Jobs Protection and Estate Tax Reform Act of 2005

Madam President, this is an interesting debate, and in some ways it is very troubling. I wish to talk a little about fiscal policy and where we find ourselves.

It is almost as if this place is disconnected from what is happening. The night before last, I sat in HC-5 until about 1:30 in the morning working on the emergency supplemental appropriation request--roughly $90 billion for Iraq, Afghanistan, and a portion for Katrina. None of it is paid for; it is just emergency spending--$90 billion. This takes us to something close to $400 billion over these recent years, none of it paid for.

Not many weeks ago, we had on the floor of the Senate a proposed $70 billion tax cut. That passed. It wasn't paid for. Just cutting the revenues. I voted against that. So we are spending money without covering it. We are cutting taxes. The gross federal debt will be $8.6 trillion at the end of 2006. We will add over $600 billion to the indebtedness just this year alone in fiscal policy. We will add over $700 billion this

year alone in trade deficits. That is different from the fiscal policy. Combined this year, we likely will be in debt by some $1.3 trillion. Everybody understands this is completely off track and dangerous.

So what is the business today? How about cutting some taxes again? What is going to come behind this? A third tax cut bill coming from the Finance Committee. It is unbelievable. It is almost as if somebody pulled the plug out of the socket, so there is no current coming through here by which people can think straight. You can go to the hometown cafe or restaurant and folks ask: What do you do next? You are choking on debt up to your neck--$8.6 trillion of fiscal policy debt this year. It is going to increase to almost $12 trillion in the next five years, we expect. So what do we do next? We say we ought to get rid of the ``death tax.''

But there is no death tax, of course. This is a function of a clever pollster, paid handsomely by people with a lot of money to come up with a moniker that would allow them politically to cast this into the water and have it float. My colleague spoke at great length about the ``death tax.'' Clever, interesting, but it doesn't exist.

There is, in fact, a tax on inherited wealth in this country. Very few Americans pay it. Currently, the exemption is $2 million for a husband and $2 million for a wife. If you don't have $4 million in net assets in your family, don't worry about this issue. That is going to $3.5 million apiece, so that is $7 million. If you are not above $7 million, don't worry about it.

By the way, notwithstanding those exemptions, if one spouse dies, the other owns everything--a 100-percent exemption--and there is no estate tax. It doesn't matter what the estate is worth; the other spouse owns it. There is a 100-percent spousal exemption.

This ruse of suggesting that this is a death tax is an unbelievable. The most interesting hoax of all is this small business and family farm issue. I will tell you why it is a hoax. I came to the floor of the Senate twice and offered amendments twice. The last time I offered the amendment, it would have completely repealed the estate tax obligation of any small business and any family farm passed from the parents to the children, the lineal descendants who continued to operate it. If that family business or farm, no matter the size, were passed from the parents to the children, on January 1, 2003, it would have forever been exempt from an estate tax. My amendment would have taken that issue off the table. And 54 Members of the Senate voted against that, including the people here today crying crocodile tears over small business and family farm issues. When they had the chance to do this, they didn't want to. Why? That is not the purpose.

The purpose of this issue is to say to the wealthiest Americans that we want to help you. My colleague said we are going to craft something that is a little bit of a modification. He didn't tell you that the modification would lose some 80 percent of the money. But his real interest and the interest of most of the folks who are speaking is to repeal the death tax, which doesn't exist.

Now, we are at war, up to our neck in debt--$8.6 trillion in debt, heading toward $12 trillion in debt--with a budget policy that is completely out of control and a trade policy that is wildly out of control. What do those who have the majority in this Chamber decide they ought to do? The President, the majority in this Chamber and in the House--what is their next step? It is to cut taxes for the wealthiest Americans.

Let me tell you what Warren Buffett says about this. He is an interesting guy. He is the second richest man in the world but a really public-spirited man. He said, ``If this is class warfare, my side is winning.'' He doesn't approve of this; he thinks this is nuts. He has an estimated worth of $42 billion. He said:

I personally think that society is responsible for a very

significant percentage of what I have earned. If you stick me

down in the middle of Bangladesh, or Peru, or someplace, you

will find out how much this talent is going to produce in the

wrong kind of soil.

Being here is what allowed him to be successful, he said. He said, by implication, that we owe something back.

We are at war, and my colleagues have decided that the pressing priority is to remove the tax burden from the wealthiest people in this country, the ones worth billions of dollars. Franklin Delano Roosevelt said in one of his fireside chats--this in another age when we were at war:

Not all of us can have the privilege of fighting our

enemies in distant parts of the world. Not all of us can have

the privilege of working in a munitions factory or a

shipyard, or on the farms or in the oil fields or mines,

producing the weapons or raw materials that are needed by our

Armed Forces. But there is one front and one battle where

everyone in the United States--every man, woman, and child--

is in action. . . . That front is right here at home, in our

daily lives, and in our daily tasks. Here at home everyone

will have the privilege of making whatever self-denial is

necessary, not only to supply our fighting men, but to keep

the economic structure of our country fortified and secure. .

. .

Do you see any urge at all by the majority here, by the White House, to call this country to action for some public spiritedness, about what we need to do together? We have soldiers dying on the battlefield, and we are sitting downstairs in the Capitol Building until about 1:30 in the morning appropriating money for those soldiers for their munitions, for their trucks and tanks and battleships, and we will not pay for it. The majority party says we will not pay for it. Even as we spend money, we won't pay for it. But we see that their highest priority is to cut taxes for those who are very well off.

