DEATH TAX REPEAL PERMANENCY ACT OF 2005--MOTION TO PROCEED; Congressional Record Vol. 152, No. 71
(Senate - June 07, 2006)

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[Pages S5534-S5554]
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  The PRESIDING OFFICER. Under the previous order, the hour of 12 p.m.

[[Page S5535]]

having arrived, the Senate will proceed to consideration of the motion 
to proceed to H.R. 8, which the clerk will report.
  The bill clerk read as follows:

       Motion to proceed to the consideration of H.R. 8, to make 
     the repeal of the estate tax permanent.

  The PRESIDING OFFICER. Under the previous order, the time from 12 
p.m. to 3 p.m. shall be divided for debate as follows: From 12 to 
12:30, the majority will have control; from 12:30 to 1 o'clock, the 
minority has control, alternating between the two sides every 30 
minutes until 3 p.m.
  The Senator from Arizona.
  Mr. KYL. Madam President, today and tomorrow could be historic days 
in the Senate--indeed, in the history of our country--because we have 
an opportunity to eliminate what some have called the most unfair tax 
of all. I speak of what has been called the estate tax, or the 
inheritance tax, or more recently has become known as the death tax.
  Just a word of the history of this tax would be interesting to my 
colleagues before I discuss the process by which this consideration 
will occur and some of the reasons why we need to proceed with it.
  It is very interesting that the history of the estate tax actually 
can be traced back to ancient times and the Roman Empire, but the more 
relevant history for purposes of the United States, because we borrowed 
this concept from England, came from the Middle Ages when the sovereign 
or the state, of course, owned all of the assets--the land and even the 
personal property--within the country.
  What would happen is, when the king owned all of the feudal property 
in England, he would grant the use of that property to the people 
within the kingdom. Certain individuals during their lifetimes--let's 
say a farmer--would have the land to till and the farm animals to take 
care of. When that farmer died, in effect, his family would have to buy 
back that property from the king in order to continue to farm that 
land, to raise those farm animals and so forth. When the king died, the 
king would let the estate retain the property on which the payment of 
an estate tax, called a relief, existed. That would then enable the 
family to continue to run the family farm or the family business, to 
put it in modern-day terms.
  It seems very strange indeed in the 21st century we would retain this 
odd and clearly out-of-place custom of having to buy back our property 
from the king. We do not have a king anymore. There has never been a 
king in the United States of America. Our right to property is 
guaranteed in the Constitution. So it seems strange, indeed, that we 
should be following a custom which required us to buy back from the 
king our property when our father or our mother dies, for our children 
to have to buy it back when we die. Yet that is the etiology of the 
estate tax, that you pay the state to continue to enjoy the right to 
the property that you always thought was yours.
  It is a very expensive price, indeed. In recent years, it has been 55 
percent for the largest estates. Clearly, a lot of people could not 
afford this, people who put their life savings into their farm or their 
  I had a friend from Phoenix who owned a printing company. He started 
it himself, and after 40 years built it up to a prosperous printing 
company. He took a modest sum out for he and his family but basically 
plowed everything back into the company because to stay ahead in the 
printing business you had to buy the most modern printing equipment and 
  On paper, his family had a lot of wealth. He had a lot of wealth when 
he died. But it was literally tied up in the company. His family looked 
at the estate tax. They had spent a lot of money buying insurance and 
so on. They found they were going to basically have to pay over half of 
the value of this company to the Government. They did not have that 
money. They did not have that liquid cash. So they had to sell this 
printing company in order to collect the money to pay the Government 
about half of it in the form of an estate tax.

  What happened? This particular man was one of the most generous 
people in the city of Phoenix. He contributed millions of dollars. In 
fact, there is a Boys and Girls Club named after him. Every year his 
wife and his daughter would be involved in charitable activities. I 
know because my wife is one of the best friends of his daughter. They 
headed up charity events and raised millions of dollars for our 
community. When his family had to sell the business to pay the estate 
tax to the Government, they were no longer in a position to do the 
things for the community they had always done. They have remained very 
active and very giving but not to the same extent when they had a 
business to rely upon.
  So this community lost in many ways. It lost a great, locally owned, 
family-owned business. It lost the patriarch of that business, a very 
generous person, who supported the community, and the family, of 
course, has not been able to employ those people. Over 200 people were 
employed in the business.
  One of the modern-day rationales for the estate tax is that it 
prevents the concentration of wealth in just a few families. If there 
is any Nation that you don't have to worry about that, it is the United 
States of America. We are a Nation in which anyone can make wealth--and 
you can lose it quickly. Everyone aspires to get higher on the economic 
ladder. The notion that somehow there are just a few rich families in 
this country controlling everything is, of course, a wild myth. So it 
is not necessary to break it up.
  But what happened when people like my friend Jerry, when he passed 
away and his family had to sell his printing company, what happened to 
the concentration of wealth? It sure took it away from his family, all 
right, though no one would contend they were really among the elite of 
this country. He was a poor Jewish kid from New York who came out west, 
made good, employed a lot of people and did a lot for his community. 
No, they sold to a big corporation, a public company. So the 
concentration of wealth, of course, was enhanced, not lessened, as a 
result of the application of the estate tax.
  It is very hard for small businesses these days, or even small farms, 
to compete with publicly-owned businesses. When the CEO of a publicly-
owned business passes on, nothing happens. The corporation simply goes 
chugging right along. But when the patriarch of a family-owned business 
passes away and half of the money in the business has to be paid to 
Uncle Sam, it can crush that small business. It is one of the reasons 
we need to eliminate this tax. The small family-owned business or 
family-owned farm cannot compete with the giant corporation which does 
not suffer the same kind of tax.
  We should not have to buy back the estate from the king any longer. 
We need to end this most unfair tax of all, the death tax.
  It is interesting that even though most Americans will not have to 
pay the death tax because their estates would fall within the amount 
that is exempted, by very large numbers, they recognize it is a very 
unfair tax. So when public opinion surveys ask people their opinion of 
the tax, the majority of people in this country say they would like to 
end the tax, that it is unfair and it should be eliminated. As a matter 
of fact, this applies to liberal and conservative voters.
  According to a Gallup poll from April of this year, 58 percent of the 
respondents said that the inheritance tax is unfair. It is interesting, 
this poll was taken when Americans were filing their taxes. The death 
tax was called unfair by more people than the despised alternative 
minimum tax. Only 42 percent of the AMT said it was fair. Yet, of 
course, we know that also to be a very unfair tax. It was never 
intended to apply to average Americans. It was put in there to make 
sure that even the wealthiest Americans with all of their deductions, 
exemptions, credits and places to park their money that even they would 
have to pay some tax--even if they did not owe any income tax, they 
would owe an alternative minimum tax.
  Now, that alternative minimum tax, much like the death tax, is 
reaching down to take money from more and more and more Americans. So 
we are recognizing that whatever its good intentions originally, it is 
an unfair tax.
  It is interesting that even though more Americans will be hit with 
the AMT, a greater number of Americans believe the death tax is more 

[[Page S5536]]

than even the alternative minimum tax. Of course, they are both unfair. 
They both need to be eliminated. It shows the sense of fairness that 
Americans have.
  There was a poll taken not long after the Presidential election last 
year. It was interesting to me that while 89 percent of people who 
identified themselves as Bush voters believed the death tax is somewhat 
or very unfair, 71 percent of the Kerry voters also found the death tax 
at least somewhat or very unfair: 25 percent, somewhat; 46 percent, 
very unfair. So this reaches across the economic spectrum; it reaches 
across the political spectrum. Americans know an unfair tax when they 
see it, and they think it ought to be eliminated.

  Of course, the economic theory backs them up. They say it is unfair 
because, among other things, it is a tax on hard work. It is a tax on 
thrift over consumption. It is a tax on assets that have already been 
taxed at least once when they were earned and sometimes multiple times 
as that money has been invested and then returned a profit.
  Americans understand we should have a tax policy that encourages 
savings and encourages working more. When people know that the next 
dollar they earn is going to be taken by the Federal Government or that 
half of everything that is left in this estate could be taken by the 
Federal Government, what is the incentive for them to continue to work?
  Dr. Edward Prescott, a Nobel Prize winner in economics from Arizona 
State University, got that prize by proving the phenomenon that there 
is a direct relationship in how much more people will work and how much 
they have to pay in taxes. When they know most of what they earn, they 
can put back into their business, save, invest or give to their kids, 
they will continue to work. When they know it will go to Uncle Sam, 
guess what. They don't work anymore. That is lost productivity. It is 
lost productivity that damages our entire country, our economy. It 
obviously hurts in job creation. It hurts in our ability to continue to 
enjoy the kind of growth we have.
  The studies verify this. The studies verify, according to the Joint 
Economic Committee, for example, which has done one of these recent 
reports, that the estate tax has reduced the stock of capital in the 
economy by about $847 billion over the last several decades, the last 
60 years. That is almost $1 trillion in lost capital that could have 
been put to work creating jobs and creating products.
  In comparison, the estate tax raised $761 billion in inflation-
adjusted dollars over this same period of time. The bottom line is, 
this is a destructive tax. It is not a tax that helps taxpayers very 
much. It is about 1 percent of the revenues we collect, and, according 
to estimates, Americans actually pay about the same amount in money 
every year to avoid paying the death tax as it brings into the Federal 
  Alicia Munnell, an economist, has made that point. She was a member 
of President Clinton's Council of Economic Advisers. She estimated that 
the costs of complying with the estate tax laws are about the same as 
the revenue raised. It is expected to raise about $28 billion in this 
fiscal year.
  The bottom line is, therefore, it is a very inefficient tax. It 
costs, actually, twice as much as we think it does. It does not bring 
in that much revenue. And certainly it is very detrimental to economic 
growth and to capital formation.
  There is a way we treat this phenomenon in the Tax Code. It really 
tells us how we should treat the estate tax. Think about the unintended 
events that occur in your life. Obviously, death is the chief among 
them. You cannot choose when you die. Everyone knows they are going to 
die, but it is not an event that is a voluntary event or that we decide 
when we are going to do it, certainly not for tax-planning purposes.
  It is much like a couple of other things that are recognized in the 
Tax Code as involuntary events. One of them is what happens when there 
is a theft. Someone breaks into your home and steals a lot of your 
property. You might get the insurance company to give you that money 
back. Should that money be taxed as income when you get it back from 
the insurance company? Of course not. It is merely a replacement for 
what was stolen from you. The Tax Code recognizes this in what is 
called an ``involuntary conversion,'' and they do not force you to pay 
the ordinary income tax on the money you get back when you suffer that 
  It is the same thing for death. Death is not a planned event. Death 
is not something like a sale of property for which you would expect to 
pay a capital gains tax but, rather, something that occurs to you 
involuntarily; certainly you should not suffer a price when the estate 
is passed to you from your loved one, let's say. It comes, of course, 
at the worst possible time in people's lives to begin with, when they 
are grieving the loss of a loved one and now are going to have to pay 
the king to get that loved one's estate. This is not something which 
Americans believe is fair or right or just.

  There is a way we treat this in the Tax Code--involuntary conversion. 
You don't get taxed on it. The same philosophy ought to apply to the 
estate tax. There are a lot of reasons. There are the purely economic 
reasons. There is American public opinion. There is the philosophy of 
the Tax Code. All of these things mitigate against having this unfair 
death tax today.
  What we have done is to, therefore, set up a process by which we can 
take up the House bill which voted overwhelmingly to eliminate the 
death tax. That is H.R. 8. What we are debating now is the taking up of 
H.R. 8 so that we, too, can vote to repeal this fundamentally unfair 
tax. We will have a cloture vote. It will occur presumably sometime 
tomorrow. I urge colleagues to vote yes on cloture so that we can take 
up the House bill.
  Some of my colleagues do not want to support the House bill for full 
repeal. I understand that. They are well aware of the fact that since 
there may not be support for that to get 60 votes, a lot of work has 
been done to develop an alternative which would end the most pernicious 
impact of the tax but still allow some revenue to be collected from the 
most wealthy estates each year. I will discuss that in a moment.
  The bottom line is that in order for us to vote on full repeal or to 
vote on an alternative to full repeal, we will have to support the 
first cloture motion to proceed so that we can take up the House bill. 
Presumably, then, the majority leader would have a cloture vote on that 
underlying bill and people can vote yes or no on that as they please. I 
will vote to repeal the estate tax. Should that fail, we will then have 
the opportunity to vote on an alternative. That alternative has been 
relatively widely discussed, and we will have an opportunity to discuss 
it more later.
  In general terms, what it would do is provide that most people won't 
have to spend the $30 billion a year that is spent on insurance 
policies, lawyers, accountants, estate planners, and the like to try to 
avoid paying most of the estate tax. For most people, under this 
alternative compromise, the exempted amount will be large enough that 
they won't have to worry about it, or if even after the exempted 
amount, their estate will be covered--and with the increase in real 
estate prices today and with the value of businesses and farms going 
up, frequently, simply because of the value of the land or the personal 
property, a lot of estates could get caught even with a generous 
exempted amount. We have a plan that only the capital gains tax rate 
would apply. If that is the case, then, whether you choose to sell the 
property before death or you are willing to pay whatever you have to 
after the exempted amount after death, it is the same. It would be 15 
percent today; after 2010, it would be 20 percent, if that is not 
changed. Everybody knows, therefore, that the penalty, in effect, to 
the Government is the same. You pay on the gain if you sell the 
property before death. If your heirs inherit the property, they would 
pay that same 15 or 20 percent. There may be an addition to ensure that 
the very wealthiest estates pay at a higher rate. That is something we 
are discussing with colleagues.
  The bottom line is, what we will do is make clear that for most 
people, they won't have to worry about the death tax anymore. For the 
very few who do, it would be only the very largest estates which would 
clearly have the financial means of doing something about it.
  We are not going to be able to get to either a vote on full repeal or 
the alternative unless we vote for cloture to

[[Page S5537]]

