William Roth

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent that Senator Baucus of Montana be added as a cosponsor of the amendment.

Mr. ROTH. The two Senators are correct in their understanding. I personally do not believe that the federal estate tax should force the sale of closely held and family-owned businesses.

Mr. ROTH. Mr. President, this motion, if adopted, sends the death tax repeal directly to the President for signature. This avoids the uncertainty of a conference, expedites our tight floor schedule, and removes the possibility that floor consideration of a conference report could be delayed and blocked altogether. I ask unanimous consent that all time on both sides be yielded.

Mr. ROTH. I make a point of order a quorum is not present.

Mr. ROTH. I congratulate the Senator from Utah for raising this very important piece of legislation. As Senator Moynihan said, the two of us have been working continually to try to make this permanent. It is long overdue. I am grateful for initiative on the Senator's part.

Mr. ROTH. Mr. President, I yield myself such time as I may use. Too often in our debates on the Senate floor, we lose touch with what really is at issue. What we do here, the decisions we make, affect real people. For that reason I want to take a moment and read a letter I recently received. Dear Senator Roth: I am a 14 year old boy, living in New York, and though my knowledge of the law is very minuscule, I know one thing, the Estate Tax is wrong. I have considered myself a Democrat for all of my life, volunteering for Bill Bradley for President and my local Congresswoman from New York's 14th District, Carolyn Maloney, but on this issue I must side with the opposition. I shall explain to you why I am so opposed. My Grandfather on my mother's side bought his house in 1945 in Winnetka, Illinois for $10,000. He was a doctor. Back then, Winnetka was a ``dry'' town, alcohol was prohibited. Today, Winnetka is one of the rich suburbs of Chicago and my Grandmother, 86 years old, lives alone in the same home without my Grandfather who passed away in 1982. The house today, not a thing changed since 1945, is worth around $2 to 3 million. It pains me to say this, but my Grandmother could pass any day and her house, her belongings, everything my Grandfather worked for 50 years as Doctor, helping others, could be gone. She is not rich, in fact, she has nothing except for her house and her furniture. I hope that you understand my staunch opposition to the Estate Tax and I hope that you will vote to repeal the Estate Tax. Thank you for reading this, could you please respond to my inquiry: Thank you. Alexander Leventhal. I hope young Mr. Leventhal, and his grandmother, do not mind that I read his letter before the Senate. I hope that they will accept a verbal response to his letter, and I hope that this Senate will vote to give them the response they and millions others deserve: repeal of the death tax. This family, separated by hundreds of miles and generations, should not have to worry about the fate of their grandfather's house. No family, no farmer, and no small business person should have to worry about this sort of thing. It is bad enough that they have to lose sleep over the worry, but the loss, as young Mr. Leventhal so accurately points out, can be so much greater. It is a house, it is a farm, it is a business, it is savings, that a family has worked for throughout a lifetime. One lifetime comes to an end, and suddenly the entire family's memories of the past and dreams for the future can come to an end as well. As we all know, no one individual creates a farm or a business by themselves. The whole family sacrifices to it. They sacrifice by having a parent, or both parents, away when they could have been home. They contribute by seeing money that could have been taken out of the farm or business and spent, instead reinvested into growing the farm or business for the family, and, of course, the family contributes their work. Family members do not punch a time card when they work on their family's farm or in their family's business. Their work is part of being a member of the family. They do not see all they worked for just in earnings--they see much of it in a growing family enterprise. Yet when one member of that family dies, they see a tax bill for income they never received. For income they never wanted--at least not as much as they wanted to grow their family's farm or business. But because the tax bill is so big and their earnings went back into the family's enterprise, they have to sell the family's farm or small business. Not because they need the money, or even because they want the money, but because the Federal Government in Washington does, and the Federal Government demands they sell it in order to pay those who never worked a day on their farm or a minute in their business or, as in the case of Alexander Leventhal, never lived a day in his grandfather's house in Winnetka. Where is the justice in this? I am sure Mr. Leventhal would like to hear it. I have heard some say that taxing at death is the only way some income will ever be taxed. Of course, this is not true. It will be taxed when it is realized--when a farm, a business, a house is sold-- when it actually exists for a family. These are not people who dodge taxes, as the apologists for a confiscatory death tax try to make them. It is nothing less than a desperate attempt to defend the indefensible. These are people who never saw the income because it never existed for them. It was in their farms and businesses. They should not be taxed on some make-believe basis at a time to be decided by the Government. When they sell their farms and businesses, they will pay tax on it. Until the family decides to, when it is right for the family, what place is it for the Government to come in and tell them that they have to sell what often is the very purpose for which that family worked and wants to continue to work? I see no justice in that. I cannot believe anyone on this Senate floor could see any justice in that. But most important, no one outside this Chamber--certainly not Alexander Leventhal, his grandmother or any one of millions upon millions of hardworking Americans--see any justice in that. It is time to repeal the death tax. It has always been unfair. Today, in a time of growing surpluses, it is no longer even necessary. I hope my colleagues will take to heart not my admonition, but that of my letter writer: ``I hope that you understand my staunch opposition to the Estate Tax and I hope that you will vote to repeal the Estate Tax.'' Alexander, I will and I hope my colleagues will as well. I believe time has run out. Mr. President, I yield back the remainder of my time.