The wealthiest 1 percent of Americans now own a bigger piece of the pie than the poorest 90 percent added together. That gap is growing. This legislation will once again decide to expand the inequality of income in this country.

Let me say this again. Those who come to this floor talking about small businesses and family farms had a chance to vote for the repeal of any estate tax obligation for any transfer of any family-owned business or any family-owned farm, and that full repeal would have been effective on January 1, 2003; and 54 Members of the Senate voted no. I daresay almost everybody speaking today in support of this legislation because they believe it will help family farms and small businesses, when they had the chance to do it, they voted against it.

And that tells you a little something about what is really at stake.

Has anybody here ever seen a hearse pull a U-Haul? Don't think so. You can't take it with you. We are on this Earth for a relatively short period of time. We are blessed to live here, a unique spot on this planet. And this, in my judgment, requires of us some responsibilities.

Oh, I know some don't want to lose anything. They want to take it all with them. But you can't take it all with you. The question is: Should at least some of the largesse that those who have been most successful in this country have accumulated in this lifetime bear a tax because most represent an accumulation of assets that never ever bore a tax? Growth appreciation of stocks that has never been taxed, should that not also contribute to this country's defense and well-being? The answer is yes.

I hope we decide to do the right thing and reject this proposal.

I move to reconsider the vote.

Mr. President, we are now considering the repeal of the estate tax. The estate tax is a tax paid by 2 out of every 1,000 Americans. It is not a tax that will affect the vast majority of Americans because they have not accumulated enough wealth in their lifetime to be subject to the tax.

It is an action which is imposed on the very wealthiest, the very richest people in America. It is a tax which is imposed on their estates after a certain amount is exempt. Up to $4 million is exempt for a couple under current estate tax, and that number is scheduled to rise.

However, the Republican majority believes this tax is unfair. They believe it is unfair for the wealthiest people in America, who have accumulated millions of dollars, to pay any tax to the Government on that accumulated wealth when they die. They say that is fundamentally unfair. They come to the Senate with a sense of outrage that we would ask wealthy people in America to pay taxes, so they propose the elimination or dramatic reduction of this tax, to the point where it will add substantially to the deficit of the United States of America.

This is not a tax cut for the wealthy; it is a tax deferral. By reducing or eliminating the tax on the wealthiest, they are passing the burden of taxation on to those in lower income groups. With their elimination of the death tax, they are creating a birth tax.

In other words, if you happen to be born in America and you are one of the 997 out of 1,000 who don't pay the estate tax, you will have a bigger debt and a bigger burden because the Republican majority believes the wealthiest should be spared paying taxes. People who have had the good fortune of living and succeeding in America should be spared, according to the Republicans, any responsibility to pay back to this great Nation for the benefits they have accrued during their lifetime. There is a sense of outrage on the Republican side of the aisle that somehow we would impose this tax. They have created this vast mythology about the estate tax. They translated it into a death tax, suggesting to Americans that when you die you must pay taxes. That is plain false. Only 2 or 3 out of 1,000 people who die each year pay any such tax. Yet the average person on the street believes the Government is going to come and grab whatever small amounts they have kept together for their sons and daughters and take it away in tax collection. It is not true. It is false. It is misleading. It is deceptive.

Who is pushing this great effort to eliminate the estate tax? Will it surprise you to know they are the fattest special interests in Washington, DC? An analysis has shown--and these numbers are nothing short of amazing--that 18 families in the United States of America, with a combined net worth of $185 billion, have spent $200 million lobbying on Capitol Hill to repeal this estate tax. Why? They are going to make a fortune because their fortunes will be

protected from being taxed. This is the ultimate special interest bill. This bill has nothing to do with the average American, the average American family, the average American farm or the average American business. It is about the wealthiest people in America flexing their muscles, pushing through on Capitol Hill the most outrageous piece of special interest legislation in modern memory. The Republican majority is pushing this to the floor with a straight face: We want to eliminate the death tax.

What does it mean for the families behind Wal-Mart, Gallo wine, Campbell's soup and other companies? It means that if they are given full repeal of the estate tax, these 18 families will collectively net a windfall of $71 billion. That is what this is about.

Who will end up paying for it? Our children will. We will take the money which we are not going to collect from the estate tax and end up borrowing. And who will loan us the money? More and more the Bush administration goes overseas to borrow the money: Japan, China, Korea, the oil sheikhs, they will loan us the money. But there are strings attached. Do you remember the Dubai Ports deal? Think there is a connection between these Middle Eastern oil giants now buying into the American economy and what we are doing on the estate tax? It is directly linked. There are bankers, mortgagors. They sell us oil. Why? Because the Republican majority runs up the biggest deficits in the history of the United States.

When President Bush took office, the national debt was $5.8 trillion. The accumulated debt in the history of America was $5.8 trillion. Five years later, the national debt is knocking on the door of $9 trillion. And if they continue to eliminate taxes on the wealthiest people, the debt will be $11 trillion. For the students who are watching this debate on television, in the galleries, through C-SPAN, let me tell you, this effort to find a benefit for the wealthiest families, to absolve them from paying debts for the success they have experienced, is going to be visited on our children and grandchildren. Where is the fairness and where is the justice? Where is the sense of outrage that we would give this special interest legislation such a priority in the Senate? Why wouldn't we consider changing the Tax Code so that average working families can deduct the cost of college education for their kids? Isn't that something good for America? Isn't that of greater value than to say to the superrich: We are going to spare you from paying $71 billion in taxes over the life of this repeal? No. From their point of view, you don't think about the families putting the kids through college. You don't worry about the situation where we have so many Americans, 46 million in fact, without health insurance today. You don't deal with the reality of funding education. You focus your attention and the time of the Republican majority on repealing a tax on the super wealthiest people in America.

