Capital Gains Tax Rate Reduction Act of 2003

Mr. Speaker, pursuant to House Resolution 281, I call up the bill (H.R. 8) to make the repeal of the estate tax permanent, and ask for its immediate consideration.

Mr. Speaker, I yield myself such time as I may consume.

I rise in support of H.R. 8, the Death Tax Repeal Permanency Act of 2003.

The bill before us has been cosponsored by over 200 Members of the House from both sides of the aisle. This approach is simple. It makes elimination of the death tax permanent. Although the bill is only one short sentence, it will have a powerful impact on the millions of people we represent.

Two years ago, Congress voted to phase out and repeal the death tax. Due to the Byrd rule, however, the tax will come back in full force January 1, 2011, imposing a maximum tax of 55 percent on estates. In the last Congress, a majority of the House voted on three occasions to remove this sunset in the law and make repeal permanent. We are here today to complete this unfinished business.

I have no doubt we will hear a great deal of rhetoric from those who want to keep the death tax alive. Repeal only helps the wealthy, they will say. It will reduce charitable giving; it will increase the deficit; it will jeopardize Social Security. Time and again these arguments have been raised. The simple truth is none of them holds water.

Does repeal of the death tax help only the wealthy? The Joint Economic Committee in 1998 underscored how repeal of the death tax will help minority-owned businesses. Both the National Black Chamber of Commerce and the United States Hispanic Chamber of Commerce support repeal of the death tax.

Robert Johnson, the founder of Black Entertainment Television, said in 2001 that ``elimination of the estate tax will help close the wealth gap in this Nation between African American families and white families.''

Supporters of the estate tax say that it does not really affect rural communities or farmers. Mr. Speaker, I represent rural communities and timber landowners. Earlier this year experts at the United States Forest Service published findings on just how devastating the tax affected rural communities.

Over a 10-year period, 36 percent of forest estates owed the Federal estate tax. In 40 percent of the cases where a Federal estate tax was due, timber or land had to bo sold to pay part or all of that tax. The amount of forest land harvested to pay the Federal estate tax was approximately 2.6 million acres every year. Forest land sold was nearly 1.3 million acres per year; and roughly 29 percent of the land sold was developed, or it was turned into subdivisions or converted to other uses.

Supporters of the tax say just lift the exemption amount, but that does not solve the problem. As inflation erodes the value of the exemption level, it will just mean more acres will be sold or harvested or developed. This is not the answer.

They say repeal of the estate tax will reduce charitable giving. In ``The CPA Journal'' of August 2001, Arthur Schmidt said, ``Philanthropy will likely increase as a result of the repeal of the estate tax, both at death because of the greater net resources available, or during the lifetime of the taxpayer as a result of the remaining tax efficiency of the charitable income tax deduction. In either case, the net present value of philanthropy will likely increase.''

Does the estate tax really promote charitable giving? IRS statistics show that in four out of five cases of taxable estates no bequest is made. No bequest is made in four out of five cases.

Would estate tax repeal jeopardize Social Security benefits? Federal receipts as a result of the death tax represent less than 1.5 of all total revenues. None of that money goes to Social Security for the trust funds, and eliminating the tax will in no way affect Social Security benefits, not one bit.

The death tax does not prevent accumulation of wealth. It does not promote charitable giving. It does not lead to increased economic growth. It is not a tax on sin. It is a tax on virtuous activities like savings and investment, activities we should be encouraging.

It increases the cost of capital for small businesses. It affects rural communities. It imposes financial burdens on minority businessmen and -women. In sum, the case for the death tax has been made, and it has been over and over again in this House thoroughly rejected.

Woodrow Wilson signed the death tax into law in 1916, and the time has come to get rid of it for once and for all. I urge my colleagues to join me in supporting H.R. 8 and opposing the substitute amendment and providing small businessmen and -women, family farmers and minorities with the capital they will need to expand, to create jobs and grow the economy.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

I want to remind the gentleman from California, whose State is in very financial straits, that in the year 2002 his State and estates in that State sent to the Federal Government $4,201,408. Actually that is $4,201,408,000 to the Federal Government, which I am sure his State could have made use of.

Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Sam Johnson), a great member of the Committee on Ways and Means and very much in touch with his constituents on repealing the death tax.

(Mr. SAM JOHNSON of Texas asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself such time as I may consume.

I think the gentleman has created not just a near miss, but a big, big miss when we speaks about family farms. Families own 99 percent of the Nation's farms and ranches, and they are capital intensive businesses. Their assets are not liquid, and so for that reason they are very much at risk at having to pay very large estate taxes. Nearly 20 percent of farmers have paid Federal estate taxes in the previous 5 years. Seventy-seven percent of farmers report that they spent money each year on estate planning.

Not only are we hitting the family farms and the people who are employed by them, but we are also wasting dollars that go into this economy not for the purpose of stimulating this economy, but to pay for life insurance policies, estate planning, and everything else that is there when there is unpredictability and they need to provide for the future of their business and the business that employs so many people throughout the United States.

Mr. Speaker, I yield 3 minutes to the gentleman from Arizona (Mr. Hayworth), a very strong member of the Committee on Ways and Means who has been close to his folks at home on this issue and who has done a great job for us on codifying the issue in the State of Arizona.

Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. Manzullo), the chairman of the Committee on Small Business.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I would just remind the gentleman from Wisconsin that we did vote three times on this legislation last year in different forms; and, in fact, the legislation passed each of the times by a bipartisan majority. It also passed in the other body by a bipartisan majority. But, unfortunately, because of their strange rule system, it required a 60-vote margin to pass in that body.

Mr. Speaker, I yield 2 minutes to the gentleman from Florida (Mr. Putnam), a very prominent member of our sophomore class.

Mr. Speaker, I yield myself such time as I may consume.