take up the House bill. That is the critical vote which will occur 
  We have a series of speakers. I believe the Senator from Texas, Mr. 
Cornyn, is next. Then we have Senators Talent, Shelby, Bunning, Allen, 
Thune, and Grassley on the Republican side. I urge them to be here to 
ensure their place in line so that they have an opportunity to speak 
for the allotted time on this important issue, laying the foundation 
for what is going to be a historic vote tomorrow to finally get on the 
process for getting rid of this most unfair tax.
  I urge colleagues' support and yield the floor.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. CORNYN. Madam President, I congratulate Senator Kyl, who has been 
a true champion of this effort and a leader on a bipartisan basis, for 
his good work. I know we were delayed a little bit because we thought 
we were going to come to the floor with this important legislation 
about the time that Mother Nature sent us Hurricanes Katrina and Rita. 
But we are back here through no small effort on the part of Senator 
Kyl. I thank him for his leadership.
  This is an issue which affects my constituents in Texas a lot and 
concerns Americans, as we know, across a broad political spectrum, as a 
result of public opinion polls. It goes back to 2001, when Congress 
passed the Economic Growth and Tax Relief Reconciliation Act which 
included a phaseout of the death tax. Eliminating the death tax was an 
important part of that overall tax relief package which has played no 
small part in the incredible economic expansion we have seen in America 
since that time: 2 million new payroll jobs in the past year; more than 
5 million new payroll jobs since May of 2003; unemployment is at 4.6 
percent, the lowest in almost 5 years; home ownership has reached 
alltime highs, including among those categories of minority owners who 
traditionally have lagged behind in terms of their pursuit of the 
American dream. The economic growth and expansion we are seeing today 
would not have been possible but for the important tax relief this 
Congress passed with President Bush's leadership in 2001 and 2003.
  Unfortunately, because of our budget rules, because of our inability 
to get 60 votes for permanent repeal, Congress has been unable to 
completely eliminate the death tax. The death tax will amazingly 
disappear in 2010 but then rear its ugly head in 2011 and revert to its 
pre-2001 level. In other words, unless we act, the American taxpayer 
will see a huge tax increase.
  This debate is about whether Members of the Senate truly believe that 
death should remain a taxable event for American taxpayers, especially 
those who are hit in a disproportionately disadvantageous way--
ranchers, farmers, and small business owners. I favor eliminating the 
death tax because, fundamentally, it is an unfair tax. Once you earn 
income and pay taxes on your income, then Uncle Sam comes along, when 
your loved one is lying on their deathbed, and says: We want another 
bite out of your savings and assets that have accumulated due to your 
hard work and industry.
  There are those who say this is just to benefit the rich and wealthy. 
That ignores the reality on the ground. The death tax brings the hammer 
down on Texas farmers and ranchers whose most valuable asset is their 
land. To pay this double tax, farmers and ranchers are threatened with 
the prospect of selling just to pay their tax. This is true of small 
business owners who have chosen perhaps not to incorporate or form a 
business organization such that they can take advantage of other tax 
exclusions and exemptions but, rather, this affects small business 
owners in a disproportionately negative way as well.
  The death tax discourages savings. By taxing bequests, the death tax 
discourages small business owners and family farms from saving and 
reinvesting in their business. Many economists bemoan the fact that 
Americans don't save enough compared to other countries. Eliminating 
the death tax would lower the barrier to savings that so many Americans 
  Not only does the death tax discourage small businesses and farmers 
and ranchers from saving, it also hinders their ability to operate from 
generation to generation. The current death tax burden especially makes 
it progressively more difficult for each succeeding generation to keep 
an agricultural operation going. The death tax reduces the inheritance 
available to heirs, again discouraging people from working, saving, and 
investing. We are all familiar with the stories of sons and daughters 
having to sell the family farm their parents gave them so they could 
merely pay the tax bill upon the demise of their loved one.
  The death tax also discourages entrepreneurial activity, which is the 
key to keeping America competitive in the global economy. As ironic as 
it may seem, the former Soviet Union, our opponent in the Cold War, 
understands the positive economic benefits of eliminating the death 
tax. Last year, Russia eliminated its own death tax. In fact, 414 
Members of the Duma, the Russian Parliament's lower house, voted in 
favor of the proposal, a record at the time.
  Dying should not be a further burdensome, expensive, and complicated 
event because of the death tax. Right now, it is. IRS data indicates 
that more than half of the estates of those who die in America are 
required to file a death tax return even though they never owe any 
death tax to begin with. In addition, complying with one or more of the 
complicated parts of the Internal Revenue Code can be crushing when you 
consider that taxpayers need to hire attorneys and accountants, 
appraisers, and other experts to make sure that all their t's are 
crossed and their i's are dotted. Many taxpayers are not lucky enough 
to afford the armies of accountants and tax lawyers needed to avoid the 
death tax through the use of legal and reasonable trusts or 
foundations. The IRS interacts with American taxpayers every day in one 
way or another. It should not be there on the day those taxpayers leave 
this Earth.
  I know there are concerns expressed by some colleagues with regard to 
the budget deficit. There is no doubt that Congress needs to do all it 
can to responsibly control the rate at which we spend on mandatory 
programs which are the primary cause of our deficit, growing as they 
are at the rate of 8 percent or more a year--Medicare, Social Security, 
and Medicaid. Earlier this year, I offered an amendment to the budget 
resolution that would have built on the successes of the Deficit 
Reduction Act and further reduced the growth in mandatory spending. 
Unfortunately, it was not accepted.
  Some advocate keeping the death tax in the IRS Code as the key to 
opening the door of fiscal discipline. I disagree. Following this path 
will lead to nowhere and lead there fast. What it will do, instead, is 
slam the door on ranchers and farmers and family-owned businesses. That 
is not something I am prepared to do. To ensure the economy's continued 
momentum, we need to make sure the permanent elimination of the death 
tax is included in this legislation. We have to end the death tax once 
and for all as a matter of fundamental fairness.
  The fact is, by cutting taxes, we spur economic activity, which, in 
part, accounts for why the budget deficit is actually lower than had 
been projected earlier, because the revenue to the American Treasury 
has increased with the burst and expansion of economic activity. With 
more people working, more people paying taxes, there is more revenue 
into the Treasury. We have been through a recession, national 
emergencies, corporate scandals, and a war. Yet because of the 
President's leadership and the leadership of this Congress in passing 
important tax relief, we were able to put money back in the pockets of 
ordinary Americans so that they could then invest and help grow the 
economy that has benefited us all. Let us not get in the way of that 
important progress by failing to take the necessary action to end the 
death tax once and for all.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BAUCUS. Madam President, the Book of Proverbs says:

       A good man leaves an inheritance to his children's 

  Tomorrow, the Senate will vote on whether the Government should have 
a part in that transaction. Tomorrow, the Senate will vote on whether 
to move to the consideration of a repeal of the estate tax.

[[Page S5538]]

  During a particularly tumultuous time in American history, President 
Ford said:

       Truth is the glue that holds government together. 
     Compromise is the oil that makes government go.

  We are not confronted with the same level of rancor today as when 
President Ford said that. But both of these institutional virtues--
truth and compromise--are as essential today as they were then. To 
achieve true estate tax relief for our constituents, we will need a 
heavy dose of each.
  The estate tax is a difficult issue. Members on both sides of the 
debate have strong feelings. Back home, many of us meet with ranchers, 
farmers, family businesses, and others who feel passionately about the 
estate tax. Some believe that it is an unfair tax. Others believe that 
it is an important source of revenue for government programs.
  Personally, I believe that the estate tax has caused significant 
hardship for families in my home state of Montana. I often hear from 
ranchers and farmers who own land that has become very valuable. Often, 
they have little cash in their pockets to pay the estate tax when 
passing their land on to their children. In Montana, like many other 
places in the West, people are committed to their land. They are 
committed to their way of life.
  Many of my constituents want to pass their ranch or farm on to their 
children. They do not want it divided up. They do not want it spoiled 
by developers. Their children want to stay on the land. They want to 
keep the lifestyle that is so important to them. They love the land. 
They are stewards of the proud western heritage of ranching and 
farming. They take their attachment to the land very seriously. And 
they do not take kindly to the government interfering with their link 
to the land. This is why I support repeal of the estate tax. From my 
view, from Montana's view, a tax that forces ranchers to break up their 
land is a bad tax.
  This is my strongly held belief. But I realize that some of my 
colleagues believe just as strongly that inheritances over a certain 
value should be subject to tax. I understand that anything is possible. 
But it appears unlikely that we are going to change many Senators' 
minds on this issue. Each side is pretty well dug in.
  As a consequence, we are short of the votes required to repeal the 
estate tax outright.
  That is why I have been working together with Republicans and 
Democrats to achieve a compromise on the estate tax. Senator Kyl, in 
particular has made an important effort to reach a compromise. I 
commend him.
  My goal is to pass a repeal of the estate tax. But if we are not able 
to reach that goal, at the very least we should reach a resolution that 
will protect as many Montanans as possible from the estate tax.
  I think that we can accomplish that. But we will need time. It will 
take real effort. It will take concessions. I am committed to that 
  I have met with many Senators from both parties on this issue. Our 
staffs have been meeting for months. We have been working to address 
the details, if we reach an agreement. After meeting with Republicans 
and Democrats on the estate tax, we have considered several proposals 
that will both increase the exemption for estates subject to the tax, 
and lower the rates of taxation.
  These proposals will not eliminate the estate tax altogether. But 
they will--at the very least--eliminate the tax for 99.7 percent of 
Montanans and Americans alike. Only 3 tenths of 1 percent of Americans 
would have to worry about the tax again. That is a very small number. 
Only 31 out of nearly 9,000 estates in Montana would be subject to an 
estate tax in 2006 under the proposals we are discussing.
  We are discussing proposals that amount to roughly half of the cost 
of full repeal. That is the ultimate consensus position. That is the 
  I think that Senator Kyl and I have made good progress. But I am 
willing to listen to other ideas that Members have. We should keep this 
process going. We should continue the work of negotiation. We have not 
finished our work on a compromise. But even so, the majority leader has 
decided to hold a vote on the estate tax.
  Let's be honest. Tomorrow's vote is thus not a constructive step to 
actual reform. It is a political exercise. It is a reward to the noisy 
Washington interest groups that pray on resentment and discord. Both 
Democrats and Republicans are guilty, on occasion, of forcing votes 
just to score political points. But that is not a productive way to run 
the Senate. So what will we be left with tomorrow at the end of this 
vote? Perhaps more distrust of one side from the other. But we will not 
have accomplished the goal that many of us in this body seek: true 
estate tax relief for our constituents.
  As our former Majority leader George Mitchell used to say said: ``Do 
you want to make a statement, or do you want to make law?'' I am 
committed to making law. I will work together with Republicans and 
Democrats alike. I will work with anyone in this body to reach a 
consensus on the estate tax that gives real estate tax relief to 
Montana families, and importantly, has the votes to pass.
  But such a compromise will take time. My hope is that we can return 
to negotiations after this vote. I hope that then we can bring to those 
negotiations a renewed sense of purpose and drive to accomplish a true 
compromise--consistent with the best traditions of this body. We owe 
this spirit of cooperation to the Senate as an institution. More 
importantly, we owe it to the ranchers and farmers and families in 
Montana and across America who expect us to work together for a 
compromise on the estate tax that will provide real relief--not 
political statements.
  Madam President, let us not just make statements. Let us negotiate. 
And let us make the law that will end this tax once and for all.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized.
  Mr. DAYTON. Madam President, today, we are witnessing another display 
of Republican anguish for America's oppressed minority, the rich and 
the super-rich. They suffer from a terrible injustice: They have to pay 
taxes on their millions and multimillions and even billions of dollars 
in accumulated wealth.
  Thanks to my Republican colleagues, the rich and super-rich pay far 
less in taxes than they did 5 years ago. But their sympathy knows no 
bounds. So today we are debating eliminating taxes--not just lowering 
them but eliminating them--on only the wealthiest one-half of 1 percent 
of all Americans, taxes they don't even pay themselves but their 
estates pay after they die.
  This debate is not about saving family farms or small businesses, 
although I personally favor exempting them from all estate taxes.
  This proposal is about eliminating a tax that falls only on the rich 
and the super-rich. When it comes to tax cuts for them, the Republicans 
just cannot do enough. They have done so much already. They lowered the 
top personal income tax rates by more than any other categories. They 
reduced the tax rate for capital gains to 15 percent. President Bush 
wanted to eliminate taxes on dividends, but Congress settled on a 15 
percent rate for that income as well.
  Republicans and a few Democrats--but mainly Republicans--have created 
a Federal Tax Code where a working person with taxable income above 
$28,400, or a head of household with taxable income above $38,400, pays 
much higher tax rates than rich people pay on millions of dollars of 
income from dividends and capital gains.
  Let me say that again. A working American pays a tax rate of 25 
percent or higher on every dollar of earned taxable income above 
$28,400, or $38,400 for a head of a household. A multi-millionaire or a 
billionaire pays a tax rate of only 15 percent on any amount of 
unearned taxable income. Now, there is a tax injustice to the middle 
class working Americans that we should be doing something about.
  But, no, what do my Republican colleagues propose today? More tax 
cuts for only the wealthiest people in America. They don't seem to care 
that they are sacrificing the financial strength and stability of our 
Federal Government to continue these tax giveaways. They are addicted 
to what the nonpartisan Concord Coalition has called the ``most 
reckless fiscal policy in our Nation's history.''
  When George Bush became President, the Federal Government's operating

[[Page S5539]]

budget had just been balanced for the first time in nearly 40 years. 
Now, it is running deficits of $500 billion a year. The entire Social 
Security trust fund surpluses are being spent to cover part of those 
operating deficits. The rest of it is being borrowed. President Bush's 
own budget projects that in fiscal year 2011, the year this proposed 
repeal would become permanent, the on-budget deficit will be $415 
  Total Federal debt will have grown to $11.5 trillion. Over $3 
trillion of that debt will be owed to the Social Security trust fund. 
That is the amount of the trust fund surpluses the Republican tax 
giveaways will squander to pay for them.
  The Federal financial situation only gets worse during the following 
years. According to the Social Security trust fund's trustees, that 
fund will start to run annual deficits in 2016--that is 10 years from 
now--as more and more baby boomers retire. Those annual Social Security 
trust fund surpluses will be gone. Those previous surpluses that 
President Bush and most Members of Congress once promised would be 
saved in a lockbox until needed to pay Social Security benefits will be 
gone, too--gone to pay for part of the tax cuts for the rich and super-
rich. So then the Federal Government's operating budget will be running 
huge deficits.
  The Social Security trust funds will start running big deficits. The 
operating fund will owe the trust fund over $3 trillion, and yet this 
Senate is talking about eliminating a tax on the richest one-half of 1 
percent of Americans.
  This is beyond fiscal irresponsibility. This is fiscal insanity. 
These projections are right from the President's own budget office and 
the Social Security trust fund trustees. The revenue shortfalls are 
catastrophic. We are standing on the look-out tower of the Titanic and 
all we have to do is open our eyes and look at the financial iceberg 
that is dead ahead. My Republican colleagues want to keep going full 
speed ahead. They also want to pour more coal on the fire. The people 
in the first-class cabin will get to enjoy their extra champagne and 
caviar for a short while longer.
  Nobody likes to pay taxes. This country was founded by anti-tax 
rebels. But once it became our country and our Government of we, the 
people, most Americans willingly paid their fair share of the taxes 
necessary for the public services that we collectively want, like 
national defense, education, highways, and the rest.
  There used to be an ethic in this country that if you made more money 
as an individual or a corporation, you paid more taxes. That was your 
fair share. That was a reasonable price to pay for living in the 
greatest country in the world and for being successful in it. Now that 
ethic has been lost. Now too many people and companies want to make 
more and more money and pay less taxes or pay no taxes or get rebates.
  Politicians pander to those desires by offering more and more tax 
cuts because they are popular and they help them get re-elected--while 
still increasing Government spending, because that is popular, too. But 
the result of that lost ethic and the insatiable desire for more and 
more tax cuts in the last year--setting aside Social Security--total 
Federal tax revenues amounted to only three-fourths of expenditures. 
Under existing tax policies, it won't get much better. Under this 
estate tax proposal, it will get worse.

  So the question before us is: Who cares about the future of this 
country? Who will say no to the demands for more money by its most 
privileged people who apparently don't understand or don't care what 
they are doing to the financial future of everyone else? But we do 
know, we, the 100 elected representatives of all the people of this 
great and still strong Nation, we, the stewards of its financial 
treasures and the trustees of the public trust, we do know. It is our 
responsibility to know what eliminating the estate tax would do to our 
Nation's future financial solvency, and there is no possible way to 
responsibly adopt this proposal. There is no way to justify placing the 
financial interests of a few Americans ahead of the financial interests 
of all the rest of America.
  If we eliminate this tax, we might as well eliminate all Federal 
taxes starting in the year 2011 and start over again because the 
Federal tax system will have been irretrievably broken, and it will be 
just a matter of time before everyone finds out and discovers that this 
country's financial future has been squandered by a few in here to 
benefit a few out there. Then there will be hell to pay.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Madam President, we are debating the question of whether 
the estate tax ought to be eliminated. It has been fashionable to call 
this tax the death tax. That is a name conjured up by some PR people 
for a handful of wealthy families whom the New York Times revealed this 
morning have spent $200 million over the last several years trying to 
convince people there is a death tax.
  There is no death tax. None. We do have a tax on the wealthiest 
estates in the country. Currently, the exemption levels of $2 million 
per person or $4 million a couple mean that only one-half of 1 percent 
of estates are taxed.
  To eliminate the estate tax would cost the Treasury $776 billion from 
2012 to 2021. That is the time it would be first fully in effect. That 
doesn't count the interest lost. The interest lost would be another 
$213 billion. So the total cost to the Treasury would be nearly $1 
trillion in the time 2012 to 2021.
  Let's look at our current budget condition because that should inform 
what we do here. Do we have this money? And the answer is clearly no, 
we don't have the money. We already can't pay our bills. This is what 
has happened in the last 5 years. These are the deficits that have been 
run up. They are the biggest deficits in the history of our country. 
This year they are anticipating a deficit of $325 billion. That doesn't 
accurately describe our fiscal condition because what is going to get 
added to the debt this year is not $325 billion. What is going to get 
added to the debt this year is over $600 billion.
  In the midst of this sea of red ink, what our colleagues are talking 
about doing is eliminating another trillion dollars. Let's just stack 
it on the debt. They are not proposing cutting spending to offset this 
amount. They are not proposing other taxes to offset this amount. They 
are proposing borrowing the money. This is our pattern of borrowing 
since this President took over.
  In the last part of his first year, the debt of the country stood at 
$5.8 trillion. We don't hold him responsible for the first year because 
that was a budget determined in the previous administration. But here 
is what is happening to the debt under this President in 10 years--the 
first 5 years we have already seen and the 5-year budget that is before 
us now.
  If the 5-year budget that has been passed in the House and the Senate 
goes forward pursuant to the President's proposal, this will be the 
debt at the end of that period--almost $12 trillion. This President 
will be responsible for doubling the debt of the country.
  Already he has more than doubled the amount of American debt held by 
foreign entities. It took all these Presidents--42 Presidents--224 
years to run up $1 trillion of external debt. This President has more 
than doubled that amount in just 5 years. This is an utterly 
unsustainable course, debt on top of debt.
  The result is, we now owe Japan over $600 billion. We owe China over 
$300 billion. We owe the United Kingdom almost $200 billion. We owe the 
oil exporters almost $100 billion. And now Mexico has gotten on to our 
list of top 10. We owe Mexico $40 billion.
  Most of the added borrowing we have done to float this boat, most of 
the money has not come from our own country. We have borrowed more from 
abroad in the last 5 years than we borrowed from America to finance 
these deficits.
  Our colleagues are saying: Let's go out and borrow another trillion 
dollars, primarily from Japan and China, in order to give a tax 
reduction to one-half of 1 percent of the estates. This makes no 
earthly sense.
  Under current law--here we are in 2006--a couple can shield $4 
million. In fact, with any kind of estate planning, they can shield far 
more than that. In 2009, that will go up to $7 million. That is under 
current law.
  Under current law, in 2009, 99.8 percent of estates will pay zero. 
There is no death tax. There is no death tax.