Warren Buffett is the second richest man in America. He said: Do you know what is going on here? It is class warfare. And do you know what? My class is winning.

They sure are.

Today the Republican majority will try to put a victory on the board for the richest people in America. Why do we do this? For some, it is a matter of philosophy. They happen to believe if the rich get richer, America will be better off. That has been a philosophy around this country for a long time. I come from a different point of view. I think the strength of America is in its families, those families getting up and going to work every day, doing their best to keep families together, to save money for the future, to put their kids through college. It is in small businesses that take risks and sometimes fail but, when they succeed, build into a business that gives them a chance to hire more people. It is in family farms. That is the strength of America. These other folks have done quite well.

The New York Times went to the Farm Bureau and asked them: Name for us a single example of a family being forced to sell its farm because of estate tax liability. Not one single example derived from the American Farm Bureau. They couldn't find one. I did the same thing in Illinois. Not one farm has been lost because of Federal estate tax liability.

We will hear them crying and moaning and whining and rending their garments about how this is needed to save family farms. They can't come up with a single example where a family farm has been lost by the estate tax. According to the Congressional Budget Office, only 123 family-owned farms and 135 family-owned small businesses would pay any estate tax at all with a $2 million exemption level--across America, pay any tax at all, let alone risk losing their business or farm.

This has been exaggerated to a point which is shameful. To think that at a time when we are facing the biggest deficits, when we are involved in a war where we are asking our sons and daughters to risk their lives for America, that we are going to make those who are comfortable more comfortable by sparing them their taxes, that we are going to welcome home the soldiers by saying, thanks for serving America and, incidentally, here is a larger national debt for you to carry the rest of your life.

I urge my colleagues to defeat this effort to repeal the estate tax.

I announce that the Senator from West Virginia (Mr. Rockefeller) and the Senator from New York (Mr. Schumer) are necessarily absent.

Madam President, this bill to repeal the estate tax is unfair and unaffordable. Full repeal is estimated by the Joint Committee on Taxation to cost $776 billion over the first 10 years it is in full effect. And in fact that cost would be nearly $1 trillion when interest payments on the extra debt that would be required are taken into account.

Repealing the estate tax would only benefit a tiny percentage of the very wealthiest Americans among us by enabling them to pass additional millions of dollars to their heirs tax-free. It would shift an even larger share of the Nation's tax burden and debt onto the backs of average working families and our children and grandchildren.

Only a tiny fraction of estates pay the estate tax. In 2004, only 1 percent of estates in Michigan and 1.2 percent nationwide paid any estate tax. In 2006, those numbers will likely be even smaller because each individual's exemption from the estate tax will increase from $1.5 million to $2 million, with those numbers doubled for married couples. In fact, it is estimated that in 2006, just one-half of 1 percent of all estates will owe any estate tax. This percentage will continue to shrink as the exemption level rises. By 2009, when $3.5 million--$7 million for married couples--will be exempt, only three out of every 1,000 estates will owe any estate tax; that's one-third of 1 percent.

Why are the Republican leaders pressing this? Over the last decade, a massive public relations campaign funded by a handful of families has succeeded in creating the mistaken impression that the estate tax catches millions of average Americans. According to a recent report by two nonprofit organizations, Public Citizen and United for a Fair Economy, 18 families worth a total of $185.5 billion quietly financed and coordinated a 10-year effort to repeal the estate tax. The report tells how these families spent over $200 million contributing to political campaigns, financing outside lobby groups and trade associations, and creating a massive anti-estate tax coalition that served as the main coordinator of the repeal campaign.

The advocates of repeal have not been forthcoming about the billions they would save if the estate tax were repealed, but instead they have promoted stories about the effects of the estate tax on family farms and small businesses. Such family-run enterprises make up the core of the American economy and society, so it is no surprise that using them as the poster children in the campaign for repeal has been met with some public relations success. The well-funded initiative has left many with the mistaken impression that the estate tax requires many small businesses and family farms to be sold to cover the estate tax bill.

Few, if any, examples of that are ever offered, but no matter. The disinformation campaign continues. What is the reality? According to data from the Tax Policy Center, of the 18,800 taxable estates in 2004, there were only 440--or two percent--in which farm or business assets made up at least half the total value of the estate. Forty percent of these 440 farm and business estates were valued at less than $2 million and paid an effective tax rate of only 1.6 percent.

According to the Congressional Budget Office, at the upcoming exemption level of $3.5 million, only 200 farms in the year 2000 would have had to even file the estate tax, and fewer than 15 of those estates would have lacked sufficient liquidity to pay the estate tax.

From these numbers, it is clear that an exemption level and other safeguards can be set to keep effectively all small businesses and family farms from having to sell their businesses to pay the tax. That is why I hope that at some point in the near future we will be able to adopt a commonsense proposal to permanently set an appropriate, inflation-adjusted exemption level.

But proceeding to this bill at this time would not achieve that goal. The majority has indicated that if we proceed to debate this bill, consideration would be limited to a small number of predetermined amendments, each of which would set the tax rate on inherited wealth lower than the tax rate on workers' wages. Giving tax preference to inheritance over workers' wages is not the American way.

Furthermore, in the face of mounting deficits, adoption of any of the so-called compromise amendments being talked about would be fiscally irresponsible and would unfairly burden average taxpayers to make up the difference in lost revenue from the Treasury. The proposal endorsed by Senator Kyl would still cost eighty-four percent of the cost of full repeal.

