[Congressional Record (Bound Edition), Volume 158 (2012), Part 12]
[Senate]
[Pages 16604-16605]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               DEATH TAX

  Mr. HATCH. Mr. President, we are in the midst of an intense debate 
about how to deal with the expiration of bipartisan tax relief at the 
end of this year.
  The President and the Democratic Party campaigned primarily on 
raising the top marginal rates. Yet income tax rates are not the only 
tax policy set to expire at the end of this month. If Congress does not 
act, the currently low death tax rates which have previously been 
supported on a bipartisan basis will skyrocket. They will go from an 
exemption amount of $5 million and a tax rate of 35 percent to an 
astonishingly low exemption amount of $1 million and a 55-percent tax 
rate.
  The question is clear: Where are the Senate Democrats on this issue? 
Again, a low death tax has previously been a rare point of bipartisan 
agreement. Yet this past July, my friends on the other side of the 
aisle proposed and passed a bill that included a tax cut extension for 
individuals making under $200,000 or families making under $250,000.
  Conversely, the bill would have designated the millions of families 
in New York, New Jersey, Florida, Virginia, and elsewhere who make in 
excess of $250,000 as rich and subject to higher taxes. Still, when it 
came to the death tax, this bill, which was supported by all but one 
Democrat in this Chamber, was silent.
  In other words, that bill assumed that current death tax rates would 
expire--a crushing blow to America's families and businesses and farms. 
This bill, which, once again, was supported by nearly every Senate 
Democrat, would allow the death tax to skyrocket and the exemption to 
be reduced to the lowest amount in over a decade, creating an 
administrative and compliance burden for nearly 1 million estates.
  Allowing death tax policy to expire is another example of the 
President putting ideology and sentiment ahead of economic reality. 
While the death tax targets the transfer of wealth from one individual 
to an infinite amount of other individuals, the repercussions are felt 
throughout all income levels.
  From a person working in the cornfields, to a cashier at a mom-and-
pop store, to a gas station attendant, the long arm of the death tax 
affects more than the so-called wealthy. It is called the death tax not 
only because it is a tax imposed at a time when family members are 
grieving over the loss of a loved one but also because it can be a 
death sentence for the family businesses and farms that American 
workers depend on for their livelihoods.
  I know a lot of my friends on the other side of the aisle understand 
this. Some have spoken on the floor of the Senate in favor of extending 
the death tax rate. Some have introduced legislation to do so.
  My friend, the chairman of the Finance Committee, where I serve as 
the ranking member, has indicated he would like to see the current 
death tax regime extended. So what is the problem? Unfortunately, bare-
knuckle politics is getting in the way of good policy. And the 
President's insistence on a $2 trillion tax increase is undermining 
progress on resolving the death tax.
  I have been a longtime proponent of repealing the whole death tax. 
Not only is it double taxation and a deterrent to savings, but it also 
sucks up capital in the marketplace. The death tax adds inefficiency to 
our economy. It is what economists refer to as deadweight loss. In 
other words, it creates another burden on our free market system that 
prevents the full potential of economic growth.
  For instance, many family farms have to purchase insurance in order 
to prepare for paying the death tax so they do not end up having to 
literally sell the farm just to pay the death tax. This added cost is 
embedded into the cost of goods when sold. In other words, American 
consumers, American workers, or Americans looking for work are those 
who will ultimately pay the death tax.
  This past July, the Joint Economic Committee analyzed the costs and 
consequences of the death tax. In a report the committee found that, as 
of 2008, the death tax has cumulatively reduced the amount of capital 
stock in the U.S. economy by roughly $1.1 trillion since its 
introduction as a permanent tax in 1916, equivalent to 3.2 percent of 
the total capital stock.
  Coincidentally, since its inception nearly 100 years ago, the death 
tax has raised just under $1.3 trillion in total revenue. By 
comparison, that is equivalent to the U.S. Federal deficit for fiscal 
year 2011 alone. But that was over all those years--100 years. And keep 
in mind, the loss is $1.1 trillion, and yet all it has raised is $1.3 
trillion. So think it through.
  I have some news for those seeking to engage in class warfare. The 
death tax does not reduce income and wealth inequality. Perversely, the 
estate tax creates a barrier to income and wealth mobility.
  In an interview this past year with the Associated Press, Deputy 
Secretary of Agriculture Kathleen Merrigan described an epidemic of 
sorts that is hitting our farmlands across the United States. She did 
not talk about rising fuel prices or droughts. Instead, Secretary 
Merrigan discussed how our country's farmers and ranchers are getting 
older and fewer young people are taking their place. I have heard time 
and time again that the death tax is the No. 1 reason family farms and 
businesses fail to pass down to the next generation.
  Consider also that heirs are often forced to sell an asset of the 
farm in order to meet this arbitrary tax. These assets are likely 
generating revenue and could be a vital part of the family farm. But 
because of the death tax, family farms and ranches are instead forced 
to sell these assets or sell the farm to pay the death tax.
  This chart shows just in a few States the drought-stricken farmers 
who are

