Death Tax Repeal Permanency Act Of 2005--Motion To Proceed
Mr. President, I have asked my staff to see if they can find some charts--maybe the kind of charts prepared by our friend, Senator Conrad. Let's look at this first chart. One of the charts I asked to see if they can find is a chart that…
Mr. President, I have asked my staff to see if they can find some charts--maybe the kind of charts prepared by our friend, Senator Conrad.
Let's look at this first chart. One of the charts I asked to see if they can find is a chart that deals with what has happened in this decade under current law with respect to the amount of an estate that is excluded from the estate tax so we can see what it looks like over time and what the rates look like over time.
As I recall, the amount that could be excluded from the estate tax in 2001 was about $1.35 million. It went up to $2 million, $3 million, and this year it is about $4 million combined, two people in a family, husband and wife, and then I believe in 2009 there is $3.5 million excluded for each spouse, for a total of $7 million for a family in which there are two people. The amount of the tax, going back to 2001, I believe was about 55 percent. Over time it has been decreasing, so that in 2009 the amount of the estate that will be excluded from the tax is $7 million, and I believe the rate is 45 percent. The next year, in 2010, there is no estate tax, and then in 2011 we go back to where it was in 2001, which is again about a little less than $1.5 million, and the rate would be 55 percent.
People like to have some certainty in their lives so they can do planning for a whole lot of activities. Certainly businesses like to have certainty so they can do planning. That is especially true when folks are trying to develop business plans or estate plans. When we look at a tax that goes from an exclusion of $7 million at a rate of 45 percent to the next year having no tax, and the year after that we will be back where we were in 2001, that certainly doesn't provide the kind of certainty under which businesses or families like to operate.
My hope is that during the course of this debate or this year, we can come up with some certainty. There are folks who would like to see the estate tax go away altogether. When I was Governor of Delaware, we actually eliminated the inheritance tax. We cut taxes 7 out of 8 years. Can you believe that, Mr. President? We reduced taxes 7 out of 8 years. We also balanced the budget 8 years in a row.
The concern in getting rid of the estate tax altogether is we didn't balance the budget last year or the year before that, and we are not going to balance the budget this year or for as far as the eye can see. In fact, the way to come closest to reducing the deficit, as the administration would have us believe, to cut it in half, is to assume we are not going to spend any more money in Iraq the next year and the year after and we are not going to spend any more money in Afghanistan or do anything to fix the alternative minimum tax, which is likely to cost us some money--in fact, a whole lot of money. If we ignore all those items, we can pretend the deficit will be cut in half, but I don't think we can in good faith ignore them.
Let me see what else we have in charts that might be worth looking at. This chart gives us some idea of the percentage of the estates that are going to be taxed in 2009. Again, this is if we consider a $7 million exclusion with a rate of about 45 percent. It says that in 2009, only 0.2 percent of estates will be subject to that tax. If we exclude everything up to $7 million, that doesn't leave very many estates. That is 2 estates out of 1,000 which would have to pay anything at all. And even in 2009, the rate would be down from 55 to 45 percent. This chart shows a pie. That is a pretty small sliver out of that pie. Actually, it would probably be a lot slimmer than that if we really wanted to show it in proportion.
Let's take a look at one more. This chart shows how many estates were being taxed in 2000--roughly 50,000. When we go up to the $7 million exclusion for a husband and wife, the number of taxable estates is down to about 7,000.
I wish we had another chart that actually showed what the value of the estate tax is in revenues to the Treasury. I don't know if we have a chart showing that information. If we can take a look, that would be good.
Some folks like to call the estate tax the death tax. That is actually pretty clever. But I always think of it as the estate tax.
