Phil Crane

Mr. CRANE

Mr. CRANE. Mr. Speaker, I thank my distinguished colleague for his remarks. In conclusion, I would simply like to pay tribute to our colleagues, the gentlewoman from Washington (Ms. Dunn) and the gentleman from Tennessee (Mr. Tanner) who are cosponsors of H.R. 8. It has had bipartisan cosponsorship from the outset, and I look forward to good, strong bipartisan support on Friday when we finally eliminate this obscene component of our Tax Code.

Mr. CRANE. Mr. Speaker, I would now yield to our distinguished colleague, the gentleman from Arizona (Mr. Hayworth), a member of the Committee on Ways and Means.

Mr. CRANE. Mr. Chairman, I congratulate our colleague for his insightful observations on this immoral Tax Code that we are speaking about tonight. And I now would like to yield to our distinguished colleague, the gentleman from Montana (Mr. Hill).

Mr. CRANE. Mr. Speaker, I rise today to address the tax that is one of the most obscene, unfair, and immoral of all taxes. The estate tax, or what is commonly referred to as the death tax, since it is generally triggered only by one's removal from productive life, has outlived its usefulness. Later this week, this body will be voting on legislation to eliminate the death tax, and I think it is past time to bury the death tax once and for all. Mr. Speaker, I am submitting for the Record an article by William Beach from the Heritage Foundation entitled ``Time to Eliminate the Costly Death Tax.'' Time To Eliminate the Costly Death Tax (Published by William W. Beach, the Heritage Foundation) The U.S. House of Representatives is once again poised to vote on repealing the federal death tax. In view of the strong support that death tax repeal receives from the general public, the House debate should be firmly grounded in what an increasingly large percentage of voters already know: Death taxes adversely affect many times the number of people who pay the tax collector. The Death Tax Elimination Act (H.R. 8), sponsored by Representatives Jennifer Dunn (R-WA) and John Tanner (D-TN), is a response to this growing understanding and offers the House its second opportunity in an many years to eliminate this onerous tax. Death taxes most often burden the very people that tax policy is intended to help. For example: Women and minorities are very often owners of small and medium-sized businesses. After sacrificing daily to build their businesses by reinvesting their profits, they soon realize that the financial legacy of their hard work, which they hoped to pass on to their children, instead will fall victim to confiscatory taxation and liquidation. Farmers often face losing their farms, but this is not so much because of competition from wealthy agribusinesses or capitalist ``robber barons.'' More often, it is because the federal government heavily taxes the estates of people who invested most of their earnings back into their farms and had only meager liquid savings. Workers suffer when they lose their jobs because many small and medium-sized businesses are liquidated to pay death taxes and because high capital costs depress the number of new businesses that could offer them a job. Low-income people are harmed--not only because the general economy is weakened by the death tax's rapacious appetite for family-owned businesses, but also because the death tax discourages savings by encouraging consumption. Specifically: Death taxes hurt small businesses. Investing in a business is one of the many ways to save for the future. For most small firms, every available dollar goes into the business-- the dry cleaning firm, the restaurant, the trucking company-- to ensure that it sustains an income for the owners's family and is an asset to pass on to children. Women with children often find self-employment to be the only entry-level work available. Minorities, many of whom wish to raise their families in ethnic communities, understand well the virtues and promises of self-employment. Yet the financial security that family-owned and small businesses provide these Americans is put at risk if the owner dies with a taxable estate. In an important 1995 study of how minority business owners perceive the estate tax, Joseph Astrachan and Craig Aronoff, economists of Kennesaw State University in Georgia, found that: Some 90 percent of the surveyed minority businesses know they might be subject to the federal estate tax; Although 67 percent of these businesses have taken steps (gifts of stock, restructuring ownership, purchasing life insurance, and buy-sell agreements) to shelter their assets from estate taxes, over 50 percent of them indicate that they would not have taken these steps had there been no estate tax; and Some 58 percent of all respondents in the survey anticipate business failure or great difficulty maintaining the business after their death. Death taxes are more ``affordable'' as income rises. Taxpayers who cannot pay tax-planning fees frequently lose more of their estates to death taxes. Thus, what appears to be a progressive tax contains a regressive dimension. Experts on the death tax continually are struck by the number of taxpayers who are insufficiently prepared to pay the death tax and by the high correlation of these types of people with those who have not had the benefit of high-priced legal and accounting advice. Indeed, legal avoidance of high death tax liabilities is closely related to the amount of fees taxpayers are able to pay for expensive tax-planning advice. Death taxes undermine savings and investment. Not only do death taxes reduce potential employment opportunities and undermine the promise that hard, honest labor will be rewarded, but they also encourage consumption and undermine savings. What can be said generally about income taxes can be stated emphatically about death taxes: Accumulation of more wealth will lead to more taxes, while consumption of income will result in relatively lighter taxation. In other words, it makes more tax-planning sense to buy vacations in Colorado or a painting by Rubens than to invest in new production equipment or expand a business. Death taxes are costly to collect. The economic effects of the disincentive to save and invest are striking, especially in light of the relatively small amount of federal revenue raised by death taxes. A 1996 Heritage Foundation analysis of death taxes using the WEFA Group U.S. Macroeconomic Model and the Washington University Macro Model, for example, found that, if the estate tax had been repealed in 1996, then over the next nine years: The U.S. economy would average as much as $11 billion per year in extra output; an average of 145,000 additional new jobs could be created; personal income could rise by an average of $8 billion per year above current projections; and the extra tax revenue generated by extra growth would more than compensate for the meager revenue losses stemming from the repeal. The death tax is not even a good value for the government. Federal death taxes probably are the most expensive taxes to pay and collect. Death taxes raise just slightly more than 1 percent of total federal revenues, but according to one 1994 analysis, total compliance costs (including economic disincentives) amount to about 65 cents for every dollar collected. Other studies, which subtract disincentives and examine only direct outlays by taxpayers to comply with estate tax law, put the compliance cost at about 31 cents per dollar. This additional cost means that the $27.8 billion collected in federal death taxes last year actually cost taxpayers $36.4 billion.