I want to remind the gentleman from California that his State, in the year 2002, sent $4,201,408,000 to the Federal Government. And you can about double that for the cost of complying with the death tax. That is what comes out of the economy. And so his figure of $80 billion, just take that and double it and that is what has been taken out of the economy.

Mr. Speaker, I yield 2 minutes to the gentleman from Nebraska (Mr. Osborne), a wonderful contributing sophomore Member.

Mr. Speaker, I yield 2 minutes to the gentleman from California (Mr. Cox), the chairman of the Policy Committee, a cosponsor of this bill, and a longtime supporter and leader on this bill.

Mr. Speaker, I yield myself such time as I may consume.

I remind the gentlewoman from Washington State that his State in the year 2001 sent back $578 million to Washington, D.C., with about an equal amount for compliance with that law. Also as a representative of a forested district, 36 percent of forest estates owe the Federal estate tax, 29 percent of the land was sold or developed or converted to subdivisions, and 1.3 million acres per year of forestland in this Nation were sold. The amount harvested to pay the estate tax was about 2.6 million acres every single year. I respect his point of view on this particular bill, but I think that there are many people who will be affected if he does not vote for this bill.

I yield to the gentleman from Washington.

As the gentleman knows, retaking my time, I have already cosponsored that measure and supported it in the committee. We have worked very hard on that and will continue to do so. It affects a number of States. It is important to get rid of it.

Mr. Speaker, I yield 2 minutes to the gentlewoman from Florida (Ms. Harris), a very active member of the freshman class.

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from New York (Mr. Houghton), a great member of our committee.

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Texas (Mr. Hensarling), freshman member of our class who has been one of the most active on the repeal of the death taxes.

Mr. Speaker, I yield 2 minutes to the gentleman from Florida (Mr. Foley), who has been with us from the beginning, who is a strong advocate and a member of the Committee on Ways and Means.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I am strongly opposed to this amendment, and I want my colleagues to look at it very closely and be very clear about what this amendment would do. It establishes a permanent death tax. It is a huge tax increase on small business and family farms.

This amendment would increase taxes on farmers, on timber growers, on small businessmen and small business women, and it would not only take money from their pockets and send it to Washington, D.C.; it would practically force them to take more money from their pockets to pay lawyers, insurance salesmen, and estate planners. And why? So they will not have to send their money to Washington, D.C. to comply with this permanent death tax.

There are people who think this is a good thing. I do not understand it; I do not question their intent, I simply acknowledge that that is the case.

We have already debated the issue surrounding the death tax, but let us look closely at the impact of this amendment, because I think it puts on display the philosophy of those who want to keep the death tax.

Under current law, the tax rate for estates is due to fall in 2004, in 2005, 2006, and 2007. For 2 years, the rate would remain at 45 percent and then be totally repealed in 2010. This amendment eviscerates that tax relief.

Some estates may benefit under this amendment. If you are unlucky enough that your business is not doing well and you fall below the $3 million threshold that is in this amendment, you benefit. But what this amendment tells you is this: do not be successful. Do not save your money. Do not invest your money. Do not grow your business.

Instead, it encourages you to spend it now, sit back, consume that estate, because the government is going to take half of that estate anyway, and everybody knows how wisely the government spends our money. Because the more successful you are and the harder and the more you work, the more expensive it will be for you to hand that business on to your children.

Does the amendment promote charitable giving? No, it does not. Does it redistribute the money it raises to those who are less wealthy? No, it does not. Does it equalize income among different layers of society? No, it does not do that. Does it help pay Social Security benefits? No.

Opponents of death tax repeal make all of those charges, but when they bring forth their own proposal, we can see it for what it really is: a tax increase, pure and simple. A way to put money in the pockets of the Federal Government. And because the exemption level is not indexed, there will be free money to the Treasury. Inflation grows, but the exemption stays just the same. As the economy improves, as businesses grow, as people invest and work hard, they will be penalized, because someone in Washington, D.C. said you can only be so successful, an arbitrary limit, and then you pay.

That is what this amendment is about and that is why it ought to be voted down.

Mr. Speaker, we hear time and again the arguments of those who want to keep the death tax. We hear about equality, about Social Security, about charitable giving, about enormous concentrations of wealth. But when it comes right down to it, it is about money.

Mr. Speaker, this approach is the wrong approach. This policy has outlived its day. This philosophy is not what made our Nation great, and I urge a ``no'' vote on this substitute.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 3\1/2\ minutes to the gentleman from Missouri (Mr. Hulshof), a very valuable member of the Committee on Ways and Means, a gentleman who knows what he is talking about because he has been through it personally.

Mr. Speaker, I yield 12 minutes to the gentleman from Georgia (Mr. Burns) for the purposes of control, a gentleman who has been very involved in the development of our legislation and very much a supporter of it as he has come to Congress as a freshman Member. He will present differing points of views from people who come from all over the country who are members of the freshman class.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I want to make a couple of points in response to things I heard during the debate, and I appreciate the participation of the freshmen Members of Congress. Their viewpoint is very energetic and fresh. It is very valuable to hear what they have to say.

There has been mention in the past of the National Farmers Union, and I want to assure people listening to this debate that the American Farm Bureau, which has 5 million members, supports permanent repeal of the death tax, as do the Agricultural Retailers Association, the Alabama Farmers Federation, the American Society of Farm Managers, the Rural Appraisers, the American Soybean Association, the American Nursery and Landscape Association, the Farm Credit Bureau. I could go on and on. There is a list of 25 organizations here that support the permanent repeal of the death tax.

Why is that? The reason is they want predictability. One of the previous speakers talked about unpredictability because the act will not go into effect until 2010, 7 years from now. These farmers support permanent repeal because they do not want to have to bet on the fact that their farm will be within $3 million, which is the limit in the Pomeroy amendment. We hear talk about $6 million, and that is for two members of a family. They do not want to put those dollars into providing for estate planning and purchasing life insurance policies so liquidity will be there when the time comes that they are taken from this vale of tears and their children have to pay for the inheritance of their estate. They want to use those dollars and put that capital into their businesses and farms and into their equipment and land and into the employment of many, many people who will lose their jobs once farms close down.