The estate tax was created not only to raise revenue but also to prevent the concentration of wealth in the hands of just a few families. It ensures that those who prosper so greatly in the American economic system do their fair share to contribute to our continued national well-being. Just like other Americans, the very wealthy benefit from public investment of tax dollars in areas such as defense, homeland security, environmental protection and infrastructure, and they rely even more than others on the Government's protection of individual property rights. The estate tax is not intended to discourage people from seeing to it that their children are more secure, but rather, it is aimed at helping keep avenues of opportunity open to all citizens. In the words of President Teddy Roosevelt, who proposed the estate tax: ``[I]nherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our government.''

We should make sure that our current and future tax policies consider not only the value to taxpayers of their take-home pay or accumulated wealth, but also the value to them of the essential government services that are funded by their taxes. It is not a popular thing to talk about these days, but our Nation relies on and needs tax revenues. Every day in Iraq and around the world our military needs tanks, aircraft carriers and protective body armor. We need scientists working toward cures for cancer, Alzheimer's disease and birth defects. We need teachers to educate our children so they can keep our Nation economically competitive in the next generation. We need USDA personnel to screen our meat and livestock for mad cow disease and harmful toxins. We need Government grants to help buy bulletproof vests for the cops on our streets. We need dollars to build new bridges and highways to relieve congested traffic, as well as dollars to repair potholes in existing roads.

On top of these things and many others we already appreciate, there are many other important initiatives: lowering the spiraling cost of healthcare so that all Americans can get the care and medicine they need, improving our education system so that every child grows up prepared to make a valuable contribution to our society, investing in leap-ahead energy technologies that will boost our auto industry and help end our dependence on imported oil, preserving our irreplaceable natural resources, and protecting the jobs provided by our Nation's manufacturers.

If we are to have any hope of paying for even a few of these priorities, eliminating the estate tax for the extremely wealthy is exactly the wrong thing to do. We are running record deficits and we are fighting a war in Iraq. We simply cannot afford such a massive tax cut which would push us even further into the deficit ditch. Today, each American citizen's share of the debt is almost $28,000, and as we continue to run up record yearly deficits, the country's total debt is estimated to reach over $12 trillion by 2016, which is $39,000 per person. It is not just reckless fiscal and economic policy to saddle future generations with this kind of crushing

debt burden; it is morally reprehensible to pass this kind of burden to our children and grandchildren.

We need to look out for all of our citizens, not just the few who are extraordinarily wealthy. I cannot agree with policy changes that favor a handful of multimillionaires, one-third of 1 percent of our people who are the very wealthiest, at the expense of working American families and of critical national priorities. That is why I am opposed to repealing the estate tax.

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Madam President, Michael Caudle's father founded the Greenfield Lumber Company in Greenfield, TN in 1955. Michael's dad and his granddad spent years building that business into the trusted, reliable family business that exists today. But when Michael's dad passed away 6 years ago in 2000, the business was put on the brink. The family at that time, all of a sudden, was forced to pay nearly $400,000 in death taxes and almost had to sell the business they had worked so hard to put together to pay the tax.

Michael says he hopes to pass that lumber company on to his children and his grandchildren. It is his life. It is what he has worked for: to give them that sense of family pride and community, that pride and community that his dad had passed on to him.

But like so many American families, his dream is threatened by what has come to be known in my State as the ``buzzard tax,'' and by people who don't see the value in preserving a hard-won family tradition, that name is appropriate.

One Tennessee couple told my office they decided not to trust their fate to the tax man. They sold their east Tennessee car dealership so that if one of them were to die suddenly, the other one simply wouldn't have to pay those exorbitant taxes; that burden wouldn't fall on their shoulders. They didn't want that buzzard picking apart that dream that they had built together.

Fred Heinecke's parents, unfortunately, didn't know about that kind of tax planning. As Mr. Heinecke of Vanore, TN wrote to the Knoxville News just this Saturday:

Current law allows a $4 million deduction for a couple.

That may be true if they die at the same time, such as in a

plane crash, but not if they die separately as most couples

do. I learned the hard way because my parents died a couple

years apart without a trust. When my mom died in 2003, I

wrote a painful check for over $300,000 to the Federal

government. This required the sale of property that had been

in the family for over 50 years.

Fred, like so many people, not only had to write that unexpected and huge check to the Federal Government in order to pay, he had to negotiate the sale of his parents' property at one of the worst moments in anybody's life, and that is the time of their death, the passing of his mom. As Fred's story, which is so typical and like so many other stories, illustrates, this death tax is unfair. I think that is the strongest argument of why we bring the repeal of the death tax back to the floor today. It is time to bury it. It is time for it to go.

In a few moments we will have a vote on cloture on the motion to proceed to H.R. 8, and we need to be very clear about what this vote means. A vote in favor is a vote to move forward with this important debate. A vote against is a vote to kill any chance of repealing or even reforming this onerous tax and is a vote in favor of returning the death tax to the pre-2001 confiscatory rate of 55 percent, an exemption of only $1 million per person.

Back in 2001, we passed a gradual phaseout of the death tax--real progress. Under that 2001 Economic Growth Tax Relief and Reconciliation Act, the death tax is scheduled to disappear in 2010.

But under the terms of this compromise legislation, after 2010 it comes roaring back with that tax level of 55 percent in 2011. That is why we need to act. We need a permanent fix, and that is what this vote is all about.

Last spring, the House passed a bill to make full repeal of the death tax permanent. They did so with strong bipartisan support. Over a year has passed and thus now it is time for us to act.

