William Roth

Mr. ROTH

Mr. ROTH. How much time do I have?

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. 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 ask unanimous consent that Senator Baucus of Montana be added as a cosponsor of the amendment.

Mr. ROTH. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

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

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent that the Senate now proceed to the consideration of Calendar No. 578, H.R. 3591.

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 rise today in opposition to the amendment offered by my distinguished colleague from West Virginia, Mr. Byrd. I do so because the commission created by this legislation is, in my view, flawed. That is why I tried to work with my good friend from West Virginia to address the concerns that I am raising. Unfortunately, we were unable to come to an agreement. For the following reasons, I must oppose this amendment and I urge my colleagues to do the same. First, let me say that if my colleague's intent is to establish a commission to provide sound advice to Congress regarding our broader relationship with China and its effect on our national security, then there are ways to create a meaningful mechanism for doing just that. One, for example, would have been to build the Senator's concerns into the quadrennial defense review required under previous versions of the National Defense Authorization Act. By giving the responsibility to a standing body like the National Defense Panel that already conducts the quadrennial defense review, we would have saved the taxpayers' money, while getting the benefit of the unchallenged expertise of many of the foremost authorities on our national security and on military matters. And, we would have put the report in Congress' hands by next spring. Instead, my colleague has adopted an approach I have not seen in my years in the Senate. He wants to take the commissioners, staff and clerical personnel of a commission constructed for very different purposes and employ it to look at our security relationship with China. That commission--the Trade Deficit Review Commission--is staffed with commissioners and staff appointed due to their expertise in economic policy. Frankly, this is simply the wrong group to undertake a serious review of the impact on our national security of our relationship with China. And, there is absolutely no benefit in terms of accelerating the progress toward a final report when compared to giving the responsibility to the National Defense Panel. I must say that I do not understand my friend's interest in perpetuating the life of the Trade Deficit Review Commission for this task. The Trade Deficit Review Commission is already overdue in providing us its report on the trade deficit. My expectation when we created that commission was that we would have had its work product by now. Instead, my colleague recently supported a three-month extension so the Trade Deficit Review Commission could complete its now amply- delayed report. In my view, we should let the Trade Deficit Commission complete its existing work, rather than burdening it with new responsibilities, even if only administrative in nature, before it has completed its primary task. Second, I am concerned that the way the issues as stated in my friend's bill could be read to imply that the United States already considers China an enemy and a threat to our national security. China clearly is an emerging force in the international arena. In many ways, China's emergence could be beneficial to the United States. There are, nonetheless, concerns, which I share, regarding the PRC's behavior on security-related matters. Those issues bear careful scrutiny. Having said that, it should also be clear that the shape and direction of the relationship between our countries is evolving and remains to be shaped. What that suggests is the need for a thoughtful, comprehensive and, most importantly, balanced review of the security implications of our bilateral relationship with China. That is, in fact, what I suggested to my colleague we should do. Third, I offered my friend my thoughts on the technical changes needed to make the commission's job clear. I worry, however, that, as it stands now, the commission's duties will be extremely difficult for any commissioner to decipher. For example, the proposed commission is supposed to examine the ``portion of trade in goods and services that the People's Republic of China dedicates to military systems or systems of a dual nature that could be used for military purposes.'' The problem is no country dedicates its trade to military systems. That is simply not a meaningful concept. I am not even sure what a ``system of a dual nature'' is? It is, furthermore, literally impossible for a country to dedicate a portion of a trade surplus to its military budget because a trade surplus is not cash in hand, as the proposal implies. Similarly, the proposal simply misunderstands the nature of the World Trade Organization and particularly Article XXI if it asks for recommendations as to how China's participation there would harm us or whether Article XXI should be more frequently invoked. What the WTO provides is a forum in which to negotiate the reduction of tariffs and other trade barriers. What do we have to fear from China lowering its trade barriers in national security terms? As to Article XXI, that provision is invoked when we do something to China in trade terms, not when China does something to us. That leads me to my final point. What the statement of the proposed commission's duties makes clear, and what I object to most strongly to, is its premise. There are many issues that I could conceive of addressing in a serious, comprehensive and balanced review of our security relationship with China. Issues related to regional stability and weapons proliferation to name just two. But, what this amendment suggests is that our commercial engagement with China somehow threatens our national security interests--that in some way, the fact that we buy toys and appliances from the Chinese, and the fact that they buy agricultural products and heavy equipment from us endangers the American people. That is simply not the case. Nor is there anything about China's upcoming accession to the World Trade Organization that makes such a review any more relevant. After all, China has committed to open its market to our goods and services to gain entry to the WTO. China's accession to the WTO does nothing to reduce our security. If anything, it reduces a point of friction in our relationship with China in a way that is only positive. Under the circumstances, I cannot support the creation of a permanent commission with an uncertain mission that would not reach many of the fundamental issues that should be addressed in our relationship with China. I urge my colleagues to oppose the amendment as well.

