Death Tax Repeal Permanency Act of 2005--Motion to Proceed

DEATH TAX REPEAL PERMANENCY ACT OF 2005--MOTION TO PROCEED

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Mr. McCONNELL. Madam President, nothing could place more stress on a family than the loss of a loved one. Yet at such a difficult time, too many families in America today must make decisions about selling a business or a farm that has been in the family for generations in order to pay estate taxes, or, as they are more commonly called, death taxes.

That is wrong. That is why I support the repeal of the death tax--immediately, completely, and permanently. No American family should be forced to visit the undertaker and the tax collector on the same day.

We have made important progress towards eliminating this onerous tax under President Bush's leadership. In 2001, Congress began phasing out the death tax, and will phase it out completely in 2010. Yet because of our budget rules, the death tax will return in full force in 2011.

Starting in 2011, many small-business owners and their families may be unfairly penalized if we do not eliminate the death tax. We can change that by repealing one of the most destructive, unfair taxes ever conceived by government. Let's kill the death tax forever.

We ought to kill it especially on behalf of America's small businesses, the lifeblood of our growing economy. From their successes come the new jobs of today and the economic growth of tomorrow. Yet the death tax often hits small businesses the hardest.

Today, we see a dogged minority working again to keep death and taxes not just inevitable, but inseparable. But death and taxes are a destructive tag team for our economy, because the death tax destroys small businesses.

My colleague the Democratic leader said recently that during a trip home to his native Nevada, not a single one of his constituents spoke to him about the repeal of the death tax. I think he took this as some kind of proof that we should not address this issue.

Well, I want to bring to my colleagues' attention a Kentuckian who did approach me about this issue last week, when I was at the Perry County Civic Night at Hazard Community College in Hazard, KY, on May 31.

I spoke with a constituent named Bill Fields. He is the co-owner of Perry Distributors Inc., a beer distributor. Without permanent relief from the death tax, he is unable to plan for the future of his business and his family.

Bill is the third generation of his family to be active in the business, and his parents are still active in it as well. Right now, the Fields family has to pay between $15,000 and $25,000 a year for an insurance policy, just in the event that Bill's parents pass on and the family is hit with this massive death tax.

And even at such a high cost, that policy will not cover the full tax burden. Bill estimates it will only cover about 20 percent. He would have to borrow to pay the rest.

Bill says: ``The way things are now, nobody knows what to do with estate planning.'' It's a shame, but it is true.

Now, Bill is still a young man--he is 43--with plenty of working years left in him. But one day, he will want to pass on his business to his heirs.

Unless we act, after Bill passes away, his family may have to sell the business he worked so hard to build during his lifetime just to pay these burdensome taxes. Bill's family faces the same dilemma as too many other Kentucky families who own small businesses.

Before I conclude my remarks, I want to bring to my colleagues' attention an excellent column in this Monday's Washington Post by the Senator from Alabama, JEFF SESSIONS, titled ``..... Or Unfair Burden on Families?''

The Senator from Alabama rightly says, ``The death tax is almost dead. Let's put the stake in its heart.''

I commend my colleague Senator Sessions for writing so cogently and persuasively on the pernicious effects of the death tax. I ask that his column be printed in the RECORD.

There being no objection, the material was ordered to be printed in the RECORD, as follows:
[From the Washington Post, June 5, 2006]

``. . . or UNFAIR BURDEN ON FAMILIES?''
(By Jeff Sessions)

This week the Senate is expected to vote on permanent repeal of the estate tax. With this vote, Congress will have an opportunity to finish the job it started five years ago.

The estate tax--or, as many of us prefer to call it, the death tax--is a tax imposed on the transfer of assets or property from a deceased person to his or her heirs. This is one of the IRS's most painful taxes, as it hits families at the worst possible time, when they are dealing with the death of a loved one.

Congress passed a gradual phaseout of this tax at the urging of President Bush in 2001, and it was scheduled to disappear in 2010. But because of the peculiarities of the lawmaking process, the death tax will return in 2011--at the same high rates that existed before--unless Congress enacts new legislation. In April 2005 the House passed a permanent repeal of the death tax by a vote of 272 to 162. Over a year has passed since; it is time for the Senate to act:

The list of reasons for eliminating the death tax is long. To begin with, this tax punishes thrift and saving. It tells people that it's better to spend freely during their lifetimes than to leave assets for their children and grandchildren, which will be taxed heavily by the federal government.

The death tax hits hardest at heirs of small-business owners and family farmers. In many cases, the heirs cannot afford to pay the tax and are forced to downsize, layoff employees or even sell their business or farm.

There can be no doubt that closely held family businesses that are growing and beginning to compete with the big guys are often devastated by the tax. I believe the death tax is a major factor in business consolidation and loss of competition.

This tax hurts the growth of minority-owned businesses. As the first generation of African American millionaires begins to die, many of the companies they founded will have to be sold to pay the estate taxes. For example, the tax almost forced the oldest African American-owned newspaper--the Chicago Daily Defender--out of business.

According to Heritage Foundation economists, the death tax also costs the American economy 170,000 to 250,000 potential jobs each year. These jobs are never created because the investments that would have financed them are not made, as these resources are diverted to pay for complex trusts and insurance policies to avoid the tax.

The death tax is double taxation. Most of the assets taxed at death have already been taxed throughout an individual's lifetime.

The death tax accounts for a small portion of federal government revenue, an expected $28 billion in 2006, or only 1.2 percent of federal receipts.

Many argue that repealing the death tax would decrease charitable giving, as this tax allows individuals to deduct gifts to charitable organizations. Yet, even though the phasing out of the death tax began in 2001, charitable contributions in the United States reached a record high in 2004.

The death tax even has a negative effect on the environment, as heirs are often forced to develop environmentally sensitive land to pay the tax. According to a study by researchers from Mississippi State University and the U.S. Forest Service, about 2.5 million acres of forest land were harvested and 1.3 million acres were sold each year from 1987 through 1997 to pay the estate tax.

Finally, the American people already understand the unfairness of the death tax and support its repeal. Sixty-eight percent of those surveyed in a recent poll commissioned by the Tax Foundation supported repeal of the estate tax. Moreover, the death tax was rated by Americans in the same survey as the least fair tax.

As a vote approaches, it is essential that constituents let their representatives hear now how unfair they believe this tax is. The death tax is almost dead. Let's put the stake in its heart.

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