[[Page S5540]]

There is a tax on wealthy estates, and if we don't get some help from 
the very wealthiest among us, guess what. We are either going to have 
to ask middle-class people to pay more, or we are just going to keep 
running up the debt.
  The proposal of our friends on the other side is just stack it on the 
debt, stack it on top of the debt that has already doubled under this 
administration's watch.

  Already under current law, the number of taxable estates has 
dramatically fallen. In 2000, we had 50,000 estates that were taxable. 
That was down to 13,000 this year. By 2009, it will be further cut to 
just 7,000.
  What is this really about? This is really about a handful of wealthy 
families who, according to the New York Times in this morning's paper, 
have spent more than $200 million over the last several years to 
convince people there is a death tax. I just had a colleague tell me a 
baggage handler stopped him and urged him to end this death tax because 
he was deathly afraid he was going to get taxed. That baggage handler 
doesn't have to worry. One has to have $4 million in their family 
before they pay a penny of tax. With any kind of estate planning, you 
can shield far more than that.
  I recently spoke with a North Dakota estate lawyer. He does more 
estates than any lawyer in my state. I said: Is this estate tax with a 
$4 million exemption per family a problem?
  He said: Kent, it is a nonissue. Not only do you have $4 million, but 
in addition, you have a whole series of things you can do to further 
reduce your tax liability, and on top of that, if you do have any 
liability, you have 14 years to pay if you have a closely held business 
or a farm.
  You have 14 years to pay. People say there is a liquidity problem. 
There is no liquidity problem. The only people who have an issue are 
very wealthy people.
  I would love to be able to say to them that we can dramatically 
reduce your tax burden, but the problem is we can't pay our bills now. 
People say it is the people's money. Absolutely it is. It is also the 
people's debt, and this debt that is going to be added to is in all of 
our names. This is in all of our names. Are we really going to take on 
$1 trillion of additional debt in order to help a handful of very 
wealthy people who really don't need the help?
  We have already heard many of them say: Please, don't do this. Warren 
Buffett, the second wealthiest man in the world, said this makes no 
sense at all. Mr. Gates, the father of the richest man in the world, 
has come before us and said: We don't need this kind of help. We have 
been blessed by being in America. We have had the opportunities of 
being here. We expect to make an additional contribution.
  There is something else that should be mentioned, and that is, we 
have other tax relief we need to consider, and this should be the 
priority over estate tax repeal. Repeal costs $369 billion from 2007 to 
2016. During that same period it would cost $286 billion to extend the 
10-percent bracket. That really does affect people, middle-class 
people. It would cost $183 billion to extend the child tax credit. That 
really does affect middle-class people. And it would cost $46 billion 
to extend the marriage penalty relief.
  I submit these are priorities. These are the issues--extending the 
10-percent bracket, extending child tax credit, extending marriage 
penalty relief--to which we ought to pay attention.
  Finally, this is a quote from the chairman of the Finance Committee 
last year:

       It's a little unseemly to be talking about eliminating the 
     estate tax at a time when people are suffering.

  The chairman of the Finance Committee had it right last year. It is 
unseemly. It is unseemly to be eliminating the estate tax when our 
country is in deep debt, when our country is at war, when our country 
is running up record deficits, and when there are so many other needs 
that are the real priority for the people of this country.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. TALENT. Madam President, is it in order for our side to speak 
  The PRESIDING OFFICER. Without objection, the Senator from Missouri 
may proceed.
  Mr. TALENT. Madam President, I wish to speak a few minutes today 
about the repeal of the death tax and why we ought to do it and, the 
very least, why we ought to vote on it. I do this with a background of 
somebody who chaired the Small Business Committee in the House for two 
terms and had occasion to have hearings on this proposal and on the 
death tax. And more than that, I have spoken over the years with scores 
and scores of small business people and farmers who are penalized by 
this tax in a particularly demoralizing way. I think it is time to get 
rid of it or at least to vote on getting rid of it. We owe that to 
  These are the people who drive America's economy. These are the 
people who create the jobs, who create the technical innovations on 
which we depend. They are particularly hard hit by our death tax, which 
is the most onerous estate tax or death tax in the world.
  Keep in mind that death taxes work on estates that have already been 
taxed. There isn't anything in an estate that hasn't already been taxed 
as a lot of it has already been taxed several times, and our death tax 
allows the Government to come in on the demise of a person and collect 
up to 55 percent of what they have worked for, what they have earned, 
and what they saved in the hope they could benefit their children.
  The death tax is punitive. It costs the economy. It is directed 
precisely at the kind of activity that we need for economic growth and 
at precisely the kind of people who drive economic growth. Repeal of 
the death tax would increase nonresidential investment capital by $25 
billion, an average of 100,000 to 200,000 jobs a year, greater 
disposable income for American workers, and stronger economic growth. 
That is what the economists say when they study it.

  I believe the impact of the death tax is far greater than just what 
the economists have been able to estimate and monetize because it is a 
particularly demoralizing tax. It says to the small businesspeople and 
the farmers, indeed, to everybody who saves and invests, that you can 
do everything you can to build up your business, you can do everything 
you can to build up your farm, you can do all that with a view toward 
benefiting your community, your employees, and making the kind of 
success we want you to make out of your life, you can be successful at 
the American dream, and then the Government comes in and takes more 
than half of it and often takes more than half of it under 
circumstances which have the impact of destroying the whole enterprise. 
This is not speculation; this is what small businesspeople are saying 
and what they have said year after year after year. I know because I 
have had them before my committee.
  Many in Missouri are affected by this tax. Renee Kerchoff is the 
second-generation owner of Rudroff Heating and Air-Conditioning, 
started in Belton, MO. Because her family worked hard, because they 
were willing to take risks, because they reinvested what the business 
earned instead of keeping it for themselves, the business has done 
well. Her father is no longer living. Renee's mother is living. She is 
going through the dilemma thousands and thousands of family 
businesspeople go through in this country every day: she is trying to 
figure out how to save the business when her mother passes away because 
she will owe a huge financial liability to the Federal Government.
  When I was chairing a committee in the House, I had one woman--not 
Ms. Kerchoff but a different woman--break down in front of the 
committee trying to explain how she and her brother were unable to save 
the family business. ``Mr. Chairman,'' she said, ``if we have to sell 
the business, what is going to happen to the employees?'' What happens 
to employees when you have to liquidate a business? What happens to 
employees when you have to sell out to a big company? They get laid 
  Farmers, in the view of this tax, are often considered to be wealthy 
because they have farmland maybe near a suburban area that has gone up 
in value. There are farms in Missouri where the land is valued at $1 
million or more. Those farmers would be surprised to hear that the 
Federal Government believes they are wealthy. A lot of that land is 
near St. Louis or Kansas City. It has gone up in value, but they don't

[[Page S5541]]

have the cash to pay the tax. They are going to have to sell the farm 
to pay the tax instead of passing it on to their heirs.
  This is a common story all over the United States. What are these 
family businesspeople and farmers trying to do? They are reacting to 
this. They don't want to sell the business. They don't want to sell the 
farm. They are spending enormous amounts of time and effort and money 
on lawyers and accountants trying to figure out how to preserve what 
they have built up for their whole lives. Do we want them meeting with 
their brothers and sisters and other family members and spending hours 
and hours on an estate plan, or do we want these innovative and hard-
working people spending hours and hours figuring out how to grow their 
business and create jobs and grow the economy so that the rest of us 
will benefit?
  To me, the answer is clear. We can unleash this layer of people 
around this country by telling them: Look, when you earn money, yes, 
you are going to pay a substantial amount to the Federal and State 
government--and many of them pay 50 percent or more of their income in 
Federal and State taxes--but once you have paid that, what is left is 
yours. It is yours and your family's. You can reinvest it in the 
business, you can build up the farm, and you don't have to have this 
hanging over your head year after year. We are not going to penalize 
you for succeeding at the American dream.
  Heaven knows, enough small businesspeople and farmers fail. They try 
their best, but they don't succeed. And here we have a tax which dates 
back decades and decades, an out-of-date tax which punishes people for 
doing what we want them to do. That is what is wrong with this tax. It 
is economically wrong. It has bad impacts. The think tanks can study it 
and monetize all that and figure out all the bad, negative impacts of 
this tax, but it is just wrong. It is wrong, when a person has spent 
their whole life trying to build something up so they can leave 
something to their kids and their grandkids, for the Government to come 
in and take it all, and that is what it amounts to, especially when 
they have paid taxes on it already.
  We have a weird tax system. We have a tax system that says to people: 
If you spend everything you earn, if you are a small businessperson and 
you take the money out of the business and you consume, if you go out 
and you draw the biggest salary you can draw, you don't expand the 
business, you don't build it up, you don't try to help your employees 
by creating more opportunity for them, you don't try to do anything for 
your community by expanding the economic base of the community, if you 
spend it all, the Tax Code favors that, we think that is OK. But if you 
try to do what my parents and the people of my parents' generation 
routinely did, which is live up to your responsibilities of the next 
generation, you try to save it and invest it and grow it because you 
believe in America, you believe in the future of the country, and you 
want to help your kids or your grandkids or somebody else's kids or 
grandkids, the Government doesn't like that. The Government is going to 
come in and take all of that. Why? Because we are afraid we are going 
to lose revenue.

  I am a believer that if you trust in the American people, in the hard 
work, the decency, the foresight of the American people, we are going 
to do OK with revenue. If we grow this economy, the Government will 
have plenty of revenue.
  At the very least, we ought to vote on this. I believe it is time for 
us to ask, as a body, are we going to filibuster everything? I mean, is 
there no bill we can just allow to come to a vote? If you don't like 
this, vote against it. Now we are filibustering the motion to go to the 
bill. I hope everybody in the country understands that this is a 
filibuster of an attempt just to debate the bill. We are not even going 
to allow that. Despite the expressed wishes of small business 
organizations and farm organizations, despite the trend in the rest of 
the world, we are not even going to debate it. We don't trust the 
American people with their money. We don't trust the small businesses 
and the farmers to expand the economy and to create jobs, and we don't 
even trust ourselves to vote on something. No wonder people are 
  There is still time to do the right thing here. Let's vote on the 
motion to proceed, pass the motion to proceed, debate the bill, and 
then I hope pass the bill--if not a permanent repeal, at least a 
substantial permanent reform that lowers this tax substantially, 
creates simplification, and says to our entrepreneurs, our small 
businesspeople, our investors, our farmers: We trust you, and we 
believe in you. Go out and do what you want to do because we think that 
is good for America.
  We still have the chance to do that. I hope we will.
  I yield the floor.
  Mr. SHELBY. Mr. President.
  The PRESIDING OFFICER (Mr. Thune). The Senator from Alabama.
  Mr. SHELBY. Mr. President, I rise today to voice my strong and 
unwavering support for a full repeal of the estate tax, or the death 
tax, as we often refer to it.
  Until World War I, the Government only imposed an estate tax or 
inheritance tax to raise revenue to fund expenses directly related to 
the necessities of war. Even then, the rate was measured. However, that 
practice changed after World War I, and unlike four previous occasions, 
the tax was not repealed once a peace agreement was reached. In fact, 
the tax continued to increase until it reached 70 percent during 
Franklin Roosevelt's administration.
  What was once a means to finance war eventually became a significant 
revenue stream that funded all aspects of a growing Federal 
bureaucracy. Today, the estate tax continues to provide a significant 
revenue stream to the Federal coffers and functions as a redistribution 
of personal wealth and punishment, basically, to those successful 
business owners seeking a better way of life.
  The death tax places an undue burden on our Nation's family-owned 
farms and small businesses. These individuals work tirelessly day in 
and day out to make their own way, to contribute to society and the 
economy, only to be told their loved ones will be punished when they 
die. Too often I hear sons and daughters forced to sell a piece--if not 
all--of the legacy their parents worked to create and sustain simply to 
pay the estate tax. That scenario is wrong. We should not punish hard 
work and entrepreneurship; we should reward it. We should reward those 
who choose to continue their family businesses rather than shut them 
down. These people work hard to promote prosperity and growth in their 
local communities, only to be told by the Federal Government that in 
addition to the taxes they have paid each and every year, they must now 
pay an additional tax, the death tax, because someone died.
  Taxing death has a negative impact on the desire of Americans to 
invest and to save. A basic economics class will teach you that savings 
and investment are positive for individuals, families, and our economy. 
Punitive taxes such as the estate tax, capital gains tax, dividend tax, 
and the gift tax all have a negative impact on our overall economic 
  In 2001, as my colleagues well know, Congress acted to eliminate the 
estate tax by January 1, 2010. Unfortunately, this provision sunsets in 
2011, just 1 year after it is fully repealed. As it currently stands, 
in 2011 the Tax Code is set to completely reverse all progress we have 
made to reduce the tax burden on our Nation's entrepreneurs. So those 
who are not fortunate enough to die, can you imagine, in 2010 will be 
faced with the prospect of their loved ones being responsible for as 
much as 55 percent of the estate's assets.
  Whether it is a construction company, a cattle farm, a medical 
practice, or any of 100 other businesses, they all require significant 
capital investment in land, equipment, and materials that quickly 
overcome the threshold we will return to in 2011. These investments are 
not part of the business; in most cases, they are the business.
  I am also concerned that, like other taxes I mentioned earlier, the 
estate tax serves as a second bite at the apple. Our current tax system 
too often taxes income and then asks for more. The estate tax or death 
tax is one of the more egregious examples of this situation.
  I believe the Federal Government should work to minimize the burden 
on the American taxpayer and to simplify our tax system. The estate tax 
is contrary to both of these purposes. It not

