House Debates H.R. 8, Death Tax Repeal Permanency Act of 2005

The Clerk read the resolution, as follows:

H. Res. 202

Resolved, That upon the adoption of this resolution it shall be in order to consider in the House the bill (H.R. 8) to make the repeal of the estate tax permanent. The bill shall be considered as read. The previous question shall be considered as ordered on the bill and on any amendment thereto to final passage without intervening motion except: (1) one hour of debate on the bill equally divided and controlled by the chairman and ranking minority member of the Committee on Ways and Means; (2) the amendment in the nature of a substitute printed in the report of the Committee on Rules accompanying this resolution, if offered by Representative Pomeroy of North Dakota or his designee, which shall be in order without intervention of any point of order, shall be considered as read, and shall be separately debatable for one hour equally divided and controlled by the proponent and an opponent; and (3) one motion to recommit with or without instructions.

The SPEAKER pro tempore. The gentleman from Washington (Mr. Hastings) is recognized for 1 hour.

Mr. HASTINGS of Washington. Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Massachusetts (Mr. McGovern), pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only.

(Mr. HASTINGS of Washington asked and was given permission to revise and extend his remarks.)

Mr. HASTINGS of Washington. Mr. Speaker, House Resolution 202 is a structured rule providing for 1 hour of general debate on H.R. 8, a bill to make the repeal of the estate tax permanent, to be equally divided and controlled by the chairman and ranking minority member of the Committee on Ways and Means. The rule provides for consideration of the amendment in the nature of a substitute printed in the Committee on Rules report accompanying the resolution, if offered, by the gentleman from North Dakota (Mr. Pomeroy) or his designee, which shall be considered as read and shall be separately debatable for 1 hour equally divided and controlled by the proponent and an opponent.

Finally, Mr. Speaker, the rule waives all points of order against the amendment printed in the report and provides one motion to recommit with or without instructions.

Mr. Speaker, H.R. 8, a bill introduced by the gentleman from Missouri (Mr. Hulshof), permanently repeals the death tax. I commend the gentleman from Missouri (Mr. Hulshof) for championing an end to the death tax, as my former friend and colleague, Jennifer Dunn, did while serving in Congress. Through Jennifer's tireless efforts, in 2001 Congress acted in a bipartisan fashion to gradually phase out the death tax and fully eliminate it in 2010.

However, if Congress does not extend the death tax repeal beyond 2010, in 2011 small business owners and family farmers will once again be assessed the full death tax at the maximum 2001 rate. The death tax is a form of double taxation and is simply unfair.

The last thing families in central Washington and across the Nation should have to worry about when a loved one dies is losing the family farm or business in order to pay the Internal Revenue Service. But, sadly, that is the situation many hard-working families would face if the death tax is not permanently abolished.

With permanent elimination of this tax, farmers and business owners will have the sense of security they need to plan for the financial future of their businesses, farms, or families. Death taxes are an unfair assault on every American's potential life savings. Today, we have the opportunity to bury the death tax for good.

The Committee on Rules reported House Resolution 202 by a voice vote. Accordingly, I encourage my colleagues to support both the rule and the underlying bill.

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

Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

(Mr. McGOVERN asked and was given permission to revise and extend his remarks.)

Mr. McGOVERN. Mr. Speaker, for years the Republican leadership has misled the American public about the estate tax. Today, because of that deceptive campaign, millions of Americans seem to believe they will be subject to the so-called death tax. They have been lied to.

Facts are stubborn things, and the facts prove that the Republican leadership is once again trying to pass a bill that helps the very wealthy few at the expense of everyone else.

The truth is that the overwhelming majority of American families, 99.7 percent, are not subject to estate taxes. Let me repeat: 99.7 percent of American families are not subject to estate taxes.

The truth is that this is the wrong bill at the wrong time that helps the wrong people, and it should be defeated. This permanent repeal of the estate tax does not help the average American. Instead, it benefits the heirs of the wealthy. Paris Hilton is doing just fine. She does not need another tax cut by the Republicans.

My colleague, the gentleman from Washington (Mr. Hastings), will claim that this bill will help family farmers and small business owners pass their assets, their farms and businesses, on to their children. The reality is that most of these family farmers and small business owners are already exempt from the estate tax.

Further, as The Washington Post pointed out today, permanently repealing the estate tax may actually hurt more family farmers and small businesses than it would help because of the cumbersome new reporting requirements and changes in how assets are valued.

Let us look at the facts. Exempting estates up to $1 million, the original level before the 2001 Bush tax cut, leaves only the top 2 percent of the estates in the country. But current law goes well beyond the $1 million exemption; and to hide the real cost of their bad economic policies, the Republican leadership included a provision that sunsets the 2001 tax cut in 2011.

Mr. Speaker, for most of the 20th century, this country operated on a progressive taxation system. Those who could afford it paid their fair share. We looked out for each other. We provided food to the hungry, shelter to the homeless, assistance to the unemployed, and health care to the sick.

But the Republican leadership wants to turn that system upside down. They believe the wealthy should be exempt from paying taxes and the poor should fend for themselves. It is wrong, and we have to stop it.

Let me connect the dots for my Republican friends. They say there is a deficit and we need to tighten our belts to pay down the debt. Of course this debt is of their creation. President Bush came into his first term with a surplus and ended his second term with the largest deficit in the history of the United States of America, and now they bring forward another tax cut that costs $290 billion according to the Joint Committee on Taxation.

Some private groups estimate that this bill will ultimately cost closer to $1 trillion.

Where is that money going to come from? It is a credit card bill that they are passing on to our children and our grandchildren. That is the actual estate tax. That is the real legacy they are leaving to future generations.

Mr. Speaker, we are at war, but the only people being asked to sacrifice are those who can least afford it. The wealthiest of the wealthy are getting a free ride at this very difficult time in our history.

Look at the budget resolution. The Republican leadership pushed the budget resolution through earlier this month. What do they do? They cut food stamps. They cut Medicaid. They cut education programs. They cut environmental protection. They cut community development block grants. They cut school breakfasts and school lunches. Why? All so a few people can inherit a few more billion dollars tax free from their relatives.

Our colleague from North Dakota (Mr. Pomeroy) will offer an amendment that will set the exemption for estates at $3 million for individuals and $7 million for couples. This would cost dramatically less than the Republican bill, $72 billion compared to $290 billion, and it would exempt 99.7 percent of all estates from ever facing the estate tax. This is a commonsense compromise that should receive near unanimous support.

Mr. Speaker, the truth is out there, but the Republican leadership is too stubborn and too arrogant to face it. We are at war. Health care costs are spiraling out of control. Poverty in America is increasing. More Americans go to bed hungry at night. Our children are falling behind in math and science. I, for one, do not believe the answer to these challenges is a permanent repeal of the estate tax.

I urge my colleagues to do the right thing and defeat this bill.

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

Mr. HASTINGS of Washington. Mr. Speaker, I am pleased to yield 3 minutes to the gentlewoman from West Virginia (Mrs. Capito), a valuable member of the Committee on Rules.

Mrs. CAPITO. I thank the gentleman from Washington for yielding me this time.

Mr. Speaker, I rise today in strong support of the rule and the underlying legislation. I am proud to be a cosponsor of H.R. 8 and thank the gentleman from Missouri for his leadership in offering this bill.

I was proud to be in this Chamber 4 years ago on the day Congress began phasing out the death tax. As a result, thousands of jobs were saved and second and third generations were able to take charge of their family's business. We knew when we passed that law the phaseout was not a permanent fix. Today we have the opportunity to complete unfinished business. If we do not act now to permanently eliminate the death tax, it will be revived at the stroke of midnight on January 1, 2011. Bringing back the death tax will drive the final nail in the coffin for America's next generation of small business owners.

The Death Tax Repeal Permanency Act represents the changes to our Tax Code called for by our Nation's farmers and small business owners who want to pass their family business on to the next generation. Small business owners and farmers devote their time, energy and money into building a business so it can be passed on to their sons or daughters. In the absence of the death tax, these small businesses become a legacy for one generation to pass on to the next. With the death tax, families face a whopping tax bill on the property and assets even though taxes have already been paid annually by the owners.

The death tax is an overwhelming burden, forcing many families to sell their businesses just to pay the 37 to 55 percent tax. As a result, jobs are lost and generations of family toil are plundered by the government.

Permanently repealing the death tax will help small businesses create new jobs. A 2002 study showed that an extra 100,000 jobs a year would be created if the death tax were permanently repealed. The Wall Street Journal wrote in 1999 that 60 percent of small businesses would add jobs if death taxes were not on the books.

The very threat of a revived death tax has a negative impact on small business. Even with the temporary phaseout, business owners must continue to plan for paying that tax. To help owners hire new workers and continue to invest in their business, they need to know that the death tax is gone for good.

We must not allow this small business killer to rise from the dead. The House today has an opportunity to rid the Nation of this tax that kicks families when they are down, takes away a lifetime of hard work, and stifles job growth. I hope that my colleagues will join me today in supporting the rule and the underlying legislation.

Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

We hear the phrase "death tax," which really is kind of a misnomer. There is no such thing. When I am dead, I am dead. You cannot collect any taxes from me. The issue is whether or not estates in the billions of dollars should be subject to any taxation. We are not talking about small family farms or small businesses. That is not what this is about. If you read the Washington Post today, it is very clear what this is about. It is about the most extremely wealthy companies, the most extremely wealthy people in this country.

The gentleman from North Dakota has a substitute that would basically exempt 99.7 percent of all estates from any estate tax. So let us be clear about what is going on, and let us also be clear about the cost to our kids. The Joint Committee on Taxation says that this is going to cost up to $290 billion. There seems to be no concern on the other side of the aisle about what this does to our deficit or our debt. This is not paid for. They make no attempt to pay for it.

Let me just remind my colleagues that the debt that we are faced with right now is close to $8 trillion, and the interest on that debt is astonishingly high. That is the legacy that they are passing on to our kids.

Our good colleague from Tennessee (Mr. Tanner) in a presentation, I thought, said it best. He said, so people can understand what the debt means, if you stack up one thousand dollar bills, a million dollars would be about a foot high; a billion dollars would be about the size of the Empire State Building; a trillion dollars would be 1,000 Empire State Buildings. Our debt is close to $8 trillion, and there is no outrage on the other side, there is no concern about what we are doing and what it means to our economy by making these tax cuts permanent.

I think that people need to understand what is going on here. This is not about small family farms. It is not about small businesses. This is about helping the wealthiest of the wealthy.

Mr. Speaker, I yield 6 minutes to the gentleman from North Dakota (Mr. Pomeroy).

Mr. POMEROY. I thank the gentleman for yielding me this time.

Mr. Speaker, this rule brings an important debate to the floor. Let me tell you what is not on the floor. What is not being debated is whether there should be additional estate tax relief. We agree there should be. Much has been accomplished over the last few years in that regard. The estate tax level attached at $600,000 per individual at the beginning of this decade. So that, as my colleague from West Virginia talks about the concern of estate tax on small businesses and farms, that may have been more the case at that time. Certainly it is less the case now. The estate tax level attaches at $1.5 million per individual, $3 million per couple, and obviously the number of estates that would have tax consequences has fallen significantly.

Is it enough? No. Let us do something quite dramatic. The proposal that I am offering as a substitute would double from where we are today and in a very certain and immediate way bring to $6 million the estate tax exclusion for couples. Couples across this country possessing less than $6 million in assets, no estate tax. Nothing. Gone. Immediately and certainly. By the end of the decade, it moves to $7 million. By 2009, there could be $7 million in a couple's estate.

Is this meaningful? You bet it is meaningful. You look at the numbers, and it will tell you that we all but make this problem go away. Looking across this country, 99.7 percent of estates in this country no longer have estate tax issues under the substitute that I am advancing. That is 997 out of 1,000. That is pretty significant.

There are a couple of other differences. It is one-quarter of the cost of the majority proposal, $290 billion, that they are talking about. There are things they are saying that just are not so, that small businesses and family farms have major estate tax issues when the level is $6 million per couple. They do not.

I represent family farms and small businesses all across the State of North Dakota. I am telling you, if we set this level at $6 million per couple, to move to $7 million by the end of the decade, we largely take care of the problem.

But beyond that, going forward, there is yet another very important wrinkle in the majority proposal. This is the capital gains tax that their proposal would add. It is unlike a tax relief bill that I have seen before, because, for everyone it helps, it adds capital gains taxes for many more. Right now in the handling of an estate, there is no capital gains tax. Under their proposal, they establish something called the carryover basis. Not to get technical with you, but what that does is impose capital gains tax exposure on estates. The way the numbers work out, more estates are going to end up with capital gains consequences than get relief from estate taxes. So you help a few; you harm a lot. It does not make much sense to me. Again, at a total budget cost of $290 billion over the first 10 years and more than $800 billion over the second 10 years.

This is a budget buster, my friends. At a time when we are talking about how we address the long-term solvency of Social Security, to just, without a concern, pass a $290 billion bill to help three-tenths of 1 percent of the most affluent in this country seems to be standing priorities directly on their head. The very people that favor privatizing Social Security, which is going to add risk in the Social Security benefit, which is going to reduce benefits sharply because they change the inflation index going forward, that is going to reduce the benefits on our children and grandchildren, want to now run up the debt on our children and grandchildren in order to help that three-tenths of 1 percent, the very wealthiest among us. What kind of sense is that?

So we have proposed something quite different, immediate and certain estate tax relief, $6 million per couple, $3 million per individual, right now, and in 2009, $7 million per couple, $3.5 million per individual. And, once more, a proposal that I think we would want to consider closely, we could take the difference between the majority bill and our bill and dedicate it to the Social Security trust fund.

There is a lot of talk from the other side: Where's your plan? Where's your plan? How about this one? Let us start by addressing the problem and making a good deal of it go away.

If we took the difference, the amount of estate tax revenue over the $7 million figure at the end of the decade, and dedicated it to the Social Security trust fund, we could fill 40 percent of the hole over 75 years, almost make half the problem go away, while preserving benefits, while keeping the inflation adjustment that our grandchildren need.

I think in the consequence of our floor discussions today it is important to talk about both concepts, the immediate and certain estate tax relief alternative that we are advancing and what we could do with the difference. They say this estate tax has to be repealed, that it is the most unfair thing in the world. I can think of something even more unfair, and that is cutting the benefits of Social Security to our children and grandchildren. That is more unfair in my opinion.

We do not have to make that trade-off. We can make estate tax go away for 99.7 percent of the people in this country, take the balance between the bills, invest it in the Social Security trust fund and deal with almost half of the problem of the underfunding over the next 75 years.

That is what the minority is bringing forward today. It is a thoroughly considered and balanced alternative, I believe a reasonable and responsible alternative, and I urge the Members' consideration.

Mr. HASTINGS of Washington. Mr. Speaker, I am pleased to yield 3 minutes to the gentleman from California (Mr. Cox).

Mr. COX. Mr. Speaker, I rise in support of this rule and the bill authored by the gentleman from Missouri (Mr. Hulshof) and commend him for his great work on behalf of America's job creators.

I just heard the Democratic Member say that only a tiny fraction of the people who die in America and their families have to pay this death tax. Apparently, the gentleman has never had to go through the dreaded form 706. How many of us right now are trying to deal with form 1040? Even though we deal with it year in and year out, we still cannot figure it out. What we are trying to get rid of is the complexity of the Tax Code and the $20 billion a year that the death tax consumes from the American economy that does not go to the Treasury but, rather, goes to tax lawyers and accountants and life insurance sales and keyman policies and so on, all of this estate planning which is economic waste. It is hurting our economy.

Eighty-eight pages of the Internal Revenue Code, 88 pages of law, are devoted to trying to close the loopholes that have erupted over the 20th century as our experiment with the death tax has shown that it actually costs the government and costs the American people money to maintain it. Much as we would like to be able to tax the super-rich, they get out of the tax with trusts and loopholes and so on, as will the rich after we do what the Democrats want, which is to create some complicated new definitions to try and cabin off this tax so it only affects a few people. The only people who will actually be hurt by the burden of these new complex rules and laws will be people who we do not want to pay the tax in the first place.

If at the time that one of one's loved ones dies, just to file the return, not pay the tax, they are going to have to plow through all of these helpful instructions that are in such small print that even a high school student might need reading glasses to get through some of these 40 pages. But here is the kind of helpful thing one will find when a loved one dies: "Generally, you may list on Schedule M all property interests that pass from the decedent to the surviving spouse and are included in the gross estate. However, you should not list any `nondeductible terminable interests,' described below, on Schedule M unless you are making a QTIP election. The property for which you make this election must be included on Schedule M. See `qualified terminable interest property' on the following page.

"For the rules on common disaster and survival for a limited period, see section 2056(b)(3)."

This is just one little paragraph out of 40 pages of this. They are going to have to hire a lawyer. They are going to have to hire an accountant to go through all this and list everything that their family member has accumulated throughout his or her entire life just to prove that they do not owe this tax. Anybody who is slogging through their form 1040 trying to file their income tax return now knows what I am talking about.

We are trying to eliminate the complexity of this law which hurts every single person who works for a small business in America. When that small business is liquidated in order to pay the death tax because it is a tax on property of small businesses, people lose their jobs, and that is where the burden and the incidence of this tax falls.

Repealing the death tax once and for all is the right thing to do, and I am very pleased that this rule will bring that to the floor.

Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

Let me again remind people that we are talking about three- tenths of 1 percent who actually pay an estate tax. In that category we are not talking about family farms or small businesses. We are talking about Paris Hilton, and I would say to my colleague from California that I think she has enough accountants and lawyers to be able to fill out form 706.

Mr. Speaker, I yield 3 minutes to the gentleman from Vermont (Mr. Sanders).

Mr. SANDERS. Mr. Speaker, this is actually one of the more absurd debates that I have ever heard in my life, and I think anybody who turns on the television and wonders what is going on here in Congress will then conclude that the reason that this institution is held in so low regard is because we have debates like this.

Let us look at what is going on in America today. The middle class is shrinking. Study after study shows that real wages for American workers are going down; and in the last 4 years, 4 million more Americans have entered the ranks of poverty. While the middle class shrinks, poverty increases. The richest people in America have never had it so good. CEOs of large corporations now make 500 times what their workers make. In America today we have the most unfair distribution of wealth and income in the history of our country and of any major country on Earth.

So what are we discussing here today? Are we going to raise the minimum wage to a living wage? Are we really going to protect family farmers from low prices? Are we going to stop the hemorrhaging of decent-paying jobs going to China? Do not be silly. We do not talk about that because corporate America does not fund those concerns.

The richest people in America said several years ago, Hey, yes, we are worth billions of dollars. That is not enough. We are going to contribute money to our Republican friends, and do you know what they are going to do? They are going to lower our taxes even more.

Mr. Speaker, we are here debating an issue that has zero impact on 98 percent of the American people. Nobody in the middle class, nobody in the working class, no low-income person pays one penny in the estate tax. All of the estate tax is paid by the wealthiest 2 percent. If their proposal passes, half of the benefits go to the richest one-tenth of 1 percent.

I want to ask my friends a question. This is a question. As my colleagues know, President Bush and the Republican leadership are supporting increased fees on our veterans. They are raising prescription drug fees for our veterans, and they want to charge a $250 co-pay for veterans of wars who enter the VA hospital. I would like to ask my Republican friends do they think it is a good idea to give tax breaks today to billionaires and to charge veterans significantly increased fees for health care. That is my question.

I am listening. I am listening. I do not hear an answer.

That is the answer. They are substantially increasing health care costs for veterans who have put their lives on the line defending this country. They are increasing our deficit, increasing our national debt, all on behalf of the richest people in this country. This bill is bought and paid for by millionaires and billionaires, and anyone who votes for it should be ashamed of themselves.

Mr. HASTINGS of Washington. Mr. Speaker, I yield 5 minutes to the gentleman from Georgia (Mr. Westmoreland).

Mr. WESTMORELAND. Mr. Speaker, I thank the gentleman from Washington (Mr. Hastings) for yielding me this time.

Mr. Speaker, I rise today in support of this rule and H.R. 8. I applaud the efforts of the leadership and the gentleman from Missouri in bringing forward H.R. 8 to finally bury the death tax once and for all.

One thing I have learned in the short time I have sat here is that the Democrats really look at the person whom this bill would affect, and, by the way, I do not think any of them are watching this on TV right now because they are all probably at work, but they are looking at the person whom this bill would affect as someone who got up early, worked hard all his life, looked after his family, built infrastructure, saved money, put capital back into this system, provided jobs, benefits, health care for people, and the Democrats look at this individual as a gift who keeps on giving.

One of the things our country needs is individuals who are willing to work hard and save their money. It is the basis of our economy and the American Dream. This country is a wonderful land of opportunity. Anyone can work hard and be whatever they want to be in this country. Yet our tax system directly discourages savings by limiting contributions to IRAs and taxing dividends. When one works hard and saves, they should be rewarded, not punished. The current death tax punishes people for saving their own money, for fulfilling the American Dream.

Tax cuts do not cost the U.S. Government money. This is something that I think is misunderstood up here. Cutting taxes does not cost the government money. It allows people who earn that money to keep more of it in their pocket. This Congress must recognize that tax cuts spur economic growth. We have seen this in the Reagan tax cuts that led to the boom of the 1990s and in this President's tax cuts that have brought us out of the recession that this country experienced after 9/11.

As a small business owner, I know firsthand how hard one has to work to build a business. And most times the assets of a family business are not in cash, or easily so. When a family business is hit with an estate tax, it often requires the selling of a large amount of inventory or other assets in order to pay the debt. That is not right. That hurts families who want to continue the legacy of their loved ones who have passed away. Why do we want to harm or punish or exploit those who work their hardest to create an inheritance for their loved ones?

The death tax has made crooks out of honest people because they have to search for all kinds of ways to avoid paying the tax. And the reason they do not want to pay this tax is because they hate to see everything that someone that they loved and deeply cared about who spent their whole life building is taken away by the government.

Small businesses should not be run while looking over one's shoulder to make sure the tax man is not about to get them. Small business owners must be able to focus on their business. More than 70 percent of small family businesses do not last beyond the second generation, and the estate tax plays a large part in that. Having someone pay half of their assets to the government is absolutely wrong no matter what is being paid. We all know that people can manage their own money much better than the government.

One of the things I hate more than anything is a double tax. When the government takes its bite out of the apple, it should not get a second bite. Yet the death tax takes an even bigger bite out of the money that has already been taxed. Economic studies have shown that the cost of trying to comply or avoid the death tax consumes as much out of the economy as is generated by the death tax itself.

The death tax also hits those who cannot afford a lawyer or a CPA to help them. If their assets are not in cash, as in most family businesses they are not, they have to make a huge burden and sacrifice that they are not ready for by having to get somebody else to advise them about how to take care of their families and their children. And in spite of all this, the death tax does not even generate that much revenue or "windfall profit" for the government, yes, a "windfall profit" for the government, while placing this huge burden on the families of this country. It is not right.

The idea of the tax coming back in 2011 is amazing. It just does not make sense, and people cannot make any long-term financial plans. Getting rid of the death tax will simplify our Nation's laws and ease the burden on our country. If it takes a CPA or a lawyer to figure out what one is trying to do and what burdens the government has put on them, then it is too much of a burden. We need to do everything we can to lessen that burden. Repealing the death tax is the right thing to do.

Although I was not in Congress when the phase-out of the death tax began, I am thrilled to be here today to cosponsor and vote for it to be completely eliminated. And I urge all of my colleagues to do the same.

Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

Let me just make a couple of points here. This is not about protecting small businesses or family farms. I mean, I think that is clear to everybody here. This is about protecting the three-tenths of the 1 percent wealthiest people in this country.

I enter into the RECORD an article that appeared in today's Washington Post that really kind of explains what this debate is all about, about how Mars candy, Gallo wine, and Campbell soup fortunes have been lobbying for the complete repeal of the estate tax for some time so they can end all taxation on their inheritance. That is what this is about. This is not about working families. This is not small family farms or small businesses. This is about protecting the richest of the rich.

