[Congressional Record (Bound Edition), Volume 148 (2002), Part 1]
[Senate]
[Pages 532-533]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        REPEAL OF THE DEATH TAX

  Mr. KYL. Mr. President, given the fact we are in morning business, I 
wish to speak to the question of the repeal of the death tax to which 
the Senator from Oklahoma just referred. As my colleagues will 
remember, of course, the repeal of the death tax was part of the tax 
package that was passed earlier in the year, but because of the unique 
procedures of the Senate and the rules under which we operate, we could 
only look to a 10-year period, as a result of which, perversely, we 
phase down the death tax and end up repealing it in the ninth year, so 
it is only effective for 1 year before the whole thing sunsets and we 
go right back to the current situation with respect to the application 
of the death tax.
  I do not think most Americans realize that is what has happened, but 
people who have to plan for their estates do realize it has happened. 
This is why a permanent repeal of the death tax now would be so helpful 
as a stimulus to the economy because all of the estate tax planning, 
the insurance, and all the other activities people have to do to 
provide against the possibility of paying the death tax must continue, 
as it has in the last many years, with the uncertainty of knowing 
whether or not, if ever, it is going to be permanently repealed and the 
expenses of all that have to continue to be incurred, expenses that 
could be put into investments so we could create jobs for our economy, 
precisely what the President has talked about doing with his stimulus 
package.
  It is time for us to complete the job we began and see to it that the 
repeal of the death tax is, in fact, permanent and, therefore, 
meaningful.
  Let me note some of the uncertainty that the lack of total repeal 
causes our family businesses, our farms, and individuals.
  As I said, the business owners are going to continue to have to do 
the estate planning that is costly, cumbersome, and time consuming. If 
we repeal permanently the death tax, then these resources can be 
reinvested directly into these businesses, thus creating new job 
opportunities and providing a much needed boost to local economies.
  In June 2001, a bipartisan majority of Congress did, in fact, act 
responsibly and provided this repeal of the death tax, much needed 
relief to our American families, with that historic tax package. But if 
we do not finish the job, we are going to be held in limbo with respect 
to the death tax because it comes right back into play after the end of 
the 10-year period.
  The amendment I have offered will not be voted on until perhaps this 
afternoon. It will repeal the death tax forever so that our children 
and grandchildren will not have to worry about it or plan to have to 
pay for it.
  Actually, last year's tax legislation has had the perverse result 
that more planning is necessary to deal with the death tax than 
currently is the case. Accountants, lawyers, and insurance companies 
are having a field day, frankly, with the uncertainty that is 
encapsulated in the current state of the death tax legislation.
  More planning is needed now because nobody knows for sure if and when 
it will ever be fully repealed.
  The sunset provision adds to the complexity of future death tax 
planning, increasing wasteful costs that are an unproductive drag on 
our economy. Until permanent repeal is certain, family businesses, 
farms, and ranches must continue to pay the high cost of life insurance 
policies, death tax planners, and tax attorneys. These expenses total 
more than $12 billion a year according to CONSAD Research Corporation 
in a study, ``The Federal Estate Tax: An Analysis of Three Prominent 
Issues.'' That is money that could be saved, could be reinvested in 
these businesses to create the kinds of job opportunities the President 
is talking about in urging us to move on with an economic stimulus and 
job creation package.
  Clearly, burying the death tax will enable family businesses, farms, 
and ranches to begin investing those billions and start providing more 
stimulus. A more efficient utilization of these resources will result 
in an immediate stimulus for the economy. More workers will be hired, 
more capital assets purchased, and more productive goods produced if we 
eliminate the confusion over the death tax's repeal.
  I think we all understand why we repealed the death tax in the first 
instance. In addition to the fact that a huge amount of money is spent 
on estate tax planning, studies indicate we spend about the same amount 
each year on the estate tax planning as is paid in estate taxes 
altogether. So it is really a double taxation. We are paying an amount 
of money to deal with the eventuality of paying an estate tax, and that 
is paid by a lot of people who do not end up paying the tax but end up 
having to pay the expenses of dealing with the existence of a death 
tax, and then an equal amount of money is spent in the estate tax 
itself.
  In 2009, families, frankly, who are grieving their lost ones will be 
faced with a potentially high 45-percent death tax rate. Fortunately, 
they are going to be able to utilize a $3.5 million death tax exemption 
which was enacted into law last year, but in 2010 families grieving for 
lost ones will avoid the death tax entirely. They will only have a 
total of $5.6 million of stepped-up basis, but that will effectively 
exempt them from all future capital gains tax, a tax in any event of 
which they would control the timing.
  Then in 2011, families grieving their lost ones will feel the wrath 
of a resurrected death tax returned to its 2001 rate potency. Rates 
will be as high as 60 percent with a paltry $675,000 death tax 
exemption. That is the way our repeal, at midpoint of last year, 
worked. So it is a very unfair and arbitrary treatment for the death of 
family members, as well as, as I said before, creating perverse 
economic incentives.
  One can only imagine the extremes to which a family will go to keep 
fatally ill family members alive in 2009. Nobody wants to predict or 
argue for anyone to die in any particular year, and that is exactly the 
perverse nature of the code that we have created now. Unless one dies 
in the year 2010, they have a big problem. And for heaven's sake, do 
not wait to die until the year