[[Page S5542]]

only taxes assets a second time, it also is one of the more complicated 
taxes to comply with in our bloated Tax Code.
  I believe repeal of the estate tax is one of the many steps we as 
elected representatives of our respective States and people should take 
to spur economic growth, remove the burden on small business, and 
simplify our tax system, and I urge my colleagues to support immediate 
and full repeal of this tax.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. BUNNING. Mr. President, I rise today in strong favor of 
abolishing one of the most unjustified taxes we have in America today: 
the death tax. Americans should not have to talk to their undertaker 
and their tax man on the same day. Small businesses and family farms 
should not be forced to close down in order to pay the Government money 
because a loved one has passed away. Unfortunately, I see this 
happening when I travel back to Kentucky every week. We are not looking 
out for our economy or our very own people when we charge them for 
inheriting the American dream.
  The mom and pop diner on the corner of our town squares and third-
generation farms in our rural areas are being unduly burdened by a 
repressive Tax Code. In fact, many are forced to close their doors or 
sell out, just so they can afford what the Government says they owe.
  America's prosperity was created by our entrepreneurial spirit, but 
today it is estimated that 70 percent of all businesses never make it 
past the first generation, while 87 percent do not make it to the third 
generation, and only 1 percent make it to the fourth generation. Why? 
One of the big reasons is the burden of the death tax.
  We call this tax the death tax not only because of the time that it 
strikes often unsuspecting families but also because it kills American 
businesses and jobs. The ridiculous complexities of the death tax 
actually favor individuals whose tax lawyers and accountants plan for 
years to shield money from estate taxation. The real people who are 
affected by the estate tax are often small businesses and farms, when 
death catches them unprepared.
  The estate tax is equal to an unfair double tax on savings and 
investment. In short, it is a tax on the American dream, the dream that 
if you work hard and save money you can leave your children with the 
opportunity to live a happier and more prosperous life than you 
yourself did.
  Estate taxes give taxpayers an incentive to save less and spend more. 
We all know that is not what we need in today's economy. The Commerce 
Department reported recently that Americans' personal savings fell into 
negative territory at minus \1/2\ percent last year. We ought to be 
doing all we can to encourage savings, not to penalize people for it. 
We should give grandparents and parents an incentive to leave their 
children with the fruits of their lifelong labors. It is time for the 
Senate to wake up and realize the death tax, which raises only a very 
small portion of our revenue, is ready for its own death.
  Poll after poll has shown us that this is what the American people 
want us to do. Please, let us join the House of Representatives in 
repealing this unneeded, burdensome tax.
  Distinguished colleagues, I urge you to join me in supporting the 
repeal of the death tax today. The time for talk is over. Today is the 
time to take an action that can really make a difference. This is the 
only way we can ensure that our fellow citizens experience the American 
dream, not the American nightmare. I urge my colleagues to vote in 
favor of cloture.
  I yield the floor.
  I make a point of order that a quorum is not present.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. THOMAS. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. THOMAS. Mr. President, I want to make a couple of comments with 
respect to the bill before us now. I just came from meeting with 
Wyoming youngsters who were here with the National Guard, helping young 
people finishing up with their GEDs, and so on. It was very impressive, 
very impressive to have young people moving forward and being able, 
hopefully, to be successful. That has a little to do with what we are 
talking about here today.
  The fact is, the question of how we treat people who have been 
successful, in terms of their business, in terms of their operations, 
is something we are talking about here. We have had, of course, a 
number of discussions on the matter of estate taxes. It seems like we 
have been back and forth on it for a very long time. The problem is 
still there. I think this is a great opportunity for us to do something 
significant about that.
  I have to tell you, in a State such as Wyoming where a lot of people 
are in small businesses and ranches and farms, this is a particularly 
important one. A family works all their lives--several families. They 
put together an operation--not wealthy families, but the value of the 
property is such that when the time comes that the older members of the 
family pass away, they have to sell the property in order to pay the 
tax. It takes it away from the continuation in that family and the 
  I know that is not a brand new idea. I think it is the important 
aspect here, that people have paid taxes all through their processes--
whenever there is a profit, there is a tax; whenever there is a sale, 
there would be a tax. But to force the family to have to sell to 
accommodate the tax as an estate tax seems to me effectively a death 
tax, and that is not the way it ought to be.
  Here is an opportunity for us to do something. I hope we can 
eliminate the tax. If we can't, we need to at least make a reasonable 
agreement as to how it might be done in a way that allows people to 
continue to pass their businesses and their farms and their ranches on 
to their families, and to be able to do it without being forced to 
dispose of the property before their family can continue to do it.
  Mr. President, I yield the floor.
  Mr. ALLARD. Mr. President, I rise to offer my strong support for 
permanent repeal of the death tax.
  It is said that ``a penny saved is a penny earned.'' Unfortunately, 
that is not the case for many Americans--especially those who have 
family businesses and farms. Instead of being rewarded for their 
initiative and determination, entrepreneurs are penalized for taking 
advantage of all this country has to offer.
  For much of the 21st century, the death tax has burdened this 
country's hardest working citizens. It is finally time for Congress to 
permanently repeal this unfair tax. That is why I am pleased to support 
the Death Tax Repeal Permanency Act. Death should not be a taxable 
  Fortunately, the Economic Growth and Tax Relief Reconciliation Act of 
2001 increased the amount that taxpayers can exempt from estate and 
gift taxes and slowly reduced the rate over the period 2002 through 
2009. This act will fully repeal the death tax for 1 year in 2010.
  However, if Congress does not act to make this repeal permanent, then 
the death tax will return to its pre-2001 levels. Failure to 
permanently repeal this tax results in estate-planning uncertainty for 
family-owned businesses and farms that are not sure whether or not to 
anticipate the return of the tax in 2011. Furthermore, failure to 
permanently repeal this tax would reinstate an unfair regime that taxes 
people twice--once on their income and again at their death.
  One of the tenets of a fair tax system is that income is taxed only 
once. Income should be taxed when it is first earned or realized, it 
should not be repeatedly re-taxed by Government. The death tax violates 
this tenet. At the time of a person's death, much of their savings, 
business assets, or farm assets have already been subjected to Federal, 
State, and local tax. These same assets are then unfairly taxed again 
under the death tax.
  One of the most disturbing aspects of the tax is that it can destroy 
a family business, or force the sale of a family ranch or farm. Despite 
what the opponents may claim, this can and does happen. To prove this 
point, I would like to share the story of some of my constituents. The 
Laurence family was forced to sell their 1,810 acres of ranch

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land just north of Carbondale, CO. The daughter of the late Rufus 
Merrill Laurence explained that the death tax forced the sale of the 
family's ranch, land Mr. Merrill had hoped to keep in the family for 
generations to come.
  No American family should lose its business or ranch because of the 
death tax. The problem is that the death tax fails to distinguish 
between cash and non-liquid assets, and since family businesses are 
often asset-rich and cash poor, they can be forced to sell assets in 
order to pay the tax. This practice can destroy the business outright, 
or leave it so strapped for capital that long-term survival is 
  Similarly, more and more large ranches and farms are facing the 
prospect of break-up and sale to developers in order to pay the estate 
  The death tax also discourages savings and investment. Former Federal 
Reserve Board Chairman Alan Greenspan repeatedly warned about the 
dangers of a low national savings rate, and current Fed Chairman Ben 
Bernanke has continued to raise the same concerns. Yet the death tax 
sends the message that it is better to consume today than invest and 
make more money in the future.
  The death tax also undermines job creation. The Heritage Foundation 
estimates that the death tax alone is responsible for the loss of 
between 170,000 and 250,000 potential jobs each year. These jobs are 
never added to the U.S. economy because the investments that would have 
resulted in higher employment are simply not made.
  The death tax also holds back overall economic growth. The Joint 
Economic Committee found that the tax reduces the stock of capital in 
the economy by $497 billion, or 3.2 percent. Permanent repeal of the 
death tax would allow individuals to save more money, spur job 
creation, and allow business resources to be put toward productive 
economic activities.
  America is a nation of tremendous economic opportunity--opportunity 
for ownership that is available to all who go in search of it. Success 
is determined principally through hard work and individual initiative. 
Our tax policy should focus on encouraging greater initiative rather 
than on attempts to limit inherited wealth. The death tax is a relic, 
and should be treated as such. It constitutes double taxation, damages 
family businesses, and harms the overall economy. It is time for the 
death tax to go--and this time, for good.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. REED. Mr. President, I rise today to express my deep concern 
about efforts by the President and some in Congress to repeal or all 
but eliminate the estate tax.
  The estate tax is an important component of our progressive Federal 
tax system, it is the Federal Government's only tax on wealth, and by 
2009 less than one-half of 1 percent of all estates will be subject to 
the tax. Far from being a ``death tax,'' the tax falls on heirs who 
seldom had any real role in earning the wealth built up by the estate 
  The estate tax is simple: when a very wealthy person dies, the 
decedent's estate pays a portion of the total assets to the Federal 
Government and the remainder is then passed on to heirs. Capital gains 
that have built up in the estate tax free are passed on to the heirs on 
a ``stepped up'' basis, and the heirs are not liable for any income tax 
on these gains. No tax is levied if the estate passes to a spouse or is 
donated to charity. The overwhelming majority of estates pay no Federal 
estate tax.
  This tax raises significant revenue, it is highly progressive, and it 
provides an important backstop to the income tax.
  Today, only estates worth more than $2 million are subject to the 
estate tax and an individual will be able to pass along up to $3.5 
million tax-free by 2009. A couple can pass along twice that amount. 
And let's not forget that estate planning often shields even greater 
sums of wealth from taxation.
  The House Committee on Government Reform estimates that the heirs of 
Lee Raymond, former ExxonMobile CEO, and the current CEOs of the five 
largest U.S. oil companies would receive a windfall of up to $211 
million if the estate tax were permanently repealed. The committee has 
also calculated that estate tax repeal could save the heirs of 
President Bush, Vice President Cheney and 11 Cabinet members as much as 
$344 million.
  It would be hard to call this a middle class tax cut without 
pretending a great deal.
  Indeed, the Congressional Research Service reports that in 2004 when 
the exemption was $1.5 million, 99 percent of estates paid no estate 
taxes whatsoever. It bears repeating that less than one-half of 1 
percent of estates will pay any tax at all as the estate tax exemption 
climbs to $3.5 million by 2009.
  Despite the concerns expressed by some farm and small business 
groups, the vast majority of taxable estates are those of 
multimillionaires and billionaires who made their fortunes through 
their business and investments in securities and real estate or were 
born into extremely wealthy families.
  After the President's tax cuts passed in 2001, he took a victory lap 
through Iowa where the New York Times quoted the President as saying:

       I heard somebody say, ``Well, you know, the death tax 
     doesn't cause people to sell their farms.''

  He added:

       I don't know who they're talking to in Iowa.

  Perhaps it was Neil Harl, an Iowa State, University economist whose 
tax advice has made him a household name among farmers throughout the 
Midwest. He has searched far and wide but has never found a case in 
which a farm was sold to pay estate taxes. ``It's a myth,'' says 
Professor Harl, who has only found heirs who wanted to sell the family 
  Even the American Farm Bureau Federation, one of the leading 
advocates of estate tax repeal, can not provide a single example of a 
farm lost due to estate taxes.
  The reality is that only a small fraction of taxable estates consists 
primarily of family-owned farm or small business assets. The Tax Policy 
Center estimates that in 2004, only 440 taxable estates--2 percent of 
all taxable estate--were primarily made up of farm or business assets. 
And the Congressional Budget Office found that the vast majority of 
family farms and small business estates would have sufficient liquid 
assets--such as bank accounts, stocks, bonds, and insurance--to pay the 
tax without having to sell any farm or business assets. CBO also found 
that with a $3.5 million exemption--$7 million per couple--only 13 or 
fewer farms would encounter any liquidity constraints.
  Moreover, there are already special provisions in place to ease tax 
burdens for family-owned small businesses and farms, such as allowing 
additional sums to be bequeathed tax free and permitting estate taxes 
to be paid in installments over 14 years at favorable interest rates.
  So if saving family farms and small businesses is not the real root 
of the repeal effort, you would think that there would be some sound 
economic rationale. However, claims by proponents that eliminating the 
estate tax would encourage saving and investment, reward 
entrepreneurship, and contribute to economic growth turn out to be 
myths as well.
  Repeal advocates argue that capital assets have already been taxed 
during the taxpayer's lifetime, so a tax at death is gratuitous. But 
the reality is that a large share of capital assets has never been 
taxed. Under current law, we have a provision called the ``step-up'' in 
basis that allows capital gains from the appreciation of assets--such 
as a house or stocks--during the decedent's lifetime to escape taxation 
through 2009. In 2010, the lone year in which full repeal is currently 
slated to be in effect, we switch to a ``carry-over basis'' in which 
heirs of large estates would inherit the potential capital gains 
liability that is realized only when the asset is sold.
  In effect, today under the pretax law, the heirs receive the estate 
but on a stepped-up basis--the current value of the home. So for the 
home the father purchased for $30,000 and is now worth $1 million, they 
receive the estate based on the value of a million dollars. No taxes 
were ever paid on that appreciation other than the estate tax.
  The Small Business Council of America opposes the full repeal of the 
estate tax because they estimate that a great number of small business 
owners will be worse off due to the loss of step-up

[[Page S5544]]

in basis and only an extraordinary few will be better off. Four years 
from now, the Halls of Congress will be filled with heirs who won't 
want to pay taxes that they have inherited with repeal of the estate 
  But any economic rationale for repeal falls apart when you learn that 
it will reduce national saving and hurt economic growth. According to 
the Joint Committee on Taxation, making estate tax repeal permanent 
would cost an additional $369 billion over 10 years. This estimate, 
however, dramatically understates the true cost of repeal. The full 
cost of repeal would not be felt until the second decade, beyond the 
time period of the budget estimates. In that decade, the cost of repeal 
could reach nearly $800 billion, plus debt service costs that would 
bring the total to nearly $1 trillion.
  A compromise plan currently circulating in the Senate would 
permanently raise the exemption to $5 million and cut the top estate 
tax rate to 15 percent, which would cost nearly as much as full repeal, 
and it is not much of a bargain.
  Rising federal budget deficits make the cost of repeal or ``repeal-
lite'' even more unpalatable. The drain on the budget would occur at 
the very time that the baby boom generation enters retirement and 
rising Social Security and Medicare costs would strain our budget.
  The President's tax cuts were passed at a time of huge projected 
surpluses in the Federal budget. The surpluses have been squandered by 
this administration and with deficits as far as the eye can see, it is 
simply irresponsible for the President and Republicans in Congress to 
press for full repeal of this tax.
  By financing repeal with debt, we would be replacing the so-called 
``death tax'' for a few very wealthy heirs with a ``birth tax'' for 
all, an action that seems neither wise nor fair. The cost of estate tax 
repeal will be paid for with borrowed money. Future generations of 
taxpayers--who will make significantly less than the deceased 
multimillionaires and billionaires whose estates would no longer owe 
taxes--will have to repay those funds. Estate tax repeal would raise 
the per-person debt burden by about $3,000 in just the first 10 years 
after the tax disappears.
  In 2005, the CEO of ExxonMobile earned $9.1 million. Contrast that 
with the fact that the typical firefighter, police officer, or soldier 
today makes less than $50,000 a year and the inequity of this repeal is 
  Clearly, estate tax repeal will predominately benefit the heirs of a 
handful of very wealthy estates. According to the Forbes 2005 ``World's 
Richest'' list, three members of the Mars family have $10.4 billion 
each and four members of the Walton family have nearly $20 billion 
each. These heirs still rank among the world's wealthiest people even 
after taxes.
  Jamie Johnson, heir to the Johnson and Johnson fortune, put it this 
way, ``I was always told that the American Dream is about getting a 
bigger and better life than your parents have. But that dream was 
accomplished by my great-grandfather. ``
  In their book about the history and politics of the estate tax, Death 
by a Thousand Cuts, Yale professors Michael J. Graetz and Ian Shapiro 
provide an eye-opening account of how a few very wealthy individuals 
and families have been working long and hard behind the scenes on 
repeal efforts. In the meantime, some of the wealthiest Americans--
including Warren Buffett, William Gates, Sr., George Soros, and Ted 
Turner--have warned about the corrosive effect of eliminating the 
estate tax.
  When Teddy Roosevelt endorsed the idea of an inheritance tax, he said 
that its ``primary objectives should be to put a constantly increasing 
burden on the inheritance of those swollen fortunes, which it is 
certainly of no benefit to this country to perpetuate.'' Indeed, our 
Founding Fathers abandoned an economic aristocracy--where large 
fortunes were handed down generation after generation, concentrating 
wealth and power--to create a meritocracy based on the ideal of equal 
opportunity for all. Underlying the estate tax is the notion that 
because our government provides a stable environment for wealth to be 
created and flourish--our financial markets, legal system, regulatory 
system, and strong national defense--society is owed a modest return on 
those investments.
  Television ads last year depicted a World War II veteran supporting 
the repeal of the estate tax, the underlying message being that the tax 
is somehow unpatriotic. Ironically, the estate tax was first adopted in 
the nineteenth century to pay for government shortfalls due to wartime 
  Today, we are at war and yet there is no sense of the shared 
sacrifice that has united this country in past conflicts. Our military 
families are making tremendous sacrifices, and too many of them have 
made the ultimate sacrifice in service to our country. With $320 
billion appropriated or pending for Iraq operations to date and nearly 
2,500 service men and women killed, the human and financial tolls are 
both more staggering than imagined.
  With mounting war costs, the impending retirement of the baby boom 
generation and deficits as far as the eye can see, it is unconscionable 
to think that we are going to vote on repealing one of the most 
progressive taxes on the books.
  There has been a lot of discussion about the death tax. It is not the 
death tax. It is the estate tax. But there is a death tax that is paid 
by Americans to sustain and support this country--and it is terribly 
unfair because it falls on a few. In Iraq, it has fallen upon 2,480 of 
our soldiers. In Afghanistan, it has fallen upon 299. It also falls 
upon the police and fire officers who each day risk their lives and 
some who give their lives. They truly pay the death tax. They will 
never be touched by this estate tax.
  The average base pay of a specialist in the U.S. Army is $24,000. He 
won't be worried nor will his family be worried about the estate tax. 
Firefighters make about $40,000; police officers, $47,000 on average in 
this country. Yet, sadly, too many of them each year for their country 
pay the ultimate death tax. It is more debilitating than any check one 
sends to the IRS.
  What do they need? What do their families need? They certainly need a 
strong, robust economy that will support their families in the future.
  For those young Americans who are wounded in action--and right now in 
Iraq, 17,869--they need a strong Veterans Administration to support 
them years from now just when this repeal of the estate tax burden 
would take its toll and take more and more money away from the Federal 
  They are the ones who really pay the cost. If we pass this measure, 
we won't be able to help them when they need the help. We won't be able 
to support the Veterans' Administration system. We won't be able to 
provide the kind of support for education, for opportunities for higher 
education that will be so necessary for their children.
  This repeal vote misses the point. The death tax was a slogan thought 
up by Republican operatives to sell an idea that does not have a 
compelling economic rationale. But there is a real death tax, and 
sadly, Americans in uniform must pay it for this country every day. 
They will receive no benefit from this repeal. Indeed, our ability to 
help them and their families will be limited in the years ahead.
  I don't think this is just bad policy, it is unconscionable.
  I yield the floor.
  Mrs. LINCOLN. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mrs. LINCOLN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. LINCOLN. Mr. President, I come to the Senate today to discuss 
the issue of estate tax with a little bit of a different perspective 
from some of my Democratic colleagues who have spoken so very 
passionately on this issue already today.
  I respect many of their approaches and concerns, but I come to this 
issue from a little bit of a different perspective. That perspective is 
because I believe the estate tax in its current form is unfair.
  Outright repeal of the estate tax for family-owned businesses and 
farms has been a goal of mine since I entered Congress 14 years ago. I 
have grown up on a seventh generation Arkansas

[[Page S5545]]

farm. I have watched as small communities and family-owned businesses 
have dwindled from their inability to maintain their competitiveness in 
the ever-growing global community, but also with the unbelievable 
challenges they face of the cost of health care, the cost of doing 
business, real estate costs, and others.
  I have seen too many small business owners and farmers in my home 
State restrict the growth of their enterprises in order to avoid facing 
the impossible choice of leaving their families with an up to 55 
percent Federal tax burden or the other option of selling off portions 
of their assets when they die in order to pay that tax.

