more and more. The death tax deprives many hard-
working Americans of opportunities to pass along the business or the 
farm to the children. Upon death, the IRS can seize up to 55 percent of 
one's farm or business. This means a mom-and-pop shop one hopes for 
their children to take will be more than half gone before their funeral 
is over.
  The death tax was enacted four times in our history to fund military 
build-ups in times of war. In all but the fourth time, it was repealed 
within 8 years. The fourth time, however, it was enacted to fund World 
War I in 1916 and has never been repealed.
  News flash: the war is over. We won. Let us get rid of the death tax.
  What is the solution? Let us eliminate it on behalf of family farmers 
and small business owners who want to leave a legacy for their 
children, for their grandchildren. I ask for fairness and common sense 
in our Tax Code.
  The benefits we get out of eliminating the death tax, more than six 
of 10 small businesses report that they would create new jobs in the 
next 12 months if the death tax were to be repealed. That means food on 
the table and college tuition for many American families.
  In the black community, sometimes it takes four or five generations 
for the African American community to create wealth; and then, when 
that proprietor dies, over 50 percent of that business is wiped out 
overnight. This tax is wrong. It is unfair. We need to eliminate it.
  We got the IRS out of the sanctuary last week by eliminating the 
unfair marriage tax. Now we must vote to get rid of the IRS, get it out 
of the funeral parlor. Uncle Sam should not raise revenue from 
somebody's coffin.
  Mr. Speaker, the death tax needs to die.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentlewoman from 
California (Ms. Pelosi).
  Ms. PELOSI. Mr. Speaker, I thank the gentleman from New York (Mr. 
Rangel), the distinguished ranking member, for yielding me this time 
and for his leadership in bringing this very wise Democratic estate 
tax-relief bill to the floor.
  Mr. Speaker, I rise in strong support of it because Democrats have 
repeatedly stated that we do support responsible tax cuts, but only 
ones that we can afford.
  Yet again, the Republican leadership has brought a tax cut to the 
floor that we cannot afford. I come from a part of the country where 
real estate values have skyrocketed. I understand the need for estate 
tax relief for homeowners, for business owners, for farmers. The 
Democratic substitute increases the estate tax exclusion to $2.5 
million for individuals and $5 million for married couples. Under our 
plan, 75 percent of the estates that are currently taxed would no 
longer pay any estate taxes. I repeat, 75 percent of those who 
currently paying estate taxes would pay no estate taxes under the 
Democratic plan.
  Our plan, the Democratic plan, costs $40 billion over 10 years. We 
can afford that. The Republicans, on the other hand, have an 
irresponsible proposal that will add to the already $1.8 trillion, 
including interest, that has come to date to this floor that they have 
voted; and their plan, one probably will not believe this, but listen 
carefully, their plan will cost $662 billion. It is so staggering, $662 
billion. $40 billion on the Democratic side, 75 percent of the people 
will pay no estate tax who pay estate tax now. Theirs, $662 billion. 
But if one is in that category where they would benefit from the 
Republican plan, listen up. Their benefit does not even come for 10 
years.
  So listen up. If they are in the category that would benefit at the 
highest end of the Republican estate tax plan, they do not see that 
benefit for 10 years down the road. The Republicans are asking this 
Congress to commit five Congresses from now, five budgets away, to 
spend up to $662 billion in tax relief for the wealthiest people in our 
country.
  What is the opportunity cost of that money? We have an infrastructure 
deficit in our country; bridges, roads, that need repair; building of 
mass transit to move people and keep the air clean. We have deficits in 
our education that we need school modernization, where these billions 
of dollars could be spent there. Or first and foremost, we could pay 
down the debt, keep interest rates down for our mortgages, for our car 
payments, for our credit cards.
  So when they give this tax break at the highest end, guess who is 
paying for it? The average working American, with higher interest 
rates.
  I urge our colleagues to support the Democratic plan.
  Mr. THOMAS. Mr. Speaker, I yield myself 30 seconds.
  Mr. Speaker, just in case anybody believes any of those figures that 
were mentioned by the gentlewoman from California (Ms. Pelosi), the 
Joint Committee on Taxation places a $185 billion price tag on the 
bipartisan H.R. 8 proposal. The Democrat substitute costs $160 billion 
over 10 years to just reduce the death tax. They do immediately repeal 
the State estate tax credit, an immediate hit on the States of $122 
billion, which produces the net that the gentlewoman mentioned.
  Ms. PELOSI. Mr. Speaker, will the gentleman yield?
  Mr. THOMAS. Not on my time. If the gentleman from New York (Mr. 
Rangel) wants to yield some time, he can.
  Mr. RANGEL. Mr. Speaker, I yield 30 seconds to the gentlewoman from 
California (Ms. Pelosi) to respond to the gentleman from California 
(Mr. Thomas).
  Ms. PELOSI. Mr. Speaker, in fact, the Joint Committee on Taxation has 
estimated that the Republican plan would cost $662 billion over 10 
years.
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I might consume.
  Mr. Speaker, notwithstanding what the gentlewoman from California 
(Ms. Pelosi), my colleague and friend, said, she is just flat out 
wrong. The joint tax on our plan is $185 billion.
  Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from California 
(Mr. Issa).
  Mr. ISSA. Mr. Speaker, I would like today to take my 2 minutes and 
use it a little differently than the other Members. I would like to put 
a face on the nobody that was talked about here earlier.
  I am one of those nobodies who will pay the tax. I came to this body, 
after 20 successful years in business, just 90 days ago. I am not 
particularly concerned about how much money the government takes from 
me, because I have sold my business in order to come to this body; but 
I am concerned about businesses like the one that my wife and I built 
over 20 years.
  Twenty years ago, I left the Army with a 1967 Karmann Ghia and a 
couple thousand dollars. Over those 20 years, with incredibly hard work 
and luck and the participation of nearly 200 men and women in our 
company, we built our business to $100 million in sales. It took 4 
years to structure a termination of that business from ownership of my 
wife and myself. People within my company now own stock, and a leverage 
group came in and helped; but it