Americans have broadly said they support repealing the death tax. In a recent poll commissioned by the Tax Foundation, nearly 70 percent polled in favor of repeal.

With stories like Mr. Henicke's, it is not hard to understand why. We already pay enough taxes over our lifetimes, whether it is a water tax, a gas tax, a payroll tax, a utility tax, a cable tax, a property tax, a sales tax, an income tax--we are taxed every minute of our lives. We are taxed from that first cup of coffee in the morning to the time we flip off the lights at bedtime. In fact, we are taxed so much that one nonpartisan organization calculates

that the first 5 months of the average American's salary is confiscated by the Government.

If you are an enterprising entrepreneur who has worked hard to grow a family business or to keep and maintain that family farm, your spouse and children can expect to hear the knock of the tax man right after the Grim Reaper.

Some on the other side of the aisle argue that the death tax is a critical stream of Federal revenue and that in any event it only hits the superrich. Neither is true. Mounting evidence shows that once widespread estate tax avoidance is accounted for, the death tax nets zero to negative tax revenue. Worse yet, the death tax may be responsible for the loss of from as many as 170,000 to 250,000 potential jobs each year.

Meanwhile, it is not the superrich who are hardest hit by the death tax; family businesses bear the brunt. The Seattle Times Company reports that 89 percent of all taxable estates filed in 1995, before the 2001 reform, were $2.5 million or less in size. What does this mean?

A family-owned business stands to lose nearly half of all

its assets when it passes from one generation to the next.

That is over half of everything, including land, buildings,

equipment, money and more--all because of the current estate

tax law which is really a tax on death. They sell out,

letting long-term employees go. Not because they want to. But

because they have to. And the echo reverberates through an

entire community.

Just yesterday I heard from farmers and western landowners and listened to the damage, the harm they suffered as a result of this death tax. Some of my colleagues have said that the death tax doesn't hurt farmers, but the farmers simply take a different view. Many of them are cash poor. They own land handed down from their parents. They know there is no easy way their children can continue to work the land if they are subjected to this death tax, so rather than wait for the death tax to pick apart their family farm, they make plans to sell the land in advance. That is the part of the story that never gets told. The death tax not only confiscates the honest earnings of the recently deceased, it often forces families to divest themselves of that family enterprise.

In the past, when Congress enacted a death tax, it was at an extraordinary time of war, and the purpose was to raise temporary funds. But after the war was over the death tax would go away, it was repealed. But that changed in the last century. The death tax was imposed and has never been lifted. Instead, it became entrenched and it took 90 years to roll back.

It is time to stop punishing America's entrepreneurs and job creators for saving, for investing, and succeeding. The death tax tells people it is better to consume today than to invest for the future; to consume today rather than save for the future; to spend now and leave nothing for later. That doesn't make sense. It is unfair.

On February 10 of this year I said the Senate would debate and decide the fate of the death tax. That time is upon us. I urge my colleagues to cast their vote in favor of cloture, of proceeding to allow debate on elimination of the death tax. If we do not, the death tax prevails. America's family businesses lose and so do the workers they hire and the communities they support. A vote for cloture is a vote to protect these family traditions. It is a vote for what is right, for simple fairness.

We will turn to the vote in just a few moments. Again, this is a vote on the motion to proceed to allow debate. It will require 60 votes on this very important issue. If we get 60 votes--and I hope we do get those 60 votes--I expect we will see a cloture motion on the underlying bill. If that underlying bill is not successful, I would think that we would need to gather together to have compromise legislation, and I would expect a vote on that as well.

I yield the floor.

Madam President, today we are debating repeal of the estate tax. Many of us have supported reform to the estate tax in a reasonable way that will help families keep their small businesses and farms. But this debate about repeal of the estate tax has become unreasonable and fiscally irresponsible.

Some in the Republican majority are calling for full and permanent repeal of the estate tax and have referred to the estate tax as ``immoral'' and ``vicious.'' I disagree. Only very wealthy Americans will benefit from the proposal before us today. It is a proposal that does not reward work, entrepreneurship, or innovation.

I also wonder why we are debating this today. The estate tax debate was postponed last fall because of Hurricane Katrina. New Orleans is still recovering and all signs point to the region being in dire need of more Federal assistance in the months to come. I believe it is still an inappropriate time to debate the estate tax. Congress just passed a $70 billion tax cut that will give those with an income of $1 million an average tax cut of $43,000. Additionally, we have had troops in Afghanistan since October of 2001 and in Iraq since March of 2003. This is a time for sacrifice, not time for another debt financed tax cut for the richest Americans.

Congress is not sending the right message by debating the repeal of the estate tax when soldiers are risking their lives and many citizens are still left homeless by Hurricane Katrina. The estate tax is simply the wrong priority.

Only a few wealthy Americans will benefit from repeal of the estate tax, but it will harm many. Repeal hurts tens of millions of Americans by shifting even more of the tax burden from those who hold wealth to those who work day in and day out to earn a paycheck. Since the proposal is not paid for, it hurts our children and grandchildren by creating billions in debt and interest that they will have to pay for. According to the Center on Budget and Policy Priorities, the total cost of repealing the estate tax for a decade would be nearly a trillion dollars. This revenue could be well spent on essential initiatives such as rebuilding the areas devastated by Hurricane Katrina, our national defense, children's health care, equitable tax reform or paying down the debt.

Repeal of the estate tax hurts millions of working families who need Congress to resolve far greater problems in our tax code, like the punishing and expanding alternative minimum tax, AMT. The AMT is levied on taxpayers merely because they have children and happen to live in particular States. Yet according to the majority leader, the estate tax--which is levied on individuals who will inherit at least several million dollars--is the ``cruelest and most unfair tax.'' I don't see the logic in that argument and I am confident the American people can see through it as well.