  However, because of our current budgetary constraints, I do recognize 
outright repeal is not feasible. Not at this time. With that said, it 
is more important than ever that we do what we can now to provide some 
certainty and relief for those who are so drastically impacted by this 
  Last week, I received a phone call from a constituent who owns a 
family trucking and farming equipment business. The business was 
started by the family in 1927. Over the years and through much hard 
work they have grown from a small dealership into a thriving family 
business that now employs more than 450 Arkansans.
  I hope many of us will continue to focus on the issue that small 
businesses are the No. 1 employer in this country and are the least 
likely to send their jobs overseas. They are the foundation, in many 
instances, of our communities. Whether it is the sponsor of our Little 
League teams or the group that is sponsoring the Cub Scout campout, we 
know they are the heart of our communities in rural America.
  Seeing this business grow, we all are thrilled to hear these stories. 
I am particularly thrilled to hear stories of families, families who 
have invested their capital, their hard work, ideas, and their lives in 
their trade, and are ultimately successful in realizing that American 
dream we all talk about.
  This same story is repeated all over our great State of Arkansas, 
whether it be the jewelry store owner in Fayetteville, the meatpacker 
in Morrilton, the car dealer in Springdale, or the timber farmer in 
Monroe County.
  Indeed, these stories can be heard across our entire Nation. Family 
businesses are the engines of our small communities. It is the family-
owned businesses that provide the jobs, the wages, and the health care, 
in most instances, for our constituents. It is the family-owned 
business that sponsors our Little League teams or pays our local State 
and Federal taxes. They are an intricate part of the community. They 
live in our rural communities. They care about what happens to them.
  Yet because of the estate tax, we are forcing them to spend valuable 
assets on estate planning and life insurance rather than creating more 
jobs by investing and expanding their businesses. We are putting them 
at a disadvantage with their publicly traded competitors.
  What kind of risk do major publicly traded corporations have to 
mitigate against with the death of a CEO? None. But a family-owned 
business has to spend tremendous amounts of resources in mitigating 
against that risk.
  I, for one, intend to fight for these family businesses, fight for 
these communities, and fight for these jobs in rural America. 
Unfortunately, as this businessman from my State was quick to point out 
to me, we in Washington have left far too many of these family 
businesses in a quagmire as a result of the erratic estate tax policy 
we set in 2001. Under the Economic Growth and Tax Relief Reconciliation 
Act of 2001, the estate tax will be phased out in 2010 only to come 
back in full force in 2011 at a 55-percent rate.
  For the family-owned business and farms which comprise more than 80 
percent of all business enterprises in America, and which spend tens of 
thousands of dollars each year in planning for this tax, the status quo 
is unacceptable. It is not acceptable because many of our mom-and-pop 
shops are having to lock a significant portion of their capital 
resources into estate planning that may or may not be needed down the 
road. For small businesses with very limited liquidity, the uncertainty 
is paralyzing at a time when we should be giving them every opportunity 
to expand.
  At the expense of our family businesses, this issue has been used by 
some as a political football for far too long. It should end now. It 
can end now. Since current policy was set in 2001, we have revisited 
this issue in the Senate on multiple occasions. However, each time we 
have had the opportunity to act, we have failed to reach a reasonable 
solution, a compromise, which is what most people in this country want 
Congress to do, to come together to bring results for the problems they 
experience, not an end-all-be-all solution but a compromise that gets 
them some results.
  In this Congress, interested parties on both sides of the aisle have 
been at the negotiating table since early last summer. We have the 
information we need to form a compromise solution. We have that 
opportunity now. It is my understanding from leaders on the other side 
of the aisle that should a true compromise be forged on this issue 
prior to tomorrow's vote, a vote on that compromise would be allowed.
  Let me emphasize again, the time for a solution is now. Our economy 
is yearning for the investment of these small businesses, these family-
owned businesses, that can help regenerate what we need in our economy, 
the jobs in our community that we need them to expand on. The time for 
the solution is now, not later.
  We have told these family businesses now is not the time far too many 
times already. I am so very hopeful this time we will do better. We 
know we do not have the perfect solution. But we also know if we do not 
seize the opportunity to provide them the certainty they need to 
continue their businesses, to take the money they are now spending on 
estate planning and reinvest those dollars into the job creation and 
the expansion of their businesses, we will have missed a great 
  We have the opportunity to come together, to provide some certainty 
for these family businesses through the estate tax reform by raising 
the estate tax exemption, reducing that tax rate to a reasonable level. 
Let's not let that opportunity slip away.
  I encourage my colleagues, come to the table. Look at what we have to 
work with. We have enthusiastic American family jobs and businesses 
that want desperately to be a part of making this country strong. We 
have an opportunity to offer them some solutions, some certainty, in 
order to be able to do just that, to give back to this great country 
that has given them the opportunity to create and build a family and a 
family business they are enormously proud of.
  Let us not let this opportunity slip away. I encourage my colleagues 
to please take seriously this issue--not politically, but seriously, 
the issue of the relief that we can provide by coming together on a 
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. MENENDEZ. Mr. President, today we have another clear chance to 
see the priorities of the other side of the aisle. While my Republican 
colleagues claim to have a plan to address gas prices, college tuition, 
and middle-class tax breaks, today the American people can see what the 
true agenda is: another gift to the wealthiest Americans who need it 
the least.
  Tomorrow, we will vote on whether we should consider permanently 
repealing a tax that only affects those who inherit estates larger than 
$4 million. We will be voting on whether repealing this tax should be a 
top priority for the United States Senate. And we will be voting on 
whether repealing a tax for those with multi-million dollar estates is 
a good way to spend the American people's tax dollars--$1 trillion of 
those tax dollars, to be exact.
  In my State of more than 8 million, only 1,100 New Jerseyans paid any 
estate tax in 2004. Of those New Jerseyans who inherited an estate, a 
small 1.5 percent paid any estate tax when the exemption was $2 
million. Today, that exemption has doubled, and in three years, it will 
have more than tripled, so even fewer New Jerseyans will be affected. I 
strongly support giving estate tax relief to family farmers, small 
business owners and others who need it, but that's not what this bill 
does. This bill showers a trillion dollars in benefits on the top half 
percent of Americans at a time of record debt and deficits.
  By contrast, however, more than 120,000 New Jerseyans have benefited

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from a tax deduction for college tuition that Republicans have let 
expire. We had the chance to extend this deduction in the most recent 
tax bill, but somehow, the tuition deduction just didn't make the list 
of priorities in a $70 billion bill of tax cuts.
  We cannot honestly pretend that repealing this tax is a priority for 
the American people; 99.5 percent of Americans aren't affected by this 
tax. And 3 years from now, under current law, even fewer will be 
subject to it. Congress has already acted on the estate tax, increasing 
the exemption level from $1.3 million to $4 million, so that only a 
quarter of the estates taxed in 2000 pay a tax today. Under current 
law, those who inherit a $7 million estate in 2009 will pay no tax.
  And yet, the American people are being told that this is about saving 
them from more taxation. Small businesses are being told that the 
estate tax could be the death of their business. The average American 
is now in fear that they, too, might have to pay a burdensome tax when 
a parent dies. But the American people should see these for what they 
are: scare tactics.
  Instead, the American people should be up in arms that this is the 
issue their Senators think is a high priority. They should be furious 
that instead of dealing with any of the issues they are concerned 
about, instead of addressing energy prices, instead of providing a 
tuition deduction to help families with the cost of college, we are 
talking about repealing taxes for the super wealthy.
  So let's not be swayed by a few stories or scare tactics.
  Instead, let's look at the facts. The fact is that under the current 
exemption, only 135 small businesses Nation-wide have to pay any estate 
tax. The fact is that while full repeal would help those with 
multimillion dollar estates--such as Vice President Cheney, who would 
save up to $60 million from repeal or former Exxon Mobil Chairman Lee 
Raymond, who would save $164 million--full repeal would actually hurt 
most small businesses, according to the Small Business Council of 
  And the fact is, while this may save a few millions for a handful of 
multimillionaires, the American people will be paying off the cost of 
repealing this tax for years to come.
  Let's see this for what it is. This is a tax that does not affect 
99.5 percent of Americans. This is not a tax crisis, and it is not a 
family business crisis. Repealing it is irresponsible. Greater debt 
upon the next generation of Americans for the benefit of a wealthy few 
is morally wrong.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Coleman). The Senator from Virginia.
  Mr. ALLEN. Mr. President, I rise to strongly endorse H.R. 8, the 
Death Tax Repeal Permanency Act of 2005 and urge my colleagues to vote 
for it. This has been brought up year after year for decades. I hope my 
colleagues will vote in favor of giving the death penalty to the death 
tax. It is an unfair tax.
  I like listening to all the different commentaries. The preceding 
speaker from New Jersey was acting as if it is the Government's money, 
that this is the taxpayers' money somehow going to those who have 
estates. It is individuals, human beings. Americans are the ones who 
are the owners of their property, not the Government. My view, as a 
matter of principle, is that death should not be a taxable event. The 
sale of an asset ought to be the taxable event.
  This is an important tax policy that affects family businesses, small 
farms, people all over this country who would like to pass on their 
American Dream, what they worked on and worked for and accrued through 
their lives, to their children.
  I was listening to the Senator from Arkansas who said she wanted a 
solution, fairness, and certainty. There is going to be a chance to 
have that fairness, that certainty and solution. Tomorrow we will vote 
on this measure, and we can repeal the death tax. That will bring a 
solution. It will bring fairness, and it will bring certainty.
  In 2001, I proudly supported efforts to reduce taxes on families, 
individuals, and small businesses, and also to phase out over a period 
of time the death tax. We reduced the death tax in the strange way that 
they do things in Washington. The death tax was at 55 percent. It gets 
reduced over a period of years, until the year 2010, to zero. In 2006, 
it is one amount; in 2008, it is another. By 2010, it is down to zero. 
But then in the year 2011, it goes back up to 55 percent and a 
$600,000-something exemption. One would think in looking at this tax 
policy that the folks in Washington are incentivizing the American 
people to die in the year 2010. If they die that year, there is no 
death tax. If they survive, then they will be subjected to a 55-percent 
tax. This is a strange and odd policy. It hurts hard-working taxpayers 
who wish to leave their life's work to their loved ones.
  It has harmed entrepreneurs and innovators who want to rely on a 
predictable, consistent tax system so that they can invest and create 
jobs and expand opportunity and spur economic growth. This absurd, 
complicated tax policy does not allow people to plan with a simple, 
stable, and certain tax law.
  We have an opportunity to give the death penalty to the death tax 
once and for all. This is the right thing to do for a number of 
reasons. First and foremost is the issue of fairness. Talking about 
whose money is this, if an American man or woman earns money, they get 
hit with an income tax. If they invest it, they get hit with taxes on 
any interest. If they sell an asset that they have invested in, that 
ends up getting hit with a capital gains tax. Dividends are taxed. 
Interest is taxed. If they buy something with that earned money that 
has already been taxed once or twice before, they pay a sales tax. And 
as a practical matter, the Government taxes people to death. Then, 
after they do die, what happens? You have, in effect, the IRS, like a 
bunch of buzzards, hovering around at the funeral trying to get another 
chunk out of what is left from that person who is deceased.
  I like to paraphrase Virginia's first Governor, Patrick Henry: There 
should be no taxation without respiration in the United States of 
America. We do need to get rid of this death tax.
  Part of the American dream is to be able to pass on what you have 
worked for or the business you have started. You may have inherited it 
from someone else or bought it, but you built it up and would like to 
pass it on. A majority of Americans agree. About 70 percent of 
Americans, according to surveys, support it, even if they would not be 
subjected to this tax, because they recognize how unfair it is to be 
taxing death. This is a matter of fairness that the American people 
  The second reason to eliminate the death tax is that it has a harmful 
effect on our economy. In many cases, the assets that are subjected to 
the death tax have already been taxed once or twice or three or four 
times before. That means the death tax is the fourth or fifth tax. It 
drains our economy. It provides little incentive to keep a farm and 
provides little incentive for a business to expand or to improve 
because its value would go up.
  We have done a lot of things in the last few years that are 
beneficial for small business: For example, the $100,000 expensing for 
capital equipment as opposed to $25,000. That new equipment will make 
that company or that enterprise more productive, more efficient, and 
undoubtedly more profitable. But if you keep doing that year after year 
and improving it, you will improve the value of your business, making 
it subject to the death tax which is obviously counterproductive.
  Another way this unfair tax hits people in the Commonwealth of 
Virginia is to look at the outer suburbs, Prince William County, Loudon 
County, the Piedmont of Virginia, the Shenandoah Valley. Someone may 
have farmland or forestry property in the hills and mountains. That 
property, when someone dies, is not taxed at what the value would be 
for running cattle on it or growing trees. It is taxed by the Federal 
Government at its highest and best use. The highest and best use of 
most of this property is not running cattle or growing soybeans or 
timber. It is going to be taxed at what the value would be if it were 
subdivided into a development or if it were along a highway 
commercially. So what happens so often is urban sprawl or suburban 
sprawl in the Piedmont, the Shenandoah Valley, the Richmond area, and 
elsewhere in Virginia and in the country because that forestry property 
will give you just the return when you harvest the timber. But to pay 