[[Page 5453]]

took a long time, and I have 5 years of obligation to make sure that my 
company goes on.
  Had I died on December 31, instead of leaving as a CEO to come join 
this body, they would have taken an immediate tax hit of over $55 
million on the company just at a time at which its value would have 
plummeted, its marketability would have been terminated.
  In the America that I grew up in, one's dreams, in fact, are rewarded 
by government, not punished. Most importantly, in the America I grew up 
in we do not determine what size business is good, what size business 
is good to be public, what size business is good to be private.
  In the America I grew up in, we reward people who build businesses 
because they create the jobs that Americans work at. Please vote down 
the substitute. Vote for the bill itself, because in fact it supports 
the ability for companies like my wife and I built to be able to 
support American jobs.
  Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from 
Mississippi (Mr. Taylor).

                              {time}  1430

  Mr. TAYLOR of Mississippi. Mr. Speaker, I thank the gentleman for 
yielding me this time.
  The one thing that apparently is not being talked about today is that 
as of the end of last month, our Nation was $5.735 trillion in debt. 
Just since September, our Nation's debt has increased by $61 billion. I 
guess many of my colleagues would like to ignore that, but they cannot 
ignore the fact that we owe the Social Security Trust Fund $1 trillion 
of unfunded liability. We owe our Nation's military retirees, including 
the gentleman who just spoke, $163 billion. We owe the Medicare Trust 
Fund $229 billion, and we owe our own public servants over half of $1 
trillion.
  When folks ask me on the street to cut out the wasteful spending, 
they are pretty shocked to discover that the most wasteful thing our 
Nation does that costs $1 billion a day is interest on the national 
debt.
  Now, the gentleman from New York (Mr. Rangel) and his proposed plan 
to try to solve the problem for most of those Americans who do pay an 
estate tax would allow people to keep $4 million of their parents', or 
whoever left them the money or estate, tax-free, and we can do that for 
less than $30 billion. The alternative costs five times more.
  Now, as someone who spends my time looking out for the defense 
interests of our Nation, that difference would build 20 aircraft 
carriers or 100 destroyers, or no telling how many 30-year-old UH-1 
Hueys could be replaced. Right now we have 20 young Americans in 
captivity in China because the pilot was afraid to ditch that ancient 
aircraft he was flying for fear that the lives of the crew would have 
been lost.
  Mr. Speaker, why do we continually underfund the things that our 
Nation should be doing the best it can for the sake of tax breaks, in 
many instances justified tax breaks, but in many instances tax breaks 
whose people are only deserving because they can write big checks to 
political parties?
  Mr. THOMAS. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
New York (Mrs. Kelly) to tell another one of those very real-world 
stories.
  Mrs. KELLY. Mr. Speaker, I rise in opposition to the Rangel 
substitute because partial repeal of the death tax is just that: 
partial. Full repeal is what is needed to benefit all of the workers on 
family farms and in small businesses. Many of the testimonials we have 
heard regarding the repeal of the death tax have centered around the 
plight of the family farmers. Farm families are not the only ones 
affected by the estate tax.
  Family-owned manufacturing and construction businesses are also 
affected. How? Because they put the bulk of their assets into the 
equipment by which they do business. For instance, if one is a road 
contractor, the very bulldozers and clam shells and backhoes that one 
owns cost in the millions of dollars, and this is what one has to pass 
on to one's children, one's good name and equipment, that is it. So 
when the inheritor of a small business has to liquidate the company's 
assets and equipment to cover the cost of paying the government, it 
marks the tragic end to an entity that may have gone on for several 
generations.
