ESTATE TAX REFORM
(Senate - June 18, 1997)

Text available as:

Formatting necessary for an accurate reading of this text may be shown by tags (e.g., <DELETED> or <BOLD>) or may be missing from this TXT display. For complete and accurate display of this text, see the PDF.

[Page S5900]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           ESTATE TAX REFORM

  Mr. ALLARD. Mr. President, I rise to make a few comments concerning 
estate tax reform.
  There are a number of things I support in the House tax bill. I am 
pleased to see cuts in the capital gains tax, and I am pleased to see 
tax relief for families with children. However, I am very concerned 
with the proposed adjustment of the estate tax. The estate tax has seen 
a significant change since 1981, and the current $600,000 exemption has 
never been adjusted for inflation. If it had been adjusted, it would be 
worth $840,000 today. The recommended adjustment in the House bill 
would not even keep pace with inflation and would not ease the 
substantial economic burden placed on family businesses and farms.
  The proposed Senate version is better but still needs improvement. It 
raises the exemption to $1 million to all estates by 2008 and would 
exempt an additional $1 million on family farm and business assets.
  At the time of a person's death, their farm or business has already 
been subjected to Federal, State, and local tax. The estate tax is a 
double tax. The estate tax not only places a burden on assets that have 
already been taxed but it does not discriminate between cash funds and 
the nonliquid assets and property that make daily activities possible 
for a family business or farm. These asset-rich, cash-poor businesses 
can have their livelihood eliminated in order to pay a tax of up to 55 
percent--up to 55 percent--of market value of the property left to 
them. Ironically, the estate tax raises only 1 percent of the Federal 
Government's revenue but helps to prevent up to 75 percent of family 
businesses from being passed to a second generation. This practice 
threatens the stability of our families and communities while 
inhibiting growth and economic development.
  I strongly support estate tax relief. The current estate and gift tax 
system poses a great threat to family-owned businesses and farms. I am 
a cosponsor of legislation to increase unified credit and to index it 
for inflation. I am also a cosponsor of legislation to eliminate the 
estate tax entirely.
  Repeal of the estate tax would benefit the economy. George Mason 
University Professor Richard Wagner has stated that the elimination of 
the estate tax would enhance the output of the country by $79.2 
billion--I repeat, by $79.2 billion--and would create up to 228,000 
jobs. Unfortunately, under the current system, the energy that could go 
into greater productivity is expended by selling off businesses, 
dividing resources and preparing for the absorption of an estate by the 
Government.
  The current system leads to the views of an Arizona citrus farmer who 
said of his family business, ``Instead of an inheritance, it's an 
albatross.''
  We must insist that no more American families lose their businesses 
because of the estate tax. We must assure that when a family is coping 
with all the inevitable transition costs of passing a business from one 
generation to the next, the Federal Government is not there as an added 
burden. The working people of the United States deserve better.
  Until we accomplish total repeal, I will be working to reduce the 
burden of this tax. I believe the exemption should be dramatically 
increased and that the current 17 rates should be reduced to one low, 
flat rate. The estate tax should then be effectively abolished for 
family businesses and farms for as long as the assets remain in the 
family. No family business or farm should ever have to be liquidated 
just to pay the estate tax.
  I look forward to working with the Senate Finance Committee to reform 
this outdated and punitive tax system.
  Mr. President, I yield back the remainder of my time.
  Mr. KYL addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. KYL. I thank the Chair.

                          ____________________