Today, the House is expected to vote to permanently repeal the estate tax, moving the Mars candy, Gallo wine and Campbell soup fortunes one step closer to a goal that once seemed quixotic at best: ending all taxation on inheritances.

"I think this train has an awful lot of momentum," said Yale University law professor Michael J. Graetz, a former senior official in the Treasury Department of President George H.W. Bush.

Last month, Graetz and Yale political scientist Ian Shapiro published "Death By A Thousand Cuts," chronicling the estate tax repeal movement as "a mystery about politics and persuasion."

"For almost a century, the estate tax affected only the richest 1 or 2 percent of citizens, encouraged charity, and placed no burden on the vast majority of Americans," they wrote. "A law that constituted the blandest kind of common sense for most of the twentieth century was transformed, in the space of little more than a decade, into the supposed enemy of hardworking citizens all over this country."

The secret of the repeal movement's success has been its appeal to principle over economics. While repeal opponents bellowed that only the richest of the rich would ever pay the estate tax, proponents appealed to Americans' sense of fairness, that individuals have the natural right to pass on their wealth to their children.

The most recent Internal Revenue Service data back opponents' claims. In 2001, out of 2,363,100 total adult deaths, only 49,911 -- 2.1 percent -- had estates large enough to be hit by the estate tax. That was down from 2.3 percent in 1999. The value of the taxed estates in 2001 averaged nearly $2.7 million.

Congressional action since 2001 will likely bring down the number of taxable estates still further. President Bush's 10-year, $1.35 trillion tax cut in 2001 began a decade-long phase-out of the estate tax. The portion of an estate exempted from taxation was raised from $675,000 in 2001 to $1.5 million in 2004. Next year, the exemption will rise to $2 million for individuals and $4 million for couples.

The impact has been clear, tax policy analysts say. The number of estates filing tax return is falling sharply, from 123,600 in 2000 to an expected 63,800 this year. And only a small fraction of those will actually be taxed.

Under the 2001 legislation, however, all of the tax cuts, including the estate tax's repeal, would be rescinded in 2011. The vote today is the first to address the sunset provisions.

House Democrats, led by Rep. Earl Pomeroy (D-N.D.), today will propose permanently raising the exclusion to $3.5 million -- $7 million for couples. That would be enough to exempt 99.7 percent of all estates. The Pomeroy bill would cost the Treasury $72 billion over 10 years, compared with the $290 billion price tag of a full repeal through 2015, according to the Joint Committee on Taxation.

"The ideological fervor that is admittedly still pretty strong in some quarters is now being tempered by the runaway debt that is weighing down this country," said Pomeroy, who thinks voters are ready for a compromise.

Indeed, Senate Majority Leader Bill Frist (R-Tenn.) has asked Sen. Jon Kyl (R-Ariz.), a repeal proponent, to find a compromise that could win a filibuster-proof 60 votes in the Senate this year, even if it falls short of full repeal.

A compromise that includes any estate tax, no matter how small, may fail if the fervent repeal coalition holds firm, Graetz said. Repeal opponents have been unable to whip up big support, he said, because they never made the emotional case that the American belief in equal opportunity runs counter to the existence of an aristocracy born to inherited riches. Paris Hilton, who inherited her wealth. and now famously enjoys spending it, could have been their counter to the small-business owners and family farmers whom repeal proponents held up as the victims of the tax.

"The public doesn't believe people should be taxed at the time of death, whether they are paupers or billionaires," said Frank Luntz, a Republican pollster who has been working on estate tax repeal for a decade. "Compromise is very difficult because the public doesn't want it to exist."

It is that sentiment that the fledgling repeal forces tapped into when they mobilized more than a decade ago. A little-known Southern California estate planner named Patricia Soldano launched her repeal effort with the backing of about 50 wealthy clients, with the Gallo and Mars families leading the way. Other contributors included the heirs of the Campbell soup and Krystal hamburger fortunes. Frank Blethen, whose family controls the Seattle Times Co., was also pivotal.

The effort caught fire when small-business groups such as the National Federation of Independent Business and agriculture groups led by the National Cattlemen's Beef Association joined in.

By 1994, Newt Gingrich's Republican insurgents had latched onto the estate tax issue, but the Contract With America called for an estate tax reduction, not repeal. In 1995, Luntz poll-tested the term "death tax" and advised the new GOP majority to never use the terms "inheritance" or "estate tax" again.

By then, Soldano's Policy and Taxation Group was spending more than $250,000 a year on lobbying. A parade of small-business owners and family farmers appealed to their congressmen, worried that they could not pass on their enterprises to their children, even though most of them would not be affected by the tax.

"There's been a sustained, determined campaign of misinformation that in the end has left the American people with a very different notion of what the estate tax is and does than actually exists," Pomeroy said.

But ultimately, whether people believe the estate tax will affect them has little bearing on support for repeal. Early this year, with Soldano's money, Luntz again began polling, this time in the face of record budget deficits and lingering economic unease. More than 80 percent called the taxation of inheritances "extreme." About 64 percent said they favored "death tax" repeal. Support fell to a still-strong 56 percent when asked whether they favored repeal, even if it temporarily boosted the budget deficit.

Democrats "still don't get it," Graetz said. "The politics are still very powerful."

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

Mr. HASTINGS of Washington. Mr. Speaker, I yield 3 minutes to the gentleman from Florida (Mr. Putnam), a powerful member of the Committee on Rules.

Mr. PUTNAM. Mr. Speaker, I thank the gentleman for yielding me this time.

I am proud to be a part of the Committee on Rules, which reported out a very balanced rule that allows both sides to be heard on this issue.

The interesting thing about this issue is that there is agreement that the death tax should go away. There is disagreement about the numbers and the number of people for whom it should go away, our side believing that it should be totally repealed, the other side believing that there are a certain number of people who should be exempt from paying this. It is good to see that we have finally come together to recognize that the death tax is a killer for small businesses and family farms and ranches. I am glad that that is a bipartisan agreement, and I am glad that this rule reflects that.

A wise man once joked that there is always death and taxes, but death does not get worse every year.

With the death tax in place, that is not true. Each year that passes, many family-owned farms and businesses are subject to this tax. It is fundamentally unfair that death is a taxable event. Taxes have already been paid on the assets subject to the taxation under the death tax during the lifetime of the owners. It amounts to a second bite of the apple for the government.

With the repeal of the tax, more small businesses and farms will stay in the hands of those families. Currently, the death tax is a leading cause of dissolution. And we see this all the time in agriculture, that when the grandparents die they have to sell off a portion of the land so that the government gets their share so that they break up the very asset that made that farm what it was. They eliminate the opportunity for that next generation to participate even though they worked on it themselves, growing up, paying their way through school, helping to support all of the family efforts. That is a great cause of the loss of rural communities and small-time agriculture in this country, and I think that we can all agree that that is a shameful loss to our Nation. They form the backbone of our rural heritage.

The death tax is a virtue tax in the sense that it penalizes work, penalizes savings and thrift in favor of large-scale consumption.

In other words, if those same families had sold off everything and spent it, then they would not be subject to the death tax. But the fact that they made a decision to hold something, to build it, to grow it so that their children and grandchildren might have a farm to continue to cultivate the bread basket for the world in, then they are taxed. Where is the fairness in that?

Mr. Speaker, 87 percent of family businesses do not make it to the third generation. Unquestionably, the death tax plays a tremendous part in that statistic. This is especially true of businesses that are land-rich and cash-poor. That is what we call it in the South, Mr. Speaker, where you have all of your assets tied up in things. You cannot afford a brand-new car, you cannot afford a brand-new tractor, you cannot afford all the nicer things; but yet on paper you are quite wealthy, because you purchased land, you gave value to that land as time passes.

Mr. Speaker, I urge that we adopt the rule and continue forward with the repeal of this scurrilous tax on death.

Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

I appreciate the words from my colleague on the Committee on Rules, the gentleman from Florida; but quite frankly, I do not know what he is talking about. The small businesses and the family farms, we are all in agreement that they need to be protected. That is not what the debate is about here today.

The debate is about whether three-tenths of 1 percent of higher income-earners in this country deserve additional tax relief at a time when they are cutting Medicaid, veterans benefits, when they are dipping into the Social Security trust fund.

This is not a death tax. What they are talking about is a debt tax,ÐD-E-B-T, adding to the deficits and the debt of this country. Right now, this year, we are paying $177 billion this year in interest on the debt. Next year it will be $213 billion. It is ridiculous. We need to rein in some of these extravagant tax cuts for the wealthy so that we can get our fiscal house in order here in this country, so we can start taking care of Social Security in the long term, so we do not have to cut veterans benefits or educational benefits or environmental protection.

Mr. Speaker, I at this time I will enter into the RECORD an article by E.J. Dionne entitled "The Paris Hilton Tax Cut."

I refer to the fact that House Republican leaders have scheduled a vote this week to abolish the estate tax permanently. Under a wacky provision of the 2001 tax cut designed to disguise the law's full cost, Congress voted to make the estate tax go away in 2010, but come back in full force in 2011.

With so many other taxes around, it's hard to understand why this is the one Congress would repeal. It falls, in effect, on the heirs to the wealthiest Americans. Fewer than 1 percent of the people who died in 2004 paid an estate tax, and half the revenue from the tax came from estates valued at $10 million or more.

Yet, because the wealthy have gotten wealthier over the past three decades or so, the estate tax produces a lot of money. Counting both revenue losses and added interest costs, complete repeal of the estate tax would cost the government close to $1 trillion between 2012 and 2021, according to the Center on Budget and Policy Priorities.

And that is where Social Security comes in. You can reject outlandish claims that Social Security faces some sort of "crisis" and still acknowledge that it faces a gap in funding for the long haul. The estate tax should be part of the solution.

In a little-noticed estimate confirmed by his office yesterday, Stephen Goss, the highly respected Social Security actuary, has studied how much of the Social Security financing gap could be filled by a reformed estate tax. What would happen if, instead of repealing the tax, Congress left it in place at a 45 percent rate, and only on fortunes that exceeded $3.5 million -- which would be $7 million for couples? That, by the way, is well below where the estate tax stood when President Bush took office and would eliminate more than 99 percent of estates from the tax. It reflects the substantial reduction that would take effect in 2009 under Bush's tax plan.

According to Goss, a tax at that level would cover one-quarter of the 75-year Social Security shortfall. The Congressional Budget Office has a more modest estimate of the shortfall. Applying Goss's numbers means that if CBO is right, the reformed estate tax would cover one-half of the Social Security shortfall.

This is big news for the Social Security debate. Michael J. Graetz and Ian Shapiro, authors of a new book on the estate tax, "Death by a Thousand Cuts," have referred to its repeal as the "Paris Hilton Benefit Act." To pick up on the metaphor, why should Congress be more concerned about protecting Paris Hilton's inheritance than grandma's Social Security check? How can a member of Congress even think about raising payroll taxes while throwing away so much other revenue?

This also means that Democrats now talking about reaching a "compromise" with the Republicans on the estate tax should put the discussions on hold until the Social Security debate plays itself out. Most of the "compromises" being discussed would repeal 80 to 90 percent of the estate tax. At some point, it might be reasonable to agree to make the 2009 estate tax levels permanent. But if they agree to any steps beyond that, Democrats will, once again, be placing the concerns of wealthy donors over the interests of the people who actually vote for them.

The Friends of Paris Hilton realize that as federal deficits mount and rising Medicare costs loom, the case for the total repeal of the estate tax grows steadily weaker. That's why they're hoping they can sucker defenders of estate taxes into a so-called compromise that gives away the store -- the store, in this case, going to Neiman-Marcus shoppers, not to those who rely on Target.

This is an instructive moment. What we are having is not a real debate on the future of Social Security but a sham discussion in which the one issue that matters to the governing majority is how to keep cutting taxes on the wealthiest people in our country.

Those who vote to repeal the estate tax this week will be sending a clear message: They see the "crisis" in Social Security as serious enough to justify benefit cuts and private accounts. But it's not serious enough to warrant a minor inconvenience to those who plan to live on their parents' wealth.

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

Mr. HASTINGS of Washington. Mr. Speaker, I am pleased to yield 2 minutes to the gentlewoman from Tennessee (Mrs. Blackburn).

Mrs. BLACKBURN. Mr. Speaker, I want to rise in support of the rule that will allow us to consider the permanent repeal of the death tax.

Mr. Speaker, I think it is so appropriate, so very appropriate that this week, as millions of American taxpayers are finalizing their Federal income tax filings that we are looking at what is one of the most egregious taxes and most unfair taxes to our small business community. I am one of those that fully believes that the death tax is the triple tax, because Americans pay tax when they earn their income. Then they turn around, they buy an asset, and they spend their money, and they are paying a tax on every bit of that. And then, when an American dies, they have to pay the tax again.

This tax affects every American, especially our small business owners. I have found it very curious that some of my colleagues across the aisle continue to say it only affects the rich. Well, in my district, do my colleagues know that it affects thousands of farmers, thousands of small business owners who are very upset about the death tax?

Families everywhere would benefit from the repeal of this tax. When 70 percent of family businesses do not make it to the second generation, there is a problem; and we know we can fix part of that problem, because it is the death tax. For too long the death tax has been a major factor in the failure of family businesses. The tax not only forces American families to hand over their hard work to the government; family businesses spend millions of dollars every year trying to comply with these regulations. In addition, it discourages savings and investment, and it is costing our economy hundreds of thousands of new jobs.

Mr. Speaker, 89 percent of Americans want death taxes repealed. Small business owners get it, seniors get it, the farmers in my district get it.

Mr. Speaker, I urge my colleagues to join the leadership and to support this rule in favor of H.R. 8.

Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

Again, I am having trouble following this debate here. The gentlewoman from Tennessee talked about the thousands of people in her district that had to pay the estate tax last year. I am reading from a report here that said there were roughly 440 taxable estates, or about 2 percent of all taxable estates were made up of farm and business assets in the year 2004.

What we are talking about here, and again, if we agree to the Pomeroy substitute, is three-tenths of 1 percent of the wealthiest people in this country. That is what we are talking about. We are not talking about family farms. I mean, that is a red herring. We are not talking about small businesses. We are talking about the Campbell Soup fortunes, the Mars candy fortunes. We are talking about the richest of the rich. That is what this is about.

What is unconscionable is that we are moving forward on this at a time when the majority of this House is proposing budgets that slash Medicaid, that cut community development block grants, that cut veterans health benefits, that cut education, that cut things that people rely on every single day. This is absurd that we are having this debate here today.

Again, I would urge my colleagues to look at the facts. Please do not exaggerate the impact of the difference between what the gentleman from North Dakota (Mr. Pomeroy) has suggested and what you are proposing here. What you are doing here is trying to extend this to protect the richest of the rich, and that is just wrong.

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

Mr. HASTINGS of Washington. Mr. Speaker, I yield myself such time as I may consume to remind my colleagues that the rule that we are debating here to talk about the repeal of the death tax makes in order the substance of the subject that the gentleman from Massachusetts talked about, the Pomeroy substitute. We will have a vigorous debate on that. This is a very fair rule so that we can debate the difference between the two, and the body will work its will.

Mr. Speaker, I yield 3 minutes to the gentleman from Indiana (Mr. Pence).

(Mr. PENCE asked and was given permission to revise and extend his remarks.)

Mr. PENCE. Mr. Speaker, I thank the gentleman for yielding me this time, and I rise in strong support of the rule and the Death Tax Repeal Permanency Act of 2005. I do so, Mr. Speaker, really to just speak about small business America and about a small businessman who raised me.

It was 17 years ago today at the too-young age of 58 that my father, Ed Pence, passed away. It happens to be an unfortunate anniversary in my family, but on April 13, 1988, we said goodbye to my father. He was a small business owner that many on the floor of the Congress today would classify as a rich American.

Now, the rich American that I saw was a man who started out in a very small business in Columbus, Indiana, and worked tirelessly to raise his four sons and two daughters and build a business that employed several hundred local people in support of their families. It is really, with the memory of my father in mind, that I rise in vigorous support of the permanent repeal of the death tax. Because while my family was reeling from the grief of the loss of my father to a sudden heart attack 17 years ago today, also we were settling into the reality that much of what he had built, all of which he had already paid taxes on, was now subject to as much as a 47 percent estate tax.

My father's death and the business that he built and the resources that he had husbanded, after paying all of his debts and all of his taxes, should not have been subject to another tax. And we come into this well today on behalf of small business owners and family farmers just like my dad to put to an end permanently this truly immoral death tax in America.

It is the reality out there, not the heated rhetoric of rich versus poor, that explains why 89 percent of small business owners favor permanent repeal. In fact, they know that more than 70 percent of family businesses do not survive to a second generation; 87 percent do not make it to a third generation. Much is made of middle America that I am proud to represent and the fact that Main Streets and courthouse squares are largely boarded up. People want to blame the Internet. They want to blame mass retailers. Well, I put the majority of the blame in practical terms at the doorstep of the death tax. It has waged war on small business and family farmers all across America, and we will begin to reverse that in a permanent way today.

So in the tender memory of my father, of his earnest labors, and with it in my mind the men and women who to this day labor to raise their families and build small businesses and family farms all across America that I extol the authors of this bill. I endorse the rule, and I vigorously support the permanent repeal of the death tax.

Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

I want to make it clear, as there is a lot of misinformation being promoted on the other side here: our side supports relief for family farmers and small businesses. That is not what we are talking about here today. The difference between our approach is the three- tenths of 1 percent richest people in this country, the Paris Hiltons of the world, the executives at Campbell Soup, the heirs of Campbell Soup or Mars candy if you read The Washington Post today. That is what this is about. In a climate where the majority is cutting Medicaid, cutting veterans benefits, cutting programs that help feed the most vulnerable in our country, to go out and protect and to try to extend a special tax cut to those richest people in this country, I think, is unconscionable.

Mr. Speaker, I yield 3 minutes to the gentleman from North Dakota (Mr. Pomeroy).

Mr. POMEROY. Mr. Speaker, I thank my colleague, the gentleman from Massachusetts, for leading the debate on this important rule in this fashion. I will just respond to my friend, the gentleman from Indiana (Mr. Pence), the preceding speaker.

It is important that we talk about real facts today and, honest to goodness, some of the language does not reflect what reality would be relative to the estate tax if you would pass the Pomeroy substitute and set it at $6 million per couple, taking care of, making estate tax completely go away for 99.7 percent of the people in this country. Language like "waging war on small business" and the majority reason for why small family farms do not pass on, 99.7 percent have no, absolutely no estate tax under the proposal that we are advancing. Clearly, that language does not match the facts of the proposal that we have advanced.

We heard about the immorality of taxing for the wealthiest three out of the 1,000 estates in this country. I believe another immorality is on the floor today, and that is the immorality of privatizing Social Security and reducing the benefits of Social Security for our children and grandchildren. An essential part of the Social Security debate is changing the inflation index that would reduce the benefit for our subsequent generations. In my opinion, that is immoral.

What I think we ought to have captured in this debate on estate tax is the trade-off, because they say it is just estate tax; believe me, it is also Social Security. If you take $290 billion out of the budget for the wealthiest three out of 1,000, you impact the ability to fix Social Security for everybody else. And the proposal I would like considered before the House is, let us give immediate and certain estate tax relief, 6 million per couple, and let us capture the amount over that dedicated to Social Security. That would fill 40 percent of the unfunded liabilities.

In context, we are looking at a 75-year solvency figure that the President has found so troublesome he wants to privatize Social Security. Well, by dedicating the sums that we capture with this three-tenths of 1 percent, we could fill 40 percent of the hole on Social Security. We would not have to cut benefits for our children. We would not have to cut benefits for our grandchildren.

So what we have is a very reasonable proposal going forward. Let us make the estate tax go away for 99.7 percent of the estates in this country. Let us not impose new capital gains taxes at the time of estates, and let us dedicate the difference to addressing Social Security. It brings us almost halfway there in terms of keeping all of the guarantees, while meeting the funding challenge over the next 75 years.

That is what is advanced by the minority proposal in this debate, and I hope it will get my colleagues' close consideration.

Mr. HASTINGS of Washington. Mr. Speaker, I am pleased to yield 3 minutes to the gentleman from Texas (Mr. Gohmert).

Mr. GOHMERT. Mr. Speaker, we have heard a lot of rhetoric here today, and some of it a bit disingenuous. I think it is a bit disingenuous to say in a loud tone, demanding an answer to some rhetorical question, and then demand, well, I hear none, when all of us here are observing the rules and not interrupting. It is a bit interesting to hear people talk about red herrings, and I like hearing from people across the aisle that they want to talk about real facts. So let me talk about real facts.

This, my friends, is a music box. It plays Amazing Grace. I would wind it up and play it now if the rules allowed that.

It belonged to my Great Aunt Lillie. She was land rich. Over a hundred years their family accumulated land, farm and ranch. I bought this music box at an IRS auction where the IRS forced the sale of everything she owned. They accumulated about 2,500 acres of farm and ranch land. She died in July of 1986, and shortly thereafter land was dumped on the market. Times were rough, and the value of the land that was around $2,000 an acre when she died went to $600 or $700 an acre.

The IRS was actually very gracious. They gave a couple of extensions or so. They allowed another appraisal, but it was around $2,000 an acre when she died.

The IRS required the sale of every acre of land that they owned. They sold every item out of her home. If anybody in the family wanted anything, we had to show up at the auction and buy it. I bought this keepsake to remember my Great Aunt Lillie, who had been so gracious and kind and a great farm woman and a great gentlewoman.

So if you want to talk about the death tax in real facts, here it is. The death tax provides no grace, amazing or otherwise. It is a socialist notion, and it needs to go away.

Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

Let me again, just for the record, point out that the Pomeroy substitute would provide $3 million in relief for individuals immediately, $3.5 million by 2009, and $7 million per couple. And, again, what we are talking about here is not what the gentleman just spoke of. What we are talking about here is the richest of the rich in this country.

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

Mr. HASTINGS of Washington. Mr. Speaker, I yield 1 3/4 minutes to the gentleman from Texas (Mr. Smith).

Mr. SMITH of Texas. Mr. Speaker, I thank my friend from Washington for yielding this time.

Mr. Speaker, in the last 2 years, the economy has created over 3 million new jobs. The unemployment rate is down. Our Nation's total output, or Gross Domestic Product, is up. Home ownership is at a record high, and personal income has increased.

Our economy is strong. To ensure that we continue to enjoy prosperity, Congress should support a pro-economic growth agenda that creates jobs and helps small businesses grow. This includes reducing taxes.

Our families and our country are better off when they keep more of what they earn. One way to enable them to do that is to pass H.R. 8, which permanently repeals the punitive death tax.

This tax often prevents parents from passing along their life's work and savings to their children. Family farms, ranches and small businesses are forced to be sold to satisfy the death tax rates which can reach 55 percent.

No one should be taxed throughout their lifetime and then have their property retaxed at the time of their death. It is the wrong tax at the wrong time on the wrong people.

Mr. McGOVERN. Mr. Speaker, I yield 3 minutes to the gentleman from Virginia (Mr. Moran).

Mr. MORAN of Virginia. Mr. Speaker, I think this piece of legislation that the majority is clearly going to be able to pass today is one of the most outrageous tax cuts that we have brought to the House floor. The Democrats are going to offer an alternative, and I appreciate the fact that it was allowed by the Rules Committee, but this alternative would exempt 99.7 percent of American families from having to pay inheritance taxes. So all we are really talking about is three-tenths of 1 percent, a relative handful, the people who clearly can most afford to pay taxes.

This excessive, unnecessary cut will pass despite the fact that, within the last few legislative sessions, this Congress has voted to take 300,000 families off food stamps, to take 300,000 children off daycare, to run the risk, by taking $20 billion out of Medicaid, that as many as 7 million very poor elderly people dependent on government help in nursing homes will not get that assistance.

Where are our priorities? Where is our source of fairness?