  When a business closes its doors for the last time, it is forced to 
sacrifice the jobs of the employees. All of the workers, many of whom 
have long tenures with the business and deep roots in the community, 
are faced with unemployment and the sudden need to find another job in 
order to feed their families. Please note, these could be union or 
nonunion jobs. It is just plain jobs.
  Mr. Speaker, it is clear that the long arms of the estate tax reach 
deep. The death tax touches every aspect of small businesses from the 
inheritor to the employees to the families to the local community. If 
we vote to repeal the estate tax, we are not only assuring a promising 
future for family farmers, but we are ensuring a promising future for 
the small business owners of America and the small manufacturers of 
America. All American workers will do better and all of America will be 
better if we pass this bill.
  Mr. Speaker, I urge my colleagues to vote no on the Rangel substitute 
to H.R. 8.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Texas (Ms. Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise to support the 
Democratic alternative by the gentleman from New York (Mr. Rangel) to 
simply emphasize that only 50,000 estates are even impacted by this 
estate tax at all, 2 percent of Americans, whereas the Democratic 
substitute ensures that the tax will exclude the $2 million per person, 
$4 million per couple as of January 1, 2002, and gradually increase to 
$2.5 million and $5 million per couple.
  But the real issue is what the estate tax does. I am gratified that 
individuals like Bill Gates really talk to America about what the 
estate tax is all about. We are interested in helping the car dealer 
and the small business, and the Democratic alternative does that. But 
do we realize that in many instances, many Americans provide sources of 
opportunity and contribution to hospitals and institutions of higher 
learning, to our arts institutions by donating murals and pictures, by 
protecting our national parks, by their wonderful largesse and their 
charitable attitude. These Americans do not want the estate tax 
repealed, they want to continue to do this and continue to be able to 
give, and they want to be able to give to America to protect its very 
precious resources.
  Mr. Speaker, I say to my colleagues, support the Democratic 
alternative.
  Mr. Speaker, I rise in opposition of H.R. 8, Estate Tax Repeal Act. 
This legislation is simply another reflection of poorly placed 
priorities that could jeopardize funds that would otherwise be used for 
next year's budget. The bill is so back-loaded that it does not even 
fully repeal the estate tax until 2011, beyond the 10-year budget 
window.
  We all know that reform of the estate tax is a bipartisan issue--both 
Democrats and Republicans have long recognized the need to reform 
estate tax. I have often heard of the need to update the estate tax 
from constituents to reflect the increase in home prices, stock prices 
as they are reflected in individual savings for retirement, and the 
value of family-owned businesses. But the Republican response embodied 
in H.R. 8 has been to help the wealthiest first and foremost by 
repealing the tax altogether, squandering the surplus and creating the 
potential for tax evasion. The Democratic response has been to provide 
the tax relief quickly and to those who need it the most--family farms 
and small businesses.
  The current estate tax applies to estates larger than $675,000. There 
are special provisions for farms and family-owned small businesses that 
increase the amount excluded from the tax. According to the Joint Tax 
Committee, the estate and gift tax will raise $410 billion between 2002 
and 2011. Each year only 50,000 estates owe estate tax at all; less 
than 2 percent of Americans have to worry about the tax. Of these 50 
estates, there are fewer than 3,000 farms and fewer than 3,000 that 
have non-corporate business assets. In fact, in 1998, there were only 
642 which were made up mainly of farm assets.
  Most of the revenues come from the largest estates--the ones that the 
Republicans have chosen to get the first and largest benefits from 
their bill. The Joint Tax Committee estimated that the cost of H.R. 8 
as introduced

[[Page 5454]]

