[Congressional Record (Bound Edition), Volume 156 (2010), Part 8]
[Senate]
[Pages 10873-10876]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          MUST-DO LEGISLATION

  Mr. GRASSLEY. Mr. President, the legislative business before the 
Senate deals with the so-called tax extenders. These extenders, as 
important as they are, represent only a small portion of the time-
sensitive tax legislative business that needs to be completed.
  I have a chart that I have used the last few days illustrating the 
status of several pieces of absolutely must-do tax legislation.
  Earlier this week, I discussed the lack of action on this year's 
alternative minimum tax. I refer to that as

[[Page 10874]]

an AMT patch. In a day or two, I will discuss the failure of Congress 
to act on the bipartisan 2001 and 2003 marginal rate cuts and Family 
Tax Relief Act.
  This evening, I want to discuss the lack of action on estate tax 
reform.
  Most of my colleagues know this about me--for as many years as I have 
been a representative of the people of Iowa, I have never believed that 
death--a person dying--should be a taxable event.
  Taxing people's assets upon their death is plain wrong, and their 
heirs should not be forced to sell a single asset in order to meet this 
arbitrary tax due date caused by death.
  Company assets should not have to be sold to pay taxes. The market, 
in fact, should determine when things are bought and sold because that 
is the very best measurement when a willing buyer meets a willing 
seller and they agree on a price and a time when a company should be 
sold. In other words, if you have to do it because somebody died, a 
fire-sale approach probably does not determine the true value of that 
property and, consequently, less money to the heirs and even less tax 
money coming in.
  That is where I come from. We ought to repeal the death tax. But that 
is not political reality. The political reality is that there are not 
60 votes in the Senate for that policy. Unfortunately, while repeal is 
the law of the land today, in a few months the law will take a sharp 
turn in the other direction--a wrong direction.
  Under current law, in 2011, we will once again have an estate tax due 
and owing within 9 months of death of 55 percent and even in some cases 
60 percent. That is not right. We force many unwilling sellers to have 
to deal with a very willing shark of a buyer waiting in the murky 
waters of tax uncertainty.
  Some people wonder why I care so much about this issue. Pundits might 
say that Iowa is poor compared to places such as New York City and that 
land and companies are not worth much.
  Much of the press attention has been paid to what the current law 
does this year. For instance, the New York Times printed an article on 
how the current law repeal of the estate tax applies to a Texas 
billionaire who died a few weeks ago.
  We are almost half a year away from a tax policy that a supermajority 
of Senators say they do not support. Yet we are stuck in a mud hole. 
This time-sensitive issue has taken a back seat in this body to 
everything else.
  My colleagues may not know that Iowa has 99 counties, and I have 
visited each of the 99 counties every year for the last 29 years to 
hold town meetings and to get people's opinions. Let me give a couple 
examples I have learned of why I think this issue of doing something 
quickly about the estate tax is a very important issue and a very 
timely issue.
  I want to talk about some people who live in Iowa. Not only do they 
live in Iowa, they have devoted their entire life for multiple 
generations to build businesses and create good jobs for the people of 
rural Iowa.
  Over 44 years ago, Eugene and Mary Sukup started a grain handling and 
storage manufacturing company in Sheffield, IA. Today, the Sukups and 
their two sons and their families are still headquartered in Sheffield, 
IA, population of a whopping 990 people, about 300 more than the town 
in which I live. They employ over 300 people from five different 
counties in good-paying jobs with a good retirement plan.
  In fact, the original employee team that started with them almost 40 
years ago is still there today and, in many cases, the next generation 
has also joined the team.
  This chart depicts one of the main products they make and sell. For 
city folks who are watching, this piece of equipment is a building 
called a grain bin. I have some grain bins such as this on my family 
farm that my son Robin operates.
  I ask unanimous consent to have printed in the Record a short history 
of the innovative efforts of the Sukup family.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Sukup Manufacturing Co is a family-owned and operated 
     company located in Sheffield, Iowa--right in the heart of 
     Midwest farmland. The company manufactures a full line of 
     grain storage, drying and handling equipment, as well as a 
     line of implements.
       The Sukup Grain Handling and Storage Solutions line 
     includes grain bins for both on-farm and commercial storage, 
     grain dryers for on-farm and commercial operations, axial and 
     centrifugal fans and heaters, stirring machines, unloading 
     equipment, bin floors and supports, drive-over hoppers, grain 
     spreaders and Airway' Tubes. The implement line 
     includes cultivators, flail shredders, a wild game food plot 
     planter and grain drills.
       Sukup's focus in manufacturing has been to hire local, 
     reliable employees and provide them with top quality tools 
     with which to do their jobs. Sukup has made a considerable 
     investment in manufacturing technologies. The manufacturing 
     facilities in Sheffield house a number of welding robots, 
     Computer Numeric Control (CNC) Machining Center, CNC Punching 
     Centers, Mazak Lasers, and numerous roll forming machines. 
     The company also utilizes progressive dies to speed 
     production of high-usage parts. Sukup's bin production line 
     is the most advanced and efficient in the industry. When 
     Sukup entered the bin manufacturing business, they had the 
     bin sidewall sheet and roof sheet lines built to their strict 
     specifications by the leader in roll forming equipment. These 
     machines are computer-controlled and maintain extremely tight 
     tolerances that make Sukup Bins the best fitting and easiest 
     to put together in the industry.
       Ultimately, the key to Sukup Manufacturing Co's success has 
     been its innovative ideas that have resulted in over 70 U.S. 
     patents. Sukup Manufacturing Co currently produces a broad 
     line of grain handling and storage systems as well as 
     innovative tillage equipment. Sukup is a market leader with 
     many of their products holding either the number one or 
     number two spot in terms of market share for their respective 
     product categories. In addition, Sukup products are sold not 
     only throughout the U.S., but also in over 50 foreign 
     countries.
       One of the other factors in Sukup Manufacturing Co's 
     success is their long-term employees. Nearly 30% of their 
     full-time employees have been with the company for more than 
     10 years. Sukup equipment is built by people who understand 
     their jobs and the important role they play in producing a 
     successful product. In the past, to reward their employees 
     for their dedication, Sukup has invited employees with 10 
     years of full-time employment with Sukup on a 7-day trip to 
     the Hawaiian islands with their spouse. It is a great 
     opportunity for co-workers to relax and get to know each 
     other away from the workplace, which leads to tighter bonds 
     when they return to their positions within the company.
       If you're ever in the Sheffield, Iowa area (approx. 100 
     miles north of Des Moines or 150 miles south of Minneapolis, 
     just off of 1-35), stop in for a visit. We'll be more than 
     happy to give you a tour of our facilities and introduce you 
     to some of our employees. We're sure you'll be impressed by 
     what you see.