You know, I think that we would all agree that we believe in equal opportunity. But in this country, unfortunately, when you see the effect of these tax cuts, that equal opportunity is really dependent upon the accident of birth. Millions of people in our country are suffering for the accident of birth, without health insurance, without any real prospect of getting decent schooling. And yet where are we putting our tax cuts? What excuse are we using for burdening the next generation with hundreds of billions of dollars of debt?

We are taking hundreds of billions of dollars, borrowing it from the Social Security trust funds, just to give more help to the very children who, because of the accident of birth, have the very best education that this country can allow, have all the contacts imaginable, are virtually guaranteed economic success unless they choose to turn their backs on it.

What we have done is to turn our backs on the vast majority of the American people, and to close our consciences to our children's generation, who are getting swamped with debt. This bill is going to cost $290 billion added on to a public debt that our children will never be able to recover from. And it is not necessary.

I ask you to consider the fact that it takes away the stepped-up basis at the point of inheritance, insuring that there will be more small businesses, more family farms that are going to get hurt -- over 70 thousand -- by this provision, by this legislation than are going to be helped, because they are going to have to pay capital gains at the point when they actually inherit calculated by going back to the original cost to the deceased. So it just does not make any sense, other than to people gripped by this ideological fervor to cut taxes irregardless of the rationale or the consequence. It is terrible legislation. It ought to be defeated.

Mr. HASTINGS of Washington. Mr. Speaker, I yield 1 3/4 minutes to the gentleman from Georgia (Mr. Gingrey).

Mr. GINGREY. Mr. Speaker, I rise today as a proud cosponsor of H.R. 8, the Death Tax Repeal Permanency Act of 2005.

First, I would like to take this opportunity to thank the gentleman from Missouri (Mr. Hulshof) for his leadership on the bill.

Mr. Speaker, I do not believe that there has ever been a more reprehensible tax on the face of the earth than the death tax. The death tax represents not only a tax on the deceased but also on their families. Husbands, wives and children and other relatives bear the burden of this tax while they are still struggling to cope with the loss of their loved one.

Mr. Speaker, it is intolerable and absolutely unacceptable for the Federal Government to exact a tax on death and on the surviving families, causing them to lose their homes, their business, their farms and the lives they have struggled to build.

After all, they have created and established these businesses with after-tax dollars. Taxes have already been paid, and every bit of profit that they might make in a year is taxed as well.

Currently, the repeal of the death tax is set to expire in 2010; and, Mr. Speaker, I cannot understand how anyone would allow the Federal Government to hand a grieving family in 2011 a bill for the death of their loved one. Death's inevitability should not be a taxable event.

Mr. Speaker, let us get the Federal Government off the backs of grieving families and pass this rule and this bill for the sake of fairness and decency.

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

Mr. HASTINGS of Washington. Mr. Speaker, I am pleased to yield 2 minutes to the gentleman from Texas (Mr. Hensarling).

Mr. HENSARLING. Mr. Speaker, I rise today as a cosponsor of H.R. 8 and in support of this rule. I believe, as most Americans do, that it is unacceptable for a grieving family who has recently lost a loved one to get a visit from the undertaker and the IRS on the very same day. It is unconscionable, and it ought to be illegal.

The death tax is really a tax on the American dream. Americans work hard all their lives building up farms and ranches and small businesses, hoping that maybe one day they can pass this along to their families. But after years of payroll taxes and income taxes and sales taxes and property taxes, many businesses and farms just do not make it. And those that do, the government can step in and take over half of what they worked their entire life to build.

Now, Mr. Speaker, I grew up working on a farm, and I represent a large portion of rural East Texas. East Texas is a great place to live, but sometimes it can be a challenging place to make a good living.

Recently, I spoke to a rancher in my district who has worked hard nearly 30 years building up a cattle ranch operation. His greatest dream is one day to leave that ranch to his family. But with sadness in his voice he told me, you know what, Congressman? By the time the government takes its share, there is just not enough to go around.

It is not fair to take that family's ranch. It is not fair that Americans are being taxed twice on the same income. And it is not fair that the Federal Government can step in and automatically inherit 55 percent of the family farm, a family business or a family nest egg.

Mr. Speaker, let us vote for this rule. Let us support H.R. 8. Let us kill the death tax and breathe new life into the American dream.

Mr. McGOVERN. Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, what the majority is doing today is wrong. We need to help family farmers and small businesses. We all agree on that, and the substitute that the gentleman from North Dakota (Mr. Pomeroy) puts forth does that, with very generous exemptions.

But what the majority is suggesting is that somehow we need to do something to help the three-tenths of 1 percent of the richest people in this country at a time when they present budgets that cut Medicaid, that cut veterans benefits, that cut educational programs, that cut programs for the poor.

I mean, what are you doing? How can you come here with a straight face and say that we need to help the three-tenths of 1 percent richest people in this country, when so many people who are struggling in the middle class, so many struggling to get in the middle class, are having such a difficult time?

This is wrong what you are doing.

Mr. Speaker, at the end of this debate, I will call for a vote on the previous question; and if the previous question is defeated I will offer an amendment to the rule.

My amendment would take the cost difference between the Republicans' estate tax cut bill, which cost $290 billion, and the Pomeroy estate tax cut bill, which costs $72 billion, and shift that difference to the Social Security trust fund. We are talking about $218 billion that could go right into the Social Security trust fund.

The Republican leadership and President Bush claim that there is a Social Security crisis. If they truly believe that there is a crisis, they should step up to the plate and support this effort to shore up the Social Security trust fund now.

The Pomeroy substitute will exempt 99.7 percent of all estates. 99.7 percent. With this amendment we can restore $218 billion back to the Social Security trust fund and help save Social Security for future generations.

Mr. Speaker, there are a lot of people on the other side of the aisle who go back home and do town hall meetings and tell their constituents that they are for protecting Social Security. Well, this is a vote to show that you want to protect Social Security.

Mr. Speaker, I ask unanimous consent to insert the text of the amendment immediately prior to the vote on the previous question.

The SPEAKER pro tempore (Mr. LaHood). Is there objection to the request of the gentleman from Massachusetts?

There was no objection.

Mr. McGOVERN. Again, Mr. Speaker, I would urge that the people join with us on this vote.

Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

Mr. HASTINGS of Washington. Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, this is not the first time that this body has addressed the issue of repealing or making permanent the death tax. In the 106th Congress, on a bipartisan basis, with 279 votes in favor, this body voted in favor of permanently eliminating the death tax. And the other body, also on a bipartisan basis, they, too, voted to permanently eliminate the death tax, but President Clinton vetoed that bill.

In the 107th Congress, again on a bipartisan basis, the House voted to eliminate the death tax permanently. Unfortunately, in the reconciliation of trying to put the differences between the two Houses together, we put the date of the 2011 when that would expire.

In the last Congress, once again the House addressed this issue and voted to permanently eliminate this death tax.

The bill that we will address when we pass this rule is exactly the same as the bill that we passed on a bipartisan basis in the last Congress.

Mr. Speaker, I urge my colleagues to vote for the rule and the underlying bill.

The material previously referred to by Mr. McGovern is as follows:

Amendment to H. Res. 202 offered by Rep. McGovern

At the end of the resolution, add the following:

SEC. 2. Notwithstanding any other provision of this resolution, the amendment made in order under the first section of this resolution shall be modified by adding at the end the following new section:

SECTION __. TRANSFERS TO SOCIAL SECURITY.

(a) Findings. -- Congress hereby finds that --

(1) permanent repeal of the estate tax will cost $290 billion over the 10-year budget window,

(2) this $290 billion understates the long-term cost of repeal - - in the last year of the budget window repeal of the estate tax will cost $70 billion,

(3) in the next decade, the cost of repealing the estate tax together with the increased interest cost to the United States would be substantially above $1 trillion,

(4) the enormous cost of repealing the estate tax would only benefit the wealthiest 0.3 percent of all families in the United States,

(5) permanent repeal of the estate tax would result in a substantial reduction in income tax receipts, and could result in lower receipts in the Social Security Trust Funds because of that tax avoidance,

(6) the provisions of this Act would prevent the reduction in Social Security receipts that could result from permanent repeal and it would preserve funds necessary to meet commitments made to the Social Security system or other programs,

(7) the provisions of this Act provide immediate and substantial estate tax relief, exempting 99.7 percent of all estates from the estate tax,

(8) the United States is faced with many other fiscal challenges, including the requirement to meet the commitments made through the Social Security system, and

(9) the amounts saved by enacting this Act as compared to permanent repeal --

(A) in the long run on an annual basis would equal the current costs of the operations in Iraq,

(B) could be used for improvements in veterans benefits, and

(C) would close half of the shortfall faced by the Social Security system.

(b) Transfers to Social Security. -- Section 201 of the Social Security Act (42 U.S.C. 401) is amended by adding at the end the following new subsection:

"(o) For purposes of ensuring that amounts are available to meet the commitments of the Social Security system, the Secretary of the Treasury shall, from time to time, transfer from the general fund in the Treasury to the Federal Old- Age and Survivors Insurance Trust Fund, the savings from the enactment of the Certain and Immediate Estate Tax Relief Act of 2005 as compared to the permanent repeal of the estate tax by the bill H.R. 8 (as introduced in the 109th Congress) as follows:

"(1) For fiscal years 2010-2015, the transfers in each year shall total for each fiscal year specified in the following table, the amount specified in connection with such fiscal year, as follows:

                                    Amount

Mr. HASTINGS of Washington. Mr. Speaker, I yield back the balance of my time, and I move the previous question on the resolution.

The SPEAKER pro tempore (Mr. LaHood). The question is on ordering the previous question.

The question was taken; and the Speaker pro tempore announced that the ayes appeared to have it.

Mr. McGOVERN. Mr. Speaker, on that I demand the yeas and nays.

The yeas and nays were ordered.

The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further proceedings on this question will be postponed.

The Clerk read the title of the bill.

The SPEAKER pro tempore. Pursuant to House Resolution 202, the bill is considered read.

The text of H.R. 8 is as follows:

H.R. 8

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the "Death Tax Repeal Permanency Act of 2005".

SEC. 2. ESTATE TAX REPEAL MADE PERMANENT.

Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to title V of such Act.

The SPEAKER pro tempore. After 1 hour of debate on the bill, it shall be in order to consider the amendment in the nature of a substitute printed in House Report 109-35, if offered by the gentleman from North Dakota (Mr. Pomeroy) or his designee, which shall be considered read, shall be debatable for 1 hour, equally divided and controlled by the proponent and an opponent.

The gentleman from Missouri (Mr. Hulshof) and the gentleman from California (Mr. Stark) each will control 30 minutes of debate on the bill.

The Chair recognizes the gentleman from Missouri (Mr. Hulshof).

GENERAL LEAVE

Mr. HULSHOF. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 8.

The SPEAKER pro tempore. Is there objection to the request of the gentleman from Missouri?

There was no objection.

Mr. HULSHOF. Mr. Speaker, I yield myself 5 minutes.

Mr. Speaker, I appreciate the fact that we are here today poised to pass H.R. 8, the Death Tax Repeal Permanency Act of 2005.

On behalf of the lead Democratic sponsor, my colleague, the gentleman from Alabama (Mr. Cramer), as well as the over 200 bipartisan Members who have co-sponsored this bill, I am pleased that we are poised to pass in this body this commonsense legislation.

I would like to talk about a couple of constituents, particularly a constituent named Howard Effert who is a resident of Columbia, Missouri, who in 1965 began a lumber yard business there in Columbia. He contributed $100, which was a very modest contribution, as he had three young children to provide for with a modest wage.

He had the idea and a desire for a new venture even though many within the community felt this venture would be unsuccessful, but yet his partners helped him provide the financial assistance and of course some valuable mentoring to help him open the doors to this lumber business.

Fast forward now 40 years. His two sons, Brad and Greg, are running the day-to-day operations of the business. Of course, they want this family business that has been in their family since its modest beginnings in 1965 to be able to be passed on pursuant to the American Dream, that is, to create a legacy, to help your children be better off than you were.

Yet the Effert family today, Mr. Speaker, has to write a check for $1,000 a week, $52,036 to be precise, to purchase a term life insurance policy, the proceeds of which will be to pay the Federal Government on that inevitable day that Howard Effert passes from this world to the next.

In 2001 we passed historic legislation that let all income tax payers keep a little bit more of what they earned, and this historic legislation included a repeal of the Federal death tax which was a top tax priority for a lot of small business and family farm groups. Thus under current law, the death tax is gradually phased out between now and 2010. This is accomplished by increasing the exemption from the tax. Currently it is $1.5 million shielded from this very confiscatory tax, and at the same time we chip away at that top rate, which was as high as 55 percent, and in fact, in a few isolated instances as high as 60 percent tax. We now chip that away, and it is currently 47 percent.

Unfortunately, as we know, the death tax does not stay dead and buried. As things now stand, it will rise from the grave in 2011, and it will revert to its form prior to 2001. Now, this quirk in the law can be directly attributed to the Senate's Byrd Rule, which applies to the consideration of reconciliation bills.

As a matter of basic fairness, we must permanently repeal the death tax. The death of a family member quite simply should not be a taxable event. And if it was good policy when we enacted it in 2001, it remains a good idea today.

Let me touch briefly on some policy rationales for finishing this unfinished work. The death tax is fundamentally unfair. By its very structure, the tax punishes thrift, savings, and hard work. Conversely, the tax forces taxpayers to engage in a host of economically inefficient activities to avoid the very punitive nature of the tax. Not only does this have a very real effect on taxpayers and their behavior but a negative impact on the economy.

With a tax like the death tax, a family business or farm has no choice but to divert these precious resources, as in the case of the Effert family, to plan financially for the financial impact for the tax: money that could be used to expand the business, to purchase a forklift, to bring another person on the payroll, whatever is in the best interest of that business. Instead, this money is diverted in anticipation of this very punitive tax.

Now, supporters of retaining the death tax will claim that perhaps redistribution of income promotes economic fairness and social responsibility. We will get to have that debate. I respectfully disagree. Instead of rewarding savings and investment, this tax actually rewards those who spend lavishly and leave no ongoing business interest or assets to the next generation.

I am mindful of the bumper sticker that I saw recently traveling Missouri's highways on a big recreational vehicle that says "I am spending my children's inheritance."

If you wanted to give some good estate tax advice to someone that has put together some assets to pass along, it would be simply to consume it. Yet as we talk about some sort of tax reform and perhaps a consumption tax, this tax actually focuses on non- consumption and on thrift and savings.

For that and for a variety of reasons, we will have the opportunity, I hope, in a good debate, in a civil discourse. I think we should permanently repeal the death tax. We should enact H.R. 8.

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

Mr. STARK. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I guess it becomes my job to point out that the Republicans are at it again. Another huge tax cut or break for the less than 1 percent of the richest Americans while they turn their back and cut Medicaid, refuse to recognize that Social Security is not in crisis but needs some adjustment, cut Head Start, cut programs for housing, cut programs for the environment, fail to provide the promised benefits to our 140,000 servicemen in Iraq, turn their back on all that is American to give a few dollars to the very richest of Americans.

Now, not all Republicans are that way. I find that many of the Republicans who have actually worked for a living at some point in their lives, and not just either inherited money or been at the trough of the government, actually oppose this bill. Warren Buffett, the Gates family, people who have done quite well think that as I do it is a stupid bill and will do nothing for our free enterprise system. It will stifle creativity and leave us with a system where merit and ability mean nothing and heredity means everything.

$300 billion over the next 10 years and perhaps another $700 billion over the decade following that are going to be frittered away to a very small number of Americans. With that we could end this talk about privatizing Social Security that President Bush is leading, and we could start shoring up the trust fund. We could get rid of the doughnut hole in the poorly constructed Medicare drug benefit. We could fulfill the promise that the President and the Republicans have ignored for funding No Child Left Behind. We could eliminate the proposed cuts to Medicaid which will hurt the poorest children in this country. And while we may help a few very rich children with an inheritance, we will cut hundreds of thousands of children's Medicaid benefits. That could be prevented.

We could cover a large portion of the 45 million people who are without health insurance, I might add 8 million more than when President Bush took office. But Republicans obviously do not care about Social Security or Medicare or the uninsured or education or the children. They only care about tax cuts for the very richest among us.

Now, if you eliminate this, you are only going to help probably less than a couple thousand people a year, and they will arguably have by 2009 estates of over $7 million. Until now there has not been a family farmer or a small business who has been unable to pass the business on to the next generation.

I might add to my friend from Missouri of his people in the lumber business, if their children cannot get the first $7 million handed to them and then get a 50 percent down payment on the balance of the business and be given 10 years at less than 6 percent to pay off the balance of that, they are probably too dumb and would lose the business in no time at all anyway.

So what the current law allows is so generous, and there have been absolutely no instances, not one, of a family farmer or family business being lost, decimated or put on the auction block because of the estate tax.

In fact, 99.7 percent of all estates would be exempt from the estate tax if we just extend the tax as it applies in 2009. They cannot show that it harms people. They can only show that gives billions, $300 to almost $1 trillion over 20 years, to the very smallest, most select group of rich people in this country.

It is indeed a follow on of the Republican mantra, give money to the rich, give it to them in huge amounts and cut back on education, cut back on health care, do not help the environment, cut back on support for our troops and cut back on improving America's infrastructure, all in the name of helping the few rich who may be contributors to the Republican party.

I urge that my colleagues vote "no" on the final bill. I urge that my colleagues vote for the gentleman from North Dakota's (Mr. Pomeroy) who will offer a responsible substitute, which will at least keep the $300 billion from being squandered, and it will prevent this bill, which does nothing to help hardworking Americans or small businesses, and I hope we can bring some sanity back to the financial code and to the economic future of this country by not passing this bill.

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

Mr. HULSHOF. Mr. Speaker, a lot of individuals have worked on H.R. 8, and I yield 2 minutes to the gentleman from California (Mr. Herger), one of those individuals.

Mr. HERGER. Mr. Speaker, I thank the gentleman very much for the time.

Mr. Speaker, I rise in strong support of legislation to bury the destructive death tax once and for all; and I might mention that my personal experiences, even with my own family and others, has been just the opposite of the gentleman who just spoke before.

Nearly everywhere I go throughout my largely rural, agricultural district in northern California, I hear from businessmen and businesswomen and many farmers and ranchers who have had to liquidate and sell a family business or farm just to pay the Federal estate tax. This is simply wrong.

Four years ago, I joined with President Bush and a majority of Representatives and Senators in an effort to enact into law historic tax relief legislation, including repeal of the death tax. Unfortunately, due to outdated Senate budget rules, the 2001 tax law will sunset on December 31, 2010. This has created an incredibly unfair and arbitrary situation.

Consider that the heirs of those who pass away in 2010 will face no death tax whatsoever, while those whose families are unfortunate enough to pass away in 2011 or thereafter will face tax rates of up to 55 percent on their assets, forcing many of them to have to sell. Certainly no one can reasonably argue that this is rational tax policy.

Furthermore, the death tax extracts a high cost from American taxpayers. Studies have found that family businesses spend up to $125,000 on attorneys, accountants and financial experts to assist in estate planning. These dollars could otherwise be used to modernize equipment, expand their business or farms and create new jobs.

Mr. Speaker, the death tax is, without question, one of the most destructive, counterproductive and unfair provisions of our Tax Code. Let us bury the death tax once and for all. Vote "aye" on this legislation.

Mr. STARK. Mr. Speaker, I yield 3 minutes to the gentleman from Michigan (Mr. Levin).

(Mr. LEVIN asked and was given permission to revise and extend his remarks.)

Mr. LEVIN. Mr. Speaker, in a few words, this is fiscal madness. It is a death wish on the part of some of my colleagues about fiscal responsibility. What my colleagues are burying is fiscal responsibility.

The national debt is now $4.6 trillion, $6.3 if we add in Social Security funds. As mentioned, this bill would add $290 billion in debt, and who would benefit? The very, very wealthy.

One-third of the estate tax is paid by the wealthiest one of one thousand Americans. I think that is one-tenth of 1 percent. Not farmers or small business people. That is the lamest argument brought to this floor in recent memory.

The Pomeroy amendment would totally take care of this, and what my majority colleagues' bill does, and it is interesting, they do not come here and say so, they would increase the taxes for thousands and thousands of Americans. These citizens would have to pay capital gains tax when they do not now do so. Why do my colleagues not come here and say this is a tax increase for thousands of Americans? They do not say that.

What this is also, everybody should understand, is a further raid on Social Security funds. My colleagues have come here, some of them on the majority side, talking about Social Security and how we need to address the shortfall. For some of these same colleagues, private accounts do not even touch that, and then they come here and increase the shortfall.

This is true fiscal madness. My colleagues will indulge in it again I guess, and I hope, once again, the Senate will come to our rescue.

Mr. HULSHOF. Mr. Speaker, I yield myself 30 seconds.

I am sure the gentleman from Michigan misspoke, and I am certain it was inadvertent. The bill, H.R. 8, actually does allow for a step up in basis of $3 million for a surviving spouse and another $1.3 million for surviving heirs.

If the intent of the legislation, which it is, is to help family businesses be passed from one generation to the next and the surviving heirs choose not to farm or continue the family business, then they are the ones making the taxable decision to dispose of assets that would be subject to a 15 percent capital gains rate but certainly not the 45 percent estate tax.

Mr. Speaker, I yield 1 minute to the gentleman from Florida (Mr. Shaw).

Mr. SHAW. Mr. Speaker, I thank the gentleman for yielding me this time.

Listening to the debate that we have listened to from the other side, the sole argument seems to be that it only applies to a small amount of our population, the wealthiest among us. We know that, but I have yet to hear anybody to justify, to give us a good reason to say this is a good and fair tax and here is why.

It seems to be that the argument is being centered around the punitive basis. Let us go after the rich guys. Let us go after them and do something.

I am in favor of the Hulshof bill to repeal the death tax simply because it is the right thing to do. The death tax is wrong. To go in and tax almost half of someone's estate because they have accumulated a lot and to make death an incident of taxation is wrong. It is a wrong tax, and I cannot imagine anybody getting up and justifying it, other than the fact it is a revenue stream to the Federal Government, but it is the wrong one.

Mr. STARK. Mr. Speaker, I yield myself enough time to remind the historians here that it was the Republicans in the 1800s who established the original inheritance tax to prevent a nobility class from forming, an idle nobility class, in this country.

Mr. Speaker, I am happy to yield 4 minutes to the gentleman from Washington (Mr. McDermott).

(Mr. McDERMOTT asked and was given permission to revise and extend his remarks.)

Mr. McDERMOTT. Mr. Speaker, my colleague from Florida, I wish he would stay, because we are here today because the Republican majority would like to repeal the estate tax, but they have forgotten history.

I am sure my colleague was not here, but I would like to remind him that it was a Republican, President Roosevelt, Teddy Roosevelt, who strongly supported an estate tax in the first place. Here is what he said. There is no argument for this.

"The man of great wealth," Teddy said, "owes a particular obligation to the State because he derives special advantages from the mere existence of government." Wow, nicely said, and a Republican, too.

That proves two things, that Republicans can sometimes speak eloquently, and sometimes they can even do something that is right.

Though Republicans want to undo all the good for the sake of greed, please, America, do not be phonied up by this rhetoric that we hear on this bill. They will pitch some gibberish about how they are helping Americans. That is nonsense.

We just came from the Committee on Ways and Means. The reason this place was in recess is because we were over there giving out $8 billion to oil companies. Those poor people, whose profits have quadrupled in the last 2 years, that is what we did a little while ago. Now we come over here, and we are going to give more money away. Does that seem like it benefits real people? This is not about real people. This is about very, very, very rich people, and that is about as plainspoken as Teddy Roosevelt would have said it.

Only 2 percent, at the most, pay any estate tax whatsoever. Three- quarters of the money that comes in comes from people with estates over $2.5 million.

If we repeal this, the rich get richer and America's deficit gets deeper and redder. We create an oligarchic class in this country from whom the money can never be taxed. If they can manipulate it around while they are alive, they can never have to pay a penny.

The real losers in this are not only the American people. It is the American universities, the American churches, all those people who get money contributed by rich people because they do not want to pay the inheritance tax.