Mr. Speaker, we have another speaker who would like to speak about the death tax. He is a long-time Member and very active in this debate through the years.

Mr. Speaker, I yield 2 minutes to the gentleman from North Carolina (Mr. Coble).

Mr. Speaker, I yield 30 seconds to the gentleman from Michigan (Mr. Smith).

(Mr. SMITH of Michigan asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself such time as I may consume.

I think Members have a good idea of what we are going through here today. We have been through this issue before. Each time I am very happy to say that the House of Representatives has stood up to get rid of the death tax repeal permanently. Three times in the last Congress the House voted to repeal the death tax. We are here today only for one reason and that is that the rules of the other body have stymied this tax relief for small business people and for family farms.

Some of my colleagues would say we should throw in the towel. They say the Senate will never pass this legislation, so why not compromise? Why even take up the permanent repeal piece of legislation? That is the statement made by the Pomeroy substitute. We faced similar arguments not very long ago when we considered an economic growth package, but the House did not throw in the towel and the legislation that is now law reflects to a very deep degree the policy decisions that were written right here on the floor of this House of Representatives. Thanks to the tenacity and the leadership of the chairman of the Committee on Ways and Means, the will of the House prevailed. Frankly, I am very optimistic that we will ultimately prevail on permanently repealing the death tax.

I hope Members will not be swayed by the rhetoric and the hyperbole on the other side because we have heard lots of it today. On this issue, the opposition rhetoric and reality have very little in common. Why should Members vote against this amendment? Let me tell you why. Number one, it will be a retreat from the tax relief this body voted 2 years ago. In fact, it would reinstate a permanent death tax. Number two, we need to permanently repeal the death tax so that small businesses and family farmers can plan their future and invest in their businesses. We do not need to make them spend the fruits of their labor on estate lawyers and accountants and insurance policies. Number three, this is a direct vote against the President's proposal to repeal this tax permanently and that is based on 80 percent of the American people who think that the death tax is an unfair tax.

We need to inject greater fairness into the Tax Code. Do not be swayed by the arguments of those who say this is about a tax break for the wealthy. This is a relief from a burden that takes money from middle-income people who run their small businesses and their family farms. The wealthy people can afford to hire lawyers and accountants to avoid the burden of the estate tax. This is not about charitable giving and it is not about the wealthy. It is about people who are trying to raise money for the Federal Treasury and using an abhorrently unfair, misguided tax to do that. When people argue in favor of keeping the death tax, I am reminded of a story about Samuel Johnson, the English literary critic. An acquaintance of Johnson's had been unhappily married for a long time, and when the man's wife died he almost immediately remarried. Dr. Johnson said, ``That's an example of the triumph of hope over experience.'' That is what this is about, Mr. Speaker. It is about people who are wedded to misguided hope over experience.

Mr. Speaker, I think we have had enough experience with the death tax, nearly 90 years worth since 1916, and that is why we should reject this amendment. I urge my colleagues to vote ``no.''

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield the remainder of my time to the gentleman from Illinois (Mr. Hastert), the Speaker of the House.

Mr. Speaker, I demand a recorded vote.

Mr. Speaker, I offer an amendment in the nature of a substitute.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, as we begin consideration of the substitute, I would like us to focus on something pretty central to the fundamentals of legislating. We ought to do as a Congress that which we can do. The substitute I bring forward will take effect during the tenure of this Congress. It is effective January 1, 2004. The majority proposal before us does nothing during the sitting of this Congress, nothing during the sitting of the next Congress, the Congress after that, the Congress after that, the Congress after that, or the Congress after that. Nothing until January 1, 2011.

We have heard so much from the other side. We have heard so much about how they care about all the problems, how mean of us to oppose their addressing the problems. And yet now when it comes to the substitute, this is where the rubber meets the road because we want to do something now and something meaningful and they do nothing. Nothing about their bill.

Not one whit of their bill applies during the sitting of this Congress or until the year 2011.

Again, I referenced earlier the heart-wrenching examples we have heard from the majority about family farmers. Let us talk for a minute about family farmers. I know something about family farmers. In representing the State of North Dakota, I probably represent more production acreage than any other Members of this House. The family farmers who have estate tax problems, and I am happy to tell my colleagues most of them do not, but of those that do, let us get after it. Let us get them relief and get them relief now.

The substitute I have advanced would give family farm couples $6 million in exclusion from estate tax. Any farmer in operation up to $6 million, no estate taxes. One hundred percent repeal, effective January 1. That is very meaningful relief and it is going to go right to the heart of the farm families that they are talking about.

Now, what do they offer by way of an alternative, this Congress, for dealing with these farm families? Absolutely nothing. In 2004, under their proposal, family farm estates over $3 million will be subject to estate tax; over $3 million. Family farm estates per couple in our situation: $6 million. We provide double the relief immediately. And so really, what they are offering these people is a total sham, because under their proposal, nobody gets anything until the very wealthiest, a tiny number of estates in this country, are taken care of.

Mr. Speaker, where I come from, a bird in the hand is worth two in the bush, and that is especially true when we consider prospects that this year 2011 will actually offer the kind of relief that they proclaim so loudly. Five Congresses from now are going to be looking at a very different budget situation, because the cost of their proposal absolutely explodes in the very decade baby boomers retire.

Consider the chart here. Mr. Speaker, $162 billion of revenue loss in the first 10 years. It ramps up slowly, and then really clobbers you: A $500 million loss in '04; a $31 billion loss in the year 2011; $57 billion loss in 2012; $63 billion loss in 2013. You catch my drift. This thing explodes in its consequence in the budget. Mr. Speaker, $840 billion worth of revenue loss in the next decade, just as baby boomers retire and want their Medicare and want their Social Security.