  Mr. GRASSLEY. Mr. President, in addition, they have facilities in six 
other States also contributing to those States' rural economies, such 
as Defiance, OH, Jonesboro, AR, Arcola, IL, Aurora, NE, and Watertown, 
SD--places where good jobs and hard work that is not flashy and does 
not make the scandal page of the big city newspapers are valued in 
those towns as important places of employment and contribute to the 
economy, places where people invest in the local economy and contribute 
as good citizens to community improvement and betterment.
  They used to call these kinds of folks the ``pillars of the 
community,'' in old-fashioned terms. But in today's economy, these are 
folks devoted to American values and small town America. They may sell 
their products all over the United States. They also sell their 
products--would you believe it--all over the world. But you know what, 
they manufacture those products right there in that small community of 
Sheffield, IA. As a family farmer, the Sukups have been successful 
because they make a great product, and this is one of their products.
  I wish to move on to another little Iowa town, somewhat larger than 
Sheffield, the town of Shenandoah. That is where Lloyd Inc. is located. 
Shenandoah is a community of almost 5,000 people--4,944 to be precise. 
Our colleague Senator Ensign is the lone practitioner of animal 
medicine in the Senate. He might be familiar with the products that 
Lloyd Inc. in Shenandoah, IA, puts out.
  It, too, is not a flashy company. They started making animal dietary 
mixes

[[Page 10875]]