Now my colleagues have taken away the encouragement. Why should they give anything away? Oh, well, because they have big hearts. They have big hearts we are told. Really? Then why are we out here with a bill like this which gives them the ability to keep every single dime?

Now if you can give your kid $2 million and say, now, Johnny, here is two million bucks, I think that ought to kind of get you a start in the world. Does that not seem like enough? Well, to the Republicans, there is never enough; take as much as you can from everybody and keep it.

Ronald Reagan put the sign of the cross on it. He said, are you better off today than you were 4 years ago? Never does anyone say on my colleagues' side, are we better off.

We are in debt to the world. We borrowed from the Japanese last year our entire deficit, more than $400 billion, and the President wanders around the country saying, well, that is just paper. Those things in the Social Security trust fund, that is just paper. Do not pay any attention to that.

If the Japanese stop buying dollars and they start buying Euros, and the Chinese start buying Euros and the Middle East buys Euros, where do my colleagues think we are going to borrow money and what kind of interest rate are we going to pay? This is a bad bill, it is bad policy, and it is bad ethics.

Mr. HULSHOF. Mr. Speaker, I am pleased to yield 3 minutes to the gentleman from the great State of Missouri (Mr. Blunt) a colleague of mine, the majority whip.

Mr. BLUNT. Mr. Speaker, I thank my good friend, the gentleman from Missouri (Mr. Hulshof), for yielding to me and for the great work he has done on this issue from the day we came to Congress 8 years ago. I rise in support of the bill that would repeal this tax.

The House and Senate are already both on record for repealing the tax. We just did not repeal it permanently.

By not repealing the tax permanently, we created an incredible situation for those people who would have an estate that was not taxable at all in 2010, but is highly taxable in 2011. The alternatives that the other side of the aisle have discovered during the hard work to achieve the goal of this bill are certainly a long way from where they were a few years ago. In fact, we have all heard about the impact on small businesses and family farms, but it bears repeating as we consider this legislation today.

More than 70 percent of family businesses do not survive the second generation, and 87 percent do not make it to the third generation because of the estate tax. The idea that you give your son $2 million overlooks the vast numbers of family members in this country who actually are working side by side with their son or daughter. It is hard to tell who made the money and who did not, but on the day that the original member of the family passes away, suddenly the side-by-side partner has a big problem.

Family farms and businesses are among the hardest hit. In fact, $2 million is quite a bit below the alternative that the gentleman will vote for and suggests that amount somehow would be okay to give in his vote, but not okay to give in his speech. Add in the value of farm equipment and business inventory, suddenly there is a lot more money than you thought you could accumulate.

When we started this debate a few years ago, I saw some statistics that the highest percentage of estates paying at that time were estates that were only slightly above the estate tax amount, but I am sure none of the principals involved had any idea that they had accumulated over their lifetime an estate that would be taxed as a taxable estate.

On Friday of this week, I am going to visit with Mark and Kim Larson who own a family farm right outside of Joplin in my district. Mark tells me he and his family spend a lot of money, money which would otherwise go into continuing to grow their family business, simply trying to comply with a Tax Code that says if somebody dies in 2010, your family deals with one set of circumstances; but if they die the next year, you are impacted by the return of the death tax.

Medium-to-large farms like the Larsons' produce more than 80 percent of agricultural products in America. Let us put some certainty in the future for those kinds of families. Let us do the right thing and abolish this tax that penalizes savings and hard work.

Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from Maryland (Mr. Cardin).

Mr. CARDIN. Mr. Speaker, I thank the gentleman for yielding me this time.

Mr. Speaker, I hope we will reject this bill. Let me give two reasons why: first, the cost. We talk about being fiscally responsible, we talk about trying to balance the Federal budget and say we have a problem with Social Security as far as long-term solvency of 75 years; but let me point out that the revenue loss of this bill equals the 75-year amount to provide long-term solvency for Social Security.

What we do here is make choices. If we have a choice to provide for the long-term strength of Social Security or the passage of this bill, my vote is for the long-term solvency of Social Security.

The second issue I would like to point out is the predictability of the current estate tax situation. It is not very predictable, and the passage of this bill will do nothing to assure people when they do their estate plans that they can rely upon the schedule Congress has passed.

We have a chance with the Pomeroy substitute to bring certainty to estate taxes with a reasonable exemption of $3.5 million, $7 million per couple, and reducing permanently the tax by 10 percent. That is what people want when they do their estate planning. They want predictability.

So if Members are fiscal conservatives and are concerned about the cost of this bill on our children and seniors and if Members want predictability in the estate tax, this legislation does not give it to us. This legislation should be rejected, and we should pass a bill that provides certainty with the estate tax. We will have that opportunity with the fiscally responsible substitute so we can deal with the budget problems of this country.

We are borrowing way too much money for our children and grandchildren. They deserve better than that. They deserve a Congress that will be fiscally responsible, and the passage of this bill just does not do it. I urge my colleagues to reject this legislation.

Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, among the many groups that support H.R. 8, including the National Federation of Independent Business, which is the voice of small business, there are many minority owners of small businesses that also support complete repeal.

Mr. Speaker, I yield 2 minutes to the gentleman from Georgia (Mr. Bishop).

Mr. BISHOP of Georgia. Mr. Speaker, I rise today to recognize the hard-working people of America who play by the rules and have paid their fair share. Decent, law-abiding, tax- paying Americans are the backbone of this country, and they are the salt of the Earth. They are the farmers of southwest Georgia and the family business owners who provide the jobs that keep small rural communities alive and flourishing.

All across this land are Americans who have paid their taxes all their lives, only to face a final taxing event at death. They paid their taxes during their lifetimes and should not be charged again when they die.

The death tax represents all that is unfair and unjust about the tax structure in America because it undermines the life work and the life savings of Americans who want only to pass on to their children and grandchildren the fruits of their labor and the realization of their American Dream.

In my State of Georgia, farmers, many of whom are widow women, are faced with losing their family farms because of this death tax. Employees of family businesses, many of whom are minorities, are at risk of losing their jobs because their employers are forced to pay the unfair and exorbitant death taxes levied on them. Funeral homes, weekly newspaper publishers, radio station owners, local dry cleaners, all are affected all across the demographic spectrum.

Mr. Speaker, although reasonable minds may differ on this issue, I believe that the death tax is politically misguided, morally unjustifiable, and downright un-American. Let us vote today to finally eliminate the death tax and return to the American people and their progeny the hard-earned fruits of their labor.

Mr. STARK. Mr. Speaker, I yield 3 minutes to the gentleman from Massachusetts (Mr. Neal).

(Mr. NEAL of Massachusetts asked and was given permission to revise and extend his remarks.)

Mr. NEAL of Massachusetts. Mr. Speaker, I thank the gentleman from California (Mr. Stark) for yielding me this time.

Mr. Speaker, the gentleman from Florida said I want Members to give me a good reason why we should not repeal the estate tax. Let me give Members two good reasons: Afghanistan and Iraq.

The idea that we would be borrowing the money to pay for Afghanistan and Iraq when by just leaving this tax in place we could pay for those incursions and maybe get the Humvees to those men and women who are defending us every single day, or maybe get bulletproof vests to them on time, borrowing the money.

The slogan of the moderate Republican Party is this: we are rich, and we are not going to take it any more. It is day after day in this institution, borrow money, run up the debt, run up the deficits and then with a straight face say, we are going to repeal a tax that affects 1 percent of the American people, just 1 percent of the American people.

They talk about industriousness and thrift and the work ethic. We see what happens to this money when it gets to the fourth and fifth generation of the same family: thrift is gone, the work ethic is gone. They quarrel about who is going to have enough money so they can enjoy the lavish ways of American life.

When I hear people say, as they have said recently in this debate, well it is going to take care of the family farmer, they cannot find a farmer that is not taken care of in the legislation that is about to be proposed here. This legislation that they are proposing today cuts against the grain of what Thomas Payne reminded us in "Common Sense." He was concerned about hereditary power, the idea that the same people would control the wealth of America with the same families that would get to go to the same schools so the same families would have the same doctors and lawyers and accountants so the rest of America might not have a chance to participate. Whatever happened to the Republican Party in America.

Teddy Roosevelt said this was about thrift and hard work and honesty; they were blessed to be born in this country. That is what patriotism is. When we look at who enjoys the fruits of this money, the smallest number of American people, again the top 1 percent in America. Inherited wealth, that is not what America is based upon. We do not live in an aristocracy. Look what happened to Europe and the way they lag behind as they do. There is no sense in the House of Lords that you can advance yourself. Here in this House, the people's House, every walk of life is represented. Why do we just not establish a House of Lords after we get rid of the estate tax so then when we get rid of hereditary power, we will simply have the permanent state of aristocracy and privilege for the few.

Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I would remind the gentleman from Massachusetts (Mr. Neal) as he mentions Iraq and Afghanistan that the budgetary impact of H.R. 8 is really not felt until the year 2011 and beyond.

Mr. Speaker, I yield 2 minutes to the gentlewoman from Florida (Ms. Harris).

(Ms. HARRIS asked and was given permission to revise and extend her remarks.)

Ms. HARRIS. Mr. Speaker, I rise in support of H.R. 8, which will finally free America's hard-working farmers and small business owners from the specter of the death tax.

Benjamin Franklin said: "In this world nothing is certain but death and taxes," but I doubt even the inventive Mr. Franklin imagined the taxation of death itself.

Americans get taxed when they earn money. They get taxed again when they spend what is left, and government pursues them beyond the grave, devastating their relatives who must sell the family farm or liquidate the family business just to pay the taxes.

The impact of the death tax extends far beyond the pain it inflicts upon grieving families. The death tax distorts economic decisions on a massive scale. It punishes thrift. It reduces savings and investment, and it diverts capital away from job creation to tax avoidance.

The National Federation of Independent Businesses has estimated that the death tax will compel one-third of small business owners today to sell some or all of their business. The Center For the Study of Taxation found that 70 percent of all family businesses cannot survive the second generation and 87 percent do not make the third.

All of this wasted money, energy and over 100,000 jobs lost per year and for what, a tax that the Joint Economic Committee says costs just as much to collect as it generates in revenue.

Mr. Speaker, the opponents of H.R. 8 cannot provide any justification for the continued existence of this useless relic. It hurts the people it is intended to help, and it reduces stock in our economy by $497 billion a year.

I urge my colleagues to drive the final nail in this coffin so 6 years from now Americans will not wake up to find that, like a vampire, this unfair tax has arisen from the dead to once again suck the blood from a lifetime of hard work and sacrifice.

Mr. STARK. Mr. Speaker, I yield 4 minutes to the gentleman from Tennessee (Mr. Tanner).

(Mr. TANNER asked and was given permission to revise and extend his remarks.)

Mr. TANNER. Mr. Speaker, in 1997, Jennifer Dunn, a Republican from Washington, and I started this debate on the estate tax. At that time the country was in much different shape financially than it is today.

At that time, we raised the issue for estate tax relief because I thought then it was punitive. It had nothing to do with the theory that the gentleman from Massachusetts (Mr. Neal) spoke so eloquently about, and that is to keep 3 percent or 1 percent of the people from owning 99 percent of our country.

We did not want to be like England where whoever got control of the land and money, and 1,450 still had it 26 generations later and people who were hardworking could not break through that ceiling because of the nobility that was enshrined in their tax code. That is why we have an estate tax.

But we raised that issue, and I voted for the bill that is being proposed today, but I can no longer vote for it. Let me tell you why. It is because, as I look in the faces of these young people, you are looking at a House, a Senate and an administration that has embarked since 2001 on the most radical, irresponsible financial riverboat gamble that this country has ever seen. There has been no political American leadership that has ever done what this group of people who currently hold the power of government here in Washington have done to this country.

Since April of 2001, in your name and mine, this government has borrowed $1.2 trillion in hard money. What that means to us is that we have transferred, at only 4 percent interest, $50 billion a year from programs like Social Security, like health care, like armor for our troops, from veterans, to health care, to education, all the things that will give the citizens of this country a chance, an opportunity to be whatever it is their God-given talents give them, we have transferred $50 billion a year from that to interest. And you know what is worse? Eighty-four percent of this $1.2 trillion has been borrowed from overseas. We are now sending more money overseas. Eighty-four percent of this interest check is going overseas.

Let me tell you something scary. A former official of the People's Bank of China, the country's central bank and now an economist in Hong Kong, was recently quoted as saying that the U.S. dollar is now at the mercy of Asian governments. Do you know what we are doing? We are mortgaging our country to foreign interests who do not see the world as we see it. It has got to stop, and it has got to stop sometime, and I for one am saying I want to stop it now.

In your name, we are borrowing at the rate of $13,300 a second. This is staggering, mind numbing. $48 million an hour. Since this debate started, in our names we have borrowed $48 million and given the bill to those little children sitting up there. $1 billion a day.

Do you know how much $1 billion is? If you take thousand-dollar bills and stack them up like that, to get to a million dollars it is a foot high; to get to a billion dollars, it is as high as the Empire State Building; and to get to a trillion dollars, which is what has been borrowed in the last 46 months in your name, it is a thousand times as high as the Empire State Building, one thousand dollar bills like this.

We are facing a financial Armageddon. What we have done has created a financial vulnerability vis-a-vis the rest of world that is every bit as big a security interest as anything else we are going to face in the future. I just hope that someday soon that some sense will come to this place about how we are handling or mishandling your money.

Mr. HULSHOF. Mr. Speaker, I certainly respect my friend from Tennessee and I trust he will bring that passion to the floor when we have our discussion on our spending bills.

Mr. Speaker, I am pleased to yield 2 minutes to the gentleman from Texas (Mr. McCaul), a newly elected Member.

Mr. McCAUL of Texas. Mr. Speaker, today I rise in support of permanently repealing the death tax. I would like to thank the gentleman from Missouri for his leadership on this issue and his good timing, for in 2 days the tax man cometh. As I look at these young people in the gallery today, I say to them, this bill is about you. It is about the youth in this country. For too long, the Federal Government has been taxing working Americans, not once, not twice, but three times, on their hard-earned money. When they earn it, the government takes an income tax. When they spend it, the government takes a sales tax. And finally, even when they die, the government takes a tax from the grave.

In addition to being bad policy, the death tax is morally wrong. It confiscates private property and is an unbearable cost to small businesses, ranchers and farmers, which is precisely why the Farm Bureau supports this bill.

I could tell you many stories about families that were forced to borrow large sums of money or sell off or parcel out their farms or businesses, dividing their families. I could tell you about the Berdolls from Austin, Texas, in my district who, after paying off a 30-year mortgage, spent 20 more years paying this unfair tax burden. They literally paid for their farm twice.

The names may change, but the story is the same. It is time we removed this financial burden from the backs of those pursuing the American dream. We must guarantee that people do not have to suffer the same hardships as the Berdolls.

I urge my colleagues to support this important measure.

Mr. STARK. Mr. Speaker, I yield 4 minutes to the gentleman from Texas (Mr. Doggett).

Mr. DOGGETT. Mr. Speaker, I rise in opposition to this latest Republican assault on Social Security and on fiscal sanity. At a time of apparently unending war and the largest budget deficits in American history, our Republican colleagues are intent on solving a crisis that does not exist.

As the President wastes millions of our taxpayer dollars crisscrossing this country to declare that there is no Social Security trust fund and questioning the full faith and credit of the Federal Government, his Republican allies here seem intent on actually making his dire and inaccurate statements a self-fulfilling prophecy. Today, what they propose is to borrow from the Social Security trust fund and to borrow from the Medicare trust fund in order to give more tax breaks to the richest one-tenth of 1 percent of the people in this country.

That is borrowing from Social Security for purposes that have nothing to do with the Social Security system because they think some rich folks in this country do not have wallets that are fat enough. It is taking from the hard-working employees and employers who are paying their Social Security money and transferring that wealth over to the richest one-tenth of 1 percent.

They call it the death tax? I think that is a good name. If they keep pursuing bills like this, it will be the death of Social Security and Medicare, as sure as I am standing here. Like most Democrats, I have voted not once but a number of times to repeal the estate tax for most Americans and to see that it is done right away, now, not postponing it for years as the Republicans propose to do.

There is another Democratic substitute coming out today that is going to exempt 99.7 percent of all estates from this tax, and only cover the richest .3 percent of the wealthiest estates in this country. That means you are not going to have a small business in East Austin or West McAllen or a family farm in Karnes County that is covered if they are even covered now, which the vast majority of them are not.

Why do they keep talking about family farms since it is irrelevant to this debate? They keep talking about the guy in the pickup who is working extra hours to try to make ends meet. They keep talking about the little family business that with good reason wants to be able to pass that enterprise on to the next generation of that hard-working family.

The reason they talk about those folks is that Steve Forbes's family is not quite as sympathetic. The family of Enrons Ken Lay, not quite as sympathetic. They cannot defend transferring money from the Social Security and Medicare trust fund to Ken Lay's family, to Steve Forbes's family, to Ross Perot's family, because it is totally indefensible. Their goal is to ensure that the richest of the rich are rewarded, as if they have not rewarded them enough for the last few years that they have controlled this Congress.

Social Security is not in crisis today, nor is Medicare, but if you keep passing bills that drain $750 billion from the Treasury at the very time more people are retiring, you will have a crisis. It was back almost a century ago when a Republican, a fellow named Teddy Roosevelt, said that "inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our government." It is still inconsistent. Would that we had even one Teddy Roosevelt Republican today to put a stop to this nonsense.

Mr. HULSHOF. Mr. Speaker, I yield myself such time as he may consume to the gentleman from Alabama (Mr. Cramer), my cosponsor of H.R. 8.

Mr. CRAMER. I thank my friend from Missouri for yielding me this time.

Mr. Speaker, I think a number of important points have been made today, but I rise today in strong support of this bill and in opposition to the estate tax. Some of the previous speakers on this side of the aisle have made reference to the fact that a number of us on the Democratic side have worked over this issue since actually the early nineties. I know the gentleman's predecessor Jennifer Dunn and I and a number of people from this side of the aisle had worked hard together to look for a commonsense way that we could end this burden which, in my opinion, is an extreme burden on the small business community and on the farm community.

I do not know about the other speakers, but when I go back to my district and I am mixing and mingling with the folks where they eat breakfast or where they have dinner or where they gather, it is my farm families that bring this issue up. In north Alabama where I come from, we have some of the most productive farm families of any district in the country. For generations, they have struggled and used tax lawyers and tax strategies to try to find a way to effectively pass that farm on to the next generation that we want to continue engaging in that farm business. But they are overwhelmed by this issue.

In 2001, we did a good step, not a great step but a good step. We passed some temporary relief. But the reality is that if we do not permanently repeal the death tax, you have almost got to time your death for the benefit of your family. That is outrageous. So let us make sure that we bury this issue once and for all.

According to the Congressional Research Service, estates that included farm or business assets represented 42.5 percent of the 30,000 plus taxable estate tax returns filed in 2003. It is not fair to say that this is just a rich person's issue, that the estate tax only affects the wealthy, because, according to that same Congressional Research Service, estates over $5 million accounted for only 6.8 percent of taxable estates.

In this day and time, assets are accumulated in a different way than they were 20 years ago, 25 years ago, 30 years ago or even more than that. For the benefit of those farmers, for those small manufacturers, for the local car dealers, the independent car dealers, the realtors, the funeral directors, the grocers, the family restaurant owners, the florists, the convenience store owners and many others, let us end this unfair tax burden.

I urge the Members to support this.

Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from Massachusetts (Mr. Tierney).

(Mr. TIERNEY asked and was given permission to revise and extend his remarks.)

Mr. TIERNEY. Mr. Speaker, I rise to register my opposition to the total repeal of the estate tax. If we want to talk about values, as so many people did in the last couple of months leading up to this, let us talk about the value of supporting one's family and supporting one's community. Let us talk about the values of responsibility and fairness. They dictate that everybody pay his or her or its corporate fair share.

Millionaires and multinational corporations benefit the most from our taxes. We talk about what our taxes go for. There are dues that belong to society. Eighty percent of court cases are commercial in nature. Businesses, mostly large ones. Air traffic controllers, paid for by our taxes, they mostly support business travel back and forth. Our Coast Guard, our Navy protecting our shipping lanes, bridges and highways, making products safe to go back and forth as well as people. The Securities and Exchange Commission is our tax money trying to make large corporations behave and treat each other well instead of cheating each other. Sometimes it actually works.

The fact of the matter is that this bill absolves the top three- tenths of 1 percent from their responsibility to pay their fair share. And I say the top three-tenths of 1 percent because the Democratic alternative would exclude the first $3.5 million, or $7 million for a couple. So much for the argument of small farms and small businesses. They would not pay a dime on the first $7 million and only pay a portion of anything above that.

The fact of the matter is that most of the money that is going to be taxed on that top three-tenths of 1 percent was not earned money. That is money they got from tax-free investments. It is money they got by appreciation, just the value of that property increasing over time. They did not earn it. To compensate for what these members of our society will not be paying as their fair share, small businesses, the people that go out and create payrolls, will have to pay more. The families that go out and work every day for a living, they will have to pay more than their fair share.

And all the while this is going on, we are not even paying America's bills. This tax is going to be $290 billion off the top at a time when our debt is larger than it has ever been. We are running annual deficits that are at historic proportions. No family and no small business would ever operate this way.

Mr. Speaker, let me just close by saying they are robbing us of opportunity and prosperity and community by attacking our education and our health, our clean water, and our clean air. All of this because they want to give America's princes and princesses a little break at the top three- tenths of 1 percent. Let us let everybody pay their fair share.

Mr. HULSHOF. Mr. Speaker, I yield 2 minutes to the gentleman from Missouri (Mr. Akin).

(Mr. AKIN asked and was given permission to revise and extend his remarks.)

Mr. AKIN. Mr. Speaker, about 50 percent of Americans or so are employed in small businesses, and obviously if something is employing almost half of Americans that are working, that should be a priority. And one can imagine my surprise the other day to find out about a guy who drove up to a bank in an old Ford, about a 15-year-old Ford pickup truck, with rust holes in the floor. He went into that bank and he took out a loan for $2 million. And the head of the bank was inquiring of the guy that is the accountant that handles our books that I have to do as a Congressman. He said, Why in the world did this guy have to take a $2 million loan out? And it particularly seemed out of place with this guy with his old rusty holes in his pickup truck.

He said, His father just died and they have to pay the estate tax on the farm.

I had heard stories like that before, but there it was right in front of me.

So what this bill is seeking to do is to try to make it possible that we do not destroy farms and small businesses that employ close to half the people that have jobs in our country; and that seems to be only reasonable. And yet I am hearing the Democrats saying over here that they are all upset because we have already taxed a dollar the first time the guy earns it; then we are going to tax him again on sales tax and other things he buys, and now it is not fair to tax a dollar the third time it comes around.

It just seems to me we do not want to destroy the businesses and farms. What we want to do is make those jobs available, and we want to get rid of this death tax. Just dying should not be a reason for taxes.

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

Mr. HULSHOF. Mr. Speaker, I yield 2 minutes to the gentleman from Ohio (Mr. Turner).

Mr. TURNER. Mr. Speaker, I am cosponsor of the Death Tax Repeal Permanency Act of 2005 because this tax is an unfair burden on American families. The death tax puts many small businesses, those run predominantly by families, at a great financial disadvantage.

According to the Small Business Administration, in 2001 in the Dayton, Ohio, metro area, which is in my district, nearly 62,000 people worked for businesses that employ less than 20 people.

Three of my constituents, Jenell Ross; her mother, Norma; and her brother Rob, run a small business, Ross Motor Cars in Centerville, Ohio. When Jenell's father unexpectedly passed away in 1997, the Ross family received a tax bill for nearly half the value of their family business. I would like to tell their story in Jenell Ross's words. She says, "30 years ago my father took the chance of a lifetime. Determined to achieve the American Dream, he invested everything he had into Ross Motor Cars. Like a lot of people, my father thought he would live forever.

"He didn't.