My colleagues on the other side of the aisle argue that estate tax repeal is needed to help small businesses, but I bet you would not hear them discuss a provision in H.R. 8 that will result in increased capital gains taxes for small firms. Under current law when a person inherits an asset, they receive a ``step-up'' in basis. This means that the person inheriting the assets receives a tax basis increased to fair market value at time of death. When the person sells the property, he or she is only taxed on the difference between the sales price and the fair market value at the date of death.

H.R. 8 would limit the amount of assets that are eligible for step-up basis. Assets exceeding $1.3 million would receive ``carryover'' basis under which the heirs receive the same basis as the deceased owner. Assets of up to $4.3 million transferred to a spouse will receive step- up basis. Carryover basis usually results in higher capital gains taxes because tax will be owed on the difference between the sales price and the basis that the decedent had in the asset. Certain assets will no longer have step-up basis which gives heirs a basis equal to the fair market value at time of death. This change in basis will result in a greater difference between the sale price and the heir's basis.

I agree that Congress should address the estate tax in the coming years, but we need to keep in mind that the current uncertainty was created by the majority's unsound tax policy. It is because of the Republican tax policies that the estate tax is now set to disappear in 2010 and then return to its previous levels in 2011. We tried in the past to make estate tax relief permanent. In 2002, we proposed exempting estates of up to $4 billion and permanently reducing the top rate to 45 percent, but that was not acceptable to advocates for full repeal. Now the Republican majority points to the problems they created with earlier tax cuts as justification for repealing the estate tax-- creating further problems, greater inequity, and more debt.

According to a July 2005 Congressional Budget Office, CBO, report, very few farms and small businesses will pay the estate tax if it is set at a reasonable level. The CBO report shows that if the exemption is set at $2 million, only 123 farms and 135 family-owned businesses would have taxable estates and even fewer would have insufficient liquidity to pay the estate tax. Even if one disagrees with the CBO report, we should all be able to agree that raising the exemption amount helps small business and farms. Proposals that exempt inheritances above $3.5 million would overwhelmingly benefit those who own stocks and other securities and really have nothing to do with helping family farms or businesses. If the exemption is increased to $3.5 million, only 0.3 percent of all estates would be affected. Many of these assets have never been taxed, given that assets of wealthy estate frequently include stocks that have never been taxed.

Often it is argued that the estate tax needs to be repealed to assist small businesses. There is no concrete evidence that a family-run business has been put out of business by the estate tax. If the AMT is not addressed it will hurt many more small businesses, but instead of addressing it, Republicans prefer to promote the myth that the estate tax shatters small businesses.

At a time when income inequality is increasing, the estate tax should not be the priority of the Senate. According to the Federal Reserve's Survey of Consumer Finances, the average net worth of an American family grew 6.3 percent while the bottom 40 percent of families' median net worth fell.

When President Theodore Roosevelt advocated an estate tax nearly a century ago, he argued that, the ``man of great wealth owes a peculiar obligation to the state, because he derives special advantage from the mere existence of government.'' He further advocated, ``We are bound in honor to refuse to listen to those men who make us desist from the effort to do away with the inequality, which means injustice; the inequality of right, opportunity, of privilege. We are bound in honor to strive to bring ever nearer the day when, as far as is humanly possible, we shall be able to realize the ideal that each man shall have an equal opportunity to show the stuff that is in him by the way in which he renders service.'' We should heed the words of President Roosevelt and vote against estate tax repeal.

We need to return to a tax system of fairness and equity. Our tax system should reward work and create wealth for more people; it should not be skewed to the wealthiest among us. We need to work together to find a solution to the estate tax which reflects the reality of our fiscal situation and provides certainty for hard-working families.

Madam President, I rise to oppose this bill. With an $8.4 trillion national debt, a budget deficit that will exceed $300 billion this year, a looming entitlement crisis, and a mounting alternative minimum tax problem, full repeal of the estate tax at this time is simply not responsible.

We have until 2010 to make decisions about the estate tax. In doing so, time will afford us the opportunity to make more informed choices, with a more complete picture of our Nation's fiscal health.

We are talking about eliminating nearly $1 trillion in Federal revenues here, during a time of war.

Now is not the time to place the interests of a small number of millionaires ahead of millions of working families.

The estate tax is already being gradually phased down under current law. By 2009, only estates valued at more than $7 million per couple-- $3.5 million per individual--will owe any estate tax at all. This means that only 3 of every 1,000 people who die would have an estate large enough to owe any Federal estate taxes.

Permanently eliminating the estate tax would cost $402 billion over the

next 10 years, 2007 to 2016, though it is important to note that this figure only captures the cost of 5 years of full repeal, from 2011 to 2016.

When all costs are included, nearly a trillion dollars will be lost in the first decade following repeal, from 2012 to 2021. Included in this staggering figure is $213 billion in increased interest payments on the national debt.

Federal revenues are already insufficient to fund our Nation's most critical domestic priorities.

I wish things were different, allowing a vote in support of reforming the estate tax to be cast today in good conscience.

Let me be clear. I am no fan of the estate tax. I understand how hard families work to provide opportunities and a better future for their children. Transferring assets from generation to generation motivates families to work even harder. It is unfair to place unreasonable burdens on small businesses and families seeking to provide for future generations.

I am deeply concerned about California's families who own farms and small businesses. Like many of my colleagues, I worry that they may be forced to sell a primary residence just to pay the estate tax. Our laws should not create even more hardship at a time when someone has lost a loved one.