in 1958, and now they are a significant provider of veterinary drugs. 
The chart depicts one of Lloyd Inc.'s products. These are different 
animals. I am not going to go into too much detail about them.
  Eugene Lloyd is a doctor of veterinary medicine. He is the CEO of the 
company. Dr. Lloyd has told me the company has never let go of any 
employees due to poor business cycles.
  Lloyd Inc. employs well over 90 well-educated people in this 
community of Shenandoah in southwest Iowa. The company has also 
provided generous health care and retirement plans to their employees, 
and as I said, in rural America, those benefits are very important.
  Finally, both the company and Dr. Lloyd and his family have given 
generously throughout the years to educational scholarships, 
unrestricted grants to Dr. Lloyd's and his wife's alma mater, and 
provided financial and product support to address disasters, both 
locally and internationally.
  Unfortunately, even after vigilant estate planning, these two 
families, the Lloyd and the Sukup family-owned companies will be facing 
a very large combined estate tax bill. That bill could total tens of 
millions of dollars between the two companies. That is tens of millions 
of dollars that will leave the State of Iowa. These companies might 
face a fire sale, and so often in this circumstance a company is sold 
to someone with no interest or no desire to maintain the current 
location or contributions to the community.
  There are two companies, two towns, six counties, four families, and 
hundreds of employees, and all will be hurt if we do not do something 
about the death tax. Businesses will be sold, locations will be shut 
down, real people will lose good jobs. The State of Iowa will lose tens 
of millions of dollars of hard capital invested for over 90 years 
between these two companies. I barely even mentioned how much salary, 
retirement plans, and charitable contributions they have made to those 
little Iowa communities.
  The multinational or foreign companies will come calling. They will 
be circling these home-grown businesses. Trust me, they will. We have 
seen it before. Perhaps they will be accompanied by sharpie hedge-fund 
types from big cities, such as New York, Boston or Chicago. They will 
go to places such as Sheffield and Shenandoah, but they will not go 
there to live. When they arrive we will have no one else to blame but 
us, right here in the Congress, for letting these family-owned 
companies committed to the community go away.
  The punitive death tax policy passionately pushed by my liberal 
friends will have greased the skids. It will have killed the local 
roots of these successful small town businesses. All of us from rural 
America are trying to battle what is called out-migration. If we leave 
the death tax in place in its punitive form, in 2011 it will take away 
jobs, businesses, and people out of rural America. That is why I care 
about this death tax debate: because of real people in real Iowa 
communities invested in expanding in those rural counties.
  It is strange, in New York City, how many multimillionaires live in 
any one block in Manhattan. But those so-called multimillionaires seem 
a little different when you check out the Iowa corn crop or you sit 
together at church or at a grandson's baseball game. They are, as the 
popular book says, ``The Millionaire Next Door.'' They are the pillars 
who help hold up all those 99 counties that I visit every year.
  I know these are not the kinds of stories that make the front pages 
of our big city newspapers. When family businesses are sold and shut 
down or move out of the State or even move out of the United States, it 
certainly makes the front pages of the newspapers that I really care 
about. So when you hear about the number of estates affected, keep in 
mind to some extent that statistic is only a snapshot. The estate tax 
return is filed by the representative of a dead person. Those 
statistics so often dwelled on by many of the proponents of the death 
tax do not capture the full picture. The statistic is only a look at 
the dead person who owned the business or farm. It does not take into 
account the dead person's family, the dead person's employees, the dead 
person's neighbors. All of those folks are affected if the death tax 
burdens that family's business or farm and causes it to move on to some 
other owner and maybe out of the community.
  There seems to be a strategy by the bicameral Democratic leadership 
to slow-walk a resolution of this vexing problem. The slow-walk 
strategy will leave the American people with the current law, and that 
current law is $1 million compared to the zero today or what we could 
have as a compromise between the House and Senate: $3.5 million on the 
one hand, $5 million on the other.
  The junior Senator from Vermont as always is passionate and 
transparent about what he thinks and believes. He has said we should 
retain current law. His position is that $253 billion in revenue gained 
from current law is better spent by those of us in Washington, no doubt 
spent on what the junior Senator believes are valuable programs, 
probably some programs that I support.
  Should his view prevail, however, we will see the essence of the 
economic policy of the Democratic leadership over the past 18 months. 
It will be another income redistribution policy. The President defined 
it a couple of years ago. It will be a program designed to ``spread the 
wealth around.'' More taxes for those who have saved and sacrificed 
during life, more spending on those who are demanding ever more 
generous tax-funded subsidies. That is basically what redistribution is 
all about. It is about folks in this city of Washington ``spreading the 
wealth around.''
  I have heard rumors and read press reports that indicate that various 
Senators have a lot of company in the House and Senate Democratic 
caucuses. For instance, maybe the position taken by the Senator from 
Vermont might have that support. But those who share his view or views 
like that have not been as transparent as the junior Senator from 
Vermont, who is very transparent. You know exactly where he stands, and 
that is an honorable position for any Senator to take. I say that even 
though I disagree with him some.
  The number of quiet supporters of the junior Senator from Vermont may 
be high enough to prevent the Democratic leadership from allowing a 
clean vote on a bipartisan compromise. I believe that bipartisan 
compromise is one of a $5 million exemption and a 35-percent tax rate 
compared to the $3.5 million and 45 percent tax rate in the House of 
Representatives.
  The American people need to hear some data about how current law will 
apply when it goes to that million-dollar exemption. They need to know 
where the revenue will come from. So we always go, around this Senate, 
to the Joint Committee on Taxation. That is a nonpartisan official 
congressional scorekeeper on the issue of taxes--and all taxes. We need 
to also know about the number of affected estates.
  Under current law it will be at least--can you believe it--at least 
10 times higher than what it would be under the Lincoln-Kyl bipartisan 
compromise that I just described, the compromise that would cap the 
death tax rate at 35 percent. It would also provide that unified credit 
equivalent amount of about $5 million.
  So here is that data from that nonpartisan Joint Committee on 
Taxation that you see right here. We are going to talk about current 
law, which is the tax law that is right now going to take effect in 
2011 if we do not do anything. That is going to arrive in just a little 
over 6 months.
  Under current law, 44,000 estates will be taxable. Under the Lincoln-
Kyl compromise, 4,000 estates would be taxable. You can see here, for 
the year 2011, Lincoln-Kyl, 4,000; current law, with a $1 million 
exemption, 44,400 estates. That is quite a big difference.
  It means that current law, the path on which we seem to be slow-
walking, means 10 times the number of estates will be hit by the tax. 
The Lincoln-Kyl compromise means that only the top 10 percent, the 
wealthiest estates, will be hit by the death tax.