Mr. CRANE

Mr. CRANE. Mr. Speaker, today I want to praise the work of Arlene E. Wilson, a Specialist in International Trade and Finance at the Congressional Research Service. Dr. Wilson is retiring after 23 years at CRS, where she conducted major studies, briefings, and seminars on international trade and financial issues for Members of Congress and Congressional staff. Dr. Wilson's knowledge of trade and international finance is so broad and deep and her communication skills so excellent that she is able to explain the European Monetary Union and make U.S. antidumping laws understandable. Dr. Wilson holds a B.A. in history from St. Lawrence University in Canton, New York, an M.A. in economics from the University of Michigan, and a Ph.D. in economics from New York University. Prior to coming to CRS in 1977, Dr. Wilson was a research associate at the New York Stock Exchange and a lecturer in economics at Marymount College in New York City, and at George Mason University in Fairfax, Virginia. Over the years, she has written 72 reports for Congress, many on international finance issues such as trade and payments balances, the international banking system, and the European Monetary Union. Eight of her reports appeared in committee prints; six others were published by the Fund for Public Policy Research in Studies in Taxation, Public Finance and Related Subjects--A Compendium. Dr. Wilson has proven to be an authority on foreign trade as well as one on international finance. During one of the most intense trade debates in recent memory, Dr. Wilson led the CRS team covering the North American Free Trade Agreement (NAFTA) in the early 1990s and has written on many aspects of NAFTA: the broad economic perspective; economic comparisons of the United States, Mexico, and Canada; U.S. jobs at risk; the peso-dollar exchange rate; the Mexican peso devaluation; and the impact of NAFTA after it went into effect. Before NAFTA, Dr. Wilson coordinated the CRS efforts on the U.S.- Canada free trade agreement. She led a workshop and wrote up proceedings on the potential effects of the agreement on the United States and coordinated the work of 16 CRS analysts on the agreement's possible effects on U.S. industries. Her study examining the U.S.- Canada agreement after one year was printed in the Bulletin of The Atlantic Council of the United States. An expert on almost every aspect of the World Trade Organization, Dr. Wilson has written on the antidumping and services agreements reached during the Uruguay Round, on trade and the environment, and on fast- track trade negotiating authority. She had principal responsibility of analyzing future negotiations in the WTO. Even after she leaves, her work on the WTO will continue to assist Congress as we face a decision on our participation in the WTO. From 1983 to 1987, Dr. Wilson served as Head of the International Section in the Economics Division. She participated in the U.S. Congressional Task Force for Interparliamentary Cooperation in 1995 and 1996, and spoke on the European Monetary Union for the USIA Germany Speaker Program in 1997 and at the Foreign Service Institute of the Department of State in 1998, 1999, and 2000. She coauthored a course guide entitled ``International Economics'' for a course sponsored by the University of Maryland. Dr. Wilson is without question an expert in her field. She has served the Congress at the highest level of expertise and has assisted us on virtually every major trade issue of our time. We wish her well on her retirement and thank her for her outstanding service.