"When he died unexpectedly in 1997, the overwhelming responsibility of keeping the family business afloat fell squarely" to us. We could never have prepared ourselves for the shock of receiving a tax bill nearly half the value of the dealership, where nearly 90 percent" of the assets were "tied up in nonliquid assets such as inventory, equipment, buildings, and land.

"Does the death tax impact family-run small businesses? Yes. My family is still experiencing its devastating effects firsthand," nearly 8 years later.

It is time to repeal the death tax once and for all, and I urge my fellow constituents and Members to support the bill.

Mr. HULSHOF. Mr. Speaker, I yield 2 minutes to the gentleman from Virginia (Mr. Goode).

Mr. GOODE. Mr. Speaker, I want to commend the gentleman from Missouri (Mr. Hulshof), the gentleman from Alabama (Mr. Cramer), the gentleman from California (Mr. Cox), and all those who have worked so hard to get rid of this onerous burden on a number of American citizens. The Federal death tax is a job killer.

I represent the Fifth District of Virginia. We have a number of counties and jurisdictions that focus on manufacturing. Many of our smaller manufacturers have had to sell out to larger manufacturers; and as a result, we have double-digit unemployment in a number of jurisdictions that used to be the home to small manufacturers. A factor in their selling out was the Federal death tax because they would not have the cash to pay when death knocked on the door. If we pass this bill, we will help the job situation in those types of jurisdictions in the United States.

I hear the other side say that this is a bonanza and a budget breaker because we will not be getting the revenue from the Federal death tax. Let me tell the Members under the current law the really rich in this country trust and foundation themselves out of the Federal estate tax. I believe that Mr. Gates, the owner of Microsoft, is a proponent of keeping the Federal death tax. He has got a father that is in charge of his foundation. But many small farmers and average business persons are not able to have the cash to set up the trusts and the foundations that will get themselves out of the Federal estate tax. And I predict that if we pass this bill, the incentive to set up those trusts and foundations that avoid taxes will not be there and in the long run the Treasury of the United States will benefit because we will still get the capital gains tax when the assets are sold.

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

Mr. STARK. Mr. Speaker, I yield 1 minute to the gentleman from California (Mr. Sherman).

Mr. SHERMAN. Mr. Speaker, this bill shows the courage to boldly go where none have gone before, to levels of public debt and levels of trade deficits that no nation has ever tried, higher than any have dared.

We have a dollar that is dependent upon our fiscal markets, a trade deficit that grows every year; and the result of this bill and its twin cousins and related Siamese twins, the other parts of the Republican tax and spend or borrow and spend policy, will be a declining dollar and a declining economy or a dollar that crashes and an economy that crashes. And this courage is all summoned up on behalf of the one quarter of 1 percent of American families it is designed to help.

We require the men and women in uniform to risk the ultimate sacrifice; and from our richest families, we say zero sacrifice under the estate tax. Shame.

Mr. STARK. Mr. Speaker, I yield the balance of my time to the gentlewoman from California (Ms. Pelosi).

Ms. PELOSI. Mr. Speaker, I thank the gentleman for his leadership and his recognition on this very important legislation that is before us today. I am very proud of the work of the gentleman from North Dakota (Mr. Pomeroy), our Member of Congress, a very distinguished member of the Committee on Ways and Means, for his initiative and leadership in presenting to the Congress today an alternative that makes sense to the American people, that is fair to America's families.

The gentleman from North Dakota (Mr. Pomeroy) speaks with authority on the issues that impact rural America, small business, and America's families and certainly America's family farms. He has their interests at heart. He knows firsthand what their challenges are. That is what makes his proposal so wise, and we all appreciate his leadership.

Mr. Speaker, in the 20th century, in the early part of the 20th century, our country made a decision to honor our American value of fairness by moving forward toward a progressive system of taxation. But under 10 years of Republican rule, this Congress has consistently passed legislation that has moved away from a progressive Tax Code. Republican tax policies have rewarded wealth over work. In its analysis of the President's budget, the nonpartisan Congressional Budget Office found that the tax rate on wage income is nearly twice the rate of capital income, unearned income. And now today Republicans have come to the floor with an estate tax bill continuing their harmful approach.

The Republican estate tax bill again rewards extreme wealth. The Republican approach would hurt more people than it helps by increasing taxes and administrative burdens on more than 71,000 estates. And it comes at a staggering cost of nearly $1 trillion over 10 years once it takes full effect.

Democrats want to be fair to all Americans, and we support being able to pass a better life on to our children and our grandchildren. But we cannot support putting the luxuries of the super-rich before the needs of America's families. The difference between the Democratic and Republican bills is that Democrats take a more responsible, indeed, a responsible approach that gives immediate tax relief to small businesses and farmers across the country.

The Pomeroy substitute would provide relief to 99.7 percent of estates in America, 99.7 percent; and .3 percent of estates would not be covered under the bill. That is a small percentage, but a huge amount of money being deprived from the National Treasury. The savings achieved by pursuing the more fair and targeted approach put forth by the gentleman from North Dakota (Mr. Pomeroy) would cover about one half of the long-term shortfall facing Social Security.

Think of it: if we pass the gentleman from North Dakota's (Mr. Pomeroy) bill, the savings would cover one half of the shortfall in Social Security down the road. It would strengthen Social Security for generations to come. That is the choice we are facing today. Do we want to put the wealthiest .3 percent of estate holders ahead of millions of American workers who have earned their Social Security benefits with a lifetime of work? Do we want to continue reckless Republican tax policies or return to a fair system of taxation?

This is a remarkable choice before us, and I hope that the American people can avail themselves of the information to understand what is at stake here. Basically, it all comes back to our deficit, to our budget, and whether we have fiscal soundness in our budget or not. What the Republicans are proposing is saying to average working families in America every day they go to work, and every paycheck money is taken from their paycheck for Social Security. What the Republicans are doing today is putting their hand into that pot and saying we are taking that money and we are going to subsidize the super-rich in our country, the largest, wealthiest estates in our country, .3 percent.

Mind you, the gentleman from North Dakota (Mr. Pomeroy) has covered 99.7 percent, which is most, of course, 99.7 percent of the people in America. So anyone listening to this is not, odds are, affected in any positive way by what the Republicans are proposing. In fact, they will be hurt because of what it does to Social Security and what it does in terms of capital gains for over 71,000 families in America.

So I think the choice should be clear, to choose to reward work. We respect wealth. The creation of wealth is important to our economy. But that does not mean we take money from working families to give more money to the wealthiest families in America. And this at the same time as the tax cuts that the administration has proposed to make permanent, that would give people making over $1 million a year over $125,000 in tax cuts.

Who are we here to represent? This is the reverse Robin Hood. We are taking money from the middle class and we are giving it to the super rich, and not only the super rich but the super, super, super rich.

So let us come down and vote for America's workers, let us come down in favor of America's families, and let us recognize that everybody, the wealthiest as well as those not so wealthy, everyone in America benefits when we have fairness in our Tax Code, where we have balance in our budget in terms of our values and in terms of our fiscal responsibility.

I urge our colleagues to support the very responsible Pomeroy resolution and vote no on the irresponsible and reckless Republican proposal.

Mr. HULSHOF. Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, I appreciate in large measure the tone of the debate. What I would say to the gentlewoman who just spoke and to others who raised the red herring of Social Security is to remind folks, first of all, the Federal receipts from the Federal death tax represent less than 1.5 percent of all revenues, first of all; and, secondly, that none of the income tax money generated from the estate tax goes to Social Security for the trust funds, and eliminating the tax in no way will affect or impact current Social Security benefits. Not one bit.

Now, I do want to respond. I heard, I think, the gentleman from Massachusetts earlier say that really there has been no policy justification for keeping this tax, other than we need the money. In fact, I think one gentleman said something, from Massachusetts, about we need to pay our fair share.

Well, let me just ask you to consider your day. When you woke up this morning, if you hit the snooze button on your electric alarm clock, you are paying an electric tax. When you jumped into the shower this morning, you paid a water tax. If you saw the gentleman from North Dakota (Mr. Pomeroy) and I on C-SPAN debating this issue this morning, you are paying a cable TV tax. When you drove to work this morning, you are paying a gasoline tax. If you stopped for a cup of coffee, you paid a sales tax. If you used the telephone at all today, you are paying a telephone tax. And, of course, when you are at work, your wages are subject to a payroll tax that does go into Social Security, payroll taxes that do pay for Medicare, not to mention your income taxes. If you drive home to your home and you are lucky enough and fortunate enough to own a home, you are probably paying a local property tax.

When you kiss your spouse good night, you think that is free. No, leave it to the Federal Government to continue to have this thing called the marriage tax.

And, yes, if you scrape and invest and save and you build a family business, have the audacity to pursue the American dream, the Federal Government is there with its hand out saying give us 45 percent of the value of your family business.

Now I have heard from my colleagues on the other side who say that family farms are not affected. Well, then let me tell you a very quick personal story, a story of a farm family in Missouri, a young married couple who in 1956 left Portageville, Missouri, in the district of the gentlewoman from Missouri (Mrs. Emerson), with $1,000 in their pocket, and that was going to be the stake that they had. It happened that the woman was an expectant mother with her first child and, as it turned out, her only child.

That married couple happened to be my parents, and over the last 2 1/2 years I have had the unfortunate reality that obviously death is inevitable, and I have had the unfortunate experience in our family of having both my father pass away in late 2002 and my mother one year ago.

I do not mind sharing with you, a 514 acre farm, a modest life insurance policy, the house that I grew up in, a combine, three tractors and some irrigation equipment, and that is it. And I am sitting across the mahogany desk from our long-time family accountant with the adding machine with a tape on it, and he is plugging in an arbitrary value for these assets that my parents invested their soul into. And I am breaking out into a cold sweat wondering whether or not this business that they built and wanted to pass on is going to fall above an arbitrary line or below an arbitrary line that we in Congress have set.

Now we did not have to pay the tax, but 14 days ago I had the requirement of filling out the form and paying the $2,000 accountant fee; and, again, I do not quarrel with that. But, Mr. Speaker, the death of a family member should not be a taxable event, period.

Mr. Speaker, I urge my colleagues to vote for H.R. 8.

Mr. HASTERT. Mr. Speaker, we come to the floor today to address an issue of tax fairness. You see, no matter what kind of spin our friends on the other side of the aisle try to use -- the death tax simply isn't fair. It's an unfair burden that the government has placed on families and small business owners. I've called it a cancer -- because it's slowly destroying family farms and businesses across the nation.

Many of our small family businesses are wrapped up in a loved one's estate. And when family members are left with a huge tax bill, it hits them hard. I've heard countless stories from families who have had to sell off a chunk of the family farm just to handle their tax burden. Our friends on the other side of the aisle say that this is too costly and it's bad for the budget. I say it's too costly not to act.

This tax is destroying small businesses. And we all know they're the real job creators in our economy. What kind of nation have we become when a small family farmer can't afford to pass the business on to his children?

Look at the facts.

70 percent of family businesses do not survive the second generation,

87 percent do not make it to the third generation.

Many of these businesses are going belly-up because of the Death Tax.

We all realize that the government must have revenues, and that taxes are a necessary evil. But this tax isn't necessary; it's just evil -- because it takes away the American Dream from too many American families.

It's time we give families a real chance at the American Dream.

We need to tell the IRS to stop lurking around a grieving family's pockets. Death is not a taxable event.

It's time we let the Death Tax die.

Mr. REYNOLDS. Mr. Speaker, the issue before us today is certainly not a new on new one. During the past three Congresses, the House has voted repeatedly in a bipartisan fashion to eliminate the death tax. And today, once again, we have the opportunity to bury the death tax once and for all.

The death tax punishes savings, thrift, and hard work among American families. Small businesses and farmers, in particular, are unfairly penalized for their blood, sweat and tears -- paying taxes on already-taxed assets. Instead of investing money on productive measures such as creating new jobs or purchasing new equipment, businesses and farms are forced to divert their earnings to tax accountants and lawyers just to prepare their estates. All too often, those families are literally forced to sell the family farm or business just to payoff their death taxes.

Equally disturbing is the fact that the death tax actually raises relatively little revenue for the federal government. In fact, some studies have found that it may actually cost the government and taxpayers more in administrative and compliance costs than it raises in revenue.

Mr. Speaker, my rural and suburban district in western New York is home to countless small businesses and family farms. They're owned by hard-working families who pay their taxes, create jobs and contribute not only to the quality of life in their communities, but to this nation's rich heritage.

Is it so much to ask that they be able to pass on the fruits of their labor -- their small business or their family farm -- to their children? Must Uncle Sam continue to play the Grim Reaper? The fact is that they paid their taxes in life -- on every acre sown, on every product sold, and on every dollar earned. They shouldn't be taxed in death, too.

Mr. Speaker, it's time to bury the death tax once and for all. I commend Congressman HULSHOF for introducing this crucial legislation and Chairman THOMAS for his continued leadership on this issue.

Mr. MACK. Mr. Speaker, I rise today to express my strong support of the Death Tax Repeal Permanency Act of 2005. As a cosponsor of this important legislation, I think it is absurd for the federal government to continue punishing the families through double- taxation. Rather than taxing people when they die, we should be encouraging families to save for the future through hard-work and sound financial planning.

The Death Tax is one of the most burdensome and counterproductive of all taxes. Small businesses create two-thirds of all jobs in the United States, and 40 percent of GDP in the United States is generated by small businesses. When the owner of a small family business passes away, this tax causes families and small business owners severe financial hardship, often to the point that the business must be liquidated.

It is offensive that the government taxes someone all their life then taxes them one last time when they die. Families should never have to visit the IRS and the funeral home on the same day. A permanent repeal is good for small businesses, family farmers, and the next generation of entrepreneurs.

Mr. Speaker, I urge my colleagues to vote for the repeal of the Death Tax.

Mr. BOUSTANY. Mr. Speaker, I strongly support H.R. 8, the Death Tax Repeal Permanency Act of 2005, and encourage my colleagues to pass this important legislation. This vital legislation will permanently repeal the estate tax, a tax that is unjust, inefficient, and harmful to small businesses, the backbone of our economy. Repeal of the Death Tax will create a system that is more equitable and more productive for our economy.

The Death Tax is a burden on our economy that costs the country between 170,000 and 250,000 jobs every year. In Louisiana, our family-owned farms have been faced with decreasing profitability and in many instances the Death Tax is an additional burden that they cannot carry; this tax is a leading cause of the dissolution for thousands of family-run businesses across the country. It also diverts resources from investment in capital, slowing research and development at a time when our country is facing growing competition around the world. We cannot afford to continue discouraging productivity and innovation.

Furthermore, the death tax is inefficient. Since the 1930's, revenue from the tax has fallen steadily as a percentage of total federal revenue. Compliance costs each year can be almost as high as the tax itself, around $22 billion in 2003; thus every dollar raised by the death tax is $2 that could have been invested in capital and new jobs.

The economic damage ofthe Death Tax is reason enough for its repeal, but it is also fundamentally unjust. The rate of taxation is as high as 47%, and this is in addition to the taxes that were already paid on the assets subject to this tax. The Death Tax also discourages hard work and savings and instead encourages large-scale consumption. At a time when we should and need to be encouraging individuals to save for their future, we cannot continue to send this mixed message.

By repealing the Death Tax we will create a tax policy that is more efficient, more equitable and more productive for our economy. I urge Congress to act today to permanently repeal the Death Tax and ensure that our future generations will be able to carry on the heritage of our forefathers.

Mr. CANTOR. Mr. Speaker, I rise today in support of the permanent repeal of the death tax. To put it simply, the death tax is just wrong. It is wrong to encourage people to work hard all their life, only to have the government reap the benefits when they die. It is wrong to levy hefty taxes against families of thriving small business owners just because their parents were successful. It is wrong to stifle economic growth by forcing small businesses to close because of an overbearing tax bill delivered by a greedy Uncle Sam.

Mr. Speaker, our Republican majority stands firmly against double taxation on working families. Taxes have already been paid on the assets subject to additional taxation under the death tax. I am confident that Americans are far better equipped than politicians to decide how to best spend their hard earned money. It is time for Congress to let important fiscal decisions to be made where they should be, at the kitchen table, not at the tax table.

Let's repeal this unjust tax and empower American working families who know best how to make the right decisions for themselves.

Mr. SHAYS. Mr. Speaker, I rise in support of H.R. 8, the Death Tax Repeal Permanency Act, although the base bill does not address the estate tax in the manner I believe to be most prudent.

In 2003, Congressman Doug Bereuter and I introduced the Estate Tax Relief Act, which would increase the estate tax exclusion to $10 million and lower the top rate to the level as the top income tax rate (currently 35 percent). I think this is a much better solution than total repeal.

Because estate and gift taxes have had devastating effects on small businesses -- many of which are forced to liquidate assets simply to pay taxes ranging from 35 to 55 percent of the value of the business -- I think we need to provide significant relief in this area. My preference, however, is to reduce estate taxes without entirely eliminating them.

In the last Congress, I voted for today's base bill because if it is not enacted the estate tax, which is being phased-out over a period between 2001 and 2010, will return in 2011 with an exemption of just $675,000 and a top rate of 55 percent.

While my first choice would be to significantly increase the exclusion and lower the top rate, I believe full repeal is preferable to the return of this onerous tax.

Mr. BOEHLERT. Mr. Speaker, I rise in strong support of H.R. 8, legislation that would permanently repeal the Death Tax, a tax that haunts millions of small business owners and farmers nationwide. The last thing the federal government should be doing is taking more money from small business owners and farmers, and curtailing further economic growth. They are the backbone that drives our economy forward. I commend Mr. HULSHOF for his leadership on this issue and praise his vision to continue lowering the federal tax burden.

Throughout my twenty-two years in Congress, I have proudly voted for every major tax cut initiative considered by the House. Cutting taxes is one of my highest priorities. I remain convinced that letting Americans keep more of what they earn will help stimulate the economy and create more jobs. People will not hide this much-needed relief under their mattress or store it in their closet; instead they will purchase necessary goods and services. An increased demand for these goods and services will require more employees; therefore, providing incentives for businesses to hire more workers -- putting unemployed Americans back on the job and providing a framework for long-term economic growth.

The key to growing our economy is simple -- allow Americans to keep more of their own money to spend, save, and invest. My favorite four-letter word -- don't worry, it's a four letter word that can be used in polite company -- is JOBS. Permanently repealing the death tax will create new jobs across the nation.

Cutting taxes is not unprecedented. Since 2001, Congress has repeatedly passed legislation, which I'm proud to say I voted for, to lower the federal tax burden. For example, we voted to extend relief from the marriage penalty tax, a burdensome tax on married couples for doing nothing more than saying "I do." We also voted to extend the Alternative Minimum Tax reforms (AMT), which is the right step toward making sure the AMT applies only to those people it was designed to cover, not working families just trying to make ends meet. We also supported a measure to extend the 10% bracket to lower taxes for hard working, low-income families. Finally, we voted to extend the $1,000 child tax credit.

It only makes sense to take the next step and permanently repeal the Death Tax. I urge my colleagues to join me in supporting H.R. 8, and put an end to this unfair, unjust, and inefficient burden on our economy.

Mr. HONDA. Mr. Speaker, I rise in opposition to H.R. 8, legislation that unwisely imperils our Nation's financial security in order to advance the interests of an elite few.

Since my election to Congress, I have consistently advocated for reasonable estate tax reform. Estate tax reform is extremely important for all the people in the 15th District of California. High real estate values and generous stock option packages have pushed many estates over exemption limits. As a result, too many of my Santa Clara County constituents have been burdened by an estate tax that was originally written to affect only the very wealthiest Americans. The estate tax needs to be modified to protect hardworking Americans and their heirs.

In keeping with this spirit, I intend to support a Democratic alternative to H.R. 8 that will benefit almost all Americans. Offered by Representative EARL POMEROY, the Democratic substitute will increase the estate tax exemption to $3 million for individuals and $6 million for married couples effective January 1, 2006 with a scheduled increase in 2009. Under this plan, 99.7 percent of all estates would have no estate tax liability.

The Republican majority has put forward a more expensive plan to benefit the three-tenths of one percent not covered by the Democratic substitute. Their plan comes at a significant cost. Once fully in effect, H.R. 8 will cost $1 trillion over 10 years. This astronomical price tag will exacerbate record Federal deficits and undermine our Nation's ability to strengthen key Federal priorities, including Social Security, Medicare, education programs and veterans health care.

H.R. 8 may also harm more taxpayers than it would help. Current income tax law provides for a "step-up" in the basis of an inherited asset to its fair market value at the time of decedent's death. When the heir sells the asset, the capital gain for income tax purposes is measured by the difference between the heir's selling price and the stepped- up basis of the asset. H.R. 8 repeals the step-up basis and substitutes carryover basis rules in which the capital gain would be measured by the difference between heir's selling price and the asset's cost at the time when the decedent acquired it. As a result, all estates with gross assets over $1.3 million would face reporting requirements and tax liabilities potentially more burdensome than under current law.

While I am deeply concerned with the problems surrounding the estate tax, and believe that substantial, long-term reform is needed, permanent repeal for all estates is not necessary to resolve these issues. Given our nation's challenges, I cannot support the Republican's fiscally irresponsible approach to this issue. I urge my colleagues to oppose H.R. 8.

Mr. NEUGEBAUER. Mr. Speaker, I rise today as a cosponsor of H.R. 8 to express my strong support for this important legislation to permanently repeal the estate or "Death" tax.

The estate tax is one of the most unpopular, destructive taxes collected by the Federal Government. It forces many small businesses and farms to dissolve, undermines incentives for work, savings, and investment, and leads to unnecessary development of environmentally sensitive land. By permanently repealing the estate tax, we would be eliminating a cruel tax that devalues the hard work and confiscates the savings of some of our most productive citizens.

As we all know, the estate tax is scheduled to be totally repealed on January 1, 2010; unfortunately, this repeal will sunset on December 31, 2010. At that point, unless the Congress acts, the estate tax will revert to the 2001 level. As no one I know can accurately guess which year they might pass on to the hereafter, only one year of complete relief of the estate tax is not only cynical -- it's bad policy. The uncertainty of not knowing whether or not the death tax will really be repealed, makes it difficult for American taxpayers to make plans for their futures, their spouses' futures, and the futures of their children. Additionally, the tax increase that would result if Congress fails to act would be entirely unfair to many of our constituents.

On the one hand, I am pleased that the House is once again taking action today to rid our Tax Code of this punitive measure. But we've done this several times in the past and each time it has gotten bogged down in the other body. Let's hope we don't have to meet again to do what should have been done years ago. Let's do the right thing today. Let's finally and irrevocably repeal the death tax.

Ms. FOXX. Mr. Speaker, today I voice my strong support for the Death Tax Repeal Permanency Act of 2005.

It is imperative we pass this very important legislation. The Death Tax is an unreasonable and unfair burden on thousands of American families, small businesses, and family farms.

The Death Tax is the largest threat to the vitality of family- owned businesses and farms because most of their owners have the entire value of their business or farm in their estate. The Federal Government currently receives nearly half of an estate when the owner passes. As a result, more than two-thirds of family businesses do not survive the second generation and nearly 90 percent do not make it to the third generation. So much for the American dream. Rather than encouraging people to build their own livelihoods, the Death Tax discourages hard work and savings.

According to the Heritage Foundation, the Death Tax costs our country up to 250,000 jobs each year. By permanently abolishing this tax, we could add more than 100,000 jobs per year.

As my colleague, Representative SAM JOHNSON of Texas, said: Americans receive a birth certificate when they are born, a marriage license when they are wed, and a tax bill when they die. This is a disgrace. I encourage my colleagues to vote "yes" for the Death Tax Repeal Permanency Act of 2005.

Mr. JEFFERSON. Mr. Speaker, Benjamin Franklin noted over 200 years ago that "in this world nothing can be said to be certain, except death and taxes." Unfortunately, the convergence of these two inescapable events, in the form of the Federal estate tax, results in a number of destructive outcomes in terms of slower economic growth, reduced social mobility, and wasted productive activity. Moreover, the costs imposed by the estate tax far outweigh any benefits that the tax might produce. For these reasons, among others, I urge my colleagues to join with me in support of permanent repeal of the Federal estate tax.