Yet, as we consider estate tax repeal today, our Nation's fiscal outlook and the potential impact of this administration's policies are uncertain. This President has broken with his predecessors by submitting only 5-year budgets.

Why, you might ask? Especially after we were presented with the traditional 10-year numbers during this President's first year in office. The answer is that these tax cuts explode the debt and deficit in the outyears--the end of the 10-year window.

The President's tax cuts have already cost more than $1 trillion, and those enacted will be more than $3 trillion over the next decade.

Republicans just passed another round, with the lion's share once again going to the very wealthy--$50 billion to extend capital gains and dividends tax breaks over 10 years.

The Federal budget deficit will be at least $300 billion this year. The national debt is soaring. And we are at war. Never before have such expansive tax cuts been enacted or continued during a time of war.

Over the next 10 years, the debt is projected to reach nearly $12 trillion. In this year alone, our national debt is slated to increase by $654 billion. More startling is the fact that the national debt is currently more than 66 percent of our gross domestic product, GDP. The total debt equates to roughly $30,000 owed by every American citizen.

When you combine the cost of the tax cuts with spending for the war in Iraq--currently totaling $370 billion--the inevitable result is that the domestic programs that matter most are squeezed.

For example, the President's fiscal year 2007 budget makes significant cuts to programs such as food stamps, cut by $272 million; food assistance for seniors and children, cut by $111 million; COPS, which put over 118,000 police on the streets nationwide, is being cut by more than $407 million, or 15,000 officers nationwide; first responders--within Department of Homeland Security--by $573 million or 25 percent; firefighters--firefighter grant program, within Department of Homeland Security--by $355 million; Job Corps--an education and job training program for youth--by $55 million, resulting in 1,000 fewer at-risk youth being served; mass transit, by $100 million; safe and drug-free schools State grants, by $346 million; and education--the President's signature education program, No Child Left Behind, would be underfunded this year by more than $15 billion and $55.7 billion since it was enacted.

Let me explain. Most of the money the Federal Government outlays in a given year is currently not controllable. It is spent on what are called entitlements--Social Security, Medicare, Medicaid, veterans benefits. If you are entitled to these benefits, you get them.

And if you add interest on the debt--nearly $400 billion in 2006-- that is about 60 percent of everything spent in a given year. So that leaves 40 percent, half of which is the defense budget and half is everything else.

There is a war going on, so it is very difficult to cut defense spending.

So while a select few are benefiting from massive tax breaks, budget cuts must be made--to the programs many Americans rely upon--to prevent uncontainable deficits.

There is a fundamental shift taking place. Republicans have become the profligate spenders, while Democrats have become the deficit hawks.

Americans deserve more responsible leadership. Leadership is about planning for the future and making the difficult decisions that ensure economic stability for our children and their grandchildren.

With the threatening fiscal demands of baby boomers retiring and the pending insolvency of Medicare in less than two decades, repealing the estate tax today would be inconceivably shortsighted.

I urge my colleagues to employ sensible leadership and understand the responsibilities we have to uphold. We have a responsibility to working families, veterans, senior citizens, children, and low-income communities.

No one will deny that this issue needs to be revisited in the coming years. We must adopt a balanced estate tax compromise, while holding the line on spending in order to restore a program of fiscal sanity. I look forward to working with my colleagues to protect small businesses and family farms, without unreasonably jeopardizing our Nation's financial well-being and our ability to help those who need Congress most.

In the meantime, I urge my colleagues to do what they know is right: encourage a more responsible fiscal course and stand in opposition to full repeal of the estate tax at this time. This is the wrong policy at the wrong time.

Madam President, I wish to express my support for a full and permanent repeal of the death tax. This is an issue of tax fairness. The death tax can consume up to half of the deceased owner's estate. Many assets that are subject to the death tax were already taxed during the life of the deceased through income taxes, property taxes and other levies. Imposing another tax on someone's estate at the time of his or her death is a grossly unfair form of double taxation.

In 2001, Congress passed a phase-out of the estate tax with full repeal effective in 2010. If Congress does not act soon, the law will revert back to where it was prior to 2001, placing an enormous tax burden on family-owned farms and small businesses. Some families would be forced to sell the farm or business they have just inherited to pay the enormous death tax bill. This goes completely against the American dream of working hard, growing a business and some wealth, and leaving the fruits of your labor to your children.

Some argue that death tax repeal only would benefit the very wealthy. During this debate we have heard names like Bill Gates and Donald Trump. However, the death tax has a major impact on a lot of Americans who aren't household names. For example, I want to talk about Clint Callicott from Williamson County, TN. Clint's family farmed on land in Williamson County that his father owned and then Clint inherited. The farm's value began to increase due to economic growth and development in the county, so at the time his father passed away the land was worth over $1 million. Clint was forced to sell the family farm against his wishes in order to pay the large death tax, and the Callicott family had to relocate to another county.

This unfortunate story illustrates the negative effect the death tax can have on family farms and small businesses, and this example is only one of many. In Alcoa, TN, Dick Daugherty and his wife tried to plan for the impact of the death tax in the early 1990's by hiring a very expensive estate lawyer. Their hope was to preserve their family farm for their children, and they went so far as to take out an insurance policy with significant premiums to ensure there would be enough cash when the time came to pay the death tax bill. However, today the value of the farm land has increased so much due to development in the Alcoa area that--despite their best efforts to plan ahead--it now looks unlikely that the Daugherty sons will be able to afford to hold on to the land that has been in their family since 1871.