Mr. ROTH. I yield 10 minutes to the Senator from Illinois.

Mr. ROTH. Mr. President, I ask for the yeas and nays.

Mr. ROTH. Mr. President, I ask unanimous consent reading of the amendment be dispensed with.

Mr. ROTH. Mr. President, I move to reconsider the vote.

Mr. ROTH. Mr. President, the amendment before us has a fundamental deficiency. It is built on the Democratic alternative to the House tax repeal bill. In other words, this amendment strikes the House death tax repeal and replaces it with the Democratic alternative which was just rejected by a rollcall vote a few minutes ago. Let me reemphasize once again that the Democratic alternative fails to correct the fatal flaws of the family-owned business deduction. According to well-known members of the American Bar Association, those fatal flaws make it virtually impossible to qualify for the tax deduction. What I am saying is that those of you who voted against the Democratic alternative should vote against this amendment because this amendment, once again, seeks to substitute the Democratic alternative. The amendment also contains some interesting ideas on education. But they should be looked at in the context of our other education incentives. One proposal, for instance, is that we allow a tax deduction for higher education costs. If a taxpayer takes that deduction, then he or she will not be allowed to take the lifetime learning credit at the same time. Families are already confused and troubled by the complexity of these educational incentives. So adding a new one with a different tax would further confuse the situation. Again, we are anxious to move on to a vote. I emphasize to those on my side that this amendment would substitute the Democratic alternative for the repeal of death taxes in substitution of the House repeal. I urge everyone to vote against this amendment. I yield my time, and I ask for the yeas and nays.

Mr. ROTH. Mr. President, I will be very brief in the interest of saving time. My amendment will eliminate the telephone tax. I think this has broad bipartisan support. I urge everyone to comport with the amendment.

Mr. ROTH. I yield the Senator 15 minutes.

Mr. ROTH

Mr. ROTH. Mr. President, I have a statement to make on behalf of the leader. I recall what my colleague said about today. I hope we can move as expeditiously as possible. It is not necessary that on each of these amendments we take the full time. Obviously, there should be full debate, but I hope, since we have 20 amendments, we can move, as I say, with dispatch. Today the Senate will begin debate on the Death Tax Elimination Act. By previous consent, the Senate will proceed to the final votes on the Department of Defense authorization bill at approximately 9:30 a.m. Following the disposition of the DOD authorization bill, the Senate will resume the death tax legislation with amendments to be offered and voted on throughout the day. As previously announced, the Senate will complete action on the death tax bill and the reconciliation legislation prior to adjournment this week. Therefore, Senators should be prepared for a late Friday session and a Saturday session if necessary. I thank my colleagues for their attention and yield the floor.

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent that the bill be read the third time, passed, the motion to reconsider be laid upon the table, and that any statements relating to the bill be printed in the Record.

Mr. ROTH. Mr. President, I ask unanimous consent that the Senate now proceed to the consideration of H.R. 3544, which is at the desk.