[[Page 16605]]

at risk for the death tax in 2013. I have chosen to show South Dakota, 
Nebraska, Iowa, California, Wyoming, and Montana. You can see the 
percentages.
  As you can see from the chart, in South Dakota, farms over $5 
million, 15 percent, farms over $1 million, 49 percent; in Nebraska, 
farms over $5 million, 16 percent, farms over $1 million, 49 percent; 
Iowa, farms over $5 million, 15 percent, farms over $1 million, 47 
percent; California, farms over $5 million, 11 percent, farms over $1 
million, 42 percent; Wyoming--just so I do not leave out the 
Intermountain West--farms over $5 million are 8 percent of the farms, 
farms over $1 million are 33 percent. Or take Montana: Farms over $5 
million are 7 percent of the farms, and farms over $1 million, 30 
percent.
  We ought to repeal the death tax. I do not want these farmers to have 
to sell the farm to pay the death tax. It might make sense in a college 
social justice seminar, but it has no place in serious discussions 
about fiscal policy; that is, the death tax.
  Recently, the Joint Committee on Taxation released an estimate on how 
many more taxable estates, farming taxable estates, and small business 
taxable estates would be affected by the increase in the death tax over 
the next 10 years. This chart I have in the Chamber shows that.
  The numbers are astonishing. If Congress does not act, we will see 
more than 15 times the number of taxable estates, more than 13 times 
the number of small business taxable estates, and a whopping 24 times 
the number of farming taxable estates. And to add fuel to the fire, 
farmers already have to recoup the economic losses incurred from the 
recession.
  This is kicking farmers and ranchers while they are down. The recent 
droughts--and that is what this other chart shows--have caused an 
unprecedented economic hardship. If we decrease the exemption amount 
for the death tax from $5 million to $1 million, just look at how many 
more farms will possibly be exposed to the death tax in certain 
drought-stricken areas.
  As you can see on the chart, that central part, shown in the real 
dark purple or black--whatever that is--that is the big drought area. 
The States shown in red are not as bad, but they still have very severe 
drought. The States shown in the darkened area basically are in extreme 
drought. They have been going through that.
  According to the information compiled from the U.S. Department of 
Agriculture, as you can see on that chart, 15 percent of the farms in 
South Dakota are valued over $5 million. But look at the number of 
farms valued over $1 million--an astonishing 49 percent.
  Look at California: 11 percent of the farms are valued at over $5 
million, but 42 percent of the farms are valued at over $1 million. 
Then there is Montana where 7 percent of the farms are valued over $5 
million but 30 percent are valued over $1 million. Not all of these 
farms will necessarily be impacted by the death tax next year, but I 
can guarantee you that most of them will down the road.
  The fiscal cliff presents us with a pivotal moment. How we tax our 
citizens is ultimately a question of what we stand for. With respect to 
the death tax, the question is whether we stand for families and jobs 
or whether we stand for redistribution regardless of the consequences.
  We need to resolve death tax policy. We can no longer afford to put 
small businesses, family farms, and individuals in a position where 
each year uncertainty about the death tax rate and exemption amount 
causes them to divert income away from creating jobs and toward 
unnecessary death tax planning. This is important stuff, and it is not 
something we can just blindly or blithely wipe out.
  It is time for the President to lead on this issue. The President, 
tellingly, said when he was running for President in 2008 that his 
experience running for President was one of the critical bullets on his 
resume qualifying him for the job. Other than writing and part-time 
teaching, President Obama has made a career running for office. Well, 
he will never run for office again, as far as he is concerned. It is 
time to put aside the campaign and take up the mantle of leadership. It 
is time to make the tough decisions necessary to get our economy moving 
again.
  Resolving the death tax is a good place to start, and should he 
decide to lead, he will find partners on both sides of the aisle to 
join him.
  As you can see from those charts, these are serious matters. To have 
to sell the family farm in order to pay the death tax is not a good 
thing or to have to borrow to keep it alive is not a good thing. To 
have to pay heavy insurance rates through the years to be able to pay 
at least something of the death tax--it may be a better way of trying 
to help, but it puts these farmers and their families in a real bind.
  We should get rid of the whole death tax, but I do not believe our 
friends on the other side are willing to do that. So then the least we 
should do is keep the tax rate at 35 percent, with an exemption of $5 
million, doubled to $10 million for the family. That would help a lot 
of these farmers keep their farms, it would help our country to still 
be an agriculture-related country, and it would stop voracious people 
from hovering over those farms, swooping them up at low rates.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. COONS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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