Amo Houghton

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I am joined today by several of my colleagues, including Mr. Brewster, Mr. Shaw, and Mr. Jacobs, in generation-skipping transfer tax [GSTT] law which we believe were unintentionally omitted by Congress at the time the original provisions were enacted. This bill was sponsored in the 103d Congress by Mr. Brewster, and I have taken the liberty of including his statement of introduction, with minor changes, to introduce the bill in this Congress. The amendments concern the predeceased parent exclusion of the GSTT law. The exclusion applies to direct gifts or bequests from a grandparent to a grandchild where the grandchild's parent, the transferor's child, is deceased at the time of the transfer. Where this situation occurs, there is no generation-skipping, since the child is dead; therefore it is not appropriate to add a GST tax on top of ordinary estate or gift taxes, and the predeceased parent exclusion properly excludes such transfers from the GST tax. Our bill would expand the predeceased parent exclusion to apply to gifts by persons without lineal descendants and to trust gifts. First, gifts or bequests by a childless individual to collateral descendants would be treated the same as transfers by persons with lineal descendants. Accordingly, the exclusion would be extended to apply to transfers made by a childless individual to his or her grandnieces and grandnephews in the situation where that individual's siblings and nieces and nephews are all deceased at the time of the transfer. Second, the bill applies the predeceased parent exclusion to transfers made through a trust. Under current law, the predeceased parent exclusion is limited, unintentionally, we believe, to direct gifts and bequests, and does not apply to trust gifts even if the parent of the receiving beneficiary was deceased at all relevant times. In addition to other trusts, this provision particularly affects certain charitable trusts where the charity would have an interest for a period of years before distributing property to the individual beneficiaries. In the situation where the beneficiary's parent is dead, and was dead when the trust was created, there is certainly no generation skipping involved which would justify the levy of an additional tax. It is important to note, that these trusts are significant sources of financial support for many charities, and should not be discouraged, unintentionally, where not necessary for the policy of the underlying tax provisions. The bill would remove this obstacle. The terminations, distributions, and transfers to which this bill would apply are those occurring on or after January 1, 1995, which would be generation-skipping transfers as defined in section 2611 of the Internal Revenue Code and subject to the GST tax, except for the application of the predeceased parent exclusion as amended by this legislation. The proposed legislation has substantial support from charities, both large and small, and of all types, for example, social service providers, museums, libraries, hospitals, and universities, from around the country. In September 1993 testimony before the Subcommittee on Select Revenue Measures of the Ways and Means Committee, the administration indicated they did not oppose the measure. We would welcome other Congressmen as cosponsors of this legislation.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I am joined today by several of my colleagues, including Mr. Payne of Virginia, Mrs. Johnson of Connecticut, Mr. McCrery, Mr. Coyne, Mr. Brewster, Mr. Weldon of Pennsylvania, and Mr. English, in introducing legislation to provide an election to exclude from the gross estate of a decedent the value of certain land subject to a qualified conservation easement, and to make technical changes to the alternative valuation rules. The bill, to be titled ``American Farm Protection Act of 1995,'' offers direct relief from the burden of the Federal estate tax to the families of the owners of these farms and other rural families, while insuring the future agricultural use of their land. The best caretakers of America's land are the farm and ranch families who have owned and cared for it for generations. Once these families are displaced from their land, no amount of regulation or tax spending can replace their productive stewardship of the land. According to ``The Second RCA Appraisal,'' published by the Department of Agriculture in 1989, 1.5 million acres of agricultural land, most of them prime farmland, are irreversibly removed from production and converted to nonagricultural use each year. The problem is especially acute near metropolitan areas. Here development pressure has caused the value of farm and ranch land to escalate dramatically over the past several decades. Yet this is some of our most productive agricultural land. An important factor contributing to the displacement of America's farm and ranch families is the Federal estate tax. That is because rural land is valued for estate tax purposes, not necessarily at a value representing its actual rural use as a farm, but at its potential value as development property. The tax can force families to sell land on which they have lived and made their living, sometimes for generations. Once farm and ranch families are gone the cycle of speculation, sprawl development, and overregulation often takes over. The bill removes this problem for America's rural families and lets them do what they can do better than anyone else: take care of the land. For rural landowners who voluntarily and permanently provide for the commitment of their land to rural uses through the donation of a qualified conservation easement, the act will exempt that land from the Federal estate tax. The concept embodied in the bill has been endorsed by the American Farm Bureau Federation and the National Farmers Union, as well as many other local, regional, State, and national forestry and land conservation organizations. We welcome other Congressmen as cosponsors of this legislation.

Mr. HOUGHTON

Mr. HOUGHTON. I thank my learned chairman. Mr. Chairman, I am trying to figure out a way of how to get into this conversation because so much of what I had intended has already been said. Let me just say one thing: I was down here in 1982 with the Grace Commission. We had a deficit of $200 billion. We had great plans, we had suggestions to close that gap, cut the spending. Nothing happened. I came here as a Congressman in 1987. Our deficit was still $200 billion, and we had all of these plans, Gramm-Rudman-Hollings, all of the great laws. Nothing happened. Here we are now with a deficit of still $200 billion or approximating that. There was a man called C. North Cole Parkinson, who said expenses have a tendency to rise to exceed income. That is what is happening here. I think it is really a bad idea, if there were any other alternative to having a constitutional amendment. However, I am convinced now that it is the only way of doing this thing. I am not for the three-fifths for the tax increase. It is not practical. It will not work. But I am for a balanced budget amendment. Let me say one other thing: That is the easy part. The hard part is to put this into practice. Peter Drucker always said that all great ideas ultimately degenerate into work. This is what is going to happen here. The easy part is passing this legislation; the hard part is going to be to put it into effect.

Mr. HOUGHTON

Mr. HOUGHTON. I thank the gentleman very much. Mr. Speaker, regarding Ed Madigan, are there are lots of things that could be said; we could go through a litany of those things which he did as Secretary of Agriculture or as a Member of the House here for 10 years. But that is not what I want to talk about. In the few seconds that I have I would just like to mention a couple of things. George Romney used to describe friends of his as ``a great human.'' Ed was a great human. He had an impact on all of us here; whether it was, as the gentleman from Illinois [Mr. Ewing] mentioned, consensus building or whatever, he recognized and emulated those great human qualities which I would like to feel we all aspire to. But another thing, President Eisenhower used to have on his desk a saying that said, ``Suaviter in modo fortiter in re.'' That means, ``Softly in manner, strongly in deed.'' That is what Ed represented. We talk, we show our emotion on a variety of different issues, but Ed was always interested in the deed rather than the emotion or the show. I would like to feel that as he was trying to build sort of a family- friendly Agriculture Department atmosphere, down here we are trying to build a citizen-friendly atmosphere. I hope he would be proud of us. I thank the gentleman for yielding.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I ask unanimous consent that my name be removed as a cosponsor of House Joint Resolution No. 1.