The estate tax has been enacted four times in our Nation's history -- each time in response to the exigent financial straits deriving from war. In three of those instances (1797-1802,1862-70, and 1898-1902), the estate tax was repealed shortly thereafter. Most recently, the estate tax was reintroduced during World War I (1916) and has existed ever since. What was meant to bring short-term budgetary relief has become a permanent burden on America's farmers, small business owners and families.

Some observers might believe that the estate tax is free from serious controversy. For example, it is often claimed that the tax only falls on the "rich" and thus serves to reduce income inequality. Other supporters of the estate tax point to the $22 billion in tax revenues for 2003, or to the incentive for charitable bequests. Nonetheless, there are many reasons to question the value of taxing the accumulated savings of productive, entrepreneurial citizens. Not the least of these reasons is the widely-held belief that families who work hard and accumulate savings should not be punished for sound budgeting. Additionally, it is unclear whether the estate tax raises any revenue at all, since most if not all of its receipts are offset by losses under the income tax.

The freedom to attain prosperity and accumulate wealth is the basis of the "American dream." We are taught that through hard work we can achieve that dream and, God willing, pass it on to our children. Unfortunately, for many the estate tax turns that dream into a nightmare. The current tax treatment of a person's life accumulations is so onerous that when one dies, the children are often forced to turn over half of their inheritance to the Federal Government. The estate tax, which is imposed at an alarming 45 to 47 percent rate, is higher than in any other industrialized nation in the world except Japan. Thus, many families must watch their loved one's legacy being snatched away by the Federal Government at an agonizing time. This is tragically wrong and nullifies the hard work of those who have passed on.

In the minority community there are numerous examples of the injurious effects of the estate tax. The Chicago Daily Defender -- the oldest African American-owned daily newspaper in the United States -- is a good example of the unique problem presented for minority families. It was forced into bankruptcy due to financial burdens imposed by the estate tax. But, beyond that, the questions were -- was the Chicago Defender family forced to sell, could a minority owner be found to purchase it, or would it become a white- owned asset, reducing the overall wealth of the African American community?

On a smaller scale, another potential victim, a storeowner named Leonard L. Harris who is a first generation owner of Chatham Food Center on the South Side of Chicago is frightened that all the work and value he has put into his business will be for naught because it will be stripped from his two sons. According to Mr. Harris, "My focus has been putting my earnings back into growing the business. For this reason, cash resources to pay federal estate taxes, based on the way valuation is made, would force my family to sell the store in order to pay the IRS within 9 months of my death. Our yearly earnings would not cover the payment of such a high tax. I should know. I started my career as a CPA." These two stories are not isolated.

According to the Life Insurance Marketing Research Association, less than half of all family-owned businesses survive the death of a founder and only about 5 percent survive to the third generation.

Another recent study found the following:

Eight out of ten minority business owners questioned believe the Federal estate tax is unfair.

Only one minority business owner in three has been able to take any steps whatsoever to prepare for the ramifications of the estate tax.

One in four believes that his or her heirs will be forced to sell off at least part of their businesses to pay the estate tax liability.

Fully half the respondents already know a minority-owned business that has had trouble paying the tax, including some that have been forced to liquidate.

Those few minority-owned businesses that have been able to take steps to reduce their estate tax liability complain that it has detracted from their ability to meet business objectives by channeling time, energy and resources away from productive endeavors.

Many of my colleagues who are proponents of the estate tax contend that the tax adds progressivity to the Tax Code and provides needed tax revenue. They argue that the estate tax falls on wealthier and higher income individuals and increases the total tax paid by this segment of the population relative to their income. This helps offset the regressivity of payroll taxes and excise taxes, which fall more heavily on low-income groups relative to their income. They also argue that increasing the unified credit to $4, $5, $6 or $7 million would remove small family- owned businesses and farms from the harsh impact of the estate tax.

I share my colleagues concerns about protecting the tax base and ensuring that our Tax Code remains progressive. However, I find these arguments in support of the estate tax unconvincing in the face of substantial evidence otherwise.

First, there is no clear evidence that the estate tax is progressive or that larger estates are paying a greater portion of the tax. Wealthier members of our society are able to reduce and or eliminate the impact of the estate tax by stuffing money away here and there at the suggestion of high-priced attorneys and accountants. Similarly, tax planning techniques such as gift tax exclusions or valuation discounts reduce the size of the gross estate but do not appear in the IRS data causing effective tax rates to be overstated for many larger estates. The Institute for Policy Innovation recently revealed evidence of this fact in a study showing that the effective tax rate on the most valuable estates was actually lower than that on medium-sized estates.

Second, the insignificant amount of money the estate tax raises for the Federal Government cannot justify the harmful effects it has on business owners who spend more to avoid the tax than the federal tax revenue raised. According to the President's fiscal year 2005 Budget, the estate and gift tax brought in $22.8 billion in revenues to the Federal Government in 2003. This represents less than 1.1 percent of the total revenues out of a more than $2 trillion Federal budget and less than the amount of money spent complying with, or trying to circumvent, the death tax.

In 2003, Congress' Joint Economic Committee reported that the death tax brought in $22 billion in annual revenue, but cost the private sector another $22 billion in compliance costs. Therefore, the total impact on the economy was a staggering $44 billion. And, when one calculates the amount of money spent on complying with the tax, the number of lost jobs resulting from businesses being sold, or the resources directed away from business expansion and into estate planning, it is clear why this punitive tax must be eliminated.

It is also important to note that many economists believe that overall tax revenues would increase if the estate tax were repealed. According to a study of estate tax repeal proposals, which was prepared by Dr. Allen Sinai for American Council for Capital Formation and Center for Policy Research, Federal tax receipts would rise in response to a stronger economy, feeding back 20 cents of every dollar of estate tax reduction. In fact, over the years 2001 to 2008, estate tax repeal would increase real Gross Domestic Product by $90 billion to $150 billion, and U.S. employment by 80,000 to 165,000.

Finally, it is not clear that increasing the unified credit to $6 or $7 million would remove small family-owned businesses and farms from the threat of the estate tax. The Small Business Administration's definition of a small business is based on industry size standards. For example, a construction company or grocery store with less than $27.5 million in annual receipts is considered a small business. Thus, families who build their businesses past the exemption amount will continue to face estate taxes that range from the aforementioned, alarming rate of 45 to 47 percent. The exemption threshold would not help these small businesses. More significantly, without significant reform or, more appropriately, repeal, these same small businesses face the prospect of estate tax rates as high as 60 percent beginning in 2011.

Permanent repeal of the estate tax will provide American families with fairness in our tax system and remove the perverse incentive that makes it is cheaper for an individual to sell the business prior to death and pay the individual capital gains rate than pass it on to heirs. But for minorities, it provides much more. It will allow wealth created in one generation to be passed on to the next thereby establishing sustainable minority communities through better jobs and education, better healthcare, and safer communities.

Mr. Speaker, I urge my colleagues to support H.R. 8 to permanently repeal the Federal estate tax and to restore fairness to our Nation's Tax Code.

Mr. ETHERIDGE. Mr. Speaker, I rise today to voice my opposition to H.R. 8. As a part-time farmer and former small business owner, I have long supported responsible legislation to provide estate tax relief for family-owned businesses. Unfortunately, this bill will not accomplish that goal.

Throughout my service in the U.S. House, I have been a strong supporter of estate tax relief for family farmers and small business owners. The first bill I introduced as a Member of Congress was a bill to raise the inheritance tax exemption from $600,000 to $1.5 million and for the first time indexed it to inflation. But H.R. 8 is an extremely irresponsible bill that will add billions to our national debt for our children and grandchildren to pay and will harm more taxpayers than it helps.

The unfortunate reality of our situation is that we have witnessed the most dramatic fiscal reversal in our Nation's history. Our budget surpluses have been frittered away, and our Nation is now drowning in red ink with ever- growing budget deficits and increasing Federal debt. The primary culprits for our increasing debt are the risky, irresponsible tax schemes the Republican Congress has enacted the last 4 years.

Instead of adopting a bill that would increase the burden on our children and grandchildren, we need a common- sense solution that would exempt the vast majority of Americans from an estate tax while maintaining a degree of fiscal integrity.

That is why I am supporting the Democratic substitute authored by Representative EARL POMEROY. This substitute provides an estate tax exemption of $3 million for individuals and $6 million for couples beginning in 2006, and the exemption would increase to $3.5 million and $7 million respectively in 2009. Furthermore, this plan would instantly repeal the estate tax on a vast majority of farms and small businesses, as well as shield heirs from dramatic capital gains tax liabilities that are part of the Republican plan. The U.S. Department of Agriculture has estimated that more farm estates would have an increased tax liability from the Republican plan's carry-over basis rules than would ever benefit from the repeal of the estate tax.

I support estate tax relief, but not at the expense of our senior citizens who benefit from Social Security and Medicare. The only way to pay for the Republican bill is by taking more money out of the Social Security an Medicare Trust Funds and replacing it with IOUs. H.R. 8 will compound the fiscal mistakes Congress has made the last 2 years with its policy of tax cuts at any cost, including our children's education and our Nation's future.

The people of North Carolina's Second District elected me to help chart a common-sense, fiscally prudent course for the country. I pledged to represent my constituents by paying down the national debt; saving Social Security and Medicare funds for older Americans, and investing our country's resources into education, health care and other initiatives that enable people to improve their lives. H.R. 8 is inconsistent with these goals; therefore, I oppose the bill.

Mr. WELDON of Florida. Mr. Speaker, I want to express my strong support for H.R. 8, the Death Tax Repeal Permanency Act of 2005. I have supported this measure in the past and have introduced similar legislation to make the death tax repeal permanent. I believe it is important that we accomplish the goal of passing this in the House and the Senate and seeing this bill enacted into law.

The Death Tax needs to die. Along with the marriage penalty, the death tax is perhaps the most disgraceful tax levied by the Federal Government and it should be repealed immediately. The death tax is double taxation. Small business owners and family farmers pay taxes throughout their lifetime, then at the time of death they are assessed another tax on the value of the property on which they have already paid taxes. This is unfair, unjust and an inefficient burden on our economy.

I have spoken in the past about a constituent of mine, Danny Sexton of Kissimmee, FL and owner of Kissimmee Florist. He, like millions of other Americans, has experienced the sad realities of the Death Tax. He joined me several years ago in Washington to highlight the adverse impact the Death Tax had on his family business.

Mr. Sexton, who comes from a family of florists, inherited his uncle's flower shop and was faced with paying almost $160,000 in estate taxes. This forced him to have to liquidate all of the assets, layoff workers and take out a loan just to pay the death tax. He also had to establish a line of credit just to keep the operation running.

Danny Sexton is the reason we need to appeal the death tax. The death tax isn't a tax on just the rich, it is a tax that hurts family owned businesses -- family owned businesses that are the backbone of this great Nation. It also caused several average workers to lose their jobs.

Family owned businesses provide and create millions of jobs for American workers. The people who worked in Mr. Sexton's florist were not rich, but they lost their jobs because of the Death Tax.

In a recent survey conducted by the National Federation of Independent Businesses, 89 percent of small business owners favored permanent repeal of the death tax. Why? Because these small business owners know this tax may mean the death of their business for future generations. According to the Center for the Study of Taxation, more than 70 percent of family businesses do not survive the second generation and 87 percent do not make it to the third generation. Family owned and operated businesses deserve the right to be inherited by the next generation without the blow of the death tax.

In current law, the death tax is phased-out, completely repealed in 2010. But that is not good enough because in 2011, the tax reemerges in full force. That means taxpayers must plan for three different scenarios when passing along their family business -- pre- 2010 when the exemption levels are gradually increasing and the top rate gradually decreasing; 2010 when the tax is completely repealed; or 2011 when the tax reemerges. This is complicated, confusing and hard to plan for -- unless a small business owner knows for certain when his or her death will occur. When we make this tax repeal permanent, taxpayers will have the ability to make long-term financial plans with certainty and will have the opportunity to pass on their hard earned family businesses and farms to future generations. It will also ensure that those who work for these small businesses are able to keep their jobs.

I urge my colleagues to vote for H.R. 8, the Death Tax Repeal Permanency Act of 2005.

Mr. HOLT. Mr. Speaker, I favor cutting unnecessary, ineffective or unfair taxes, but in balanced and fiscally responsible ways. I have been one of the few Democrats in Congress who has been willing to cross party lines to vote for tax cuts. I have voted to eliminate the estate tax in the past. I have been willing to vote for eliminating the marriage penalty, to vote for cutting taxes for small businesses, to vote for cutting taxes to help people pay for education and retirement, and to vote for cutting taxes for senior citizens and to give business tax credit for research work.

With a war in Iraq and looming postwar costs, increased expenses for domestic security and a ballooning budget deficit, Congress must exercise restraint on both revenues and spending to prevent fiscal policy from spiraling out of control. The consensus in favor of balancing the budget over the long term must be re-established.

There are a wide range of pressing national challenges that need action, from rapidly increasing health care costs, to our increasing dependence on ever-more-expensive foreign oil, to a broken and increasingly corrupt political system, and yet today we are passing a bill that will only help a few of the already wealthy.

Today we are debating total elimination of the federal inheritance tax. Permanently repealing the estate tax would further balloon the Federal budget deficit by an estimated $290 billion through 2015; and by $745 billion through 2021. Add in the interest costs of borrowing the funds to pay for this measure, and the true 10-year cost is nearly $1.3 trillion.

I support the substitute offered by Representative EARL POMEROY which will protect families and small business from the estate tax. The substitute increases the estate tax credit to $3 million, $6 million for married couples, beginning in 2006. Under the substitute, the credit would be increased to $3.5 million, $7 million for couples, in 2009. The Pomeroy substitute would eliminate tax reporting compliance burdens and carryover taxes for over 71,000 estates each year which effects small business and families. According to Representative Pomeroy's calculation, his package would exempt 99.68 percent of all estates from the estate tax, yet it would save the Treasury $217 billion compared to total repeal. It is worth noting that the saving of $217 billion is equal to 40 percent of the shortfall of Social Security of the next 75 years.

Mr. Speaker, today the national debt is the largest in history. Americans now collectively owe about $7.8 trillion. Here we have another tax cut that is not being paid for, even as the Bush administration and the leadership of this Congress spend more than the American government has ever spent on homeland security and on all the other expenses of running the Government -- especially the huge costs of the war in, and occupation of, Iraq. Government borrowing of this scale places the burden of repaying our debts on our children.

Governing is about making choices. Our constituents all across America sent us to Congress to make the tough decisions. They did not send us here so we can pass those decisions on to our children, and they certainly did not send us here to pass the cost of our decisions on to our children.

I want the people of this country to realize that, right now, we owe collectively, about $4.5 trillion to foreign countries. Japan holds $702 billion of our debt; China, including Hong Kong, $246 billion; the U.K. $163 billion; Taiwan, $59 billion; Germany, $57 billion; OPEC countries, $65 billion; Switzerland, $50 billion; Korea, $68 billion; Mexico, $41 billion; Luxembourg, $29 billion; Canada, $43 billion -- the list goes on and on.

More tax cuts of this size will not only jeopardize critical public services now, but they will also hurt Americans well into the future. Massive deficits now create large debt and will create high interest payments that will crowd out spending on public investments for future generations. Moreover, these deep deficits threaten to increase interest rates in the future -- making it harder for Americans to buy homes and afford higher education and making it harder for businesses to raise capital.

I urge my colleagues to join me in supporting permanent reform of the estate tax, but not irresponsibly repealing it. Government should follow the principle of helping the present generation and helping future generation as well -- not leaving future generations to pay our bill.

The SPEAKER pro tempore (Mr. LaHood). The Clerk will designate the amendment in the nature of a substitute.

The text of the amendment in the nature of a substitute is as follows:

Amendment in the Nature of a Substitute offered by Mr. Pomeroy:

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE.

This Act may be cited as the "Certain and Immediate Estate Tax Relief Act of 2005".

SEC. 2. RETENTION OF ESTATE TAX; REPEAL OF CARRYOVER BASIS.

(a) In General. -- Subtitles A and E of title V of the Economic Growth and Tax Relief Reconciliation Act of 2001, and the amendments made by such subtitles, are hereby repealed; and the Internal Revenue Code of 1986 shall be applied as if such subtitles, and amendments, had never been enacted.

(b) Sunset Not To Apply. -- Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to title V of such Act.

(c) Conforming Amendments. -- Subsections (d) and (e) of section 511 of the Economic Growth and Tax Relief Reconciliation Act of 2001, and the amendments made by such subsections, are hereby repealed; and the Internal Revenue Code of 1986 shall be applied as if such subsections, and amendments, had never been enacted.

SEC. 3. MODIFICATIONS TO ESTATE TAX.

(a) Immediate Increase in Exclusion Equivalent of Unified Credit. -- Subsection (c) of section 2010 of the Internal Revenue Code of 1986 (relating to applicable credit amount) is amended by striking all that follows "the applicable exclusion amount" and inserting ". For purposes of the preceding sentence, the applicable exclusion amount is $3,500,000 ($3,000,000 in the case of estates of decedents dying before 2009).".

(b) Freeze Maximum Estate Tax Rate at 47 Percent; Restoration of Phaseout of Graduated Rates and Unified Credit. --

(1) Paragraph (1) of section 2001(c) of such Code is amended by striking the last 2 items in the table and inserting the following new item:

"Over $2,000,000 $780,800, plus 47 percent of the excess of such amount over $2,000,000.".

(2) Paragraph (2) of section 2001(c) of such Code is amended to read as follows:

"(2) PHASEOUT OF GRADUATED RATES AND UNIFIED CREDIT. -- The tentative tax determined under paragraph (1) shall be increased by an amount equal to 5 percent of so much of the amount (with respect to which the tentative tax is to be computed) as exceeds $10,000,000. The amount of the increase under the preceding sentence shall not exceed the sum of the applicable credit amount under section 2010(c) and $159,200.".

(c) Effective Date. -- The amendments made by this section shall apply to estates of decedents dying, and gifts made, after December 31, 2005.

SEC. 4. VALUATION RULES FOR CERTAIN TRANSFERS OF NONBUSINESS ASSETS; LIMITATION ON MINORITY DISCOUNTS.

(a) In General. -- Section 2031 of the Internal Revenue Code of 1986 (relating to definition of gross estate) is amended by redesignating subsection (d) as subsection (f) and by inserting after subsection (c) the following new subsections:

"(d) Valuation Rules for Certain Transfers of Nonbusiness Assets. -- For purposes of this chapter and chapter 12 --

"(1) IN GENERAL. -- In the case of the transfer of any interest in an entity other than an interest which is actively traded (within the meaning of section 1092) --

"(A) the value of any nonbusiness assets held by the entity shall be determined as if the transferor had transferred such assets directly to the transferee (and no valuation discount shall be allowed with respect to such nonbusiness assets), and

"(B) the nonbusiness assets shall not be taken into account in determining the value of the interest in the entity.

"(2) NONBUSINESS ASSETS. -- For purposes of this subsection --

"(A) IN GENERAL. -- The term `nonbusiness asset' means any asset which is not used in the active conduct of 1 or more trades or businesses.

"(B) EXCEPTION FOR CERTAIN PASSIVE ASSETS. -- Except as provided in subparagraph (C), a passive asset shall not be treated for purposes of subparagraph (A) as used in the active conduct of a trade or business unless --

"(i) the asset is property described in paragraph (1) or (4) of section 1221(a) or is a hedge with respect to such property, or

"(ii) the asset is real property used in the active conduct of 1 or more real property trades or businesses (within the meaning of section 469(c)(7)(C)) in which the transferor materially participates and with respect to which the transferor meets the requirements of section 469(c)(7)(B)(ii). For purposes of clause (ii), material participation shall be determined under the rules of section 469(h), except that section 469(h)(3) shall be applied without regard to the limitation to farming activity.

"(C) EXCEPTION FOR WORKING CAPITAL. -- Any asset (including a passive asset) which is held as a part of the reasonably required working capital needs of a trade or business shall be treated as used in the active conduct of a trade or business.

"(3) PASSIVE ASSET. -- For purposes of this subsection, the term `passive asset' means any --

"(A) cash or cash equivalents,

"(B) except to the extent provided by the Secretary, stock in a corporation or any other equity, profits, or capital interest in any entity,

"(C) evidence of indebtedness, option, forward or futures contract, notional principal contract, or derivative,

"(D) asset described in clause (iii), (iv), or (v) of section 351(e)(1)(B),

"(E) annuity,

"(F) real property used in 1 or more real property trades or businesses (as defined in section 469(c)(7)(C)),

"(G) asset (other than a patent, trademark, or copyright) which produces royalty income,

"(H) commodity,

"(I) collectible (within the meaning of section 401(m)), or

"(J) any other asset specified in regulations prescribed by the Secretary.

"(4) LOOK-THRU RULES. --

"(A) IN GENERAL. -- If a nonbusiness asset of an entity consists of a 10-percent interest in any other entity, this subsection shall be applied by disregarding the 10- percent interest and by treating the entity as holding directly its ratable share of the assets of the other entity. This subparagraph shall be applied successively to any 10- percent interest of such other entity in any other entity.

"(B) 10-PERCENT INTEREST. -- The term `10-percent interest' means --

"(i) in the case of an interest in a corporation, ownership of at least 10 percent (by vote or value) of the stock in such corporation,

"(ii) in the case of an interest in a partnership, ownership of at least 10 percent of the capital or profits interest in the partnership, and

"(iii) in any other case, ownership of at least 10 percent of the beneficial interests in the entity.

"(5) COORDINATION WITH SUBSECTION (B). -- Subsection (b) shall apply after the application of this subsection.

"(e) Limitation on Minority Discounts. -- For purposes of this chapter and chapter 12, in the case of the transfer of any interest in an entity other than an interest which is actively traded (within the meaning of section 1092), no discount shall be allowed by reason of the fact that the transferee does not have control of such entity if the transferee and members of the family (as defined in section 2032A(e)(2)) of the transferee have control of such entity.".

(b) Effective Date. -- The amendments made by this section shall apply to transfers after the date of the enactment of this Act. Amend the title so as to read: "A bill to amend the Internal Revenue Code of 1986 to retain the estate tax with an immediate increase in the exemption, to repeal the new carryover basis rules in order to prevent tax increases and the imposition of compliance burdens on many more estates than would benefit from repeal, and for other purposes.".

The SPEAKER pro tempore. Pursuant to H. Res. 202, the gentleman from North Dakota (Mr. Pomeroy) and a Member opposed each will control 30 minutes.

Mr. HULSHOF. Mr. Speaker, I claim the time in opposition.

The SPEAKER pro tempore. The gentleman from Missouri (Mr. Hulshof) will be recognized for 30 minutes in opposition to the amendment in the nature of a substitute.

The Chair recognizes the gentleman from North Dakota (Mr. Pomeroy).

Mr. POMEROY. Mr. Speaker, I am pleased to begin the presentation of the amendment in the nature of a substitute by yielding such time as he may consume to the distinguished gentleman from Maryland (Mr. Hoyer), the minority whip.

Mr. HOYER. Mr. Speaker, I thank the gentleman for yielding me time.

Mr. Speaker, I was very interested in the last presentation. The bottom line was, he did not pay a tax. All that story, all those facts, and he did not pay a tax. He did pay his accountant some money to go through and make sure that he was doing what was right. He did that because the Tax Code is extraordinarily complicated and has been made 25 percent more complicated by the Republican majority over just the last 48 months.

Mr. Speaker, let us be absolutely crystal clear: This Republican proposal is nothing but a tax increase. Hear me, this is a tax increase disguised as a tax cut.

"Who are you, Mr. Hoyer? Lewis Carroll? What is this gibberish that you are talking about?"

It would raise taxes for thousands of families and thousands of family farmers and small businesses. There are no two ways about it.