Mr. ROTH

Mr. ROTH. I have a parliamentary question.

Mr. ROTH. Mr. President, I request that the Democratic side give us a list of the order, and we will try to develop one as well. Then when the manager comes back for the Democratic side, we will see if we can't work that out.

Mr. ROTH. Mr. President, Senator Moynihan and myself will work this out. We will try to work it out so we can alternate back and forth.

Mr. ROTH

Mr. ROTH. Mr. President, I rise today in support of the majority leader's motion to proceed to H.R. 8, the Death Tax Elimination Act of 2000, which overwhelmingly passed in the House by a vote of 279-136. As I pointed out before, that vote of 279 included 65 Democrats. So it was, indeed, a bipartisan vote in support of this legislation. Before going into the details of the legislation, I'd like to talk about the rationale for this bill and the debate around it. Some ask why are we concerned about the death tax. Only 2 percent of estates pay the tax. Many of those taxpayers have the resources to minimize the tax. Even if they have to pay the tax at rates approaching 60 percent, the balance of the estate is available for the beneficiaries. The other 98 percent of estates need not worry about it. Those in this position also argue that the revenue raised by the estate tax is better spent on Federal programs than kept by the children. I guess it all depends on your perspective. The opponents of death tax repeal look at an estate as a thing, such as money or property, detached from the person that created it. From their view, it is a valuable resource for an ever-expanding Federal Government. There is another view. If you look behind the statistics and revenue figures, you will see an estate as something that represents a lifetime of actions by the individuals and families. Every day a person makes decisions to sacrifice, work harder, and save. And every day these hardworking families are taxed on what they earn. Over a lifetime, this daily dedication adds up. It is natural that the families who created the wealth, by a lifetime of working hard and paying taxes, would want the benefit of their work to go to their families. That is, to stay within the family rather than be broken up and sent to Washington. I take this latter view. Coming from a small state, like Delaware, I meet a lot of small business people and farmers. Everybody knows how hard these folks work, and if they are successful, they are in the position to pass along a family business or farm to their families. The death tax is a serious obstacle to these family farmers and small business people. Not only is a major portion of their hard work taken by the Federal Government, and spent here in Washington, DC, but the need for cash to pay the tax often ends up causing a sale of the farm or small business. It is this fundamental unfairness, with particular grief inflicted on family farms and small business at the worst possible time, that, I believe, has resulted in bipartisan support for repealing the death tax. Nine Senate Democrats and 65 House Democrats, better than 20% of the Democratic caucuses of each body, support repeal of the death tax. You're going to hear that family farmers and small businesses are already protected from the current death tax. Thanks to the Taxpayer Relief Act of 1997, we, on this side of the aisle, won a hard fought concession for estate and gift tax relief. Under that legislation, a family farm or small business couple can shield up to $2.6 million, on a phased in basis, from the death tax. Since that legislation became law, however, I have heard that the provision is technically and practically difficult for family farmers and small businesses to use. It seems that the better and simpler approach is to rid our family farmers and small businesses of the burden of this tax. I'd like to turn to the bill before us. The bill is substantially similar to the estate tax provisions in the tax bill that was vetoed by the President last year. Some may ask why this House bill did not come through the Finance Committee. The reason is that the bill holds to the estate tax provisions the House and Senate agreed to last year. Since the Finance Committee has already debated and approved these provisions and we have negotiated these provisions with the House, I saw no need to process the bill in the committee. There are really two time periods to which the bill applies. In the first period, generally from 2001 to 2009, estate tax relief is provided on several fronts. In the second period, beginning in 2010, the whole estate and gift tax regime is repealed. During the first part, from 2001 to 2010, the estate and gift tax rates are reduced on both the high end and low end. On the low end, currently, there is a unified credit that applies to the first $675,000 of an estate. That amount is scheduled to rise to $1 million in 2006. While current law provides some relief for the smallest estates, for modest estates, those above the credit amount, a high tax rate applies. For example, now a decedent's estate of $750,000 faces a tax rate of 37 percent on each dollar over the credit amount. Keep in mind that's where the rate starts. For larger estates, the rates can be as high as 60 percent. For the lower-end estates, the bill converts the unified credit to an exemption. What this means is that estates right above the unified credit amount, will face tax rates starting at 18 percent rather than 37 percent. In other words for modest size estates, this bill cuts the tax rate in half. For the larger estates, some now facing marginal rates as high as 60 percent, the bill includes a phased in rate cut. The rates are reduced from the current regime, with its highest rate of 60 percent, down to a top rate of 40.5 percent for the highest end estates. Keep in mind that the base of the tax is property, not income, and the rate is still above the highest income tax rate of 39.6 percent. Prior to full repeal in 2010, the bill would also expand the estate tax rules for conservation easements to encourage conservation. In addition, the bill provides some simplification measures for the generation skipping transfer tax. In 2010, the whole estate and gift tax regime is repealed. At the same time, a carryover basis regime is put in place instead of the current law step up in basis. This means that all taxable estates-- again, I want to emphasize the words ``taxable estates''--that now enjoy a step up in basis will be subject to carryover basis. Carryover basis simply means that the beneficiary of the estate's property receives the same basis as the decedent. For example, if a decedent purchased a farm for $100,000 and the farm was worth $2,000,000 at death, the tax basis in the hands of the heirs would be $100,000. The step 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. 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. Our family owned businesses and farms must not be denied this relief. 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 budget surplus. Other than being a money grab--estate and gift taxes do not serve any legitimate purpose. They certainly don't keep people from dying. 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, and it is the right thing to do now. 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. I urge my colleagues to support the motion to proceed to this bill. Mr. President, I yield the floor.

