Introductory Statement on S. 928
Mr. President, four years ago, as projected budget surpluses reached over $5 trillion, Congress passed a tax cut bill that began the process of addressing the unfairness of the estate tax. Now in 2005, the surpluses have long since…
Mr. President, four years ago, as projected budget surpluses reached over $5 trillion, Congress passed a tax cut bill that began the process of addressing the unfairness of the estate tax. Now in 2005, the surpluses have long since disappeared, and Congress has made no further progress on estate tax relief for America's family- owned farms and businesses--many of whom still pay this tax today.
Earlier this month, the House once again voted for a complete repeal of the estate tax. I myself have consistently supported complete repeal, I have voted in favor of full repeal on multiple occasions, and I will continue to support full repeal should that option be brought to the floor of the U.S. Senate for a vote in the future. Nevertheless, given the persistent state of our more than $400 billion annual deficits, it is increasingly doubtful such a bill could obtain the necessary votes in the Senate for passage right now.
I'm not alone in feeling that the votes just aren't there for full repeal. President of the U.S. Chamber, Tom Donahue, was quoted this week stating that the Chamber would likely support a good compromise coming out of the Senate. We all understand the state of affairs and I want to echo Mr. Donahue's sentiments. We must work together to bring relief to those that this tax affects most--family-owned farms and businesses.
It is the family-owned farms and businesses across Arkansas and all across this Nation that serve as the backbone of our rural communities. To put it simply, they are the economic engines of rural America. It is the family-owned businesses that provide jobs, wages, and health care for my constituents. It is the family-owned businesses that sponsor Little League, they pay local taxes, they are a part of the community. They live there. And that's why family-owned businesses aren't the ones that are shutting down and heading off-shore. When we force family businesses to spend valuable assets on estate planning and life insurance rather than on investing and expanding their businesses, we are putting them at a disadvantage to their publically-traded competitors. I, for one, intend to fight for these family businesses, fight for these communities, and fight for the jobs in rural America.
In the wake of the House vote and the real lack of votes here in the Senate to pass a complete repeal bill, talk of compromise has raised speculation of higher exemptions and/or lower tax rates as an alternative to complete repeal.
Quite frankly, I believe these compromise approaches are incomplete solutions to the problems faced by family-owned farms and businesses. Certainly, I understand that a higher exemption and lower rates will be considered as part of a compromise. But both are expensive and inefficient methods to specifically reach family-owned farms and businesses.
Given the restraints of our budget deficits today, I ask, how can we raise the exemption high enough, or lower the rates low enough, to provide necessary relief for family farms and businesses?
We could not get there in 2001 when projected surpluses reached $5 trillion. What makes us think we can solve this problem today with projected deficits totaling $2.6 trillion in the President's budget?
We took these approaches in 2001, and family-owned farms and businesses still face this tax today, so we should be leery of any compromise approach that considers only rates and exemptions. They were incomplete compromise solutions then--and they will be tomorrow.
In this environment, I feel we are seriously losing ground on coming to a fair and final resolution of this issue. In the meantime, the current state of the law places many family-owned businesses in an extremely uncertain and precarious position--a law that taxes family- owned businesses today, then repeals the tax in 2010, and then snaps back to pre-2001 law in 2011 is simply not responsible on our part. This amounts to nothing more than a nightmarish rollercoaster ride for the businesses we intended to help!
So, we need to set some priorities and go about the business of lifting this tax from these family-owned farms and businesses first.
On the subject of setting priorities, I would like to relay a statistic that may startle my colleagues a bit. The IRS Statistics of Income for 2003 show that only 7.4 percent of the estate tax is paid on ``farm assets, closely held stock, or other non-corporate business assets.'' These 7.4 percent should be our first priority in any compromise the estate tax. The remaining 92.6 percent of assets--such as widely-held stock, bonds, insurance proceeds, art, and real estate partnerships--should not drive or dictate our actions at the expense of America's family-owned farms and businesses.
This simple statistic helps lead us to a targeted solution which should cost less and immediately help those we intended to help in the first place. Today, I introduce the ``Estate Tax Repeal Acceleration for Family-Owned Businesses and Farms Act''--or ExTRA. Under ExTRA, an estate may voluntarily elect to exclude an unlimited portion of family business assets from the estate tax. The carryover basis rules will apply to these business assets and no estate tax will be paid on them. That is the same deal that repeal promises--but we do so immediately and permanently--and at a fraction of the cost.
My bill does not seek to change current law to repeal the estate tax. It would leave in place the scheduled increases in the unified credit, the decreases in rates, and the repeal of the estate tax in 2010. My bill would only seek to rectify the special circumstances of family- owned businesses and farms, in an attempt, not to inflame the issue further, but to resolve this issue now and forever for those this effort was originally intended to help.
The goal of the Lincoln bill is that no family-owned farm or business will ever pay the estate tax. Americans are driven to build their lives and their communities and they want to be able to pass that on to the next generation. What comes of the American dream if someone works hard all their life to build something to pass on to their family, their legacy, and it has to be sold for taxes.
If there is an idea that will protect the American dream and the family-owned business, we should not be reluctant to put it on the table. Today, I am introducing such an idea, and I firmly believe such an approach must be part of any compromise if one is reached. In fact, I will not support any compromise that does not take care of family businesses in Arkansas.
I urge my colleagues to take a look and study the Lincoln bill to immediately and permanently repeal the estate tax for family owned farms and businesses.
I ask unanimous consent that the text of the bill be printed in the Record.