would have been $370 billion. The long phase-in period in H.R. 8 kept 
the cost down; $192 billion over 10 years. Combined with the first two 
tax cut bills passed by the House--H.R. 3 and H.R. 6--this bill raises 
the total cut to $1.55 trillion over ten ears. The total budget cost is 
nearly $2 trillion. That is just an unacceptable price.
  Mr. Speaker, we cannot afford this costly approach. H.R. 8 would 
reduce the rates on the largest estates first, giving the greatest 
benefit to only a few wealthy estates while providing no tax relief to 
the great majority of smaller estates while providing no tax relief to 
the great majority of smaller estates. When fully repealed, more than 
half of the tax cuts would go to the largest 5 percent of the estates--
2,900 estates valued at more than $5 million each.
  Mr. Speaker, we can reform the estate tax and target a larger segment 
of America at the same time. For this reason, I look forward to 
supporting the Democratic Estate Tax Reform Proposal as an alternative 
to the proposed bill. The Democratic substitute raises the exclusion 
from the tax to $2 million per person and $4 million per couple as of 
January 1, 2002 and gradually increases the exclusion so that it 
reaches $2.5 million per person and $5 million per couple. The net cost 
is $40 billion over ten years. Accordingly, the substitute would not 
cause enormous drains on the Treasury and it takes care of the problem 
for the vast majority of estates. The Republican proposal will cost 
Americans $662 billion over 10 years creating a fiscal crisis.
  The Democratic alternative is simple and cost-effective. It maintains 
the progressive features of the current estate and gift tax system 
while effectively exempting two-thirds of all estate that would have to 
pay the estate tax under current law. It would exempt 99.4 percent of 
all farms that would otherwise have to pay the estate tax and would 
give more estate tax relief to estates of less than $10 million than 
the Republican bill through 2008. In short, the Democratic alternative 
exempts many more estates, more quickly.
  Mr. Speaker, I urge my colleagues to oppose H.R. 8. Instead, I urge 
my colleagues to support the Democratic substitute.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentlewoman from 
California (Ms. Millender-McDonald).
  Ms. MILLENDER-McDONALD. Mr. Speaker, I rise today in support of the 
Democratic alternative and in opposition to H.R. 8.
  Mr. Speaker, I am not opposed to estate tax relief, but this tax 
bill, H.R. 8, does not speak to providing estate tax relief to small 
businesses and family farmers. The Democratic substitute targets tax 
relief to small businesses and farms, as well as those estates that 
have increased in value over time. The Democratic bill will not result 
in an enormous drain on the Treasury, and it takes care of the problems 
of the vast majority of estates. I will support the Democratic 
alternative bill today.
  Mr. Speaker, I am opposed to H.R. 8. I want to urge all of my 
colleagues to support the only tax plan that gives true relief from 
estate taxes.
  Mr. RANGEL. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, one of my Republican friends brought to me an ad which 
ran in The Washington Post where African American businesspeople were 
calling for an end to the estate tax. I was moved by their concern for 
these African Americans. I thought it was the beginning of the new 
Republican civil rights movement. But I told them that I had shared my 
concerns about this with some of these people, and they agreed with me 
that only in a country as great as America can someone be born in 
poverty and be able to achieve the great economic success that they 
have been able to achieve.
  But in doing this, we also had an obligation to America, to those 
people who are less fortunate. Whether they be black or white or Jew or 
gentile, there has to be a basic understanding that we have to secure 
for ourselves a sound economic system that allows all of the people to 
hope and aspire to achieve economically, a sound public school system 
that gives us the tools to be able to negotiate one's way through 
success; a Nation that would not only allow us to move forward, but 
have a concern about the Social Security System, the Medicare System, 
to be concerned about one whose parents who are dependent on Social 
Security and dependent on prescription drugs. In other words, yes, we 
have to be prepared to give something back to this great Republic that 
has given so much to so few.
  So it seems to me as we conclude this argument, if people are talking 
and debating about repealing the estate taxes now, we have the wrong 
debate. Yes, that figure, $662 billion, no longer applies because the 
Republicans do not want repeal; not now, not next year, not the year 
after. They are talking about a decade from now. So call it the 
Republican I-Hope-You-Live-For-10-Years bill, but do not say relief is 
being given now, because the relief is in the Democratic substitute and 
the relief is when? The relief is now.
  The Republicans would expose those who hold property that have 
appreciated in value to additional capital gains taxes after they die. 
We do not do that.
  So what I am suggesting to my colleagues is that we have to live with 
some framework of what we are going to do in the future, and I can tell 
my colleagues this. The Republicans are talking about $1.6 trillion 
today, but tomorrow they will be talking about $2 trillion, the next 
day they will be talking about $2.5 trillion, and before we leave this 
House, they will be talking about a $3 trillion bill. Am I making it 
up? No.
  The thing is that there is nothing left for them to cut after this 
bill. If this bill passes, they would have taken a $662 billion budget 
bill and squeezed it into a wedge that is left for $200 billion. But 
that is the last wedge, and this is our last chance.
  Mr. THOMAS. Mr. Speaker, folks have heard a lot of numbers here today 
in the debate. The one that is real, 1998, in the States of the last 3 
speakers, Texas, California and New York, those families had $7.9 
billion taken from them in the death tax.
  Mr. Speaker, I yield the balance of my time on this measure to the 
gentleman from Texas (Mr. Armey), the majority leader.
  Mr. ARMEY. Mr. Speaker, I thank the gentleman for yielding me this 
time. I want to thank the chairman of the committee and the committee 
for bringing this bill to the floor.
  Mr. Speaker, I do not often feel a need to answer the arguments made 
by my Democrat colleagues and, Mr. Speaker, I do not often argue by 
analogy, but for just a moment, Mr. Speaker, I would like to use an 
analogy to answer one of the arguments that they have made from the 
other side of the aisle.
  We have brought here before the American people an effort to end the 
death tax. We choose to do that because we think it fundamentally wrong 
to tax a family's legacy. We have had testimony here about the fact 
that a handful of very, very rich people in America, most of whom on 
that list have more money than their families could ever spend in 
several lifetimes, have signed a letter saying, please do not end the 
death tax. My Democrat colleagues have seized upon that as testimony to 
the virtue of continuing the death tax. They are wrong to do so, and 
let me give my colleagues the analogy.
  We have laws, Mr. Speaker, against battery, because we believe it is 
wrong to beat on a person. Now, Mr. Speaker, if a handful of masochists 
were to write a letter saying, oh, lift the ban on battery, beat us, 
beat us, I am sure the gentleman from New York (Mr. Rangel) would not 
say, oh, by all means, we will not only beat the masochists, but we 
will beat everyone else who happens to have similar socioeconomic, 
demographic characteristics. No, he would immediately say, well, that 
is wrong. If it is wrong, it is wrong, and we cannot allow the sadists 
to beat the masochists just because the masochist says, beat me.
  But if we follow the logic that they have applied to this effort to 
end this wrongful taxation, that is precisely the logic we would find 
them applying to the whole question of battery.