[[Page S5547]]

taxes, you will have to get a loan. You are not going to get enough 
income off of that property to be able to pay those taxes. So what 
happens is that that forestry property or that family farm gets 
subdivided to pay the Federal Government death taxes. And whatever 
remains of that farm, if any, after it is subdivided, is a less 
efficient farming or agricultural or forestry operation.
  This does harm people in a variety of ways, not just fairness, not 
just impeding and countering incentives for improving a business. It 
also means for Virginia ending up with more suburban sprawl. Talk to 
developers when they develop a subdivision. It is usually and so often 
from an estate sale where that family cannot keep the family farm 
going, and it changes the nature of many communities.
  I have listened to all the arguments: Gosh, why can't we do this, and 
why can't we do that. We can do a lot tomorrow. We can act. It is 
something that has been promised year after year. Some people may not 
think it is entirely how they would like it, but why not do something 
positive, constructive and useful and follow the will of the majority 
of the Senators. Those of us advocating this are not in the minority. 
We are in the majority. There is a supermajority needed to keep 
proceeding, but stop the obstruction. Let's follow the will of the 
majority of the American people, the will of a majority of the Senate, 
and for tax fairness, for tax simplification, for certainty and 
stability of tax policy, let's kill the death tax once and for all and 
provide new life to the American economy and the American Dream.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from South Dakota.
  Mr. THUNE. Mr. President, I echo what my colleague from Virginia has 
said and rise in support of repealing the unfair death tax.
  It is fair to say that death should not be a taxable event. There is 
decisive majority support in the Senate for repealing the death tax. 
And if you look at what happened in the House of Representatives, 272 
votes in favor of repealing the death tax, a bipartisan vote in the 
House, and a big, bipartisan support vote in the Senate. What is 
happening is it gets filibustered. It takes 60 votes to end the 
filibuster. I hope my colleagues will join with the rest of us, those 
who have chosen to try to block this from consideration, and vote with 
us to at least allow us to proceed to consideration, to proceed to a 
vote, to allow the will of the Senate and what I believe is the will of 
the majority of the people in the country to be worked.
  It is an unfair tax because the Donald Trumps and Paris Hiltons of 
the world, which are the examples most often used by our colleagues on 
the other side, are not going to pay it. They have a team of lawyers 
and accountants who are going to make sure that they pay little or no 
death tax. It is family-owned farms and small businesses that will end 
up paying the tax.
  There are a lot of numbers being put up by both sides in this debate. 
After spending a little time in Washington, it becomes clear that just 
about everyone can find a statistic to support their particular point 
of view. I brought with me some real South Dakota stories that can help 
us understand who the death tax can hit and how it can hurt or even 
shut down a family farm or business.
  Perhaps the most well-known example of a family-owned and operated 
business in my State of South Dakota is Wall Drug. I had hoped to have 
a poster to show it because people across this country, anybody who has 
traveled down interstate 90 in South Dakota has seen signs for Wall 
Drug. Although it currently draws thousands of people every day, Ted 
and Dorothy Hustead never imagined the success of their family-owned 
and operated business. Wall Drug wasn't always the tourist attraction 
it is today.
  In fact in 1931, Ted and Dorothy Hustead and their son Bill moved to 
the prairie town of Wall, SD. Ted was a pharmacist and started his own 
drugstore with $3,000 left behind for him by his father. After a 5-year 
trial, the Husteads were ready to give up their family-owned business 
until Dorothy's extraordinary advertising idea.
  The Husteads began advertising free ice water on the billboards to 
draw people in who were traveling across the hot, vast prairie of South 
  The story is told that before they could get back to the store, after 
putting the signs up on what used to be highway 16 in South Dakota, 
there were already customers streaming into the store to get some of 
this free ice water. The first sign sprung up on highway 16 and it 
turned out to be the key to their success. Today, Wall Drug's 
advertisements are still along the highways of South Dakota, still 
advertising free ice water, along with other more modern draws. Their 
signs can also be seen all over the world, often with the mileage 
dutifully added. My office is 1,565 miles from Wall Drug.
  This didn't happen overnight. In 1951, Ted and Dorothy's son, Bill 
Hustead, joined the business, working to create the family attraction 
that Wall Drug is today. The second-generation Husteads expanded the 
business and increased advertising spending.
  In 1981, Bill's oldest son Rick became the first member of the third 
generation to join the business. Later joined by brother Ted, the 
third-generation owners continue to run the family business based upon 
the same western hospitality once embodied by their grandparents. 
Holding its reputation high, Wall Drug represents America's strong 
entrepreneurial spirit, built on innovation and perseverance and passed 
down through three generations of the Hustead family.
  Why do I use this illustration to tell the Wall Drug story? Because 
it would be a shame to see family operations such as Wall Drug be sold 
off because of an untimely death in the family. That is what might 
happen to this business and these two other South Dakota stories that I 
will share with you. The effect of the death tax is very real on these 
family-owned operations, family-owned businesses.
  In central South Dakota sits a 3,000-acre family farm. I will 
describe it as a medium-sized farming operation in South Dakota--not 
too big, not too small. Unfortunately, a death occurred in the family. 
As a result, $750,000 will likely be paid in taxes. This is a huge 
amount of money for a farm operation in my State, where land values can 
make an operation look a lot more valuable on paper than they are in 
reality. In other words, farmers like this can often be described as 
``land rich'' and ``cash poor.'' All their value is in their land. When 
a massive death tax bill comes due, the only option is often to sell 
the land to pay this unjust tax. Thus, a family legacy comes to an end.
  There is another operation in my State of South Dakota, with 10,000 
acres in the north central part of the State. Like so many farms and 
ranches in South Dakota, the parents who have run the place for decades 
are now advancing in years. In this particular family, the mother 
passed away and the father is getting on in age. Their kids would like 
to continue in the business, but the tax on the farm would likely be 
$1.5 million. That might make it impossible for the kids to stay on and 
keep that family farm alive. I find it very disturbing that our Federal 
Tax Code could influence a family's ability to keep their farm from 
being broken up and sold off.
  These are examples of real family farms that are facing the effects 
of the death tax. This is just not an exercise in the theoretical. Real 
farms, ranches, and real small businesses are watching how the Senate 
is going to act on this important issue. Our action, or inaction, this 
week will affect real businesses in each of our States.
  Mr. President, in my State and other rural States, we are seeing the 
next generation leave for school and, too often, not coming back. We 
need to put in place incentives for our young people to keep rural 
America alive and strong. The death tax is an incentive for exactly the 
opposite effect. It can help push young people away from carrying on 
the family business in rural places. I hope the Senate will do the 
right thing and bring a permanent end to the unfair death tax.
  I will offer one final thought on an argument we are hearing from the 
other side of the aisle. I have heard it said that repealing the death 
tax will add up to $1 trillion to the deficit. We heard a similar 
argument made when it came to reducing the tax rate on capital gains. 
The other side was wrong then, and they will be wrong again this time.
  The analysts who have churned out figures in the trillion-dollar 
range are

[[Page S5548]]

not taking into consideration the nature of the death tax and its 
larger impact on the economy. With the death tax permanently killed, 
family business owners would then reroute tens of thousands of dollars 
from lawyers and accountants hired to avoid being hit by the death tax 
back into their business. There this capital would be used to hire 
another employee or add value to their operation.
  In fact, repealing the death tax would remove the asterisk on the 
American promise of passing your hard-earned business or nest egg to 
your children or grandchildren. The death tax in its current form has a 
chilling effect on the creation of new family businesses that would be 
created if assets could be passed down to the next generation. How many 
next generation beneficiaries would have invested in a new business if 
only they had sufficient capital to do so? How often has the death tax 
prevented this? How many potential jobs were not created as a result?

  The changes in economic behavior if the death tax was no longer a 
factor to consider is hard to determine. But the dividend and capital 
gains rate reductions serve as a good indicator. Those rate reductions 
have paid for themselves many times over in increased Government 
  Last month's budget report from the Treasury Department has tax 
receipts up by $137 billion, up 11.2 percent for the first 7 months of 
fiscal year 2006. The year before, if you look at 2004 to 2005, there 
was a $274 billion increase in Federal revenues, or 14.6 percent more 
Federal revenues for fiscal year 2005. Reducing those taxes spurred 
economic growth and increased Government revenue. That is exactly what 
I expect would happen if we were to eliminate once and for all the 
death tax.
  So I ask my colleagues to take a look at the death tax and getting 
rid of it simply as a matter of bringing fairness to our Tax Code. That 
is how the American people view it; that is how South Dakotans view it. 
Even though many Americans might not have a substantial nest egg to 
pass on to their children, they understand the death tax to be unfair. 
For that reason, they oppose it. They also know that it is those very 
same small businesses, small farms, and ranch operations that are 
creating jobs and making it possible for young people to continue to 
stay in the rural areas of this country.
  One recent poll suggests that 68 percent of Americans support 
repealing the death tax. It is simply unfair for death to be a taxable 
event. I urge my colleagues to allow us to vote, allow us to proceed to 
the debate, and to get an up-or-down vote on the floor of the Senate, 
and to join the House of Representatives, which passed it by a very big 
bipartisan vote--legislation that would repeal and end the death tax 
once and for all.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, I speak in favor of doing away with the 
death tax. To follow a principle of taxation and not just for the sole 
purpose of doing away with the tax, but following on what the Senator 
from South Dakota said, an obvious one is that death should not be an 
incident of taxation--not because it is death, but because when you 
collect taxes in an instance like that, it is like a fire sale. When 
you force a sale at a particular time to pay taxes, the value is going 
to be less than if the marketplace works. So by letting the asset pass 
from one generation to the other and letting the succeeding generation 
sell it according to the willing buyer/willing seller, more money is 
going to come in. That is a principle that has been laid out by the 
Senator from South Dakota.
  Another principle that hasn't been spoken about yet is when to tax 
for Government services--tax income the earliest it is made, and tax it 
once. Beyond that, you ought to let the marketplace decide the value of 
something and tax it accordingly. Under both circumstances, more money 
is going to come into the Federal Treasury.
  So I believe that death should not be a taxable event. Since I have 
been in the U.S. Senate, I have been working on reform of the estate 
tax. Taxing people's assets upon their death is just plain wrong--not 
wrong to the heirs as much as it is wrong to think that you are going 
to get more money into the Federal Treasury that way than if you let 
the marketplace work and determine the true value of something with a 
willing buyer and a willing seller.
  Heirs should not be forced to sell a single asset in order to meet an 
arbitrary tax due date--the due date caused by death. Assets should not 
have to be sold to pay taxes. The market should determine when things 
are bought and sold. That is the best measurement--when a willing buyer 
meets a willing seller and they agree on a price and a time when that 
asset should be sold.
  Unfortunately, under existing law, we have it all wrong. Under 
current law, in 2011 when we will once again have an estate tax due and 
owing within 9 months of death of 55 percent, and even in some cases up 
to 60 percent, that is just not right. It is not right for the family 
involved and it is not the best thing for the Federal Treasury, because 
that is not going to bring in the massive amount of revenue that would 
come in if the marketplace were working. It is not right because we 
have forced many unwilling sellers to have to deal with a very willing 
shark of a buyer who is waiting in the murky waters of tax uncertainty.
  Some people wonder why I care so much about this issue. I have 
reporters from big city newspapers calling me, because I am a U.S. 
Senator, to remind me that Iowa is somewhat economically poor compared 
to very so-called wealthy places, like New York City, and that land and 
companies in the Midwest are not worth much. They take great joy in 
calling up my constituents--probably very randomly--and maybe stopping 
by once or twice for a so-called investigation about the haves and the 
have-nots of our State. They do it trying to find out the grassroots 
feeling about this great tax debate.
  I may not get to write on the front page of a fancy urban newspaper, 
but I do get to talk to a lot of my constituents because I visit every 
county every year to find out what is important to my constituents 
through my town meetings. I will give you, from those meetings, a 
couple of examples, as my colleague from South Dakota did for his 
State, of why I think this debate is so important and this bill is so 
important and this cloture vote should pass.
  Unfortunately, we have it all wrong. 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 up to 60 percent. That just 
is not right. We have forced many unwilling sellers to have to deal 
with a very willing ``shark'' of a buyer waiting in the murky waters of 
tax uncertainty. These are real people who live in Iowa. They have 
devoted their entire lives, for multiple generations, to building 
businesses and creating good jobs for people of rural Iowa.

  Over 40 years ago, Eugene and Mary Sukup started a grain handling and 
storage manufacturing company in Sheffield, IA. On my family farm, my 
son and I used Sukup equipment to store our corn and soybeans and to 
use drying equipment for drying corn for storage. So I know that the 
Sukups, as a family manufacturing business, have a quality product and 
they serve their customers well, and they serve all Iowa well in the 
sense of jobs. Today, the Sukup family and the next generation of two 
sons and their families are involved; they are still headquartered in 
this little community of Sheffield, IA, with a population of 968 
people. But they employ over 300 people from 5 different counties, in 
good-paying jobs, with good retirement plans. In fact, the original 
employee team that started with them 40 years ago is still there today, 
and, in many cases, the next generation of that family has also joined 
the team.
  In addition, the Sukups' facilities in other States, also 
contributing to the economy of those other States, like Defiance, OH; 
Jonesboro, AR; Arcola, IL; Aurora, NE; and Watertown, SD-- places where 
good jobs and hard work that isn't flashy and doesn't make the scandal 
page of big city papers are valued as important ingredients of down-
home, good living. These are the places where people invest in the 
local economy and contribute to the community as good taxpaying 

  Let me tell you about another little Iowa town, Shenandoah. That is 
where Lloyd Inc. is located. It, too, is not a flashy company. They 
started making

[[Page S5549]]

animal dietary mixes in 1958 and now is a significant provider of 
veterinary drugs. Eugene Lloyd is a doctor of veterinary medicine and 
the CEO of the company. He tells me that the company has never laid off 
employees due to poor business cycles and employs over 80 well-educated 
people in Shenandoah, a town of less than 6,000 people.
  The company has also provided generous health care and retirement 
plans to their employees and, like I said, in rural America, those 
benefits are very important.
  Unfortunately, even after vigilant estate planning, these two family-
owned companies will be facing a combined estate tax bill of well over 
$40 million. That is $40 million that will leave the State of Iowa. The 
companies will probably face a fire sale and so often, it is sold to 
someone with no interest or desire to maintain the current location or 
contributions to the community. So there are two companies, two towns, 
6 counties, 4 families and hundreds of employees, all of which will be 
hurt if we don't do something about the death tax. Businesses will be 
sold, locations will be shut down, and real people will lose good jobs 
and the State of Iowa will lose $40 million of hard capital invested 
for almost 90 years between the two companies. Not to even mention how 
much salary, retirement plans and charitable contributions they have 
made to those little Iowa communities.
  So when the multinational or foreign companies come calling, we have 
no one else to blame but ourselves for letting these family owned 
companies committed to the community go away.
  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 suck jobs, businesses, and people out of rural America.
  That is why I care about this death tax debate--real people, in real 
Iowa counties that have entire communities that would care. It is 
strange, in New York City, how many multimillionaires live on any one 
block in Manhattan?
  Those so-called multimillionaires seem a little different when you 
check out the Iowa corn crop, or you sit together at church or the 
grandson's baseball game. They are, as the popular book says ``the 
millionaire next door,'' they are the pillars that help hold up all 
those 99 counties that I visit every year. I know these are not the 
kind of stories that make the front page of the big city papers, but 
when family businesses get sold and shut down or moved out of State or 
even out of the United States, it certainly makes the front page of the 
newspapers about which I really care.
  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 the dead person. Those 
statistics, so often dwelled on by many of the proponents of the death 
tax, don't capture the full picture. The statistic is only a look at 
the dead person who owned the business or farm. It doesn't take into 
account the dead person's family, employees, or neighbors. All of those 
folks are affected if the death tax burdens that family business or 
  I plan to vote for cloture, and I hope 60 other Senators also vote 
for cloture on Thursday. It is time we had a real debate on a 
reasonable solution to this problem. Kicking the can of tax uncertainty 
is draining dollars out of these family owned businesses, just as well 
as the estate tax, only the expense of planning for these uncertainties 
takes money every month and not just all of it within 9 months of 
death. Vote yes on cloture. We owe these folks an answer.
  The PRESIDING OFFICER. The Senator's time has expired.
  The Senator from Delaware.
  Mr. CARPER. Mr. President, I have asked my staff to see if they can 
find some charts--maybe the kind of charts prepared by our friend, 
Senator Conrad.
  Let's look at this first chart. One of the charts I asked to see if 
they can find is a chart that deals with what has happened in this 
decade under current law with respect to the amount of an estate that 
is excluded from the estate tax so we can see what it looks like over 
time and what the rates look like over time.
  As I recall, the amount that could be excluded from the estate tax in 
2001 was about $1.35 million. It went up to $2 million, $3 million, and 
this year it is about $4 million combined, two people in a family, 
husband and wife, and then I believe in 2009 there is $3.5 million 
excluded for each spouse, for a total of $7 million for a family in 
which there are two people. The amount of the tax, going back to 2001, 
I believe was about 55 percent. Over time it has been decreasing, so 
that in 2009 the amount of the estate that will be excluded from the 
tax is $7 million, and I believe the rate is 45 percent. The next year, 
in 2010, there is no estate tax, and then in 2011 we go back to where 
it was in 2001, which is again about a little less than $1.5 million, 
and the rate would be 55 percent.
  People like to have some certainty in their lives so they can do 
planning for a whole lot of activities. Certainly businesses like to 
have certainty so they can do planning. That is especially true when 
folks are trying to develop business plans or estate plans. When we 
look at a tax that goes from an exclusion of $7 million at a rate of 45 
percent to the next year having no tax, and the year after that we will 
be back where we were in 2001, that certainly doesn't provide the kind 
of certainty under which businesses or families like to operate.
  My hope is that during the course of this debate or this year, we can 
come up with some certainty. There are folks who would like to see the 
estate tax go away altogether. When I was Governor of Delaware, we 
actually eliminated the inheritance tax. We cut taxes 7 out of 8 years. 
Can you believe that, Mr. President? We reduced taxes 7 out of 8 years. 
We also balanced the budget 8 years in a row.
  The concern in getting rid of the estate tax altogether is we didn't 
balance the budget last year or the year before that, and we are not 
going to balance the budget this year or for as far as the eye can see. 
In fact, the way to come closest to reducing the deficit, as the 
administration would have us believe, to cut it in half, is to assume 
we are not going to spend any more money in Iraq the next year and the 
year after and we are not going to spend any more money in Afghanistan 
or do anything to fix the alternative minimum tax, which is likely to 
cost us some money--in fact, a whole lot of money. If we ignore all 
those items, we can pretend the deficit will be cut in half, but I 
don't think we can in good faith ignore them.
  Let me see what else we have in charts that might be worth looking 
at. This chart gives us some idea of the percentage of the estates that 
are going to be taxed in 2009. Again, this is if we consider a $7 
million exclusion with a rate of about 45 percent. It says that in 
2009, only 0.2 percent of estates will be subject to that tax. If we 
exclude everything up to $7 million, that doesn't leave very many 
estates. That is 2 estates out of 1,000 which would have to pay 
anything at all. And even in 2009, the rate would be down from 55 to 45 
percent. This chart shows a pie. That is a pretty small sliver out of 
that pie. Actually, it would probably be a lot slimmer than that if we 
really wanted to show it in proportion.
  Let's take a look at one more. This chart shows how many estates were 
being taxed in 2000--roughly 50,000. When we go up to the $7 million 
exclusion for a husband and wife, the number of taxable estates is down 
to about 7,000.
  I wish we had another chart that actually showed what the value of 
the estate tax is in revenues to the Treasury. I don't know if we have 
a chart showing that information. If we can take a look, that would be 
  Some folks like to call the estate tax the death tax. That is 
actually pretty clever. But I always think of it as the estate tax.
  I think of something I call the birth tax. It is a tax that every 
child born in the country this year inherits upon their birth because 
it is the amount of our debt that accrues to them and, frankly, to the 
rest of us. The amount of money we owe as individuals as a personal 
obligation--again, take the total amount of our debt divided by the 
total number of people, and we are talking about tens of thousands of 
dollars. In fact, if we look not just at the money that is accumulated 
debt but if we look at that more on an accrual