Mr. ROTH

Mr. ROTH. Mr. President, the Senate Democrats have proposed an amendment as an alternative proposal to H.R. 8 known as the Death Tax Elimination Act of 2000. In their alternative, my colleagues across the aisle continue to rely upon the concept of a ``unified credit'' against the death tax. Their $1 million unified credit does not equal H.R. 8's $1 million exemption. The math behind the Democratic alternative forces the families of the deceased to continue to pay the very high tax rate of 41 percent for even one dollar over their $1 million unified credit. Now compare that to the reasonable 18 percent tax rate for the first dollar over our proposed $1 million exemption. H.R. 8's use of an exemption versus the Democratic alternative's use of a credit literally cuts the remaining tax rate in half or modest estates. In short, the Democratic alternative still has a ``cliff effect.'' If the total fair market value, based on the Internal Revenue's opinion as to the estate's highest and best use, happens to exceed the Democratic credit, then the family is immediately exposed to death tax rates 41 to 60 percent. The Democratic alternative fails to take advantage of the lower estate tax rates currently provided in the tax code. Their increase in the unified credit to $1 million forces American families to still pay death taxes ranging from 41 to 60 percent. While H.R. 8's use of the exemption would allow American families the benefit of the lower tax rates beginning at 18 percent until such time as all of the death taxes are eliminated. I think through all of the debates, most if not all of my colleagues in the Senate would agree that the influences of a strong economy have created $1 million estates in American families who have never had to face these types of overwhelming tax burdens. Dozens of American cities continue to report that the average sales price for a single family home has climbed to more than $250,000. Their average homes are worth a quarter of a million dollars, by the time you add life insurance for husband and wife, 401(k)s and IRAs to the fair market value of their homes many American families could be facing the previously unknown burden of death tax. Even though the Democratic alternative goes on to eventually increase the unified credit to $2 million by the year 2009, American families' life insurance, 401(k)s, IRAs, and other lifetime savings are exposed to death taxes beginning at 49 to 60 percent for every dollar above the credit. In vast contrast, those same families would be shielded from all death taxes after 2009, under our proposed Death Tax Elimination Act, H.R. 8. Additionally, the Democratic alternative attempts to target its proposed relief to family farms and small businesses by raising the family farm and small business deduction from $1.3 million per decedent to $2 million per decedent in the year 2001. Beginning in 2006 through 2009 the deduction would then be increased through a series of steps to $4 million per decedent. First of all, I am concerned that under the Democratic alternative, only those estates with over 50 percent of the estate in small businesses would qualify for relief. Upon the detailed review of the 50 percent requirement it becomes obvious that their alternative has several complicated adjustments, which includes all gifts made to the spouse within 10 years of death. This fact alone makes this approach very limited. In addition to the 50 percent requirement, the Democratic alternative requires that for ten years beyond the date of death, small business families shall have an additional estate tax imposed if the family must dispose of any portion of the family owned business interest for such reasons as bankruptcy or foreclosure. The additional tax is a portion of what would have been owed without the small business exemption and the accrued interest from the date of death. Second, I am also concerned about the complexity of this approach. The Democratic alternative would require the use of business appraisals and also the preparing and filing of extensive paperwork for up to 10 years beyond death. After a couple of years of this targeted modest relief having been in effect, I have heard about how it is working. Based on what family farmers and small business folks are telling me in Delaware, I have some misgivings about whether this approach is taking care of most or all of the cases. Since this complex provision was originally passed in the Taxpayer Relief Act of 1997, 902 estates have elected the current $1.3 million deduction available under the code. Our experience in the area of estate tax provisions leads us to believe that if the Internal Revenue Service challenges as many of the estate valuations as they do under similar provision then only about one-third of the estates that could elect under this provision would benefit under the Democratic alternative. There are other significant differences between H.R. 8 and the Democratic alternative. H.R. 8 has painstakingly attempted to address multiple concerns in the rules under the generation skipping transfer tax provisions, in a sincere effort to make those rules less burdensome and less complex. Those technical rules, if violated by accident or otherwise generate an additional tax for violating the restriction against generation skipping transfers, by levying 55 percent tax over and above the 41 to 60 percent death tax already due and owing on the total value of the estate. The Democratic alternative does not address the much needed technical changes to general skipping transfer taxes. Additionally, H.R. 8 has expanded the geographical limitations to qualified conservation easements. This is in recognition of the opportunity to further ease existing pressures to develop or sell environmentally significant land when families must raise funds to pay death taxes. The Democratic alternative has not even considered this important issue nor has it attempted to advance the preservation of such land. Now the Democratic leadership has repeatedly complained as to the expense associated with the Death Tax Elimination Act of 2000. But their own alternative is expecting a revenue loss of $64 billion over 10 years, roughly 60 percent of the revenue loss of H.R. 8. This is a $64 billion revenue loss that does not even protect those American families with simple homes, savings, insurance, qualified plans, and investments that do not include a farm or a business. H.R. 8 repeals the whole estate and gift tax regime in 2010. But, because there are billions of dollars of assets previously untaxed, if the heirs sell any portion of the estate, capital gains taxes are then due and owing. Taxes are then paid at the right time, when the heirs convert the asset to cash. The tax is not collected on an arbitrary and traumatic event such as death. Nor is tax collected on an arbitrary valuation based on paper equity that has never been realized. Moderately sized estates would be safeguarded from this capital gains tax exposure. The step up in basis is retained for all estates in an amount of up to $1.3 million per estate. In addition, transfers to a surviving spouse would receive an additional step up in the amount of $3 million. So a family could cumulatively receive a step up in basis of $5.6 million at the death of both husband and wife. This effectively protects moderately sized estates from both death tax and capital gain tax exposure. The House passed the bill on a bipartisan basis with 65 Democrats voting in favor of repeal of the estate and gift taxes. Now is the Senate's opportunity to pass this bill on a bipartisan basis and send it to the President. It is my understanding this will be the only chance this year that we will have to pass this bill and repeal estate and gift taxes. If we fail, the bill dies. If we come together and vote in favor of the House bill--estate tax repeal that the Congress passed last year--it will go directly to the President for his signature. This should not be a partisan issue. Unfortunately, the White House has indicated its opposition to repeal of estate and gift taxes and has promised to veto this bill. With roughly $2 trillion of estimated non-Social Security surpluses over the next 10 years, I believe the approximately $105 billion cost of repealing estate and gift taxes to be well within reason--it is only about 5 percent of the projected non-Social Security surplus. Taxpayers are taxed on their earnings during their lives at least once. Our Nation has been built on the notion that anyone who works hard has the opportunity to succeed and create wealth. The estate and gift taxes are a disincentive to succeed and should be eliminated. It is the right thing to do. It has been said that there are only two certainties: death and taxes. The two are bad enough, but leave it to the Federal Government to find a way to make them worse by adding them together. This is probably the worst example of adding insult to injury ever devised. Yet Washington perpetuates over and over again on hard working families who have already paid taxes every day they have worked. The Democratic alternative fails to address the needs of the American people. Therefore I urge my colleagues to support the majority leader and vote for H.R. 8. Mr. President, I yield the floor.