Clearly, there is something wrong with a tax system that forces people off the land that has been in their family for generations. And it is just as wrong when the tax system makes it harder for family- owned small businesses to succeed. According to one study, less than 30 percent of these small businesses survive to a second generation and only about 13 percent continue to a third generation. These small businesses face enough hurdles as it is without Uncle Sam imposing yet another obstacle in the form of the death tax.

Supporters of keeping the death tax claim that repeal would be too costly for the Treasury. However, over the last 10 years the death tax only has accounted for about 1.3 percent of all Federal tax revenue. In addition, the ``costs'' of repeal have been overstated because estimates fail to account for estate planning and compliance costs, the tax revenue lost when a farm or business ceases operation due to the death tax burden, or the economic growth and job creation that would be generated by freeing up capital for investment.

I mentioned the burden of estate planning and compliance costs, and wanted to share another example from my home State of Tennessee. The Anderson Family operates a crop and beef cattle farm. Mr. Anderson recognized the need for estate planning and formed a family partnership that allowed him to pass on his farm assets to his children during his lifetime. This plan is likely to minimize the impact of the death tax, and will increase the chances that the Anderson children will be able to hold onto the family business. However, the considerable legal and accounting costs involved in forming this partnership could have been better utilized elsewhere in the family business.

It is staggering to note that as much as $847 billion over the last several decades has been diverted from the economy for estate planning and compliance costs, according to a Joint Economic Committee study. Estate planning can cost individual families as much as $150,000. This money could be put to better use if it were invested in creating jobs growing our economy. According to the Heritage Foundation, it's estimated that the Federal death tax alone is responsible for the loss of between 170,000 and 250,000 potential jobs each year.

We want a tax system that encourages growth and prosperity, not one that acts as a job killer. However, anticipation of the death tax's impact on one's heirs causes many people to stop working at an earlier age, to reduce

the amount of saving and investing, and to cut back on their entrepreneurial activities. Once these Americans reach a certain age, there is less incentive to further build up the estate because that simply increases the tax burden for the loved ones they leave behind.

That is not the right message to send. We should encourage the creation of jobs, new ideas, and new investment in our country. We should encourage our citizens to continue to strive for the American dream of working hard, building up their assets, and passing them on to future generations.

I am disappointed that efforts to repeal the death tax have been blocked in the Senate for the last few years, and I hope Congress will enact a full and permanent repeal.

Madam President, I want to take a few moments to discuss the estate tax and explain why I support its permanent repeal.

I am well aware that many see the move to eliminate the estate tax as little more than a gift to the rich. In my home State of Utah, for instance, the Salt Lake Tribune characterized the elimination of the estate tax as nothing more than ``subsidizing spoiled heiresses at the expense of everyone else.''

I believe that while this is a commonly held view of the estate tax, it is an unfair and inaccurate pejorative of a principled policy position. A punitive tax on inherited wealth is in no one's best interest, least of all the people with no inherited wealth. The Tax Code should collect revenue in a way that does the least harm to economic growth, and this goal should take precedence over any desire to punish the Paris Hiltons of the world.

Without a doubt, the high estate tax rate harms economic growth.

Perhaps our tax system's biggest flaw is that it taxes the returns to investment, usually more than once. When our employer pays us a dollar, both the Federal and State governments gets their share. When we save what is left over by investing it in stocks or bonds, the government takes another bite at the apple by getting a share of the profits of the company in which we invested. And when the stock or bond delivers an investment return to us, we get to pay the tax man yet again.

The estate tax is often yet another layer of taxation on the investment. How many times does the government need a cut of our money?

At what point do we stand up and say: Don't tax more; spend less?

Because of the estate tax, people save less than they otherwise would and as a result businesses have less capital available to use to grow, expand, and create jobs. With less investment, workers are less productive and wages are lower than would otherwise be the case.

The Bush administration's signature economic achievement, in my view, has been to lower the tax on dividends and capital gains, a change that deserves much of the credit for the strong productivity growth of the past three years. This policy change greatly increased investment and the concomitant growth in output has a lot to do with the simply incredible growth in tax revenue we have seen in the past 2 years.

It now appears that we will collect 30 percent more tax revenue this year than we did just 2 years ago, according to the Congressional Budget Office. This is really incredible. Especially when you consider that the economy was headed for a free fall just 5 years ago. Our efforts to cut taxes have saved our economy over the last 5 years.

A sensible tax system should tax income just once and at a low rate. The inheritance tax does neither.

The current 46-percent estate tax rate borders on being confiscatory. Chris Edwards of the Cato Institute reports that out of the 50 largest economies in the world, we have the third highest estate tax rate.

Len Burman of the Urban Institute recently wrote that it is time for both sides of the aisle to agree that the U.S. Tax Code should be designed solely to collect money in the most efficient way possible, so that it does the least damage to economic growth. From that beginning we can then move to address distributional issues outside of the scope of the Tax Code.

I believe this makes a lot of sense. Strong economic growth is in everyone's best interest, and we have not done a good job communicating that fact to the American people. Too often economic growth is viewed as a barrier to a cleaner environment, or stronger families, or less poverty, when in fact nothing could be further from the truth. Nearly everyone in society benefits from a more productive economy, especially those on the lower rung of the economic ladder.

The way to help the people at the bottom of the ladder is not to pull down those at the top of the ladder, but to help those at the bottom to get the education and training they need to obtain and keep good jobs.

The estate tax as it currently stands represents a barrier to economic growth, and it behooves us to remedy this situation as quickly as we can by making its repeal permanent.