                              {time}  1445

  So we see they are wrong because they missed the point. We have here 
come today to end the death tax because it is wrong, and just as a 
compassionate man would end the battery even for the masochist, we 
would choose to end the death tax for the tax

[[Page 5455]]

masochist that signed that letter. Because a conservative that is 
compassionate and understands recognizes that when one is taxed one's 
entire life, it is unfair, it is wrong, to be taxed again after one is 
dead.
  Just consider, Mr. Speaker, what all we are taxed on today. Our wages 
are taxed, our property is taxed, our spending is taxed, our savings is 
taxed, our investment is taxed, and even our marriage is taxed, 
although we are trying to end that.
  But for some of my colleagues, that is still not enough taxation. For 
them, as we draw our last breath, they want the tax man to pay us one 
final visit.
  No, Mr. Speaker, it is just not right. It is not only unfair, it is 
not only immoral, but the death tax strikes at the very heart of the 
American dream.
  What do I mean by that? Mr. Speaker, this is a nation that has drawn 
people from all over the world. They have come to this country with a 
dream. Their dream has been to work hard, obey the laws, and build a 
better life for themselves and their families. They have pulled 
themselves up by their bootstraps. They want to leave the fruits of 
their life's labor to their children.
  At the very moment when our final dream in life is to be realized, 
where we can pass on to our children all our life's work and its 
benefits, they have the government step in and pull the rug right out 
from underneath us. With that death tax, the government says to the 
family, ``Your small business is destroyed. To your loyal friends and 
employees, your jobs are lost. Another farm is put up for auction.''
  It is not enough. It is not, in fact, a tax on big business. The 
death tax is not a tax on just rich people. It is a tax on a family's 
legacy, and that is why it is wrong. It taxes the family's capital, it 
taxes the small business, and it attacks the American dream, so we have 
come here today to put an end to it.
  I say to my colleagues, look only at this one question: Is it right 
or is it wrong for the Federal government of the United States to be 
the largest grave robber in the world?
  It is time for us to put an end to this immoral tax; not compromise, 
not end it for just a few, not continue to tax the masochistic rich 
because they do not feel the pain of the tax, but put an end to it for 
one very simple reason: It is wrong, and it should stop.
  Ms. DUNN. Mr. Speaker, the Democratic substitute is short term fix 
masquerading as real tax relief. It will not solve the problem. Here is 
why:
  First, it does not address the high death tax rates. On the first 
after their $2 million dollar credit, the family is forced to pay taxes 
starting at a 49 percent rate on every dollar over the credit. For 
businesses valued at $6 million, this could mean a tax bill approaching 
2 million. Under the substitute the U.S. will still have the second-
highest death tax rates in the world--behind bastions of free market 
capitalism such as France and Sweden.
  Second, every attempt to provide relief from the death tax has been a 
failure. In 1997, with the best intentions, we fashioned the Qualified 
Family-Owned Business Exemption as a way of addressing the concerns of 
small businesses and farmers, but it has not been the solution we 
envisioned. It is so complicated and onerous that the American Bar 
Association has called for its repeal. It also has a limited reach. 
According to Treasury estimates, only between 3 and 5 percent of 
estates qualify. In short, our experience shows that reform will only 
prolong the problem.
  Finally, and perhaps most importantly, the substitute affirms the 
flawed notion that it is fair and reasonable to tax people at the end 
of their life. Instead of rewarding them for saving or for building a 
business, we punish them by assessing a burdensome tax. I urge my 
colleagues to reject the substitute and eliminate the death tax once 
and for all.
  The SPEAKER pro tempore (Mr. LaHood). All time has expired.
  Pursuant to House Resolution 111, the previous question is ordered on 
the bill, as amended, and on the amendment in the nature of a 
substitute offered by the gentleman from New York (Mr. Rangel).
  The question is on the amendment in the nature of a substitute 
offered by the gentleman from New York (Mr. Rangel).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. RANGEL. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  The vote was taken by electronic device, and there were--yeas 201, 
nays 227, not voting 3, as follows:

                             [Roll No. 82]

                               YEAS--201

     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett
     Bentsen
     Bereuter
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Castle
     Clay
     Clayton
     Clement
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Gephardt
     Gonzalez
     Green (TX)
     Gutierrez
     Hall (OH)
     Hall (TX)
     Harman
     Hastings (FL)
     Hill
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E.B.
     Jones (OH)
     Kaptur
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lucas (KY)
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Moakley
     Mollohan
     Moore
     Moran (VA)
     Morella
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Ross
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Schiff
     Scott
     Serrano
     Sherman
     Shows
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thurman
     Tierney
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NAYS--227

     Abercrombie
     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Bartlett
     Barton
     Bass
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Chabot
     Chambliss
     Clyburn
     Coble
     Collins
     Combest
     Cooksey
     Cox
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Gordon
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hansen
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hilliard
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Issa
     Istook
     Jackson (IL)
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Kanjorski
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Largent
     LaTourette
     Leach
     Lee
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (OK)
     Manzullo
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Murtha
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)

[[Page 5456]]


     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Scarborough
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Spence
     Stearns
     Stump
     Sununu
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thompson (MS)
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Towns
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--3

     Becerra
     Kennedy (RI)
     Latham

                              {time}  1508

  Messrs. SIMMONS, CRANE, TERRY, BAKER, NETHERCUTT, and GILMAN changed 
their vote from ``yea'' to ``nay.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. LaHood). The question is on the 
engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


               Motion to Recommit Offered by Mr. Pomeroy

  Mr. POMEROY. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. POMEROY. Yes, Mr. Speaker, I am.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. Pomeroy moves to recommit the bill, H.R. 8, to the 
     Committee on Ways and Means with instructions that the 
     Committee report the same back to the House promptly with an 
     amendment in the nature of a substitute that--
       1. provides immediate relief from estate and gift taxes by 
     increasing the estate and gift tax exemption with a goal of 
     providing an exemption level that eliminates estate and gift 
     tax liability for over two-thirds of those currently subject 
     to the tax and exempts at least 99% of all farms from estate 
     and gift taxes;
       2. in no event increases the exemption to a level less than 
     the increased exemption provided in H.R. 8 as introduced;
       3. does not have growing budgetary costs like those shown 
     in the Committee report that begin at $4 million in fiscal 
     year 2002 and grow to $49.2 billion in fiscal year 2011, the 
     last fiscal year beginning before the bill is fully 
     effective; and
       4. in no event includes provisions that would result in net 
     tax increases (through additional capital gains tax levies) 
     on the estates of certain decedents (such as farmers with 
     average debt levels) with net assets below current law estate 
     tax exemption levels.

  Mr. THOMAS (during the reading). Mr. Speaker, I ask unanimous consent 
that the motion to recommit be considered as read and printed in the 
RECORD.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
North Dakota (Mr. Pomeroy) is recognized for 5 minutes in support of 
his motion to recommit.
  Mr. POMEROY. Mr. Speaker, I offer this motion on behalf of myself and 
the gentleman from Texas (Mr. Turner).
  The majority would have us believe that estate taxes collected by the 
Federal Government are the single greatest obstacle interrupting the 
passage of a family farm, a small business from one generation to the 
next.
  To place the issue in perspective, 2 percent of all estates in this 
country were subject to the estate tax at present levels. Of those 2 
percent, a single percent had assets that were at least half involved 
in farming. Ninety-nine percent of the 2 percent had not had operations 
involved in farming.
  Mr. Speaker, I represent more production acres than any other Member 
of this body, and I will tell my colleagues there are an awful lot more 
farms lost to the ruinous cost of long-term care than ever lost to 
estate taxes collected by the Federal Government, but the majority has 
nothing in this bill to address that issue. By passing this bill, it 
will deprive this body of the resources to ever address the long-term 
care cost issue threatening the passage of farms and small businesses.
  The motion to recommit has three fundamental principles: first, we 
should provide relief now, as opposed to relief later. The bulk of the 
majority bill takes effect 10 years from now. Mr. Speaker, we cannot 
bind future Congresses. There will be no fewer than four additional 
Congresses past this one that would have the opportunity to tinker with 
the majority's bill. Let us put relief in place now.
  The second point, this should not explode in the outyears. It should 
take a relatively level hit on the Federal budget so we know what we 
are dealing with. The explosion of the majority bill just at the time 
the baby boomers move into retirement, escalating the costs of Social 
Security and Medicare will wreck the Federal budget. Why would we want 
to pass this on? Let us deal with it now.
  The third, and very important, point, the majority bill exposes farms 
and small businesses to a level of capital gains that they do not have 
presently. Today, we have farms and small businesses that will pass 
under the estate tax but be fully protected against capital gains in a 
subsequent sale because of this stepped-up basis ultimately used to 
calculate capital gains.