Mr. CRANE

Mr. CRANE. Mr. Speaker, I yield 3 minutes to the distinguished gentleman from California (Mr. Thomas) from Committee on Ways and Means. (Mr. THOMAS asked and was given permission to revise and extend his remarks.)

Mr. CRANE. Mr. Speaker, I yield myself 1 minute. Mr. Speaker, I want to take advantage of this opportunity to commend my colleagues on the other side of the aisle who are supportive of this effort that we are initiating here with Mainland China, one-fifth of the world's population. And I want to congratulate them for the support they gave us just 2 weeks ago, when 309 Members on a bipartisan basis supported my Africa bill and the Caribbean Basin bill, and we made an outreach to underdeveloped portions of the world in sub-Saharan Africa. And it is because of our belief that, based upon experience with the 48 countries there and the 700 million population, that kind of an outreach has a positive effect and it does raise the standards, the human rights issues are addressed when we have this kind of contact. While we have more ways to go with some of the other sub-Saharan African countries, and we do with China, too, this is a positive initiative working in the right direction, and I think everyone who supports it should be commended. Mr. Speaker, I reserve the balance of my time.

Mr. CRANE. Mr. Speaker, I reserve the balance of my time.

Mr. CRANE. Mr. Speaker, I reserve the balance of my time.

Mr. CRANE. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished gentleman from California (Mr. Dreier), who has played so vitally important a role in this effort. (Mr. DREIER asked and was given permission to revise and extend his remarks.)

Mr. CRANE. Mr. Speaker, I yield such time as he may consume to the gentleman from Washington (Mr. Nethercutt). (Mr. NETHERCUTT asked and was given permission to revise and extend his remarks.)

Mr. CRANE. Mr. Speaker, I yield such time as he may consume to the gentleman from California (Mr. Calvert). (Mr. CALVERT asked and was given permission to revise and extend his remarks.)

Mr. CRANE. Mr. Speaker, I yield 30 seconds to the distinguished gentleman from Delaware (Mr. Castle).

Mr. CRANE. Mr. Speaker, I yield 30 seconds to the gentleman from Nebraska (Mr. Bereuter). (Mr. BEREUTER asked and was given permission to revise and extend his remarks.)

Mr. CRANE. Mr. Speaker, I yield 1 minute to the gentleman from California (Mr. Herger), our distinguished colleague.

Mr. CRANE. Mr. Speaker, I yield 1 minute to the gentlewoman from New Jersey (Mrs. Roukema). (Mrs. ROUKEMA asked and was given permission to revise and extend her remarks.)

Mr. CRANE. Mr. Speaker, I yield such time as he may consume to the gentleman from California (Mr. Ose). (Mr. OSE asked and was given permission to revise and extend his remarks.)