Now, what do my colleagues think is likely? We are going to say, no, baby boomers, we have this estate tax we repealed some time ago, and we are going to stick with it. I do not think so. I think the prospects are overwhelming that this distant repeal will never arrive.

Finally, I think that it just makes it very, very clear what this is all about. To look at the relief we offer in each of the next 5 years being vastly superior to theirs, because they do not want, in any way, to lose some of the momentum behind total repeal. So they will leave family farmers in the lurch through the year 2011; they will leave the small businesses they talk about in

the lurch in the year 2011. Again, look at this: estates $6 million and under; no tax under our proposal in 2004; $3 million and under taxed under their proposal. In 2005, the same situation. Again, we are superior in 2006, 2007 and 2008.

Now, if this Congress has before it the opportunity to give over each of the next 5 years meaningful relief to people that need it, why in the world do we not do it? That is exactly what this substitute is all about.

There is one final feature that I would discuss briefly; it is a feature that I was surprised to hear my friend, the gentlewoman from Washington, tout before the Committee on Rules yesterday, and that is, this notion of who is going to have capital gains tax on inherited property? Because under our proposal, when you inherit the property, the only capital gains tax on the appreciated value of that property you are going to have is between the time you inherited it and the time you sell it. Under their proposal, you are going to face capital gains taxes from the time it was purchased originally, whoever purchased it that ultimately bequeathed it to you in the inheritance.

And so in the family farm context, you have an awful lot of farmland coming into families in the 1930s, in the 1940s at just nominal value, which now has significant value. And when the heir goes to sell it, you are going to have capital gains on all capital appreciation over $1.3 million. We are going to have an awful lot of the family farmers that they are touting so much on this debate that right now do not have estate tax problems, and surely would not have estate tax problems under our bill, that are going to find themselves with walloping capital gains taxes, because they take this stepped up in basis and throw it out for carry-over so that they can help the wealthiest tiny few in this country.

Mr. Speaker, we have a proposal in my substitute to take care of 99.65 percent of the estates in this country. My gosh, that is pretty darn close to perfect, 99.7. But they do not want that relief to move forward, because it is the three-tenths of 1 percent of their wealthiest benefactors that they are most worried about. Well, I say let us deal with this straight up, take what we can get now, provide meaningful relief effective in 2004, pass the Pomeroy substitute, and get this on the road toward exactly what we need: estate tax relief now for America's families.

Mr. Speaker, I ask unanimous consent to have my friend and colleague, the gentleman from Maryland (Mr. Cardin), assist in the management of the time.

Mr. Speaker, I yield 2 minutes to the gentleman from Michigan (Mr. Levin).

(Mr. LEVIN asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 1 minute to the gentleman from Vermont (Mr. Sanders).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I find it curious that the preceding speakers each making their eloquent speeches on behalf of their family farm constituents, their small business constituents, will oppose the amendment that I have offered that will bring them meaningful relief right now, January 1, 2004.

Mr. Speaker, let me just go through the comparison. If a couple's estate is worth $6 million or less on January 1, 2004, no estate tax under our proposal. Under their proposal, these farms and small businesses with valuations in excess of over $3 million, they are going to have tax under their proposal in 2004, 2005, 2006, 2007, and 2008. There is more relief under our proposal than their proposal.

If they want to protect these estates, they should pass the substitute today; and next year if they want to go ahead and try to pass the repeal, they can go ahead and try. There is no harm in that, take what you can get now and come back and take some more later. That is how we function in this Congress a lot. But they have done something quite different. They say nobody gets any relief until 2011 because at that time the wealthiest three-tenths of 1 percent get to participate fully in the relief as well.

If that is what this is about, let us talk about the three-tenths of 1 percent. But do not put this on family farms or small businesses; or as an earlier speaker said, this estate tax repeal is really about the guy pushing the broom. I do not know too many guys pushing brooms that have estate tax problems. It goes to show really the overblown rhetoric on the other side of the aisle unmatched by any reasonable effort to help now address the estate tax problems they speak so compellingly about.

Mr. Speaker, I yield 3 minutes to the gentleman from Seattle, Washington (Mr. McDermott).

(Mr. McDERMOTT asked and was given permission to revise and extend his remarks, and include extraneous material.)

Mr. Speaker, I yield myself such time as I may consume.

I want to speak for a moment on the question of where rural America is on my amendment. I believe if we ask the farmers of this country today, and I represent a whole lot of farmers in North Dakota, if they would take a proposition where they get $6 million per farm couple estate tax relief, no estate tax if their farm is $6 million or under, or no relief at all until 2011 under the majority proposal, leaving them with exposure over $3 million under their proposal as opposed to $6 million with our proposal, I would be interested in a show of hands on that one.

I have a strong feeling that most would support relief now. In addition to that, we are not used to the notion of capital gains on inherited estates, but I heard the gentlewoman from Washington (Ms. Dunn) talk about the new capital gains feature that is part of their proposal and that it is going to be a good thing because it means you are going to have to keep farming or running that small business because if you sell it, you are going to have capital gains exposure. I do not think that it is a good thing that we suddenly impose capital gains exposure on inherited assets. That is why the stepped-up basis feature of our bill is so important.

Mr. Speaker, I yield 1 minute to the distinguished gentlewoman from California (Ms. Pelosi), our leader. I am so proud of her and so proud she joins the debate on my amendment.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, I am very pleased that our leader was able to participate in the debate, and am pleased to have the participation of the Speaker of the House in closing for the majority, because I think the issue is of that importance.

