Death Tax Repeal Permanency Act of 2005 - Motion to Proceed
DEATH TAX REPEAL PERMANENCY ACT OF 2005--MOTION TO PROCEED -- (Senate - June 07, 2006)
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Mr. THUNE. Mr. President, I echo what my colleague from Virginia has said and rise in support of repealing the unfair death tax.
It is fair to say that death should not be a taxable event. There is decisive majority support in the Senate for repealing the death tax. And if you look at what happened in the House of Representatives, 272 votes in favor of repealing the death tax, a bipartisan vote in the House, and a big, bipartisan support vote in the Senate. What is happening is it gets filibustered. It takes 60 votes to end the filibuster. I hope my colleagues will join with the rest of us, those who have chosen to try to block this from consideration, and vote with us to at least allow us to proceed to consideration, to proceed to a vote, to allow the will of the Senate and what I believe is the will of the majority of the people in the country to be worked.
It is an unfair tax because the Donald Trumps and Paris Hiltons of the world, which are the examples most often used by our colleagues on the other side, are not going to pay it. They have a team of lawyers and accountants who are going to make sure that they pay little or no death tax. It is family-owned farms and small businesses that will end up paying the tax.
There are a lot of numbers being put up by both sides in this debate. After spending a little time in Washington, it becomes clear that just about everyone can find a statistic to support their particular point of view. I brought with me some real South Dakota stories that can help us understand who the death tax can hit and how it can hurt or even shut down a family farm or business.
Perhaps the most well-known example of a family-owned and operated business in my State of South Dakota is Wall Drug. I had hoped to have a poster to show it because people across this country, anybody who has traveled down interstate 90 in South Dakota has seen signs for Wall Drug. Although it currently draws thousands of people every day, Ted and Dorothy Hustead never imagined the success of their family-owned and operated business. Wall Drug wasn't always the tourist attraction it is today.
In fact in 1931, Ted and Dorothy Hustead and their son Bill moved to the prairie town of Wall, SD. Ted was a pharmacist and started his own drugstore with $3,000 left behind for him by his father. After a 5-year trial, the Husteads were ready to give up their family-owned business until Dorothy's extraordinary advertising idea.
The Husteads began advertising free ice water on the billboards to draw people in who were traveling across the hot, vast prairie of South Dakota.
The story is told that before they could get back to the store, after putting the signs up on what used to be highway 16 in South Dakota, there were already customers streaming into the store to get some of this free ice water. The first sign sprung up on highway 16 and it turned out to be the key to their success. Today, Wall Drug's advertisements are still along the highways of South Dakota, still advertising free ice water, along with other more modern draws. Their signs can also be seen all over the world, often with the mileage dutifully added. My office is 1,565 miles from Wall Drug.
This didn't happen overnight. In 1951, Ted and Dorothy's son, Bill Hustead, joined the business, working to create the family attraction that Wall Drug is today. The second-generation Husteads expanded the business and increased advertising spending.
In 1981, Bill's oldest son Rick became the first member of the third generation to join the business. Later joined by brother Ted, the third-generation owners continue to run the family business based upon the same western hospitality once embodied by their grandparents. Holding its reputation high, Wall Drug represents America's strong entrepreneurial spirit, built on innovation and perseverance and passed down through three generations of the Hustead family.
Why do I use this illustration to tell the Wall Drug story? Because it would be a shame to see family operations such as Wall Drug be sold off because of an untimely death in the family. That is what might happen to this business and these two other South Dakota stories that I will share with you. The effect of the death tax is very real on these family-owned operations, family-owned businesses.
In central South Dakota sits a 3,000-acre family farm. I will describe it as a medium-sized farming operation in South Dakota--not too big, not too small. Unfortunately, a death occurred in the family. As a result, $750,000 will likely be paid in taxes. This is a huge amount of money for a farm operation in my State, where land values can make an operation look a lot more valuable on paper than they are in reality. In other words, farmers like this can often be described as ``land rich'' and ``cash poor.'' All their value is in their land. When a massive death tax bill comes due, the only option is often to sell the land to pay this unjust tax. Thus, a family legacy comes to an end.
There is another operation in my State of South Dakota, with 10,000 acres in the north central part of the State. Like so many farms and ranches in South Dakota, the parents who have run the place for decades are now advancing in years. In this particular family, the mother passed away and the father is getting on in age. Their kids would like to continue in the business, but the tax on the farm would likely be $1.5 million. That might make it impossible for the kids to stay on and keep that family farm alive. I find it very disturbing that our Federal Tax Code could influence a family's ability to keep their farm from being broken up and sold off.
These are examples of real family farms that are facing the effects of the death tax. This is just not an exercise in the theoretical. Real farms, ranches, and real small businesses are watching how the Senate is going to act on this important issue. Our action, or inaction, this week will affect real businesses in each of our States.
Mr. President, in my State and other rural States, we are seeing the next generation leave for school and, too often, not coming back. We need to put in place incentives for our young people to keep rural America alive and strong. The death tax is an incentive for exactly the opposite effect. It can help push young people away from carrying on the family business in rural places. I hope the Senate will do the right thing and bring a permanent end to the unfair death tax.
I will offer one final thought on an argument we are hearing from the other side of the aisle. I have heard it said that repealing the death tax will add up to $1 trillion to the deficit. We heard a similar argument made when it came to reducing the tax rate on capital gains. The other side was wrong then, and they will be wrong again this time.
The analysts who have churned out figures in the trillion-dollar range are not taking into consideration the nature of the death tax and its larger impact on the economy. With the death tax permanently killed, family business owners would then reroute tens of thousands of dollars from lawyers and accountants hired to avoid being hit by the death tax back into their business. There this capital would be used to hire another employee or add value to their operation.
In fact, repealing the death tax would remove the asterisk on the American promise of passing your hard-earned business or nest egg to your children or grandchildren. The death tax in its current form has a chilling effect on the creation of new family businesses that would be created if assets could be passed down to the next generation. How many next generation beneficiaries would have invested in a new business if only they had sufficient capital to do so? How often has the death tax prevented this? How many potential jobs were not created as a result?
The changes in economic behavior if the death tax was no longer a factor to consider is hard to determine. But the dividend and capital gains rate reductions serve as a good indicator. Those rate reductions have paid for themselves many times over in increased Government revenue.
Last month's budget report from the Treasury Department has tax receipts up by $137 billion, up 11.2 percent for the first 7 months of fiscal year 2006. The year before, if you look at 2004 to 2005, there was a $274 billion increase in Federal revenues, or 14.6 percent more Federal revenues for fiscal year 2005. Reducing those taxes spurred economic growth and increased Government revenue. That is exactly what I expect would happen if we were to eliminate once and for all the death tax.
So I ask my colleagues to take a look at the death tax and getting rid of it simply as a matter of bringing fairness to our Tax Code. That is how the American people view it; that is how South Dakotans view it. Even though many Americans might not have a substantial nest egg to pass on to their children, they understand the death tax to be unfair. For that reason, they oppose it. They also know that it is those very same small businesses, small farms, and ranch operations that are creating jobs and making it possible for young people to continue to stay in the rural areas of this country.
One recent poll suggests that 68 percent of Americans support repealing the death tax. It is simply unfair for death to be a taxable event. I urge my colleagues to allow us to vote, allow us to proceed to the debate, and to get an up-or-down vote on the floor of the Senate, and to join the House of Representatives, which passed it by a very big bipartisan vote--legislation that would repeal and end the death tax once and for all.
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