[Congressional Record (Bound Edition), Volume 153 (2007), Part 15]
[Extensions of Remarks]
[Pages 20771-20772]
[From the U.S. Government Publishing Office, www.gpo.gov]




        INTRODUCTION OF CAPITAL GAINS AND ESTATE TAX RELIEF ACT

                                 ______
                                 

                         HON. HARRY E. MITCHELL

                               of arizona

                    in the house of representatives

                        Wednesday, July 25, 2007

  Mr. MITCHELL. Madam Speaker, earlier today I introduced, along with 
my colleague Chris Shays, the Capital Gains and Estate Tax Relief Act, 
a bill to extend key tax cuts that are critical to middle class 
families in my district and across the country.
  If enacted, the Capital Gains and Estate Tax Relief Act would 
preserve the lower tax on capital gains as well as the reduced estate 
tax which are both set to expire in 2011.
  Several years ago, these tax cuts were championed by President Bush 
and a Republican Congress. Clearly the political winds have changed. 
But in the race to distance ourselves from the former congressional 
leadership, I implore my colleagues to give careful consideration to 
these tax cuts before dismissing them.
  They are sensible. They help millions of middle class Americans. They 
encourage investment and make our tax code more fair and more 
predictable.
  After careful consideration, I believe they should be made permanent 
and bipartisan.
  They affect small businesses. They affect the stock holders. They 
affect anyone who owns a home.
  While, a generation ago, these may have sounded like the lofty 
concerns of the wealthy elite, today, these are mainstream, middle-
class experiences.
  In 1983, less than 20 percent of Americans owned stock. Now, between 
IRAs, 401(k)s, and education savings accounts, more than half of 
Americans do.
  And after a decade and a half of low interest rates, more than two-
thirds of Americans are now homeowners. By 2011, the year that these 
tax cuts expire, economists predict that number will reach 70 percent.
  When it comes time to sell your home or trade your stock, capital 
gains taxes prevent you from making optimal financial decisions. This 
is bad for sellers, bad for buyers, and bad for our economy.
  Decisions like these should be based on personal and financial needs, 
such as paying for college or planning for retirement, not the needs of 
the IRS.
  While it would be impractical for us to eliminate the tax on capital 
gains, I believe we can take steps to minimize its harmful effects. 
Most notably, we can make the temporary cut from 20 percent to 15 
percent permanent.
  The estate tax is equally troublesome. Before the temporary tax cuts 
went into effect, anyone with assets of more than $675,000 at the time 
of his or her death was subject to the estate tax. In calculating this 
amount, the government didn't just count the amount of money in your 
bank account. It also counted the value of your home and the value of 
your investments. And if you owned a small business, the government 
counted the value of that business as well.
  As home values began to rise and the number of small businesses 
continued to grow, more and more middle-class tax payers began 
exceeding this exemption.
  This was a particular problem in Arizona, where home prices have 
increased by more than 150 percent in the past decade. But there are 
many States where the growth of real estate has outpaced Arizona's.
  In other words, if a taxpayer purchased a $250,000 home in the 1990s 
and this home increased in value to $625,000, the owner was only 
allowed $50,000 in additional assets before the Federal Government 
started taking

[[Page 20772]]

away 55 percent of everything else that person owned upon his or her 
death. If that taxpayer was self-employed, owned a small business, or 
had money saved in a retirement account, it is easy to see how quickly 
his or her estate could exceed $675,000.
  Home ownership and small businesses are things we want to promote. 
Over the past decade, small businesses have created more than 60 
percent of new jobs in the United States. In Arizona, small businesses 
account for 97 percent of employer businesses.
  But home ownership and small business development are precisely the 
things that are hurt by the estate tax. It makes it harder for family 
businesses to transfer their assets down from one generation to 
another. When combined with capital gains, it makes it harder for 
parents to realize the benefit of the recent housing boom and share 
that benefit with their children.
  I believe we need an estate tax that takes inflation into account, so 
the value of your property today will be the same as what you would 
like to pass onto your children. H.R. 3170 would permanently reduce the 
estate tax by establishing a system for future increases in the estate 
tax exemption based on inflation.
  The Congressional Budget Office estimates the combined costs of 
making these tax cuts permanent to be $332 billion over 10 years. To 
put this in perspective, we are currently spending $124 billion a year 
on the war in Iraq. If we can find that much to help Iraqis with their 
economy, I believe we can find $332 billion to help our own.
  In March, I voted against the Budget Resolution, H. Con. Res. 99, in 
part, because it failed to extend cuts to the estate and capital gains 
taxes. At the time, I expressed frustration with both Democrats and 
Republicans for failing to work together to create a budget that 
incorporates good ideas from both sides of the aisle.
  When I ran for Congress last year, the one thing I heard over and 
over again from voters was how sick and tired they were of partisan 
bickering in Washington that was getting nothing done.
  I believe we can do better. So today I challenge my colleagues, on 
both sides of the aisle, to do the right thing. Consider this 
legislation, not through a caustic, partisan lens, but on its merits. 
The middle class wants Congress to make these key tax cuts permanent, 
and working together, I know we can make that happen.

                          ____________________