The esteemed Speaker of the House, a gentleman I admire greatly, representing the State of Illinois, I reckon is going to tell us something about how we have to do this for family farmers and the small businesses of this country. I think that it is time that family farmers and small businesses have estate tax relief and that is why I have put forward this amendment which brings them estate tax relief effective January 1 of 2004. Again, let us put the rhetoric aside and just look at the facts.

In 2004, these families that they have been talking about, 3 million and over, estate tax liability attaches. A couple, in our side, 6 million liability of taxes. Meaningful relief now, 2004, 2005, 2006, 2007, 2008. We provide meaningful relief in each of those years beyond what the majority proposes.

I also expect that the Speaker of the House is going to talk a little bit about how we need to do this to get the economy moving again. Let us consider that one because something that takes effect in 2004 is much more related to getting the economy moving again than something that has no effect whatsoever until the year 2011. Consider this date, 2011, which, again, is the first time the majority proposal has any effect. That is five Congresses from now and into the third Presidential term from now. There is nothing we can do to bind action at that time, nothing in the world. We might kid ourselves about it, but what this Congress can do is attend to that in the here and now. That is why I believe it is time we move estate tax relief forward, do it in a meaningful way, do it in a way to provide couples 6 million and under complete freedom from ever having to worry about estate tax again, and if we attach at that number, we will address completely the estate tax concerns of 99.65 percent of the people in this country.

I do not know the definition of universal, but that is getting mighty darn close; and it beats by a mile, in my opinion, leaving people with the estate tax exposure they have until the year 2011.

Here is the danger that we will never get to 2011. This is the cost of the proposal the first 10 years; this is the cost in the next 10 years. I believe there is significant risk 2011 will never be allowed to occur under the majority bill. Let us get relief now. Please vote for my amendment.

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. Speaker, the previous gentleman who spoke indicated that the estate tax is immoral. Do Members know what is more immoral? Giving this tax relief to the wealthiest individuals in this country and passing it on through national debt to our children and our grandchildren.

The action we take today, which will cost over $800 billion in the next 10 years after fully effective, will be put on the national debt of the country to be paid back by our kids and grandkids. Boy, are we generous. Mr. Speaker, the only good thing about today's bill to repeal the estate tax for the billionaires of this country is that it is dead in the Senate, so all of the talk and debate today and the vote we will have later is for naught because the Senate is going to kill it. That is the good news. But let us see what we have done in this House and Congress over the last couple of years.

Last week we provided a tax cut of some $82 billion. The country is broke. We have a $400 billion deficit this year. The kids are going to pay that because that is part of the debt now. A month before that we passed another tax bill. This one totaled $350 billion, of which the wealthiest Americans would get about $92,000. The average taxpayer in my district would get about $400. We had no money for that one either. The real problem with that bill is once we total it up, that costs $1 trillion but that is a secret, so do not say anything. Quiet.

Now 2001 we passed another tax bill. How much did that one cost? That one cost $1.3 trillion. Again, the surplus is gone. The country is broke. We have a deficit. What the heck are we doing around here? When is this idiocy going to stop?

Today the estate tax has an exemption of $2 million. It covers everyone in my district. Well, we are going to have an option later today which would raise that to $7 million and that would take care of 99 percent of all small businesses and farmers in this country. But that is not good enough. That is

not good enough for the Republicans because that is not who they are trying to help. The people they are trying to help are the Hallmark Card people and the Mars candy bar people, who over the last couple of years have spent millions of dollars hiring lobbyists in D.C. and giving campaign contributions, and today they want their due.

Mr. Speaker, I include for the Record a Washington Post article of this morning by Jonathan Weisman entitled, ``Estate Tax Compromise Sought.'' What we are doing today is sheer nonsense.

Let me say to my Republican colleagues, we have already voted on this proposition three times; and under the campaign finance law if we vote for an item three times and it does not pass, you are still entitled to the campaign contribution, okay. So Members are still going to get the money from Hallmark and the campaign contributions from the Mars candy bar people; but for God's sake, save the taxpayers of this country.

[From the Washington Post, June 18, 2003]

Estate Tax Compromise Sought

House Set to Pass Repeal, but Supporters Know Senate Votes Aren't There

(By Jonathan Weisman)

When a coalition of wealthy families, small-business groups

and farm interests won temporary repeal of the estate tax two

years ago, they immediately resumed their campaign for

permanent repeal. Now, even as the House is expected to vote

today for just that, some in the alliance have second

thoughts.

It's not that they have backed off their vehement

opposition to the tax on large inheritances. Rather, as the

Federal budget deficit grows and their patriarchs and

matriarchs age, they are losing faith that permanent repeal

will ever happen and are considering compromises that were

unthinkable two years ago.

The House is expected to vote today to permanently repeal

the estate tax after 2010, when it is set to expire after

being in effect for only one year. But no one expects the

Senate to pass the bill, leading some proponents to believe

that the vote and the distant temporary repeal date are more

political gamesmanship than a serious legislative attack on

the tax.

So some of the affluent families who have bankrolled the

repeal movement are exploring estate tax changes short of

repeal that could be implemented sooner.

``There is some real concern that 2010 is not soon

enough,'' said a lobbyist working on the issue, referring to

the deficit and the uncomfortable fact that some affluent

benefactors may not live until 2010. Grover Connell of

privately held Connell Co., for example, is 85. The

matriarchs and patriarch of the Hallmark greeting-card

fortune are in their seventies.

For more than a decade, the coalition has rejected

overtures for compromise and declared it will accept nothing

short of ``death tax'' repeal.

The simplicity of their demand, the strength of the small-

business coalition and the money of the families financing

the effort combined to turn an obscure tax affecting very few

Americans into a powerful rallying point, especially for

Republicans.

The movement culminated in 2001 with the 10-year, $1.35

trillion tax cut, which repeals the estate tax in 2010. But

the tax is to return in 2011 when the entire tax cut expires.