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent that the Senate proceed to a period of morning business with Senators permitted to speak for up to 10 minutes each.

Mr. ROTH

Mr. ROTH. I ask unanimous consent that when the Senate completes its business today, it adjourn until the hour of 9 a.m. on Friday, July 14. I further ask consent that on Friday, immediately following the prayer, the Journal of proceedings be approved to date, the morning hour be deemed expired, the time for the two leaders be reserved for their use later in the day, and the Senate then resume consideration of H.R. 8, the Death Tax Elimination Act, under the previous order.

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent that the next votes in the series be limited to 10 minutes each.

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent that the Committee on Health, Education, Labor, and Pensions, Subcommittee on Employment, Safety, and Training be authorized to meet for a hearing on ``The Effect of the Proposed Ergonomics Standard on Medicaid and Medicare Patients and Providers'' during the session of the Senate on Thursday, July 13, 2000 at 9:30 a.m.

Mr. ROTH. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on Thursday, July 13, 2000 at 2:30 p.m. to hold a closed hearing on intelligence matters.

Mr. ROTH. Mr. President, I ask unanimous consent that the Governmental Affairs Subcommittee on International Security, Proliferation, and Federal Services be authorized to meet during the session of the Senate on Thursday, July 13, 2000, at 2:00 p.m. for a hearing on the annual report of the Postmaster General.

Mr. ROTH. Mr. President, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on Thursday, July 13, 2000, to conduct a mark-up on ``S. 2107, the Competitive Market Supervision Act; S. 2266, the 2002 Winter Olympic Commemorative Coin Act; S. 2453, awarding a Congressional Gold Medal to Pope John Paul II; S. 2459, awarding a Congressional Gold Medal to former President Ronald Reagan and former first lady Nancy Reagan; a committee print of a substitute amendment to S. 2101, the International Monetary Stability Act of 2000; and a committee print of a substitute amendment to H.R. 3046, providing for semi-annual Federal reserve testimony before Congress.''

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent that the bill be considered read the third time, passed, the motion to reconsider be laid upon the table, and that any statements relating to the bill be printed in the Record.