Mr. ROTH. Thirty minutes a person?

Mr. ROTH. I think we can agree to alternate back and forth; but as to who, at this time, we are not certain in what order. I will go ahead, and why don't we have some informal discussions to see how we proceed after that?

Mr. ROTH. Mr. President, what is the regular order?

Mr. ROTH

Mr. ROTH. Mr. President, I rise today in support of the motion to proceed to H.R. 8, the Death Tax Elimination Act of 2000, which overwhelmingly passed in the House by a vote of 279-136. I point out that it was a bipartisan vote. It included 65 Democrats. So this legislation that we are about to proceed to has significant bipartisan support. This is an historic opportunity to repeal the onerous estate and gift taxes which currently have rates as high as 60 percent. In an age of surpluses where taxpayers are, indeed, paying too much, it is time to repeal the estate and gift taxes. Families who toil all their lives to build a business and diligently save and invest should not be penalized for their hard work when they die. Their assets were already taxed at least once--and it is unconscionable that their estates are taxed again at rates as high as 60 percent on the value of their assets at the time of their death. This bill would address this problem. I point out, we have held hearings on estate taxes in the Finance Committee as of the last Congress. It is the Finance Committee that is the committee of jurisdiction. I also point out, this bill is substantially similar to the estate tax provisions in the tax bill that was vetoed by the President last year. Some may ask why this House bill did not come through the Finance Committee. The reason is that the bill holds to the estate tax provisions the House and Senate agreed to last year. Since the Finance Committee has already debated and approved these provisions and we have negotiated these provisions with the House, I saw no need to delay the bill in the committee and perhaps kill the chance of repealing the tax. Now, I would like to briefly go through the bill before us. I point out, there are really two time periods to which the bill applies. In the first period, generally from 2001 to 2009, estate tax relief is provided on several fronts. In the second period, beginning in 2010, the entire estate and gift tax regime is repealed. During the first part, from 2001 to 2009, the estate and gift tax rates are reduced on both the high end and low end. On the low end, currently, there is a unified credit that applies to the first $675,000 of an estate. That amount is scheduled to rise to $1 million in 2006. While current law provides some relief for the smallest estates, for modest estates, those above the credit amount, a high tax rate applies. For example, now a decedent's estate of $750,000 faces a tax rate of 37 percent on each dollar over the credit amount. Keep in mind that is where the rate starts. For larger estates, the rates can be as high as 60 percent. For the lower end estates, the bill converts the unified credit to an exemption. What this means is that estates right above the unified credit amount will face tax rates starting at 18 percent rather than 37 percent. In other words, for modest size estates, this bill cuts the tax rate in half. For the larger estates, some now facing marginal rates as high as 60 percent, the bill includes a phased in rate cut. The rates are reduced from the current regime, with its highest rate of 60 percent, down to a top rate of 40.5 