I think of something I call the birth tax. It is a tax that every child born in the country this year inherits upon their birth because it is the amount of our debt that accrues to them and, frankly, to the rest of us. The amount of money we owe as individuals as a personal obligation--again, take the total amount of our debt divided by the total number of people, and we are talking about tens of thousands of dollars. In fact, if we look not just at the money that is accumulated debt but if we look at that more on an accrual
basis, we are looking at a birth tax that is not $20,000 or $30,000 per person but maybe 10 times that amount of money.
This is the cost of the estate tax repeal. We generally only look ahead 5 years. We have been raising the amount of estates that are excluded and lowering the tax rate for the last couple of years-- actually, the last 5 years--and the amount of money lost to the Treasury is actually pretty small.
Starting right about 2010, it jumps rather considerably, and it looks like it is $60 billion a year starting in 2012, and it just climbs to 2021 and almost $100 billion a year. This wouldn't concern me if we had a balanced budget. This wouldn't concern me if we had a reasonable prospect for a balanced budget. This concerns me because we don't have a balanced budget and we don't have any prospect for a balanced budget going forward. For us to go willy-nilly into eliminating the estate tax altogether is just imprudent--woefully imprudent.
Should we do nothing? Should we just let the clock continue to tick, so we get to 2009 with a rate of 45 percent and $7 million excluded from the estate tax, and then in 2010 it all goes away, no estate tax, and then in 2011 it comes back to where it was 10 years earlier? Does that make sense? I don't think that makes much sense, either. Rather than simply criticize those who make the estate go away, we ought to find a middle ground, a third way, and the third way says: What can we do that is fair and reasonable to farm businesses, families, and so forth, and at the same time will not make the budget deficit look like this or this much worse going forward?
The approach I like is we go back to where we will be in 2009 if we don't change the law. There are several of us who are going to introduce legislation to do this. I am not sure who will be in the lead. I will be one of the cosponsors. It says: Let's think about providing continuity and certainty. Let's acknowledge the fact that moneys should be excluded from the estate tax. And what is a reasonable level? Right now, we are at $4 million for a family, and in 2009 it will be at $7 million. We are going to suggest we exclude not just in 2009 but in 2010 and 2011 at least $7 million.
I believe we should index that amount going forward, just stay at $7 million for the next 10, 20, 30 years, but it will go up every year in conjunction with some deflator, the CPI or something such as that, and say the rate that is going to be effective in 2009 on the money in excess of the $7 million that can be excluded is 45 percent and lock it in at 45 percent for a while. So not only in 2009 will the amount excluded be $7 million, but in 2010 we will exclude $7 million, maybe with a CPI adjustment, and in 2011, $7 million, again adjusting according to inflation, but the rate would stay the same at 45 percent.
I wish I had a chart that actually shows how that would affect this accumulation of debt, our deficit. It would reduce by about 70 percent the amount of red ink. It wouldn't eliminate it entirely, but we wouldn't be looking at numbers of close to $100 billion a year in 2021. We might be looking at $30 billion. We wouldn't be looking at $50 billion a year in lost revenues to the Treasury; we would be looking at something more like $15 billion.
If people don't think we should have the estate tax where it was in 2001, that is not going to make them too happy because it is still a fair amount of loss to the Treasury, but it is not this huge loss to the Treasury. As long as we are running these huge deficits with little prospects of things getting better anytime soon, we need to find a middle ground, something more fiscally responsible and something responsive to what has been expressed to me by our farm families and small businesspeople.
We are going to have a chance to vote on a cloture motion on the motion to proceed tomorrow. I understand those who want to eliminate the estate tax entirely would like to prevail tomorrow and they would like to go forward. I don't know if the cloture motion on the motion to proceed tomorrow is going to pass. If it doesn't pass, rather than throwing up our arms and saying that is it for another year or two, I hope we will actually take a closer look at what some of us are going to be introducing either today or tomorrow which says that $7 million is a reasonable amount of money to exclude from the estate tax, which is lower than the current rate on estates, 45 percent for everything above $7 million is not an unreasonable level, and see if we can't work toward that goal.
Mr. President, I yield the floor.