For years, House Republicans have proclaimed that the elimination of the inheritance tax, a tax, now hear me on this side of the aisle, I know you want to hear this, a tax first proposed by Theodore Roosevelt in 1906. Now for those of you who may not be quite fully cognizant of our history, Theodore Roosevelt, of course, was a Republican President of the United States of America. It was intended to save family farms and small businesses.

But, today, not according to the gentleman from Maryland (Mr. Hoyer), not according to the gentleman from North Dakota (Mr. Pomeroy), not according to all the Democrats in this House or in the Senate, according to the Republican Department of Agriculture, I tell my friend from Missouri, the Republican Department of Agriculture says more farm estates would have increased tax liability from the carryover basis rules in this bill than would benefit from repeal of the inheritance tax. In other words, if we pass this bill, family farmers and small businesses are going to pay more taxes.

Now, I am for the Pomeroy alternative. First of all, we do not have that complicated look-back to find out what the basis was 10, 20, 30, 40, 50 years ago. We do as we do now, what is the basis now when you get it?

But we exempt under the substitute offered by the gentleman from North Dakota (Mr. Pomeroy) $7 million. That means that 99.7 percent of the people in America would never pay an estate tax. I am for that. So this argument, I tell my friend from Missouri, is about the three-tenths of 1 percent of the very largest estates in America. Because if you vote for Pomeroy, 99.7 percent are exempt. So, as we have been doing for the last 4 years, we have been talking about the upper 1 percent. That is who we are talking about.

Now we are pretty well off in Congress. The American people do pretty well by us, very frankly. I am doing well enough. I paid a little bit of Alternative Minimum Tax this year. It shocked me, but my accountant pointed out that I did. So we are doing pretty well.

But there are a whole lot of people that are not doing nearly as well as we are doing, and we are not helping them at all by simply giving away revenue that we could spend on the education of their kids and the defense of their country, which we are borrowing for, of course, so that their kids will pay the debts.

Mr. Speaker, under current law, the Joint Economic Committee estimates that only 7,500 estates, in a Nation of 290 million people where some 3 million people die every year, 7,500 estates out of the 3 million people that die would have any estate tax liability in 2009. However, the permanent switch to carryover basis rules, rules that are used to calculate cap gains, would impact an estimated 71,000 additional estates, and many of those estates would face capital gains tax increases.

Now even as this bill increases the capital gains tax on many farm estates and small businesses, I tell my friend, it still adheres to what seems to be the Republican Party's core economic principle: fiscal irresponsibility.

The gentleman says this tax, that tax, and he is right. There are a lot of taxes on all of us, and we have a lot of services in this country. And, frankly, for the most part, as the gentleman knows, particularly if you take the industrialized nations, our tax structure at the Federal level is lower. But, still, they are high, and we would like to see them reduced.

But the fact of the matter is, I have three children, three daughters, they are wonderful people, and they provided me with three grandchildren. And I am buying stuff. I am buying defense against terrorists, I am buying stabilizing Iraq, I am buying education, I am buying health care, I am buying roads. All of us are buying that.

I do not want to have to say to my grandchildren, look, I am going to use it, but you pay for it. That is an immoral policy as well as a fiscally irresponsible one, an unwillingness to pay our bills.

Now, this is $290 billion. Just $29 billion a year over 10 years. No sweat. Shoot, we are borrowing all the Social Security money right now that the Republicans said they were not going to spend a nickel of. They are going to spend $170 billion of Social Security money this year alone. How do we do that? We borrowed $118 billion last February, from foreigners mostly, which we are putting our kids deeply in hock to China, to Japan, to Germany.

At a time of record budget deficits of nearly half a trillion dollars, this Republican bill would cost nearly $1 trillion over the first 10 years of full repeal. It would irresponsibly drive our Nation even further into debt and immorally force our children to continue to be liable for our bills.

In sharp contrast, I tell my friend from Missouri, and I wish there were more people on this floor, but it is only giving away, you know, $250 billion to $1 trillion. What do we care? We have given away trillions of dollars over the last 4 years as we go trillions of dollars into debt. As a matter of fact, $9 trillion into debt.

The substitute offered by the gentleman from North Dakota (Mr. Pomeroy) is excellent. It costs less than one-third of this Republican bill. It would permanently increase the current exclusion amounts to $3.5 million per individual and $7 million for couples. Three-tenths of the estates would be left in 2009 and, as a result, exempt 99.7 percent of all estates from estate tax liability.

Mr. Speaker, I congratulate the gentleman from North Dakota (Mr. Pomeroy) for this alternative. It solves the problems of small farmers, it solves the problems of small businesses, it solves the problems of pretty significant but nevertheless smaller estates, to make sure that the hard work of mom and dad can be passed along to their daughter and their son and their son's and daughter's families.

We agree with the gentleman from Missouri (Mr. Hulshof) that that is a good objective, but we also agree that we ought to have fiscally responsible policies.

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

Mr. HULSHOF. Mr. Speaker, just a quick comment for whatever time I may consume before yielding to the gentleman from South Carolina (Mr. Barrett).

Did I hear the last speaker correctly, that we have given away, whose money is that? It would be the American taxpayers' money, who are probably, even as we speak, trying to grapple with those forms as they have tax day coming, as the income tax payers of America that provide for the comfortable living that he and I enjoy.

Mr. HOYER. Mr. Speaker, will the gentleman yield?

Mr. HULSHOF. I yield to the gentleman from Maryland.

Mr. HOYER. Mr. Speaker, I ask my friend, whose debt is it?

Mr. HULSHOF. Mr. Speaker, I would say to my friend, and of course, as we have had a lot of unforeseen circumstances that have occurred, as was mentioned earlier, Iraq and Afghanistan. And let us hope and pray that as permanent repeal occurs, if it occurs, in the outyears that we will not be in that war on terrorism. But I would say to my friend, and I appreciate the question, but he also mentioned the Department of Agriculture, and lest, Mr. Speaker, anyone wonder who those agricultural groups are that represent farm families across America, I would place into the RECORD a letter from said groups.

In essence, the letter reads as follows: The groups listed below support permanent estate tax repeal, ask for this body to vote for H.R. 8, and the letter goes on to say, individuals and families own virtually all of the farms and ranches that dot America's rural landscape. Death taxes threaten the transfer of these operations to the next generation of food and fiber producers. Sincerely, Alabama Farmers Federation, American Farm Bureau Federation, American Sheep Industry Association, the American Soybean Association, Farm Credit Council, National Association of Wheat Growers; to my friend from North Dakota, National Cattlemen's Beef Association, National Corn Growers Association, National Cotton Council, National Grain Sorghum Producers, National Milk Producers Federation, National Potato Council, USA Rice Producers Federation, U.S. Rice Producers Association, and the Western Peanut Growers Association.

Individuals and families own virtually all of the farms and ranches that dot America's rural landscape. Death taxes threaten the transfer of these operations to the next generation of food and fiber producers.

In 2001, Congress recognized the harm that death taxes cause family businesses and voted to repeal this onerous tax. Unfortunately, repeal scheduled for 2010 is temporary and sunsets after only one year.

Congress should act now to make death tax repeal permanent. Please show your support for permanent death tax repeal by voting for H.R. 8 when the bill reaches the House floor this week.

Sincerely,

Mr. BARRETT of South Carolina. Mr. Speaker, I thank the gentleman for yielding me this time. And, yes, I say to the gentleman, they are from South Carolina, and I see them every day.

Mr. Speaker, I rise today against the Pomeroy substitute and in full support of H.R. 8, the Death Tax Repeal Permanency Act of 2005.

The death tax defies common sense and is fundamentally unfair, Mr. Speaker. Prior to 2001, the top death tax rate was 55 percent. Today, the top rate is 47 percent, and these are unbelievably high tax rates, especially when the tax is imposed after a lifetime of hard work.

The death tax is also a job killer, Mr. Speaker. Resources that could be used to expand businesses and hire new employees are instead used inefficiently to plan for the impact of the death tax. The Joint Economic Committee noted that the death tax reduces the stock in the economy, listen to this now, approximately one-half of $1 trillion.

Mr. Speaker, the permanent repeal of the death tax will not only ensure that small businesses and family farms are not subject to these unfair rates of taxation, but also simplify the tax law and facilitate long-term financial planning. The 2010 sunset date for the death tax repeal makes it nearly impossible for taxpayers to make long-term financial decisions as they relate to the tax. Enactment of the Death Tax Repeal Permanency Act promotes fairness and simplification by giving taxpayers the certainty they deserve.

Mr. Speaker, I strongly support H.R. 8, the Death Tax Repeal Permanency Act of 2005, and I urge my colleagues to vote "no" on the Pomeroy substitute amendment.

Mr. POMEROY. Mr. Speaker, I yield 4 minutes to the gentleman from Oregon (Mr. Blumenauer), the other member of the Earl Caucus of this House.

Mr. BLUMENAUER. Mr. Speaker, I appreciate my namesake's courtesy in permitting me to speak on his substitute. I appreciate his hard work and clarity in dealing with this issue and a step forward to stop a cynical game that I have watched be played here in this Congress since I was first elected 9 years ago.

There is today, and there has been throughout these 9 years, a consensus to make adjustments to the inheritance tax, to make it less steeply graduated, to raise the exemptions, to be able to do fine- tuning, to deal with the legitimate problems of small, closely held businesses and farms. And if the Republican majority would have permitted a fair and honest debate on this floor of the inheritance tax, we would have enacted significant permanent adjustments that would have solved the vast majority of the problems for 99.9 percent, I dare say. But that is not to be.

Instead, we have been involved with a cynical process that we are seeing played out here today. Nobody expects over the long haul that we are, in fact, going to eliminate in its entirety the inheritance tax. Our Republican friends have been involved with a roller coaster of a 10-year phase-out, and then insanely reinstating it in its entirety. As a result nobody has been able to plan thoughtfully for the last 5 years.

My friend from Missouri says, well, on the one hand, it is only 1.5 percent of Federal revenues; but that is half of the problem of Social Security that has driven some people into a frenzy. It is not an insignificant number, in the neighborhood of $1.5 to $2 trillion over the period of time we are talking about.

But my Republican friends do not want to allow the legislative process to work, and have a permanent solution that will stop the ambiguity and that will solve the problem for closely held businesses and yet, not allow vast amounts of wealth, wealth that is so significant that Bill Gates's own father does not think that it should eliminate the inheritance tax and has even written a book about it.

The gentleman from North Dakota has proposed not that we game the system. The gentleman from Missouri (Mr. Hulshof) found out that his parents, like 99 percent of the people, are not subjected to the inheritance tax.

The Pomeroy amendment would immediately raise that threshold to $6 million, with further adjustments to $7 million in 4 or 5 years from now, I forget the exact period of time; he will correct me, I am sure. This brings it up so that 99.7 percent of the American public are exempt, and it does it today. Not with games, not with promises but by solving the problem. I think this is so important as I think of the millions of Americans today that are struggling with the 1040 form, the 2.9 million Americans subjected to the alternative minimum tax, soon to be 16 million families next year. Not enough money, not enough time to solve that yet we are going to be involved with this cynical game of the inheritance tax.

I strongly urge the adoption of the Pomeroy substitute, which will solve the problem once and for all for the vast majority of the family farms, the small businesses, and, in fact, a number of people of significant wealth; and it will provide resources so that we can solve problems like Social Security and the alternative minimum tax and be about our business.

Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the gentleman just indicated that the Pomeroy substitute solves the problem once and for all, and I have listened to a number of individuals on the other side during the course of this discussion that this is only going to affect the superwealthy and that really there are no family businesses that are affected by the estate tax. It has been interesting, because some of those comments have come from colleagues of mine on the Committee on Ways and Means.

Mr. Speaker, we have had a number of hearings going back to at least, from my memory, 1997. So I will mention some of these folks who have come and testified in front of the Committee on Ways and Means.

Martin Whalen testified about his family-owned and -operated company, Etline Foods Corporation, a distributor of food service products in York, Pennsylvania. When they purchased the business, 48 employees; in 1997, 105 employees. Rhetorically, I would say to my friend from North Dakota, will this solve their problem?

Wayne Nelson, a farmer from Winner, South Dakota. His father farmed until his father's death in 1993. Their estate planning was inadequate. Several parcels of land in South Dakota were liquidated in order to pay the Federal tax. Will the substitute rectify that situation?

What about Roger Hannay of Hannay Reels, Incorporated, a small manufacturer in the foothills of the Catskill Mountains about 25 miles from Albany, New York, a small manufacturer employing 150 employees?

What about Richard Forrestal, Jr., a principal in Cold Spring Construction, a firm specializing in highway and bridge construction?

What about Douglas Stinson, a tree farmer from Toledo, Washington, that runs the Cowlitz Ridge Tree Farm? Each of these testified, Mr. Speaker, that they were impacted negatively by the existence of the death tax.

What about Carol Loop, Jr., president of Luke's Nursery and Greenhouses, a wholesale plant nursery operation in Jacksonville, Florida? He started his business with a $1,500 loan and a borrowed truck. Would the problem be solved with the Pomeroy substitute?

Or Christopher and Kimberly Clements of Golden Eagle Distributors in Tucson, Arizona. They lost their father unexpectedly after a valiant bout with cancer. He lost his life at the age of 58.

Or Jeannine Mizell, a third-generation owner of Mizell Lumber and Hardware Company of Kensington, Maryland.

What about Robert Sakata, a vegetable farmer from Brighton, Colorado, or Jean Stinson, a railroad track manufacturing company in Barto, Florida, running the R. W. Summers Railroad Contractors? Their family had to shut down a facility in North Carolina, laying off two- thirds of the 110 employees to pay the estate tax.

Or Jack Cakebread, founder of Cakebread Cellars in Napa Valley, California. Would each of these individuals be solved or their estate problems solved by the substitute?

It is a rhetorical question, and the gentleman from North Dakota (Mr. Pomeroy) knows it, and I do not mean to put him on the spot, but he cannot answer the question because when we draw a line, an arbitrary line, wherever we draw that line, we still are going to have those entrepreneurs that have been willing to invest in their businesses, hire employees, build local communities; and as long as the death tax remains in existence, they are going to have to do some sort of estate planning.

I think it is much the better course to completely and finally permanently repeal the tax.

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

Mr. POMEROY. Mr. Speaker, I yield myself 5 minutes.

Mr. Speaker, it is a privilege to carry this debate today on behalf of the minority, and a privilege to participate with the gentleman from Missouri, who is one of my favorite Members of the House. He has presented his side very well.

He asked relative to a number of estates, would they be covered under the Pomeroy substitute? Well, I believe that a number of them would have their estate tax problems completely eliminated, because we take the exemption and we double it. We go from today, a joint estate at $3 million, and we say, if you have a joint estate of $6 million, no estate tax. We, like 2009, take that up to $7 million in a joint estate circumstance.

So as to the question he asked, I do not know the particulars of those cases, but I expect that a number, if not all of them are covered, because 99.7 percent of the estates in this country are under that amount.

But there is a feature of the majority proposal that is not represented in our substitute, and I want to talk about it right now, and this involves the imposition of capital gains liability at the handling of an estate under the majority bill.

I can just imagine Members in the majority, some of them that might have signed that "no new tax" pledge that was going around last Congress, just wringing their hands because they are about to vote for a tax increase, a tax increase in the form of capital gains taxation on estates. Section 541 of the bill that the majority proposal would make permanent reads this way: termination of step-up in basis at death. Tax legalese, but what does it mean? It means new capital gains and capital gains if you have an estate that exceeds that 1.3 gross value. You have a reporting commitment that attaches at 1.3 gross value for estate.

You know, it is the darndest tax bill I ever saw. Because, while they talk about tax relief, they are hurting more than they are helping.

I direct you to this chart. Number of estates today with capital gains issue, zero; and that is because the taxable basis in the property is established at time of transfer in an estate. No capital gains.

What happens under their proposal? Well, we know that there are 71,000 estates in the year 2011 that are likely to have reportable amounts, in other words, gross valuation over $1.3 million. Some will have a capital gains issue they have to pay. Some will not. But they are all going to have to report with the IRS.

And this report is something else. It means going back in and trying to establish what the value of the property was at the time mom and dad acquired it. It is a nightmare. And that is well- established in the Congressional Record. Because I have here the hearing, I have here the Ways and Means record at the time the committee considered testimony to repeal the carryover basis, the very provision they want to re-establish in tax law.

You see, it passed once before, in 1976. It was delayed from implementation and then repealed retroactively because of its consequences.

Here is what some very interesting participants had to bring to the committee. Carryover basis fosters an insidious bias against farmers and ranchers. Carryover basis calculations for land, buildings, machinery, livestock and timber have been described as, at best, potential nightmares. Trying to establish what the taxable basis on this is, which their law would require, is a nightmare. So says the American Farm Bureau in their 1979 testimony.

The Cattlemen's Association, one touted as one of these that want to re-establish capital gains on estates, they say, because of its complexity, carryover base is impossible to comply with. It will increase the tax burden and compound the illiquidity of estates of farmers, ranchers and other family business operators who sell inherited property in the normal course of business, and I quote, and find it in the record from the National Cattlemen's Association.

NFIB also states, I strongly urge you, as an individual and as a taxpayer and as one who professionally and through an association represents small business people, repeal the carryover basis. So says the National Federation of Independent Business, the very group that they have cited as trying to re-establish carryover basis in the Tax Code and put capital gains back on estates.

We have been here before. We do not want to do it again. Do you not understand, voting for the repeal bill brings a new bill, a capital gains bill, and a capital gains bill to thousands that have no estate tax consequence?

So if you want to cast a vote this afternoon for a tax relief proposal, vote the Pomeroy substitute. No capital gains in the Pomeroy substitute.

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

Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.

As the gentleman from North Dakota recognizes; and, again, I do not think he meant to misspeak, but the underlying bill, H.R. 8, does provide a step up in basis of $3 million for the surviving spouse and a $1.3 million step up in basis for surviving heirs.

Mr. Speaker, many have worked on the death tax repeal and going back even to the, I think, Family Heritage Preservation Act of 1993. The gentleman from California introduced that bill and I think had 29 cosponsors. Now, of course, we are over 200 on permanent repeal.

Mr. Speaker, I yield 4 1/2 minutes to the gentleman from California (Mr. Cox).

Mr. COX. Mr. Speaker, the preceding speaker just told us that he does not like the carryover basis. And I will tell you what. If his amendment got rid of any aspect of carryover basis in death tax I would vote for it. But this is a give-with-the-right-hand, take-away- with-the-left-hand operation that he is proposing, because what he is also doing is he is bringing back the 47 percent death tax.

We are trying to repeal the death tax, not bring it back; and you cannot tell us that capital gains at 15 percent is worse than the death tax at 47 percent.

And as the gentleman from North Dakota just mentioned, we do not have a carryover basis in its entirety. We have simply a step up in basis for both the spouse and for the children.

I wish we could get rid of the carryover basis. I would be thrilled with that. But the Pomeroy substitute gives us the death tax back full strength at 47 percent tax rate, and it arbitrarily says that a small business that is worth $3 million is going to have to deal with this.

Now you have to ask yourself, in advance of your death, do you know what the assets and inventory of your business is going to be 10 years, 20 years, 30 years down the road? The answer is no. Of course not. You are going to have to do that tax compliance year in and year out.

Tax compliance, the cost of actual accountants and lawyers and life insurance and all the other things that you have to do to deal with the death tax year in and year out is $20 billion a year.

This tax, the death tax, kills between 170,000 and a quarter million jobs each year, according to the Nonprofit Center For Data Analysis. The death tax is a job killer. It is destroying family farms and businesses. It is a drag on economic growth, and it is the greatest disincentive to invest additional capital in family businesses in America.

But the authors of this amendment still want to pry lots of cash out of the cold dead fingers of America's deceased entrepreneurs. So they rewrite the language of the Tax Code so we can keep all 88 pages of complexity of the death tax and all the thousands of pages of regulation and the hundreds of thousands of pages of case law that go with it. This is the most complex part of one of the most complex tax systems in the world, and it is time to drive a stake through its heart. It is time for the death tax to die.

This is not the time to redefine the death tax or add legislative language so that tax lawyers and accountants can have more to play with. It is time to kill it. And that is why we must vote against this amendment and in favor of the total repeal of the death tax.

Here is the message that this amendment, were it to be adopted, sends to American workers: Do not work for a small- or medium-sized American family business. Do not work for a large family owned business. To be safe, do not work for any small businesses that are growing quickly or picking up new customers or introducing new products. Because the Federal Government has decided that the family businesses can grow without the destructive burden of the death tax but only until some IRS bureaucrat decides that these businesses are worth $3.5 million dollars. Then the businesses will be subject to huge new tax burdens. And guess what? You will not know until it is too late whether you are on one side or the other side of that threshold.

I have to tell you, it sounds like $3 million is a lot of money. And it is if you or I had it in our pocket. But for a business, counting its real estate, its assets, its inventory, its trucks, that is a tiny business indeed. And if you are trying to employ some people, you have 10, 11, 12 people that work for that business, what are you going to say to them when they lose their jobs because the family business has to be liquidated on the death of the entrepreneur in order to come up with the actual cash to pay for it?

The IRS is not going to accept shares of stock in the family business in payment of the death tax. They are going to say, go sell those shares, go liquidate the business, go sell the assets in order to pay off the tax plan.

To the supporters of this amendment I say we agree with you that the death tax destroys family farms and businesses. Obviously, that is your presumption if you are trying to have a threshold below which people will not pay it. We agree with you that the death tax destroys family farms and businesses, that it kills jobs and reduces economic growth. So why do you want to keep this monster alive?

Please join with us and kill the death tax once and for all.

Mr. POMEROY. Mr. Speaker, I yield myself 90 seconds.

You know, anyone in the accountant or tax-planning profession worrying about losing business because of the estate tax is going to be smiling broadly at the end of tonight when we pass this re- creation of capital gains tax and estates.

In fact, the ABA Task Force report devotes almost 70 pages to discussing the problems that exist with the new carryover basis rules in their legislation. The problems identified in the report include unequal treatment of capital losses, difficulty in applying basis adjustments to property sold during the administration of the estate, treatment of property with debt and excessive basis, treatment of installment loans, unequal treatment of pension assets, administrative problems with allocation to spousal property, discrimination in favor of spouses in community property states. Even a cursory examination of that report leads to a conclusion that serious problems exist with the new rules and that their surface simplicity is quite misleading.

Let us just walk through some of the titles, some of the titles of the new capital gains law that they are going to have: Basis increase for certain property; limit increased by unused built- in losses and carryovers; spousal property basis increases; qualified terminable interest property; definitions and special rules for application of subsections (b) and (c); fair market value limitation; coordination with Section 691; information returns, et cetera.

And to think that for every one taxpayer getting relief under their proposal, an additional ten are now going to face this nightmare. It is a funny way to give tax relief.

Mr. Speaker, I yield 4 minutes to the gentleman from California (Mr. Sherman).

Mr. SHERMAN. Mr. Speaker, I thank the gentleman from North Dakota for yielding me this time and perhaps for mentioning what I see as the only good part of this bill. You see, I am a CPA and tax lawyer by training, and this bill is the full employment act for both my CPA friends and my tax lawyer friends.

Republican after Republican has come to that microphone and talked about the electrical tax, the sales tax, the telephone tax, the payroll tax, the income tax, the marriage tax, the cable tax and the fuel tax.

And what is their solution? To eliminate a tax that applies to only 1/4 of 1 percent of America's families. Yes, that is right. They want to keep the electrical tax, the sales tax, telephone tax, payroll tax, the income tax, marriage tax, cable tax and the fuel tax.

They want to vote for a bill that takes $290 billion out of the Treasury in its first 4 plus years and about $70 billion a year thereafter and make it impossible for the Federal Government to ever give any relief for those other taxes. It is a bill to shaft 99 and 3/4 percent of all American families.