percent for the highest end estates. Please keep in mind that the base of the tax is property, not income, and the rate is still above the highest income tax rate of 39.6 percent. Prior to full repeal in 2010, the bill would also expand the estate tax rules for conservation easements to encourage conservation. In addition, the bill provides simplification measures for the generation skipping transfer tax. In 2010, the whole estate and gift tax regime is repealed. At the same time, a carryover basis regime is put in place instead of the current law step up in basis. This means that all taxable estates--and I emphasize we are only talking about taxable estates--that now enjoy a step up in basis will be subject to a carryover basis. Carryover basis simply means that the beneficiary of the estate's property receives the same basis as the decedent. For example, if a decedent purchased a farm for $100,000, and the farm was worth $2 million at death, the tax basis in the hands of the heirs would be $100,000. The step in basis is retained for all transfers in an amount up to $1.3 million per estate. In addition, transfers to a surviving spouse receive an additional step up of $3 million. As I have already pointed out, 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. Our family-owned businesses and farms must not be denied this relief. 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 budget surplus. Other than being a money grab--estate and gift taxes do not serve any legitimate purpose. 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.

Mr. ROTH. I yield 5 minutes to the distinguished assistant majority leader.

Mr. ROTH. I yield 2 minutes to the Senator from Arizona.

Mr. ROTH. Mr. President, I yield myself 10 minutes.

Mr. ROTH. Mr. President, as I was saying, the estate and gift taxes are a disincentive to succeed and should be eliminated. I believe it is the right thing to do. I urge my colleagues to vote in favor of the motion to proceed to this bill to repeal the estate and gift taxes.

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent that the Subcommittee on Water and Power of the Committee on Energy and Natural Resources be authorized to meet during the session of the Senate on Tuesday, July 11 at 2:30 p.m. to conduct a hearing. The subcommittee will receive testimony on S. 2195, a bill to amend the Reclamation Wastewater and Groundwater Study and Facilities Act to authorize the Secretary of the Interior to participate in the design, planning, and construction of the Truckee watershed reclamation project for the reclamation and reuse of water; S. 2350, a bill to direct the Secretary of the Interior to convey certain water rights to Duchesne City, Utah; and S. 2672, a bill to provide for the conveyance of various reclamation projects to local water authorities.

Mr. ROTH. Mr. President, I ask unanimous consent that the Subcommittee on Housing and Transportation of the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on Tuesday, July 11, 2000, to conduct a hearing to examine the ``Federal Transit Administration's approval of extension of the Amtrak Commuter Rail Contract.''

Mr. ROTH. Mr. President, I ask consent that the Special Committee on Aging be authorized to meet today, July 11, 2000 from 9:30 p.m.-12:00 p.m. in Dirksen 628 for the purpose of conducting a hearing.

Mr. ROTH. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet to conduct a hearing on Tuesday, July 11, 2000, at 10:00 a.m., in Hart 216.