[[Page S5550]]

basis, we are looking at a birth tax that is not $20,000 or $30,000 per 
person but maybe 10 times that amount of money.
  This is the cost of the estate tax repeal. We generally only look 
ahead 5 years. We have been raising the amount of estates that are 
excluded and lowering the tax rate for the last couple of years--
actually, the last 5 years--and the amount of money lost to the 
Treasury is actually pretty small.

  Starting right about 2010, it jumps rather considerably, and it looks 
like it is $60 billion a year starting in 2012, and it just climbs to 
2021 and almost $100 billion a year. This wouldn't concern me if we had 
a balanced budget. This wouldn't concern me if we had a reasonable 
prospect for a balanced budget. This concerns me because we don't have 
a balanced budget and we don't have any prospect for a balanced budget 
going forward. For us to go willy-nilly into eliminating the estate tax 
altogether is just imprudent--woefully imprudent.
  Should we do nothing? Should we just let the clock continue to tick, 
so we get to 2009 with a rate of 45 percent and $7 million excluded 
from the estate tax, and then in 2010 it all goes away, no estate tax, 
and then in 2011 it comes back to where it was 10 years earlier? Does 
that make sense? I don't think that makes much sense, either. Rather 
than simply criticize those who make the estate go away, we ought to 
find a middle ground, a third way, and the third way says: What can we 
do that is fair and reasonable to farm businesses, families, and so 
forth, and at the same time will not make the budget deficit look like 
this or this much worse going forward?
  The approach I like is we go back to where we will be in 2009 if we 
don't change the law. There are several of us who are going to 
introduce legislation to do this. I am not sure who will be in the 
lead. I will be one of the cosponsors. It says: Let's think about 
providing continuity and certainty. Let's acknowledge the fact that 
moneys should be excluded from the estate tax. And what is a reasonable 
level? Right now, we are at $4 million for a family, and in 2009 it 
will be at $7 million. We are going to suggest we exclude not just in 
2009 but in 2010 and 2011 at least $7 million.
  I believe we should index that amount going forward, just stay at $7 
million for the next 10, 20, 30 years, but it will go up every year in 
conjunction with some deflator, the CPI or something such as that, and 
say the rate that is going to be effective in 2009 on the money in 
excess of the $7 million that can be excluded is 45 percent and lock it 
in at 45 percent for a while. So not only in 2009 will the amount 
excluded be $7 million, but in 2010 we will exclude $7 million, maybe 
with a CPI adjustment, and in 2011, $7 million, again adjusting 
according to inflation, but the rate would stay the same at 45 percent.
  I wish I had a chart that actually shows how that would affect this 
accumulation of debt, our deficit. It would reduce by about 70 percent 
the amount of red ink. It wouldn't eliminate it entirely, but we 
wouldn't be looking at numbers of close to $100 billion a year in 2021. 
We might be looking at $30 billion. We wouldn't be looking at $50 
billion a year in lost revenues to the Treasury; we would be looking at 
something more like $15 billion.
  If people don't think we should have the estate tax where it was in 
2001, that is not going to make them too happy because it is still a 
fair amount of loss to the Treasury, but it is not this huge loss to 
the Treasury. As long as we are running these huge deficits with little 
prospects of things getting better anytime soon, we need to find a 
middle ground, something more fiscally responsible and something 
responsive to what has been expressed to me by our farm families and 
small businesspeople.
  We are going to have a chance to vote on a cloture motion on the 
motion to proceed tomorrow. I understand those who want to eliminate 
the estate tax entirely would like to prevail tomorrow and they would 
like to go forward. I don't know if the cloture motion on the motion to 
proceed tomorrow is going to pass. If it doesn't pass, rather than 
throwing up our arms and saying that is it for another year or two, I 
hope we will actually take a closer look at what some of us are going 
to be introducing either today or tomorrow which says that $7 million 
is a reasonable amount of money to exclude from the estate tax, which 
is lower than the current rate on estates, 45 percent for everything 
above $7 million is not an unreasonable level, and see if we can't work 
toward that goal.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. LAUTENBERG. Mr. President, I am sure it is not going to be a 
surprise to anyone here that I am opposed to the repeal of the 
inheritance tax. Now, I don't believe people ought to be taxed beyond 
what is normal by increasing taxes here or there, but I do have a 
problem with figuring out ways to reduce taxes, inheritance taxes, on 
the wealthiest among us. We are talking about wealth that staggers the 
imagination, that is so vast that the average American can't even 
comprehend it. We are talking now about making it easier for the 
wealthiest among us to pass along the fortunes that some of them worked 
hard for, a lot of them inherited, and for the next generation who is 
waiting for dad or mom to pass away so they can make sure they can keep 
up with the yachts and the airplanes and the things of that nature. I 
don't say that everybody who is wealthy is spoiled or has bad values, 
but I think we have to look very carefully at what we are doing in the 
circumstances in which this country is living.
  To give an example, this is like saying, if you are in debt, deeply 
in debt, the best way to solve your problems is to go out and borrow 
more money to pay off the old debt. It sounds foolish, doesn't it? But 
that is what we are about to do if we chip away at the taxes that are 
now--the revenue that is now collected through inheritance taxes.
  At first glance, it sounds like a good idea to get rid of the 
inheritance tax. When you look below the surface, you learn that 
repealing it is a bad deal for the vast majority of Americans.
  There is a lot of misinformation being passed around about who pays 
this tax. We have even given it a name that makes it so repulsive that 
as soon as you hear it, you say: Wow, what is this, a death tax? Do you 
mean you have to pay a tax for dying?
  No. You have to pay a tax for making so much money that life can 
forever be comfortable. Not a bad thought, but at what cost? That is 
the thing that we are concerned about.
  Here is the truth: One-half of 1 percent of the estates this year 
will be subject to tax. I don't know how many people who make $45,000 a 
year can understand what happens with one-half of 1 percent of the 
estates in this country of ours. What it says is that 99.5 percent of 
the estates left are not subject to any tax. To be even considered for 
this tax, an estate must be worth at least $2 million.
  For any of you who hear my voice or look at the figures you see in 
the paper, remember, when someone says to you: You don't want that 
death tax out there, do you? It doesn't affect you unless you are worth 
at least $2 million. Then, on top of that, there are all kinds of tax 
shelters and exemptions. So very few people pay the tax. As a matter of 
fact, the average rate that estates pay is somewhere in the high teens, 
and rarely ever approaches the 55 percent marginal rate, which is the 
highest of them all. So I think some of my colleagues have to 
understand the history of the inheritance tax.
  I was very lucky in my lifetime. My father died very young and left 
my mother a widow when she was 37 years old, and I was already in the 
Army. I had enlisted in the Army just over--well, over 62 years ago. My 
mother was this young, struggling widow, deep in debt because my 
father, who was a very healthy man, got sick on the job, and it took a 
year to rob him of his strength and his energy, so that there was 
nothing left except grief and debts my mother had to pay.
  I was the beneficiary, as a result of my military service, to get 
something called the GI Bill. The GI Bill said to those who serve: We 
are going to help you make up for some of the years that we took for 
you to protect our country and protect our ideals, and we are going to 
provide funds for you to improve your lot, to get an education, to make 
up for the time lost, for building a career. The GI Bill sent me to 
college. I never would have been able to

[[Page S5551]]

go. It would never have been available to me.
  When I graduated high school, I had a job loading trucks. That is 
what my life was like. But good fortune struck me, and the 
opportunities that America gives were mine in abundance.
  I went to Columbia University. I went to the business school there. I 
sit on that school's board now. I look back in amazement at what good 
fortune that I had. I created a company with two other fellows named 
ADP, Automatic Data Processing. Automatic Data Processing is a company 
that today employs 44,000 people in 26 countries in which we serve. 
Three guys from factory-working fathers, two of them are brothers, and 
my father, all worked in the same kinds of factories in Patterson, NJ. 
So life was good.
  We presented a new idea in America, those years when we started. It 
was called outsourcing. It was the opportunity for companies to render 
specialized services so that the companies who hired us could devote 
themselves to making their product better and selling it cheaper and 
being more efficient totally. So as a consequence of that--why is this 
story relevant? It is because as a consequence of creating a company--
my old company before I came to the Senate over 20 years ago--that 
company had the longest growth record of any company in America at over 
10 percent, each and every year, growth and income. Every year for 42 
years in a row we had the longest growth record in America, and I take 
modest pride in knowing I was part of that development.
  As a consequence, of course, I made some money, a lot of money by 
most standards, and I brought my four kids up to understand that they 
were also lucky, and not just because their father was successful, and 
each one of them has worked very hard to make their own lives.
  I tell that story because what I want to be understood is that I 
would be a beneficiary, or my kids would be beneficiaries, of a no-tax 
estate if it was left to them. But what would that do for my children 
as a result? It wouldn't do anything for them, in my view, in the long 
run. Give them more money? No. I would rather give them a safe country. 
I would rather give them a chance to fight against childhood diseases. 
My oldest grandchild has asthma, and my daughter, when she takes them 
out to play sports anyplace, the first place she looks for is an 
emergency clinic to make sure if he has an attack, they can get there 
in a hurry.
  That is the most important thing in my life, to make sure that my 
children are safe and that we know that if, heaven forbid, they are the 
one-third of the children in America who are going to get diabetes in 
their juvenile years, that we will be able to fight against it. I meet 
with those families. I talk to them. I talk to the children, and I ask 
them about the terrible inconvenience that it is to deal with sticking 
their fingers day and night and making sure they feel good throughout 
their schoolday.

  So when I think of what legacy I might give my children, it is not 
more money in the bank. It is a safer country, it is air that they can 
breathe, it is water that they can drink, it is assistance, if they 
need it, to get through school, the same thing that every grandparent 
wants for their grandchildren.
  Now, to say, OK, Frank, you have been lucky. You did well. You 
provided a lot of people with very good jobs. But now what we are going 
to do is reward you on top of the rewards you have already gotten by 
giving you more money, by making sure that your kids can live 
  I have a list of people who are lobbying against the estate tax. When 
you see the size of some of these estates, it blows your mind, to use a 
common expression. I want to take a look at the chart that shows what 
happens if we cut estate taxes for the wealthiest.
  This is interesting. There is a company called Halliburton, a company 
that used to be run by the Vice President of the United States, and who 
still gets an income from them, almost as large as his income from the 
U.S. Government. This is the Vice President of the United States who 
gets an income from a private company that does all kinds of defense 
business that has been charged with overcharging us for work they did 
in Iraq, that got a no-bid contract that ran over $2 billion. The 
Cheney family--and listen, we respect success, but Vice President 
Cheney still has options, tens of thousands of options that are not yet 
exercised in Halliburton, whose value depends on their ability to do 
  That is the price of the stock. So if we want to reward Vice 
President Cheney and Halliburton for their questionable work and their 
questionable morality when they still do business with Iraq through 
sham corporations, Iran who gives money to terrorists, who go to Iraq 
to kill our kids--Halliburton, that is the company. Vice President 
Cheney was the CEO of the company. I am not suggesting there is a 
connection anymore, but I will tell you this: If you want to go to ADP 
and sell them something, you tell them you know Frank Lautenberg--I was 
the chairman and CEO of the company--it does make it a notch easier to 
get some business. We are going to give them a $12 million tax cut--
$12.6 million. That is what happens if we repeal the estate tax, as is 
  A famous name here, it is not the Hilton Hotel, but it is Paris 
Hilton, and she will get $14 million in tax cuts if we go ahead and 
eliminate the estate tax as suggested. The chairman of Exxon made a lot 
of money. He made $145,000 a day--$145,000 each and every day--and the 
average wage in this country is $45,000 a year, the average wage. The 
number of people who make $145,000 a year is very small. Senators in 
the United States Senate make a little more than $145,000. In fact, 
they make $165,000. But here, Mr. Raymond made $145,000 a day. So we 
are going to be nice to him because he made so little: $145,000 a day. 
We want to give him a $164 million tax cut, give his heirs $164 
million. It is obscene, Mr. President. That is what it is.
  It is really funny. When you ask for the origins--when did the 
inheritance tax come into play--people forget that it was originally 
pushed by President Roosevelt. President Roosevelt, people say? Yes, 
but not Franklin Roosevelt. It was developed by a Republican, Teddy 
Roosevelt. He believed that an inheritance tax should not be aimed at 
the average citizen or even citizens of above average wealth. President 
Theodore Roosevelt said the inheritance tax should ``be aimed merely at 
the inheritance or transmission in their entirety of those fortunes 
swollen beyond all healthy limits.'' This is what the current estate 
tax does. It affects only the hereditary elite, those who inherit 
estates of more than $2 million. I repeat: 99.5 percent of American 
families will not be affected by the estate tax. They won't have to pay 
a penny out of their legacy.
  So when I look at where we stand now, deep in debt because in America 
we increased the debt limit so we could splurge some more and spend and 
borrow up to $9 trillion--not earn, borrow to get us up to $9 trillion, 
and it is rumored that soon we will be looking at the possibility of 
raising the debt limit again.
  And repealing the inheritance tax will only further balloon our 
Nation's debt. So in order to increase the inheritance of the richest 
people in the country, we are going to pass more debt to everyone 
else's children and grandchildren.
  I would like someone to explain why that is a good idea.
  In 2009, the estate tax exemption will be $3.5 million--but that is 
not good enough for most Senate Republicans.
  Here's what that means in real life:
  You could have a $1.9 million mansion, a 44-foot motor yacht, a 
beautiful summer beach house, his and hers Porsches, and a $600,000 
investment portfolio--and still--still--you would not pay a penny of 
estate tax.
  The people who need a break are not the wealthiest one-half of 1 
percent. It's everyday people who deserve a break. They deserve a break 
from high gas prices, rising college tuition and health care costs.
  But instead of trying to help everyday people, the Republicans in the 
Senate are clamoring to help the richest families in America.
  Forget gas prices--Congress needs to make sure Paris Hilton gets a 
few more million dollars in inheritance. We have to make sure that the 
heirs to the former CEO of ExxonMobil don't miss out.
  Some of the wealthiest Americans in the country have actually spoken 
out against this madness.