                              {time}  1515

  Mr. Speaker, the majority bill does away with that, puts back in 
carry-over basis. The effect is to tax farms and small businesses that 
do not have a capital gains exposure and gives them capital gains 
exposure. That is not the kind of tax relief our farmers are looking 
for.
  Mr. Speaker, I yield to the gentleman from Texas (Mr. Turner).
  Mr. TURNER. Mr. Speaker, many Members on both sides of the aisle know 
that we can do better than the version of H.R. 8 that is before us 
today. The average number of estates each year subject to taxation in a 
congressional district in this country is 115. Just 115.
  Now some of my colleagues come from more affluent areas, and that 
number is higher. Some of us come from areas that are of less 
affluence, and it is far lower. But whether my colleagues have 50 or 
350 estates a year that are subject to the estate tax, these families 
would like to see significant estate tax relief now, not 10 years from 
now.
  Mr. Speaker, this motion states that the exemption shall be no less 
than provided in H.R. 8 as originally introduced, which was $1.3 
million, rather than the $700,000 under the current Thomas bill. This 
motion provides that it should be our goal to provide immediate repeal 
of the estate and gift tax for two-thirds of those currently covered by 
the tax, including 99 percent of all family farms. As the gentleman 
from North Dakota noted, the bill should guarantee that no family 
should pay more tax because of what is done here today.
  Under H.R. 8, a $2 million estate would pay approximately $450,000 in 
2002. With an affordable tax cut we can do better. We can make that 
family's estate tax zero in 2002. It all comes down to one's sense of 
fairness. Shall we start by giving the largest tax cuts to the 
wealthiest families in America, and no significant relief for the next 
10 years to the smaller estates; or should we repeal the tax at the 
lower end immediately while granting gradual rate reductions for the 
upper end?
  Mr. Speaker, I hope a majority of the House will support the latter 
approach and support this motion. This motion says we should start by 
repealing the tax for two-thirds of the taxable estates at the lower 
end rather than continuing to subject these families to 10 years of 
taxation.
  I talked to a prominent senior citizen in my district who has a 
sizable estate to pass on the other day about these alternatives. He 
told me, whatever you do, do it now. I do not have 10 years.
  Mr. Speaker, to pass a shell of a bill with a 10-year fuse is not tax 
relief. It is an empty promise to all who will lose loved ones over the 
next decade, and who may be forced to sell their

[[Page 5457]]

family farm or family business to pay the estate tax. We will not be 
able to tell these families that we cannot afford to help them, because 
we can afford it, and we should do it now.
  Mr. Speaker, I urge my colleagues to vote for the motion to recommit.
  The SPEAKER pro tempore (Mr. LaHood). The gentleman from California 
(Mr. Thomas) is recognized for 5 minutes in opposition to the motion to 
recommit.
  Mr. THOMAS. Mr. Speaker, I think the debate today has been very good. 
H.R. 8 seeks repeal of the death tax, and the substitute by my friend 
and colleague on the Committee on Ways and Means, the gentleman from 
New York (Mr. Rangel), sought relief.
  If one listens to my two colleagues discussing this motion to 
recommit, one would have thought that that debate was continuing; their 
motion to recommit is for relief, and the underlying bill is for 
repeal. I want my colleagues to be very, very careful. I apologize to 
my colleagues; once again, I read their motion to recommit.
  Mr. Speaker, in looking at the particulars, in the first particular 
it says it provides immediate relief. There is no repeal in any of the 
four items. One would think we are continuing the debate that we have 
had all afternoon, relief versus repeal. If my colleagues wanted to 
support our friends on the other side of the aisle, like the gentleman 
from Hawaii (Mr. Abercrombie) or the gentleman from Georgia (Mr. 
Bishop), my colleagues would have voted no on the gentleman from New 
York's substitute because it was only relief. H.R. 8 is repeal.
  But under the rules of the House, my colleagues ought to read the 
first paragraph, because what the first paragraph says is: Mr. Speaker, 
I move to recommit the bill, H.R. 8, to the Committee on Ways and Means 
with instructions that the Committee report the same back to the House 
promptly.
  Normally when we see these motions to recommit, the word that is 
normally used is ``forthwith.'' A motion to recommit forthwith is 
immediate. It has a time certain to it. For those of us who have been 
around awhile, we have had a motion to recommit when, forthwith, it is 
brought right back to the floor, and we discuss the change that is in 
the motion to recommit.
  Mr. Speaker, this is a motion to recommit promptly. When is promptly? 
No one knows. It is not a time certain. It is uncertain. The motion to 
recommit kills the bill. What does that mean? It is not an argument 
between relief and repeal. It is between killing this bill, having no 
change whatsoever, or repeal.
  Mr. Speaker, I think the choice is clear. Vote no on the motion to 
recommit so my colleagues can vote yes on H.R. 8, and repeal the death 
tax.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.


