[Congressional Record (Bound Edition), Volume 148 (2002), Part 8]
[Extensions of Remarks]
[Page 10460]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 PERMANENT DEATH TAX REPEAL ACT OF 2002

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                               speech of

                    HON. ROBERT E. (BUD) CRAMER, JR.

                               of alabama

                    in the house of representatives

                         Thursday, June 6, 2002

  Mr. CRAMER. Mr. Speaker, I rise today as Co-chairman of the End the 
Death Tax Caucus in support of this bill and in opposition to the death 
tax. Eliminating this unfair provision in our tax code has been a 
priority of mine since becoming a Member of this body.
  Today's death tax places a tremendous burden on America's small 
businesses and family-owned farms, which are at the heart of the 
economic vitality of our communities. Small businesses and farms can 
quickly reach the current low exemption levels for the death tax.
  For example, urban convenience stores invest an average of $1.24 
million per store for land, building and equipment, and rural stores 
invest almost $900,000 per store. Construction companies often need to 
purchase expensive heavy equipment to build our buildings, roads, and 
bridges. Our farmers, machine shops, and many other businesses often 
invest in equipment that involve high capital outlays. The Alabama 
Farmers Federation tells me that much of family farm estates is usually 
locked up in their farmland, which often must be sold to pay the estate 
tax. Too often, this tax has forced American families to liquidate a 
business or farm that was built on years of hard work and sacrifice.
  The tax relief package enacted last year provided temporary relief 
from the death tax. This law provides for a slow drop in death-tax 
rates from 50 percent to 45 percent and then an abrupt drop to zero in 
2010. For some of us--like myself--this reduction does not occur fast 
enough. Over the same time period, the exemption increases from $1 
million to $3.5 million. Regretfully, current law resurrects the death 
tax in 2011, with tax rates as high as 55 percent and an exemption at 
the low level of $675,000.
  This temporary repeal does little to alleviate the estate-planning 
burden on our families. It forces them to play expensive, cumbersome 
games of tax strategy instead of allowing these entrepreneurs to 
reinvest their money and time into building their business. In fact, 
the temporary nature of the current law has made an already-complex tax 
code more complicated, and estate planning more difficult. Estate 
planning for farms is further complicated by the uncertain nature of 
the future net worth of farm operations. This money spent on estate 
planning--both attorney's fees and insurance premiums--would be better 
spent invested back into the business and providing job growth for our 
nation.
  Family businesses spend nearly $14.2 billion a year on estate 
planning and insurance costs. This capital that is used for estate 
planning is an economic drag on family businesses at a time when they 
must deal with other economic burdens beyond their control.
  The sunset provision simply prevents small business owners and 
farmers from taking advantage of the repeal. Unless they know for a 
fact that they will pass on by the year 2010, they must continue to pay 
tax advisors to help them secure their family's welfare in the future.
  According to the IRS, just in the tax year 1999 alone, $227 million 
was collected from the estate tax in my state of Alabama. One study 
shows that permanent repeal would increase our GDP a total of $150 
billion over 10 years, and it could provide an additional 165,000 jobs 
per year. The anti-growth death tax causes small businesses--who are 
undercapitalized in the first place--to cut back on labor, re-
investment, and risk-taking. Studies have also shown that the death tax 
encourages small business owners to sell out or merge with larger 
companies.
  Furthermore, the death tax can encourage the rich to spend down their 
savings on lavish consumption. A Joint Economic Committee study 
estimated that the death tax existence has reduced the nation's pool of 
savings by $497 billion.
  Mr. Speaker, this tax is an unfair tax. It double-taxes income that 
was already taxed when it was earned, It is collected at a time of deep 
grief for our families. And it penalizes those who have worked hard 
over a lifetime to provide for the future security of their family.
  In closing, Mr. Speaker, the time has come to finish the job and get 
rid of this unfair, burdensome tax once and for all. The death tax 
reduces wages, it reduces job creation, it discourages savings, and it 
is a leading cause of the liquidation of small businesses. Permanent 
relief from this death tax is critically important for America's 
family-owned small businesses and farms.
  Finally, let me thank my colleague from Washington and Co-Chairwoman 
of the End the Death Tax Caucus--Congresswoman Dunn--for working with 
me in a bipartisan manner to remove this unfair provision from our tax 
code.
  I urge Members to support this legislation.

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