[[Page 533]]

2011. Now what kind of tax policy is that, where we say if one dies in 
the year 2010 they get full benefits of repeal but if they hang on to 
life and die a year later they are right back to where they were a year 
ago with a 60-percent tax rate and an exemption that does not cover 
most of the family farmers and businesses that we are talking about? 
That is horrible moral policy. It is horrible economic policy. It 
cannot be the policy of the U.S. Government and yet that is exactly 
what our repeal last year resulted in, the reinstitution of the tax in 
the year 2010. It is an outrage that our Tax Code would incorporate 
such arbitrary and immoral incentives.
  Of course that is not what we intended when we repealed the tax. It 
is not what we intended when a bipartisan majority voted on that repeal 
and passed it. We really wanted it to be forever, but again it was the 
rules of the Senate that limited us to a 10-year program. So the best 
solution would be to finish the job and permanently repeal the death 
tax effective January 1, 2002. By making the tax repeal permanent in 
2010, Congress can keep the promise it made last year. I think this is 
the only moral way we can respond to this very immoral tax.
  I will have more to say when we actually debate the amendment, but I 
close by asking my colleagues to allow us to present this amendment and 
have an up-or-down vote on it without playing parliamentary games. It 
is possible that somebody could second degree this amendment. We could 
play the game by second degreeing it. We could second degree somebody 
else's amendment with this amendment. We can do all of those things, 
but I think the American people would like for us not to be playing 
games.
  When I go home, that is what I hear all the time: Why do you guys go 
back to Washington and play all of these, as they say, partisan games?
  The repeal of the death tax and the passage of the tax bill was a 
successful bipartisan effort. So I think it is important the majority 
of us who approved that tax package, including the death tax 
provisions, be given an opportunity to vote up-or-down on this 
amendment, which finishes the job we started, and enable us to vote to 
repeal the death tax permanently. If we cannot get that kind of a vote, 
then all we are doing is hiding from the American people our views with 
respect to this issue and allow a lot of people to say, oh, sure, yes, 
I voted for repealing the death tax knowing full well that it was not 
an effective appeal because it only existed for 1 year.
  One better not wait to die the following year if they want to get the 
advantage of what we did. That is a perverse policy. So I urge my 
colleagues to allow this vote, up or down, on the death tax amendment. 
We will be bringing it up this afternoon.
  I am looking forward to a spirited debate on it. At the conclusion of 
that debate, we need to stand up for what is right and true and vote 
yes or no. If my colleagues do not want to make it permanent, then 
stand up and say so and let everybody know exactly where they stand.
  I think the majority of us are going to want to finish the job we 
started, make this tax cut permanent, allow the people who otherwise 
would have to spend $12 billion a year or more on estate planning to 
put that money into more productive enterprises, to create jobs and 
help us get out of the economic doldrums our country is in today.
  It is good policy for the economy but, more importantly, it is good 
policy for small businesses, farms, and the American people.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Is there a time limit on morning business?
  The PRESIDING OFFICER. Up to 10 minutes.
  Mr. GRASSLEY. I ask unanimous consent to have 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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