Mr. CRANE. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, we have heard some very intense rhetoric thus far in this discussion of granting permanent normal trade relations for China, and I think it is important for folks to recognize that the permanent normal trade relations with China opens China's market to the United States, which has not been opened heretofore. If we were to continue the annual renewal of normal trade relations with China, 134 countries on the face of this earth will have access to that huge market, the biggest market on the face of this earth. They will have accessed that market, and we will be the only country that has not accessed that market. We have let them, since 1980, access our market and that has produced indeed a rather sizable trade deficit; and it has produced a sizable trade deficit because we have not enjoyed reciprocity. What we are accomplishing here with China's accession into the World Trade Organization is reciprocity. I would like to include one more comment here and it is by Clyde Prestowitz, and it was in the Wall Street Journal and he points out, ``There is a final, most important reason to grant China PNTR.'' And keep in mind he was a trade negotiator for the Reagan administration, and he is currently president of the Economic Strategy Institute, a Washington-based think tank. He says, ``For 30 years the U.S. has worked to bring China more fully into the community of nations, and to promote both economic development and a more liberal society. The policy has been working. Anyone who saw China in the early 1980s and compares it with today must be amazed. Bicycles and drab Mao suits have morphed into traffic jams and bright fashions; the freedom and the range of individual choices available to the average person has expanded exponentially. After years of estrangement, China is asking to join the international community. To turn it down at the very moment it is moving in the direction we have desired would be a tragic and historic mistake.'' Mr. Speaker, I yield 4 minutes to the gentlewoman from Washington (Ms. Dunn), our distinguished colleague on the Committee on Ways and Means.

Mr. CRANE. Mr. Speaker, I yield 2 minutes to the gentleman from Pennsylvania (Mr. Weldon). (Mr. WELDON of Pennsylvania asked and was given permission to revise and extend his remarks.)

Mr. CRANE. Mr. Speaker, I yield 1 minute to our distinguished colleague, the gentleman from Cincinnati, Ohio (Mr. Portman). (Mr. PORTMAN asked and was given permission to revise and extend his remarks.)

Mr. CRANE. Mr. Speaker, I yield 1 minute to the distinguished gentleman from California (Mr. Cunningham).