[[Page S5552]]

  Billionaire investor Warren Buffett said that the estate tax has 
played a ``critical role'' in promoting American economic growth by 
creating a society in which success is based on merit rather than 
  Buffett said that repealing the estate tax ``would be a terrible 
mistake'' and would be the equivalent of ``choosing the 2020 Olympic 
team by picking the eldest sons of the gold-medal winners in the 2000 
  Mr. President, if we repeal this inheritance tax, what would be the 
effect on everyday people and the Federal budget?
  For starters, it would cost our Nation $73 billion every year by the 
middle of the next decade.
  What could we do with that much money?
  We could provide health insurance for every uninsured child in 
America, and have enough left over to give them full college 
  We could give every family in America a $500 tax cut.
  We could eliminate 75 percent of the Social Security shortfall.
  We could provide clean food and water to the 800 million people in 
the world who lack it.
  We could provide the funds necessary to pay for the war in Iraq for 
the next 10 years.
  So that is our choice. We can help everyday people, or we can give a 
big gift to the richest people in America.
  I have heard my colleagues on the other side say they hear stories 
every week about farmers or small business people having to sell their 
businesses to pay the estate tax. But they have not been able to cite a 
single example of this actually happening.
  In fact, in 2001, the American Farm Bureau could not find even one 
family farm that had to be sold to pay the estate tax.
  The estate tax mostly does not hit small business people and family 
farms. The vast majority of assets affected by the estate tax, more 
than 70 percent, were in liquid assets like stocks, bonds, and cash.
  In an attempt to do away with this ``small business'' and ``family 
farm'' fiction once and for all, in 2002, Democrats proposed to 
completely and permanently exempt all family farms and all family-owned 
businesses from the estate tax. But those on the other side of the 
aisle voted against it. It was an illustration that they are interested 
in protecting the wealthy, pure and simple.
  Mr. President, this week has really showcased how backwards the 
priorities of this Senate are. Instead of tackling gas prices or 
dealing with the war in Iraq, we tried to pass a constitutional 
amendment on gay marriage.
  Now, instead of helping families afford college or get better access 
to health care, we are looking to help the richest families in the 
country get richer.
  This is indeed the twilight zone Senate. In my view, it is time to 
cancel this show.
  I yield the floor.
  Mr. KENNEDY. Mr. President, the audacity of the Bush administration 
and their congressional allies truly knows no limit. In spite of all of 
the urgent problems facing our Nation--from the ongoing war in Iraq, to 
the devastating hurricane damage along the gulf coast that has not yet 
been repaired, to the outrageously high gasoline prices that are 
squeezing American families--the top Republican priority is eliminating 
the estate tax for the richest families in the country. President 
Bush's policies have already added nearly $3 trillion to the national 
debt in the last 5 years. Now, they are proposing more of the same, 
more tax breaks benefiting only the wealthiest among us.
  The first 10 years of estate tax repeal would cost $800 billion in 
lost revenue, nearly a trillion dollars when the cost of interest on 
the higher national debt that would result is included. It is 
unaffordable. It is the ultimate example of misplaced priorities. 
Repealing the estate tax would cost as much each year as the Federal 
Government spends on homeland security, and it would cost more than we 
spend on education. And, it would be grossly unfair.
  Today, under current law, only 5 estates in 1,000 are subject to the 
estate tax. By 2009, only 3 estates in 1,000 will be subject to the 
estate tax. Only estates over $3.5 million will be taxed. Thus, 
repealing the estate tax would only benefit a few thousand heirs of the 
richest men and women in the country. One columnist recently called it 
the ``Paris Hilton Tax Break'' and that description accurately 
identifies who would benefit from such an enormous tax giveaway.
  The notion of an estate tax is nothing new or radical. We have had an 
estate tax for over 100 years. During much of that period, it covered a 
far greater percentage of estates than we are taxing today. One of the 
strongest advocates of the estate tax was Teddy Roosevelt, who believed 
it was essential to a fair and democratic society. Those who have 
benefited most from the opportunities America offers have a special 
obligation to contribute something back to their country.
  Advocates of repeal always claim that the estate tax forces the sale 
of large numbers of farms and small businesses each year. That claim is 
greatly exaggerated. CBO analyzed this issue. It concluded that if the 
2009 exemption level of $3.5 billion had been in place in 2000, only 94 
small businesses and 65 farms in the entire country would have owed any 
estate tax. Of those, most had sufficient liquid assets to cover the 
estate tax owed without touching the business or farm. The few that did 
not, have the option of paying the tax in installments over 14 years.
  These small businesses and farms are being used as a sympathetic 
Trojan horse to conceal those who would really benefit from estate tax 
repeal. The real beneficiaries of repeal would be the heirs of the 
richest men and women in America.
  If we eliminate the estate tax on the largest concentrations of 
wealth in our society, we will be permitting the very few who inherit 
huge amounts of money to receive their millions tax free while working 
Americans have to pay substantial taxes on their wages. It would be 
terribly unfair to tax work while giving inherited wealth a free ride.
  The estate tax is the most progressive of all Federal taxes. At a 
time when the income gap between the wealth few and the middle class 
has grown disturbingly wide--wider than it has been in decades, why 
would we want to transfer more of the tax burden from the rich onto the 
shoulders of middle class families. Make no mistake, the trillion 
dollars that would be lost should the estate tax be repealed will have 
to be made up by increasing other federal taxes, taxes paid mostly by 
the middle class. That is the injustice of repealing the estate tax.
  What we should do is make permanent the estate tax that will be in 
place in 2009--covering estates over $3.5 million--$7 million per 
couple--with a top tax rate of 45 percent. Only three-tenths of 1 
percent of estates would owe any tax under that proposal. While the 
maximum rate of 45 percent may sound high, that figure is very 
misleading. Analyses show that the effective tax rate on these 
estates--the rate after the $3.5 million exemption and other available 
deductions are taken into consideration--would be, on average, only 17 
  I believe all the revenue from preserving the estate tax at the 
2009--level should be statutorily dedicated to the Social Security 
trust fund. Saving Social Security for the many who depend on it is far 
more important than repealing the estate tax for the wealthiest few.
  No Government program reflects the values of the American people 
better than Social Security. We are a community that takes care of our 
most vulnerable members: the elderly, the disabled, and children whose 
parents have died prematurely. Two out of every three retirees receive 
over one-half of their income from Social Security. Without it, many of 
them would be living in poverty. Social Security does much more than 
provide retirement income for seniors. It also provides lifetime 
disability insurance protecting those who become seriously injured or 
ill. When a worker becomes disabled before reaching retirement age, 
Social Security is there to help him and his family. And when a worker 
dies leaving minor children, Social Security provides financial support 
for those children until they reach adulthood.
  The revenue from the estate tax would reduce the Social Security 
shortfall by more than 25 percent, according to the Social Security 
Administration's chief actuary. It would add years of solvency to the 
program. That

[[Page S5553]]

would set the right priority for America.
  The priorities of this Republican Congress have been wrong for our 
country. If we are serious about reducing the deficit and strengthening 
the economy, we must stop lavishing tax breaks on the rich, and start 
investing in the health and well-being of all families. These families 
are being squeezed unmercifully between stagnant wages and ever-
increasing costs for the basic necessities of life. The cost of health 
insurance is up 56 percent in the last 5 years. Gasoline is up 75 
percent. College tuition is up 46 percent. Housing is up 57 percent. 
The list goes on and on, up and up--and paychecks are buying less each 
  The dollars that Republicans now want to spend on the ultimate tax 
break for the rich--allowing the heirs of multimillionaires to inherit 
their enormous wealth tax free--are dollars that should be used to help 
all Americans. The American people deserve better; and in November they 
will insist on a new Congress that truly shares their values and cares 
about their needs.
  Mr. BIDEN. Mr. President, I rise today to speak in support of the 
Native Hawaiian Government Reorganization Act of 2006. Unfortunately, 
this bill has been mischaracterized and therefore misunderstood by 
  Sponsored by Senator Daniel K. Akaka and Senator Daniel K. Inouye, 
the bill brings into focus the unique political and legal relationship 
that the indigenous peoples of Hawaii, Native Hawaiians, have with the 
United States. The United States has treated Native Hawaiians in a 
manner similar to that of American Indians and Alaska Natives since 
Hawaii became a territory in 1898. All that this legislation does--with 
the substitute amendment that addresses some concerns raised by the 
Departments of Justice and Interior--is extend the Federal policy of 
self-governance and self-determination to Native Hawaiians, thereby 
providing parity in Federal policies toward American Indians, Alaska 
Natives, and Native Hawaiians.
  More than 160 statutes have been passed by Congress recognizing the 
political and legal relationship that Native Hawaiians have with the 
United States. These statutes demonstrate how Congress has repeatedly 
acknowledged the legal and political relationship between Native 
Hawaiians and the United States. Just as it has done with the other 
indigenous people of this country, the Native Americans and Alaskan 
Natives, Congress has established Federal programs to address the 
health, education, and housing needs of Native Hawaiians. As an 
indigenous people that exercised sovereignty over lands now comprising 
the State of Hawaii, Native Hawaiians are seeking parity with other 
federally recognized indigenous peoples. S. 147 is the vehicle for 
which this can be achieved.
  Beginning with the debates of the Continental Congress and continuing 
in the records of discussion and correspondence amongst the framers of 
the Constitution, it was recognized that the aboriginal, indigenous 
people who occupied the lands now comprising the United States had a 
status as sovereigns that existed prior to the formation of the United 
States. Based upon the recognition of that preexisting sovereignty, the 
U.S. Constitution--article I, section 8, clause 3--vests the Congress 
with authority to regulate commerce with the three classes of sovereign 
governments identified there--foreign nations, the several States, and 
Indian tribes.
  In numerous rulings over the ensuing 215 years, the U.S. Supreme 
Court has repeatedly held that legislation enacted to address the 
conditions of the native people of the United States is constitutional 
and does not constitute discrimination on the basis of race or 
ethnicity because the sovereign status of the Indian tribes is the 
basis for the government-to-government relationship the tribes have 
with the United States.
  The Court has thus consistently drawn a distinction between 
legislation that addresses the conditions of the native people of the 
United States on the grounds that the United States has a political and 
legal relationship with the Indian tribes--a relationship that is not 
predicated on race or ethnicity but rather on sovereignty--and 
legislation that addresses the conditions of specific groups whose 
members are defined only by reference to their race or ethnicity--
African Americans, Hispanic Americans, etc.
  The status that the Constitution recognizes in Indian tribes was 
later extended to Alaska Natives in their capacity as aboriginal, 
indigenous people of the United States, and it is on the same basis 
that the Congress has enacted legislation for the aboriginal, 
indigenous people of Hawaii.
  Many opponents of the bill are attacking and classifying 
reconciliation efforts between the United States and the Native 
Hawaiians as race-based. However, anyone who has a clear understanding 
of Hawaii's history cannot deny that Native Hawaiians are Hawaii's 
indigenous peoples, nor can they deny that Native Hawaiians have a 
legal and political relationship with the United States based on their 
status as Hawaii's indigenous peoples. It is offensive that laws 
intended to seek justice and equality for African Americans are now 
being used to oppress native peoples.
  We must be fair and thorough while deliberating the merits of this 
legislation. It is unfair to pick and choose what aspects of the 
Constitution and related statutes do and do not apply. This is an 
opportunity that each Member of this Chamber has to demonstrate their 
commitment to recognizing and respecting the aboriginal, indigenous 
people that had a status as sovereigns that existed prior to the 
formation of the United States. The time to recognize Native Hawaiians 
and their contributions to our country is now. I urge my colleagues to 
support efforts of the Senators from Hawaii to secure Federal 
recognition for Native Hawaiians.
  Mr. BINGAMAN. Mr. President, I rise today to speak in opposition to 
the legislation before us today, H.R. 8, which would make the repeal of 
the estate tax permanent starting in 2010. Without so much as a 
hearing, debate, or markup in the Finance Committee, the majority is 
bringing the largest tax bill that will be before us this Congress with 
the clear intent of not allowing the minority any reasonable 
opportunity to amend it. The Joint Committee on Taxation has estimated 
that repeal of the estate tax will require roughly $370 billion in debt 
financing through 2016, although a more accurate cost of 10 years of 
enactment is closer to $1 trillion when interest on the debt is 
calculated into the equation. At a time when interest rates are being 
raised steadily to address inflationary fears, it is hardly the time 
for our Government to be adding to our national debt in this magnitude 
for tax relief that only benefits the wealthiest in our country.
  In 2001, in my State of New Mexico, there were only 200 people dying 
with any estate tax liability. This left roughly 98 percent of New 
Mexican estates entirely untaxed. If the exemption had been $2.5 
million, as will occur in 2009 under current law, 99.7 percent of 
people dying in New Mexico would have owed no estate taxes. At a time 
when gas is over $3 a gallon and many businesses are telling me that 
they can no longer afford to offer health insurance to their workers, I 
cannot in good conscience support repealing the estate tax--an act that 
provides a benefit to only about .3 percent of New Mexicans.
  The effort to permanently repeal the estate tax is a continuation by 
the majority of giving tax breaks to a small minority of Americans--
those who need it least. Just a couple of weeks ago, the President 
signed the reconciliation tax bill into law which added 2 additional 
years of tax relief for those receiving dividends and capital gains. 
Slowly but surely, the majority is creating a society where those who 
work for a living will be paying taxes while those who are fortunate 
enough to have investments or inherited wealth will either avoid 
taxation or be paying at a significantly lower rate. The result will be 
a United States that has slid back to economic disparity not seen since 
the Gilded Age where extreme wealth accumulated in the pockets of our 
Nation's wealthiest while the average working family was left behind. 
At a time when gas prices are climbing, the cost of electricity is 
growing, and health care costs are exploding, it is simply unacceptable 
that this Congress is devoting time and our children's resources to 
providing another tax break to the wealthiest among us. Instead this 
Congress should be looking at ways to reduce the tax

[[Page S5554]]

burden on folks who only have earned income--and generally not enough 
of it.
  I would remind my colleagues on the other side of the aisle that the 
impact of deficit spending is immense and one that will be borne not 
only by us in the coming years but by future generations who have no 
say in our current financial irresponsibility. Since this 
administration took over and Congress has been controlled solely by one 
party, we have seen our Nation's economic security drop precipitously. 
In order to pay for unaffordable tax cuts, we have become a beggar 
nation, forced to go to foreign countries with our hat in hand asking 
them to buy our debt. Many of these countries, such as China and Japan, 
are the very same countries that are becoming more and more competitive 
with our Nation for high-tech and higher salaried jobs--a fact that is 
not unrelated. As interest rates continue to rise to combat 
inflationary pressures, it is costing this Government more and more to 
sell our debt to our foreign competitors. At the same time, we are 
facing demand pressures to offer a higher rate of return to attract 
these wary investors, as they gradually accumulate more of our debt 
than most economic models would indicate is prudent. The only prudent 
course of action would be to tighten our belts and balance our budget 
thereby returning control of our economic prosperity to us instead of 
leaving it in the hands of our foreign competitors. But instead of 
coming up with rational tax policy that rewards the majority of 
Americans who work for a living, we are foisting on these families the 
delusion that estate tax relief benefits them and handing out further 
tax cuts to those who have seen their wealth grow at historic rates in 
the past several years.
  Mr. President, we owe it to our children and grandchildren to provide 
them with the opportunities we inherited from our parents. The real 
``death tax'' is the one we are leaving for our children to pay when we 
are gone. With the passage of the Deficit Reduction Act in 1993, we 
were able to correct years of irresponsible tax policy and head our 
Nation back in the right direction. By maintaining fiscal discipline, 
we were able to have our first surplus in decades. It is shameful that 
we are considering legislation today that, in many senses, is the final 
nail in the coffin of fiscal responsibility by providing additional tax 
cuts to the richest in our Nation to the detriment of hard-working 
American families. This is not the act of a Government that is supposed 
to represent all of the people in our Nation--a nation that was founded 
on the belief that the opportunity for prosperity is to be shared by 
everyone. This legislation is another step toward creating an America 
that I was not elected to represent by my fellow New Mexicans--the vast 
majority of whom earn their living by going to work every day. I hope 
my colleagues will join me in opposing this legislation.