[[Page 10876]]

  If you project that out, as this chart does, 8 years of current law 
over the 10 years, you will find that roughly 616,000 estates will be 
taxed over that period, and under the Lincoln-Kyl compromise, roughly 
54,000 estates would be taxable over that period of time.
  To give everyone a bit of perspective, I wish to share some Iowa farm 
data. It is from the U.S. Department of Agriculture. Under current law, 
in a bit over 6 months, with the $1 million exemption that is on the 
law now taking place, the line between a taxable farm and nontaxable 
farm will be that $1 million.
  The U.S. Department of Agriculture reports that there were 92,800 
farms covering 86 percent of Iowa in 2007. In 2007, the average Iowa 
farm was 331 acres. According to a survey conducted by Iowa State 
University in 2009, the average acre was worth $3,371. That means that 
a farm the size of the 2007 Iowa average, at average 2009 prices in 
Iowa, is going to be worth $1,446,801. In 2007, there were 19,302 Iowa 
farms with 500 or more acres worth at least $2.1 million at average 
2009 prices. Now, keep in mind that farmers sometimes carry debt. That 
would reduce the value of the farm. But, on the other hand, farmers 
have other farm-related assets, such as the farm machinery to operate 
it, that are not included in the figures I just cited.
  This data shows that the current-law estate tax could hit many Iowa 
farmers. For those folks working the lands, this is an unwelcome 
certainty. As I indicated earlier, the tax is an impediment to passing 
on the family business--in this case, the family farm. Current-law 
death taxes, quietly supported by, apparently, many Members on the 
other side--and that is that $1 million figure--will act as an 
incentive to break down many family farms and small businesses. These 
family farms and small businesses form the economic backbone of their 
hard-working heartland communities.
  What amazes me is the zeal by some to use tax policy to inflict this 
kind of damage on family farms and small businesses such as the two I 
pointed out in Shenandoah, IA, and Sheffield, IA. All of this is 
somehow supposed to fund an ever-expanding set of Federal benefits to 
many who do not pay any income tax. The signal sent is that those who 
work hard, save, and want to pass something on to their family exist 
solely to fund these bloated Federal programs. So why work hard? Why 
save? Why not work less? Why not go into debt and live beyond your 
means? In the end, the government levels everyone out at death by, as 
the President said, ``spreading the wealth around.''
  I have not touched on the damage being inflicted now by our inaction 
on estate tax reform. At every townhall, I hear from folks--in fact, I 
just finished a half hour monthly television program I do back in the 
State of Iowa. And one of the callers called in: When are you going to 
do something about the estate tax? Kind of embarrassing to tell him. I 
told him to watch my speech that I was going to give just as soon as 
the program is over. So here I am. But everybody at my townhalls--I 
hear from folks who ask these kinds of questions. They ask: What is the 
law going to be? Will it be retroactive? When will the Congress address 
this action? Why delay?
  Recently, I received a letter that was signed by 750 Iowa attorneys 
asking for a resolution of this issue. At a time when families are 
dealing with the emotional and financial stress of the death of a 
family member, why do we add this additional confusion and anxiety for 
the family or for a counselor who cannot even advise his clients on 
what they should do in planning an estate?
  I am afraid I do not have a good answer for these folks, just as a 
few minutes ago on my television program I did not have an answer for 
that person who called in from Pocahontas, IA, wanting to know what we 
are going to do about this. But we do need to get an answer. Hopefully, 
it is one that will be bipartisan, such as Lincoln-Kyl, and limits the 
reach of the death tax to at least the top 10 percent of the wealthiest 
estates. At the very least, we owe the American people an open and 
intellectually honest debate and votes up or down on a very fair 
policy.
  Resolving the estate tax nightmare with real reform is time-sensitive 
tax legislation business. It is nowhere on the Senate's radar screen. 
As I point to this checklist once again that I bring to the Senate 
almost every day, I urge my friends in the Democratic leadership to put 
it on the Senate's radar screen.
  I yield the floor.

                          ____________________