Mr. CRANE

Mr. CRANE. Mr. Speaker, Congress takes an historic step today in considering legislation to grant normal trade relations to China. We do this to position our workers, firms, and farmers to take maximum advantage of the vast opportunities offered as a result of China's decision to join the WTO. Just as importantly, we do this to reinforce the reformers in China who look in our direction and at our success, as they attempt to move the Chinese economy out from under the iron grip of Communism and stranglehold of state control. China's decision to adopt the WTO system of fair trade rules is a choice to impose the discipline of market- based principles throughout a vast country of 1.2 billion people. In my estimation, the revolutionary change WTO rules will bring to the Chinese economy dwarfs any other avenue of influence available to the U.S. The trade agreement with China and this vote to normalize trade relations between our two countries have been hard fought and long awaited. For fourteen years, through Democrat and Republican Administrations, this body insisted that we would not take an empty trade deal with China. At last we have succeeded in obtaining a great win for Americans. In addition to the commercial benefits, this bill turns our relationship with China in a positive direction. By reinforcing the efforts of Chinese citizens fighting for change, we magnify our chances of maintaining peace, stability and security in Asia. In bringing China into the WTO, we will obtain access to the WTO dispute settlement mechanism to systematically tear down barriers, if China chooses to be recalcitrant in any area. With a WTO finding on our side, and the collective judgment of 135 countries against China, we multiply ten-fold our leverage to bring China into compliance with the rules of fair trade. In the event China chooses to flaunt a WTO finding against it, we would have the ready option of imposing WTO-legal trade sanctions. I expect this new approach to solving trade disputes with China to be many times more effective than our current method of threatening unilateral trade sanctions under Section 301. Over the past 21 years, China has sought to reform its economy, encouraging the growth of the private sector. Since 1979, China's government policy toward the private sector has evolved from prohibition, to toleration, to active encouragement. The number of private sector employees (i.e. those working for a privately owned Chinese company or self-employed) rose from 4.5 million in 1985 to an estimated 81.3 million in 1999. Accounting for over half of China's economic output, the private sector in China has become a major force in the country's economic development. China's membership in the WTO will require it to privatize a substantial portion of its economy, not only to conform to the WTO, but also to be able to compete internationally. Reduced government control over the economy will enhance living standards and economic freedom for the average Chinese citizen. The growth of the private sector in China, which WTO membership will further encourage, has allowed many more Chinese citizens to choose their employment, education, housing and recreation free from state control. According to CRS, privatization ``has reduced the pervasiveness of the work unit as a means of social control''. We know that U.S. foreign investment exposes Chinese workers and managers to such principles as merit-based pay and promotion, individual rights and privacy, ethical business practices, transparency of business and payroll transactions, and free access to more information. Internet usages and the consequent flow of information into China are surging. Motorola, my own corporate constituent, provides wireless communications equipment that enables Chinese citizens to gain access to, and utilize affordable communications services. Motorola directly promotes the exchange of ideas by sending hundreds of Chinese employees to its U.S. facilities each year to attend technology, engineering, and management seminars. In a country where only 10-15% of the people have access to a college education, this is precious training that allows for eye-opening exposure to the American way of life. In 1998, Motorola established the Center for Enterprise Excellence (CEE) to provide training for management of China's ailing state-owned enterprises. As of June 1999, 500 executives and engineers of 75 state- owned enterprises from 15 provinces had received training. Motorola also provides scholarships to 8 universities in China--with money disbursed to approximately 1,000 students and 100 teachers every year. Caterpillar has also worked with Illinois State University (ISU) to establish a learning center in Beijing. Motorola pioneered a company-subsidized Employee Home Ownership Program in China. The program provides for an additional 20% of each employee's salary to be paid into a special housing fund. The money can be withdrawn and used to buy or rent a house or apartment, or to renovate an existing home. U.S. companies export U.S. concepts of volunteerism, charitable giving, and community activism. For example, Motorola has contributed approximately $1.5 million to China's Project Hope--which focuses on providing funds and mobilizing non-governmental resources to support elementary school education in the poorest rural districts in China. Through these donations, Project Hope has built 24 primary schools and financed education for more than 6,700 children. In short, a vote for normal trade relations, which will allow these types of exchanges to continue, is a vote for bringing American values and ideals much closer to average Chinese citizens. I urge a ``yes'' vote on H.R. 4444. [From the Daily Herald, May 23, 2000] The Case for China Trade Like it or not, China is a growing economic and military force with whom Washington must deal over time. U.S. business interest are urging Congress to permanently normalize trade relations with China in a vote this week. That would drive China's tariffs down and further open the vast Asian nation to a wide range of American products. American labor, by contrast, is lobbying hard for Congress to reject Permanent Normal Trade Relations. Unions argue that jobs would flow away from Americans and to poorly paid and highly exploited Chinese workers. That many Chinese workers toil under miserable conditions is beyond dispute. But the hard reality is that their lives will not improve by Congress rejecting normalized trade with China. China is going to be admitted to the World Trade Organization whether Congress OKs permanent normal trade relations or not. European nations have already built their own trade bridges while China. Congressional rejection of permanent trade status for China would merely guarantee that European and Pacific Rim nations would benefit from China's reduced tariffs and do so without competition from U.S. business. Illinois farmers and suburban companies such as Motorola would miss an opportunity that would carry direct and ripple benefits for thousands of workers here. That's the economic side of the story. The political side is that Congress, by turning down permanent trade status, would introduce new tensions into U.S.-Chinese relations that would serve no positive purpose for the United States or China's citizens. Like it or note, China is a growing economic and military force with whom Washington must deal over time. Those dealings are often frustrated, given China's oppression of its citizens, aggressive stance toward Taiwan, ambitious weapons acquisition and resistance to granting political liberty even as it experiments with limited economic freedom. But to nurture a long-term relationship with Cuba is nonetheless in the best interests of the United States, and such a relationship can be better built and sustained between two countries that are cooperating--not battling--over commerce. China's leaders make it difficult for Washington to work with Beijing even when doing so is in America's better interests. That was true when Richard Nixon traveled to China and when the U.S. agreed to China's admission to the United Nations. It remains true today, when a vote for permanent trade status is a tough vote but the correct vote noneless.

Mr. CRANE. Mr. Speaker, I demand a recorded vote.

Mr. CRANE. Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Armey), our distinguished majority leader.

Mr. CRANE. Mr. Speaker, I yield the balance of my time to the gentleman from Illinois (Mr. Hastert), our distinguished Speaker of the House.