For the past two years, the repeal coalition has tried, and

failed, to gather the 60 Senate votes needed to make the

repeal permanent. One lobbyist working on the estate tax said

the appeal of the issue may have ``plateaued.''

And just as the surging Federal budget deficit is beginning

to shake up the Bush administration's plans for more tax

cuts, it is starting to change the politics of estate tax

repeal. Repeal supporters worry that the growing deficit will

make it more difficult to eliminate the tax, particularly by

2010, when the vanguard of the baby boom will retire.

The Treasury Department said repeal of the estate tax in

2011 through 2013 would cost the government $115 billion in

revenue. In 2014 through 2023, repeal would cost about $820

billion, according to the Center on Budget and Policy

Priorities.

``The principal issue is the growing federal budget

deficit,'' said William Gates Sr., father of the Microsoft

Corp. founder, who opposes repeal of the estate tax. ``You

can't run a $400 billion deficit year after year and go

around repealing taxes at the same time.''

Even if Bush is reelected in 2004, a new president, who

could be far less friendly to repeal, will be elected in

2008. And the broad appeal of the anti-estate-tax movement

that caught fire in the 1990s may be dissipating simply

because people are not feeling so rich anymore, one lobbyist

said.

Even at the height of the stock market boom, the estate tax

affected very few families because estates worth up to a

certain amount are exempt. That amount is currently $1

million for a single person or as much as $2 million for a

couple. In 2000, the most recent year for which statistics

are available, more than 2.4 million adults died in the

United States, but only about 52,000 left taxable estates.

The strength of the repeal movement always came from

people's fear that their estates would be hit with a huge tax

bill. If that fear dissipates in a sluggish economy, so will

the movement, lobbyists said.

``I think some of [coalition members] are coming around to

`Let's get a common-sense solution that can work now instead

of just talking about this for eons,' '' said Sen. Blanche

Lincoln (D-Ark.), a past repeal supporter who is floating a

less expensive alternative.

With all those factors in mind, some of the biggest names

in the estate tax coalition are looking to compromise. The

candy-making Mars family of McLean gave more than $1 million

to lobbying powerhouse Patton Boggs LLP last year, in part to

explore ``estate and gift tax reform,'' according to lobbying

disclosure forms.

Koch Industries Inc., a family-run energy, ranching and

finance conglomerate, paid Hogan & Hartson LLP $40,000 last

year, while spending $500.000 on in-house lobbying on the

estate tax. The Connell Co. hired Washington Council Ernst &

Young for $120,000 to lobby for ``estate and income tax

relief,'' while Hallmark Cards Inc. spent $60,000 to hire

Capitol Tax Partners LLP.

Stephen Moore, a conservative tax-cutting activist with the

Club for Growth, and Mark A. Bloomfield, president of the

business-backed American Council for Capital Formation,

proposed taxing estates at the current capital gains rate of

15 percent. Taxable estates are subject to a 49 percent tax.

``There are Republicans who want this debate to last

forever, keep the [campaign] money flowing in, keep the

Democrats off guard,'' Moore said. ``Mark Bloomfield and I

have been on crusade to get this done, to break the logjam.''

If that proposal cannot be passed, another lobbyist

suggested taxing inheritances at income tax rates, which are

at most 35 percent. A stream of lobbyists has passed through

Lincoln's office to discuss her proposal to immediately

repeal the estate tax for family-owned businesses and farms.

The public faces of the repeal movement remain resolute.

``We are 100 percent united behind permanent repeal in

2010,'' said Patricia Soldano, a Southern California

financial planner who, in 1992, helped launch the repeal

movement with funding from the Mars family and the Gallo wine

heirs, among others.

Dena Battle, the National Federation of Independent

Business's lobbyist on the issue, conceded that the budget

deficit ``certainly changes the dynamics of the debate.''

``But,'' she said, ``you're talking about something that

takes place 10 years from now. There's no way we can know

what the economy is going to look like then. That's not an

excuse to vote against this.''

There is little doubt that the House will vote today to

repeal the tax, but lobbyists said they will look closely at

the tally. If past repeal supporters--especially Democrats--

vote against it this time, the fledgling movement toward

compromise will pick up steam quickly, a lobbyist for one of

the rich families predicted.

Announcement by the Speaker Pro Tempore

Mr. Speaker, I yield myself 6 minutes.

I rise today to oppose this repeal of the estate tax. In the very same week that the Republicans are willing, as they did last night, to shortchange seniors on a Medicare prescription drug benefit, they are willing to go out and spend $60 billion a year on a tax cut for the richest 1 percent. Kind of a new form of shock and awe, along with the same kind of truth that they use in weapons of mass destruction.

This bill before us cost $163 billion. It occurs only in the last 3 years of the 10-year budget window, and it is on top of the $1.3 trillion tax cuts signed into law in 2001 and the recent $350 billion, or trillion bucks when we strip away all the accounting gimmicks.

The gentlewoman from Washington misspoke. Only 642 or 1.4 percent of taxable estates had farm assets making up half or more of the gross estate in the last reported statistics; 776 or 1.6 percent of taxable estates had business or partnership assets comprising half or more of their gross estate. One percent of small businesses and farms, one percent, of those estates would have been forced to liquidate any assets at all to pay the current level of estate tax.

So here they are responding, as the Republicans will, to the Mars family who spent $1 million lobbying already to get this through and the Connell Company and the Koch Industries, Incorporated, Hallmark Cards. So they have got a few very, very rich people who would like to get away without paying their fair share of what it keeps to make America great.

I suspect that what is really troubling the Republicans is they are worried about the efficacy and ability of their children to succeed. That is understandable. If one is raised and coddled by rich parents and never have to work, they probably need some protection. Most of the money that they are sucking out of our Federal revenues is money that we are taking out of programs like Head Start, Leave No Child Behind, Medicare, health insurance for children, things that will make healthy and strong families.