                             Recorded Vote

  Mr. POMEROY. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to a minimum of 5 minutes the period of time within which a 
vote by electronic device, if ordered, will be taken on the question of 
passage of the bill.
  The vote was taken by electronic device, and there were--ayes 192, 
noes 235, not voting 4, as follows:

                             [Roll No. 83]

                               AYES--192

     Ackerman
     Allen
     Baca
     Baird
     Baldacci
     Baldwin
     Barrett
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Clay
     Clayton
     Clement
     Clyburn
     Conyers
     Coyne
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Gephardt
     Gonzalez
     Gutierrez
     Hall (OH)
     Harman
     Hastings (FL)
     Hill
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Lucas (KY)
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Moakley
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Ross
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Scott
     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NOES--235

     Abercrombie
     Aderholt
     Akin
     Andrews
     Armey
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Chambliss
     Coble
     Collins
     Combest
     Condit
     Cooksey
     Costello
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Gordon
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hilliard
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Largent
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lucas (OK)
     Manzullo
     Matheson
     McCarthy (NY)
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Morella
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Scarborough
     Schaffer
     Schiff
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shows
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Spence
     Stearns
     Stump
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--4

     Becerra
     Green (TX)
     Kennedy (RI)
     Latham

                              {time}  1540

  Mr. HUTCHINSON changed his vote from ``aye'' to ``no.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  Stated for:

[[Page 5458]]


  Mr. GREEN of Texas. Mr. Speaker, I was unavoidably detained just a 
few minutes ago on Rollcall No. 83. If I had been present, I would have 
voted ``aye.''
  The SPEAKER pro tempore (Mr. LaHood). The question is on the passage 
of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. THOMAS. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--yeas 274, 
nays 154, not voting 3, as follows:

                             [Roll No. 84]

                               YEAS--274

     Abercrombie
     Aderholt
     Akin
     Andrews
     Armey
     Baca
     Bachus
     Baird
     Baker
     Ballenger
     Barcia
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Berkley
     Berry
     Biggert
     Bilirakis
     Bishop
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boswell
     Boucher
     Boyd
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Capps
     Carson (OK)
     Chabot
     Chambliss
     Clement
     Coble
     Collins
     Combest
     Condit
     Cooksey
     Costello
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis (CA)
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Dooley
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Etheridge
     Everett
     Farr
     Ferguson
     Flake
     Fletcher
     Foley
     Ford
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Gordon
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Harman
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hinojosa
     Hobson
     Hoekstra
     Holt
     Honda
     Hooley
     Horn
     Hostettler
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Israel
     Issa
     Istook
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Lampson
     Largent
     Larsen (WA)
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Maloney (CT)
     Manzullo
     Mascara
     Matheson
     McCarthy (NY)
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     Mica
     Miller (FL)
     Miller, Gary
     Moore
     Moran (KS)
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Ortiz
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Rahall
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Sanchez
     Sandlin
     Saxton
     Scarborough
     Schaffer
     Schiff
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shows
     Simmons
     Simpson
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Souder
     Spence
     Stearns
     Stenholm
     Stump
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Wynn
     Young (AK)
     Young (FL)

                               NAYS--154

     Ackerman
     Allen
     Baldacci
     Baldwin
     Barrett
     Bentsen
     Berman
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capuano
     Cardin
     Carson (IN)
     Castle
     Clay
     Clayton
     Clyburn
     Conyers
     Coyne
     Crowley
     Cummings
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Engel
     Eshoo
     Evans
     Fattah
     Filner
     Frank
     Frost
     Gephardt
     Gonzalez
     Green (TX)
     Gutierrez
     Hall (OH)
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hoeffel
     Holden
     Houghton
     Hoyer
     Inslee
     Jackson (IL)
     Jackson-Lee (TX)
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Langevin
     Lantos
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Luther
     Maloney (NY)
     Markey
     Matsui
     McCarthy (MO)
     McCollum
     McDermott
     McGovern
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Moakley
     Mollohan
     Moran (VA)
     Morella
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Pomeroy
     Price (NC)
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Sawyer
     Schakowsky
     Scott
     Serrano
     Sherman
     Slaughter
     Snyder
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Taylor (MS)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu

                             NOT VOTING--3

     Becerra
     Kennedy (RI)
     Latham

                              {time}  1548

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________