Warren Buffett who earned some money on his own, something that my Republicans do not seem to understand, most of the people opposing this bill worked at the public trough all their lives, never had a job in free enterprise or else they inherited their money. So if they listen to somebody like Warren Buffett who said we come closer to a true meritocracy than anywhere else around the world, we have mobility so people with talents can be put to the best use. Without the estate tax, we in effect will have an aristocracy of wealth which means we pass down the ability to command the resources of the Nation based on heredity rather than merit. I suppose that is something the Republicans need to keep themselves in office.

He likened the tax repeal to choosing the 2020 Olympic team by picking the eldest son of gold medal winners in the 2000 Olympics. We would regard that as absolute folly in athletic competition. Yet my colleagues on the other side of the aisle, having been seduced by, I guess, they had 1,200 folks last night raise 3 or $4 million for the President, but they are worried about every one of them, but not about the 40 million seniors who they denied decent Medicare prescription drug benefits last night because they felt they did not have the money.

The reason they do not have the money is they are giving it away to less than 10,000 people a year. So as they help 10,000 people, who I might add, make that the kids who are going to inherit this, that is, 40,000 a year, so they are going to give away $60 billion to 40,000 rich kids every year, and they are going to deny 40 million senior citizens the health care they deserve in their old age; and some of my colleagues may snicker about that, but those are mostly you do not have anything left to leave and so I say that it is the same old same old: Republicans pandering to the rich to entrench themselves here and people whose children cannot make it on their own trying to figure out how to support them in an era where they should be learning to make it on their own if they had the right kind of education, which again the Republicans are denying us.

So it is very clear, it is the same old message over and over. Billions of dollars to a few very rich people, turn your back on those who need the help they should be getting from society.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I am happy to yield 4 minutes to the gentleman from Michigan (Mr. Levin), a senior member of the Committee on Ways and Means, who, with his brother, understands that hard work and education can lead to a successful career without inheriting a lot of money.

(Mr. LEVIN asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I am pleased to yield 3 minutes to the gentleman from Washington (Mr. McDermott).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I would inquire of the gentleman from Illinois (Mr. Manzullo) if he would be willing to engage with me for a moment. The two constituents mentioned, would they not have been covered under the Pomeroy amendment?

I yield to the gentleman from Illinois.

The estate on which they paid $185,000 in tax, how much was the farm worth?

Reclaiming my time, so it would be covered by the Pomeroy amendment. I just suggest that many of these horror stories of people who are quite fortunate would be covered under the Pomeroy amendment.

Mr. Speaker, I yield 3 minutes to the gentleman from Wisconsin (Mr. Kleczka).

(Mr. KLECZKA asked and was given permission to revise and extend his remarks, and include extraneous material.)

Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. Becerra).

Mr. Speaker, I yield 1 minute to the gentleman from New Jersey (Mr. Pascrell).

Mr. Speaker, I am delighted to yield 1 minute to the gentleman from Washington (Mr. Baird).

Mr. Speaker, I am delighted to yield 3 minutes to the gentleman from Maryland (Mr. Hoyer), the distinguished minority whip.

Mr. Speaker, I reserve the balance of my time until just before the gentlewoman closes.

Mr. Speaker, I yield myself the balance of my time.

There are two issues with this bill. One is fairness. And the other is lost opportunity. Let me give the Members a hypothetical. Let us take a young man, young woman, who started out after school and never worked anyplace but for the Government, and suddenly early in their youth in their career as a Government worker, they are going to inherit $40 million. They never had a job outside of public service in their lives. And they might pay $20 million in tax, be left with $20 million, to which they contributed nothing but it is nice to get.

The question of fairness is why should my children, who went to school and worked hard to become lawyers and teachers and contribute to society, why should they have to pay the $20 million for this kid who is going to inherit the $40 million? That is not fair. They are not asking for a handout. They are probably grumping at their father for fighting against this bill, but they are content. They have got a leg up. They got to go to school, and now they are making their own way. And if, when I pass away, they have to pay some tax, they are going to be proud to do it, and they are proud of me for suggesting that they pay their fair share instead of asking me to give them a free ride. That is the fairness issue.

The lost opportunity is this: For those of us who are wealthy enough to pay the tax, my good friend from New York I think senses this. This bill is going to cost 60 billion bucks a year. We just got a release from the Institute of Medicine that shows that with the 41 million uninsured in this country, for about $69 billion a year we could provide them with health services. Do my colleagues know what? That would save us another $130 billion a year that we are paying in lost costs by having them go to hospitals without insurance. What is more important? To give a few thousand rich kids an exemption from paying their fair share and denying 40 million people health care in this country? That is the issue. Yes, it is divisive. Yes, we are talking about separating the rich and the poor. But I think those of us who are fortunate enough to be successful in this country ought to give something back and ought to help those who are less fortunate, and I just think it is crummy, it is anti-Christian, it is cheap, it is obscene to sit and say we have got ours, we are going to give tax breaks to our wealthiest contributors and to hell with the people who do not have health insurance. That is what the Republicans are saying with this bill, and I urge them late in life to come to do what is fair, to help 40 million Americans get health insurance rather than 4,000 get a tax break that will do none of us any good.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I guess we are all in touch with our constituents. Mine was quoted today. Bill Gates, Sr. lives in my district, and he said the principal issue is the growing budget deficit. You cannot run a $400 billion deficit year after year and go around repealing taxes at the same time.

Now, I learned in Sunday school, and it may surprise some of you, but I went to Sunday school, and I learned that you cannot take anything with you when you die. But it is not fair to heap $800 billion of additional debt on your kids as you go out of sight.

This argument we are having here today is an old one in this society. We made the decision between John Adams and Thomas Jefferson that we were not going to have primogeniture in this country; that you could not pass everything on to your eldest son and that was it. We said everybody ought to start with an even shot, men and women. We have come a long way using that. But now we are saying that somebody who inherited from his father or his mother, millions and millions and millions of dollars, should get it just because he was born lucky.

Now, I have read the Bible and I have looked around and I do not find that anywhere, that if you are born lucky, as they say, some guys were born on third base and they think they hit a triple, but this is not something where you have a God-given right to that. You have a God- given right in this country to have an equal shot.

As for the farmers, I listened to my colleague from Washington go on and on and on about the farmers. I have a letter here from the National Farmers Union dated 16 June. ``I write on behalf of 300,000 farmers with the National Farmers Union. There is no evidence that the estate tax has forced the liquidation of any farms, and existing estate tax provisions already exempt 98 percent of all farms and ranches.'' By increasing the level of the estate tax, as we will get an opportunity with the Pomeroy substitute, to $4 million per individual, 99.5 percent of America's agricultural producers would be exempt from any State liability.

Now, if the farmers are who we are arguing about here, 300,000 of them just spoke, and they say this is baloney. In fact, the letter goes on to say that, ``we need that money for crop supports and conservation and all the other things that government provides.'' So they understand that having a government that can provide services is important.

Mr. Speaker, if we give away all of the money, we are going to come back here next year and say we cannot do conservation, we cannot do crop subsidies, we cannot do anything because we do not have the money. These farmers are not stupid. They understand. I think we ought to vote for the Pomeroy amendment.

Mr. Speaker, I think the gentleman from North Dakota, who comes from a big farming district, has a great amendment here.

Mr. Speaker, I will include for the Record a letter from the National Farmers Union dated June 16, 2003. The letter says there is no evidence that the estate tax has forced the liquidation of any farms, and existing estate tax provisions already exempt 98 percent of all farmers and ranchers. This is a letter on behalf of 300,000 farmers and ranchers. By increasing the level of estate exemption to $4 million per individual, which is what the Pomeroy amendment does, 99.5 percent of American agricultural producers would be exempted from any estate tax liability. It goes on to say the 20-year Federal cost of Federal estate tax repeal is estimated to be nearly $1 trillion. For farmers and ranchers, such a loss in Federal revenues will reduce our ability to fund a wide range of commodity, conservation, rural development, research and trade programs important to family farms.

Why are we doing this? Well, we are in the rubber-stamp Congress. We have an amendment out here that makes sense, but the Republicans will not consider it because ``I approve of everything George Bush does,'' and they are out here to rubber stamp another amendment.

In spite of the fact that last night we created a bill in the Committee on Ways and Means to deal with pharmaceutical benefits, we said to people, we are going to cover you from zero up to $2,000 and then there is going to be this big gap up to $4,900 people do not get a thing. They have to keep paying their premium, but they are not going to get anything out of it. From $2,000 to $4,900 in your bill is not a tax benefit that covers the pharmaceutical needs of people.

Now we could fix that simply with the money we have here today that we are passing out the back door, not to farmers; this is not a farmer issue. This is a bunch of very, very rich people hiding behind farmers. They are sort of sneaking behind the combine waiting until this bill gets through, and then they are going to stand up and take all their money. This is not for farmers. The farmers say that.

So who is it for? It is the President of the United States who had a fund-raiser last night, and he said give me $2,000 a plate, sit down; and I am going to rubber-stamp another bill.

Mr. Speaker, we have rubber-stamped one bill after another. A Member on the other side of the aisle said this is equally important with the other tax bill we did. Hey, there is $900 billion still laying in the Committee on Ways and Means. It is going to be brought out here, and we will rubber-stamp it. How big is the debt? Nobody cares. Our kids can pay for that, except for the kids of rich people; they do not pay taxes.

National Farmers Union,

June 16, 2003.

House of Representatives,

Washington, DC.

Dear Member of Congress: I write on behalf of the 300,000

farmer and rancher members of the National Farmers Union to

urge you to vote against H.R. 8, legislation that

would repeal the federal estate tax when it comes to the

floor of the U.S. House of Representatives.

Repeal proponents have characterized this issue as critical

to the future sustainability of America's family farms and

ranches because it is a primary cause of farm liquidations.

This argument is without merit. There is no evidence that the

estate tax has forced the liquidation of any farms, and

existing estate tax provisions already exempt 98 percent of

all farms and ranches. By increasing the level of the estate

tax exemption to $4 million per individual, 99.5 percent of

America's agricultural producers would be exempt from any

estate tax liability.

We believe estate tax laws should be reformed, not

repealed. An immediate increase in the level of the exemption

utilized to calculate estate tax liability, and

simplification of the rules and procedures governing the

filing and payment of estate taxes, represents a more

rational and beneficial approach for farmers, ranchers and

small business owners than full repeal.

The tax reform approach will minimize the loss of revenue

for both the federal and state governments that will result

from full repeal at a time when budget deficits and declining

public revenues are severely stressing our capacity to

maintain and expand priority programs important to the

American people. The twenty-year federal cost of full estate

tax repeal is estimated to be nearly $1 trillion. For farmers

and ranchers, such a loss in federal revenues will reduce our

ability to fund a wide range of commodity, conservation,

rural development, research and trade programs important to

the farm economy. These programs are much more critical to

retaining a family farm oriented production agriculture

system than the limited savings resulting from estate tax

repeal that will only accrue to the nation's wealthiest

individuals.

Estate tax reform will provide much needed certainty to

those engaged in planning for the future while ensuring that

individuals are not subjecting their heirs to a capital gains

tax liability resulting from the potential loss of the

stepped-up basis provisions contained in current law. If this

occurs, the result will amount to a substantial tax increase

for those of more modest means and smaller accumulations of

wealth.

We look forward to working with you to develop and adopt an

estate tax reform proposal that is both fair and fiscally

responsible. Thank you for your consideration of these issues

and for your vote against repeal of the federal estate tax.

Sincerely,

David J. Frederickson,

President.