But that does not stop there. Republican after Republican has come up here and boasted how the passage of this bill will slash charitable giving. So it is not just a loss to the Federal Treasury, it is a loss to our hospitals and a loss to our universities, who are strangely silent on this bill because they are afraid of angering 1/4 of 1 percent of the families in the United States who happen to be a huge chunk of their donors.

Let us look at the substitute. It is more fiscally responsible, costs about 1/4 as much, but it provides more tax relief for middle- class families.

Let us look at this from the standpoint of a widow, a surviving spouse. Under current law and under the Pomeroy substitute, no estate tax, no capital gains tax and little or no compliance work. Under their bill, more compliance work and sharp restrictions on the step up in basis.

So this bill is an attack on working families, an attack on the middle class, and an attack on widows. They have lost their spouse, and now you want them to lose their step up in basis as well. These are people who pay zero estate tax and get zero benefit from this bill. They have lost a spouse, and that is the folks you go after. $290 billion in the first 4 plus years. It is part of an overall Republican tax package.

I am on the International Relations Committee. We are waging a war on terrorism. We turn to our men and women in uniform and say, stand ready to make the ultimate sacrifice; and we turn to the richest families in America and say, you should make a zero sacrifice.

Now these Republican tax policies have caused the President of the United States to call into question our intent and ability to pay U.S. government bonds.

It calls into question our ability to pay our bonds.

Now, the President will not warn the Chinese investors. He wants them to buy the bonds, but he has warned every Social Security recipient that we may dishonor the U.S. Government bonds held by the Social Security trustees.

This bill is part of an overall plan that keeps in effect the electrical tax, the sales tax, the telephone tax, the income tax, the payroll tax, the marriage tax, the cable tax, and the fuel tax. And it is part of an overall plan that, well, I ought to write a commercial because there is a lot of public policy commercials out there, and I ought to write them for them.

Allowing corporations to avoid American taxes just by renting a hotel room in the Bahamas, $8 billion. Allowing millionaires to pay virtually nothing on dividend income, $80 billion. Eliminating the estate tax even on the richest estates, $290 billion. Telling our soldiers in the field that it is the billionaire families who are the ones who have sacrificed too much for America, priceless.

And the Republi-card, accepted everywhere. The very wealthy want their taxes released.

And do not forget the Deficit Express Card, now with a new $12 trillion credit limit.

Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, notwithstanding the gentleman's props, I would commend to him for his reading leisurely "The Economics of the Estate Tax: An Update," a Joint Economic Committee study dated June 2003 which in essence states the estate tax raises very little, if any, net revenue because of distortionary effects of the estate resulting in income tax losses roughly the same size as the revenue collected. Secondly, estate taxes force the development of environmentally sensitive land. Through 2001, 2.6 million acres of forest land were harvested and 1.3 million acres were sold every year to raise funds to pay the estate tax.

Regarding his criticism on philanthropy, the estate tax according to the Joint Economic Committee study, the estate tax may actually be one of the greatest obstacles to charitable giving as estate taxes crowd out charitable bequests.

Mr. Speaker, I yield two minutes to the gentleman from Iowa (Mr. Latham).

Mr. LATHAM. Mr. Speaker, I thank the gentleman for yielding me time.

Mr. Speaker, it is fascinating if you would think if there was a proposal in the substitute to eliminate the whole list of taxes that the gentleman referred to, but I have never heard one case where they have talked about eliminating any tax, only increasing taxes. So it is quite an interesting debate.

Let me just say, I come to this as someone who grew up in a family farm operation, a family small business. I can tell you firsthand from real life, honest experience the effect that the death tax has on families and creating jobs and opportunities and being able to continue what I believe is the American Dream, and that is to have an opportunity for your children and your grandchildren to continue a life that you love and cherish. Nothing stands in the way more for families and small businesses to be successful, to continue, than the death tax.

We spend thousands and thousands of dollars every year as a way to try and avoid what the death tax will do to us. It is morally wrong that the day you die, your heirs should not only see the undertaker but have to go see the tax man to see how much the Federal Government is going to take away from a lifetime of work.

The idea, while the gentleman from North Dakota (Mr. Pomeroy), I have the greatest respect for him, but the idea of continuing an immoral tax that destroys family, destroys family businesses, I have seen neighbors who have lost everything they have, lost generations of work on a family farm because of the death tax. It is a fact that nothing is more harmful, nothing is more hurtful than a tax that takes away the hope of the American Dream.

This country is based on farms, on small businesses. That is the lifeblood of this Nation, and nothing destroys it more than the death tax; and that is why we have to kill this death tax to make sure that we can experience the American Dream in this country.

Mr. POMEROY. Mr. Speaker, I yield 3 minutes to the gentleman from Tennessee (Mr. Davis).

(Mr. DAVIS of Tennessee asked and was given permission to revise and extend his remarks.)

Mr. DAVIS of Tennessee. Mr. Speaker, I thank the gentleman for yielding me time.

Mr. Speaker, I rise today in strong support of the Pomeroy substitute to House Resolution 8. And I argue that anyone in this body who is currently concerned about our ballooning national debt should vote in favor of the substitute.

The Pomeroy substitute is fair, and it covers those who need tax exemption now, America's small businessmen and America's farmers.

It is clear from the debate today that the majority of Members in this body believe that our farmers and small businessmen and - women need relief from the estate tax, and I will do all I can to ensure that these hardworking Americans get their due tax relief. In my opinion, the Pomeroy substitute does this by increasing the estate tax exemption level in 2006 by $3 million for individuals and $6 million for couples. Additionally, from 2009 forward, the tax exemption level would be $3.5 million for individuals and $7 million for couples. This will fully cover 99.8 percent, 99.8 percent of all the estates in this country. Only two out of every 1,000 would not be totally covered.

I know my friends on the other side of the aisle desperately want to make sure that the Paris Hiltons of America are fully covered, but they have done pretty good the last 100 years; and I am sure under the Pomeroy bill in the future they will continue to do pretty good.

Additionally, the substitute bill eliminates the liability for tax on gains accrued before death. This is incredibly important to those children who may decide to sell the small farms and businesses they have just inherited. By using the stepped-up basis to calculate the value on an estate at a time of death, the substitute bill is actually making the Tax Code simpler and less cumbersome. It seems to me that this is important to us. It is important to the President, and it is important to many of us in Congress.

I will do all that I need to do in order to support estate tax relief for farmers and small business owners in my district. But would it not be a great message to send to the Senate and to the American people by providing them with the estate tax relief they want and need without breaking the bank? It seems to me that it is the fiscally conservative thing to do. I truly believe we have got to stop this liberal policy of borrowing and spending.

To my friends on the right who believe that any estate tax is so vile that you took your polling advice and decided to start calling it the death tax, you should read Leviticus 25 containing God's message to Moses that every 50 years, called the Jubilee, all possessions must be returned to the original owners. I invite you to read that scripture.

You had a chance in 2002 to increase the benefits by giving the tax relief to the estates of all Americans. Why did you not? It clearly was not to keep the budget balanced. Was it political? Every year around tax time and every 2 years around election time, you come back with permanent tax repeal. I think now is the time to do it. Let us get it done.

The Pomeroy substitute bill is a bill we need to send to the Senate. It is a fair bill. It is fiscally responsible. It should be the House's bill.

Mr. POMEROY. Mr. Speaker, how much time remains on each side?

The SPEAKER pro tempore (Mr. Simpson). The gentleman from North Dakota (Mr. Pomeroy) has 4 1/2 minutes remaining. The gentleman from Missouri (Mr. Hulshof) has 14 1/2 minutes remaining.

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

Mr. HULSHOF. Mr. Speaker, I yield 1 1/2 minutes to the gentleman from Georgia (Mr. Price).

Mr. PRICE of Georgia. Mr. Speaker, I thank the gentleman for yielding me time. I thank the gentleman for his leadership on this issue.

I think it is important that we spend a moment or two and talk about how we got here, why do we have a death tax and what is its consequence; what is the fundamental we are talking about.

The death tax began in 1916 in order to fund World War I, a noble cause but a cause that has long since passed. It remained through the 1920s and 1930s under the rationale that we should prevent the accumulation of wealth, an issue more than addressed with our current anti-trust laws.

The death tax has become a harmful relic of previous times. It survives through the inertia of government and now has the consequence of punishing hard work and success. It harms families, and it kills small businesses.

Families should not have to visit the undertaker and the tax collector on the very same day.

The death tax is fundamentally unfair and violates what should be our principle of freedom and liberty and the imperative of personal property rights.

Freedom and liberty demand that hard-working Americans be able to leave their children and their grandchildren the results of their diligence and their success and not have Washington get a windfall.

I urge all of my colleagues to act positively today on behalf of all Americans and let the death tax die for good.

Mr. POMEROY. Mr. Speaker, in light of the imbalance of time, I would be happy to have my friend from Missouri burn up a little more of his time, unless he has no further speakers.

Mr. HULSHOF. Mr. Speaker, I have no further requests for time, and I can assure my friend I will not use the entire 14 minutes to close.

Mr. Speaker, who has the right to close?

The SPEAKER pro tempore. The gentleman from Missouri (Mr. Hulshof) has the right to close.

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

Mr. POMEROY. Mr. Speaker, I yield 2 1/2 minutes to the gentleman from Illinois (Mr. Emanuel).

Mr. EMANUEL. Mr. Speaker, I rise in opposition to H.R. 8, which continues, in my view, the policies by the majority of three tax cuts, in 4 years, with four straight record- breaking deficits that have added $2 trillion in 4 years to the Nation's debt. And here again the majority offers $850 billion of tax cuts to the wealthiest families in this country.

When you get in a hole that is $2 trillion deep, rule one, stop digging. If you cannot figure that out, you cannot produce any more when it comes to economic growth for this country or jobs or resolving the health care crisis or the educational crisis we have in the country. My view is repeating the same mistake and expecting a different result is a sign that you have lost your bearings.

This bill will do nothing to stimulate the economic growth or savings, which is what we should be focused on, rather than further shifting the tax burden from wealth to work.

We could be debating and using this time on simplifying the code. Just 2 weeks ago there was a report out by the IRS and others showing that $350 billion a year goes unreported in taxes where people are not complying and cheating.

We have a Tax Code that rewards and initiates a culture of cheating and penalizes those who abide by the rules. That is where we should be focusing, on simplifying the code and taking away the incentive to cheat, which is what we have today in our code.

With all the economic challenges we are facing today in the area of health care, energy, education, eliminating the estate tax, fully eliminating, should be the last of our priorities. But the Republicans will soldier on and continue to fight until taxes are eliminated for the very last multimillionaire. Instead of helping the wealthy avoid taxes, we should be helping middle-class families save for their retirement.

That is a true deficit we have in this country, a retirement and savings deficit. The savings rate is at its lowest level since the 1930s, lower than any other industrialized nation. Millions of families are financially unprepared for retirement.

Given this reality, why are we debating the elimination of the estate tax instead of real tax reform and a savings agenda for the middle class.

Are holding the interests of the wealthy and special interests above the hopes and dreams of the middle-class families the kind of values we want our Tax Code to reflect?

As late former Supreme Court Justice Louis Brandeis once said, "We can have democracy in this country or we can have great wealth concentrated in the hands of a few, but we cannot have both."

Mr. Speaker, there is no doubt which one this bill will achieve.

Mr. HULSHOF. Mr. Speaker, I yield 2 minutes to the gentlewoman from Washington (Miss McMorris), a newly elected Member from the State of Washington.

Miss McMORRIS. Mr. Speaker, I appreciate the opportunity to address the House today on this very important piece of legislation, the repeal of the death tax and making it permanent.

The repeal of the death tax is one of the first bills that I was honored to place my name on as a cosponsor.

Growing up on a family farm in eastern Washington, I have seen firsthand the negative impacts the death tax has on our families and our businesses.

One of my top priorities in Congress is to grow jobs and expand the economy in the Pacific Northwest.

I believe that the repeal of the death tax will help accomplish this goal, especially for the farmers and small businesses in my district.

The death tax costs thousands of jobs each year; and by repealing this unnecessary tax, jobs will be created and many small business owners will be able to add workers to their payrolls.

As a Member who represents a significant farming sector, I have seen the death tax destroy some family farms. Without a doubt, death taxes hurt our farmers and our ranchers by forcing family farms to sell land, buildings or equipment needed to operate their business in order to pay for this excessive tax. Some family farmers have had to take out a second mortgage on their home to pay for the tax.

When farms and ranches shut down, so do the businesses they support, leaving many out of work and leading to a depressed rural economy.

The time is now to end the death tax. I support the passage of H.R. 8 in order to end this unjust, unfair, and inefficient tax burden on our families, businesses and especially our farming communities.

Mr. POMEROY. Mr. Speaker, I believe we are at the end of our time, and I yield myself the balance of the time to close our side.

Mr. Speaker, I am feeling a bit like the man in the middle as we approach this debate. There has been some on our side that suggests the Pomeroy substitute provides too much estate tax relief. Indeed, the amounts are higher than acceptable. Obviously, we have heard from the other side they believe this is too low, but I would say to my friends in the majority, and listen to this carefully, those who approach this issue with an all-or-nothing mentality are likely to get nothing.

We cannot tell what is going to happen in the year 2010. None of us know. Except there is one thing we know, and look at this chart, the national debt is going to exceed $10 trillion, $10 trillion, 36 percent above where we are at today, and this is based upon established budget projections.

Do we really believe that that future Congress is going to sit blithely by and let this become implemented? There is not a nickel's worth of certainty in that. And we all know, because as damaging as this is to the budget in the first 10 years, with $290 billion of revenue loss, debt service added, this is a $326 billion hit to the budget in the first 10 years, look what happens in the second 10 years: $1.3 trillion impact in the second 10 years when we count the value of the debt service.

Do any of us think that we are really going to allow this to happen in the future years?

That is why I have advanced a very different alternative, entitled certain and immediate estate tax relief, because it is certain and it is immediate, and it deals by taking the estate tax to $6 million per couple, $7 million per couple by the time we get to 2009. It deals with the estate tax issues of 99.7 percent of the population.

Those of my colleagues looking at this chart may not be able to see this tiny red line, because that is what three- tenths of 1 percent represent with looking at the total population, three out of 1,000, and we know that on average those estates are going to average $15 million.

So for three-tenths of 1 percent we offer an alternative that has no capital gains, that is one-quarter of the cost, that immediately phases in estate tax relief and is far and away the superior way to go. All or nothing gets us nothing. Vote Pomeroy, immediate and certain estate tax relief.

Mr. Speaker, I yield back the balance of my time.

Mr. HULSHOF. Mr. Speaker, I yield myself the balance of the time.

Let me first say, Mr. Speaker, how much I appreciate my friend from North Dakota as we have done this in a number of sessions of Congress, and I appreciate the tone, and he is a friend of mine, and I have a lot of respect for him and the intent with which he comes to this debate.

Let me answer a couple of points that have been raised in particular, first of all, about the tax simplification. Tax day is 2 days away, and I am sure taxpayers, in particular small businesses and family farmers, would appreciate anything that we can do to simplify our tax laws, and I would submit that permanent repeal of the death tax does just that.

In fact, H.R. 8 is one simple paragraph, and it reads as follows: "Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to title V of such Act." Basically, we repeal the sunset.

Now, again, the gentleman from North Dakota's (Mr. Pomeroy) substitute, I counted, and I hope I am counting correctly, but 40 subparagraphs and directing accountants and the like to this subparagraph or that particular paragraph.

The reason that we are here is because of complicated and arcane Senate budget rules, called the Byrd rule, that we phase out the death tax for one single year. In 2010, it magically disappears, and then on January 1 of 2011 it springs back to life, and the uncertainty, how would one as an estate planner advise a client when the tax is gone today and comes back again in the very next year? By making death tax repeal permanent, we give taxpayers the certainty they need to make those long-term financial decisions.

The form itself, the blank form I am holding here, Form 706, is 40 pages in length for the estate tax return, 40 pages in length, and it comes with a handy dandy 30-page instruction booklet. So when one is talking about simplification, what better simplification would there be than ripping these pages dealing with the estate tax completely out of the Internal Revenue Code?

Lastly, when it comes down to the nuts and bolts of it, whether or not the Pomeroy substitute, and again, in the effort to pursue the American dream, whether those businesses are going to be shielded by the Pomeroy substitute or not shielded, the fact is that as long as the tax is on the books, as long as Congress draws some line in the sand, and that is all we are doing with the substitute, is just some arbitrary line, we are still going to have those family businesses that are going to be taking some of their resources and these convoluted schemes, legal, but efforts to avoid the tax.

Again, we hear a lot about these very high-profile individuals who have been successful. I mean, this is the land of opportunity, is it not? I would submit to my colleagues that the billionaires and the top of the Fortune 500 lists, those folks have a stable full of lawyers and accountants to create this intricate estate plan to thwart the estate tax.

Not so, and I go back to the original discussion, that small family in Columbia, Missouri, the Eiffert family who spends $52,000 a year just to buy term life insurance because they might have to face the estate tax. Under the current law, or probably even under the gentleman from North Dakota's (Mr. Pomeroy) substitute, there is no certainty for families like the Eiffert family.

So I salute my colleague.

The gentleman from Illinois (Mr. Emanuel), again a colleague of mine on the Committee on Ways and Means, said, why are not we debating real reform? Interestingly, there is a lot of discussion. I am not here to advocate one particular tax reform proposal because we have got this blue ribbon panel that is happening and looking at various options. There is a lot of talk about the consumption tax, and yet it is notable that, while there may be support for the idea of a general consumption tax, the death tax, by contrast, is a tax on nonconsumption.

We talk a lot, too, about sin taxes. Why can we not put taxes on alcohol or on cigarettes and the like and whether or not that generates support among certain groups. This death tax is a tax on virtue. In other words, if you work hard, you play by the rules, if you scrape together your savings, and, again, we as an industrialized Nation, not only do we have even under the Pomeroy substitute a 47 percent death tax rate which would be the second highest in the world, but the fact is that we are not very good at savings and investments. In fact, if you are looking at your 1040 right now, look at line eight because it says if you have been thrifty and you are able to generate a little interest income, guess what, Uncle Sam says put this amount here because we are going to take our bite of the apple.

Permanent repeal of the death tax actually rewards virtue.

Let me just paraphrase a column recently, actually it was some years ago but I think republished recently by Professor Edward J. McCaffery. He is a professor who says this: "As a committed liberal myself, I used to believe that the gift and estate tax was essential to a just society. But as a former estate planner and a scholar in both law and economics, I confess that I was mistaken. The gift and estate tax is quite simply a bad tax, even, and maybe especially, when viewed from a liberal perspective."

Professor McCaffrey goes on and says, "This is not a supply-side argument but a moral one. People who die with large amounts of wealth have done three good things for society. They have exercised their talents, rather than living a life of leisure. They have saved, contributing to a common pool of capital whose benefits manifest, for example, in lower interest rates, inure to all. And they have refrained from spending all of their wealth on themselves."

In fact, Professor McCaffrey across the Capitol some years ago I think before the Senate Finance Committee said, to paraphrase Scripture, the reason he changed his mind, I was blind but now I see.

If this comes from an unrequited liberal that the estate tax, the death tax, is a bad tax, then I would suggest to all of my colleagues here that it is time to permanently and completely repeal the tax.

Finally, I would say to my friend again, because there has been some discussion about creating a new tax, as the gentleman knows, the intent of H.R. 8, the underlying bill, is to help make it easier to pass a family business from one generation to the next. As we have heard from nonpartisan groups, 70 percent of family businesses do not make it to a second generation, 87 percent of family businesses do not make it to a third generation, and often the reason cited is because of this very confiscatory punitive tax called the death tax.

The fact is that under H.R. 8, if it were to pass and become the law of the land, the tax rate imposed at death on a lifetime of work and thrift is zero percent. Under my friend's substitute amendment, the rate imposed would be locked in at 47 percent.

Now I mentioned my personal experience, and I am running our family farm. If a surviving heir chooses not to farm and then makes the conscious decision to dispose of assets, then that is a taxable event, but that is a purposeful decision made by the heirs of that family business owner. It is not the Federal Government requiring the death of a family member to be a taxable event.

So I would simply say to all of my colleagues that death should not be a taxable event, period. Under the underlying bill of H.R. 8, it would no longer be a taxable event. Under the substitute from my friend, individuals above an arbitrary line drawn by this body, death would continue to be an event that triggers the Federal death tax. That is why prominent organizations such as the Chamber of Commerce, National Federation of Independent Business, American Farm Bureau Federation and a host of other small business coalition members, representing the interest of small businesses and family farms across the country, support H.R. 8 and oppose my friend from North Dakota's substitute.

I urge a "no" on the substitute and a "yes" on the underlying bill.

Mr. KIND. Mr. Speaker, I rise today in strong support of making estate tax relief permanent so that family-owned farms and businesses can be passed down from generation to generation. The estate tax should be updated and modernized to reflect both the economic growth many Americans have experienced in recent years, and the hard work of millions of entrepreneurs and those just trying to make a living. These businesses should not be punished for being successful or for simply having their owners pass away.

The United States is the land of opportunity, encouraging free enterprise and rewarding entrepreneurs. The estate tax should be modified to protect family-owned small businesses and family farms from the threat of having to be sold just to pay the tax.

But, Mr. Speaker, H.R. 8 would fully repeal the estate tax for all Americans at a time when the administration is running record deficits that threaten the futures of our children's children. As we all know, the estate tax applies to fewer than 2 percent of all estates, about 50,000 a year. This bill would initially cost the Nation's treasury $290 billion over 10 years.

This year alone, our budget deficit will exceed $400 billion. This administration has turned a projected $5.6 trillion surplus over ten years into deficits totalling $2.6 trillion. However, even with these record deficits, we are debating yet another tax cut.

With the majority's policies leading our Nation toward a fiscal train wreck, we should not be talking about totally repealing the death tax and instead talk about doing something about the debt tax, which falls upon all Americans.

Therefore, I am supporting the substitute being offered by my good friend Mr. POMEROY. His legislation will immediately help the small businesses and family farms by increasing the estate tax exemption to $3 million for individuals and $6 million for couples. This meaningful, common-sense bill will exempt 99.7 percent of all estates from the estate tax. Under current law, the tax basis for inherited property is "stepped up" to its value at transfer through 2009, which helps farmers and small business owners who inherit property by reducing the amount of capital gains taxes to which the property is subject. Under current law, in 2010, "carry-over" basis rules (with a $1.3 million exemption) replace the "stepped-up" basis rules, creating burdensome new requirements and increasing the tax liability for many of these property-owners. H.R. 8 makes this switch permanent and creates more losers than winners. The Pomeroy substitute, however, will retain the "step-up" rules rather than the "carry-over" rules.

Mr. Speaker, it is our responsibility to avoid towering deficits and reduce the debt future generations will inherit. We must give them the capability and flexibility to meet whatever problems or needs they face. I cannot, in good faith, support legislation that will put our country further into deficit spending with a tax cut that will hurt future generations for the unforeseeable future.

Mr. HULSHOF. Mr. Speaker, I yield back the balance of my time.

The SPEAKER pro tempore (Mr. Simpson). Pursuant to House Resolution 202, the previous question is ordered on the bill and on the amendment in the nature of a substitute offered by the gentleman from North Dakota (Mr. Pomeroy).

The question is on the amendment in the nature of a substitute by the gentleman from North Dakota (Mr. Pomeroy).

The question was taken; and the Speaker pro tempore announced that the noes appeared to have it.

A recorded vote was ordered.

The vote was taken by electronic device, and there were -- ayes 194, noes 238, not voting 2, as follows:

[Roll No. 101]

Messrs. OBEY, MEEHAN and TOWNS changed their vote from "no" to "aye."

So the amendment in the nature of a substitute was rejected.

The result of the vote was announced as above recorded.

Stated against:

Mr. JINDAHL. Mr. Speaker, on rollcall No. 101 I was inadvertently detained. Had I been present, I would have voted "no".

The SPEAKER pro tempore (Mr. Simpson). The question is on the engrossment and third reading of the bill.

The bill was ordered to be engrossed and read a third time, and was read the third time.

The SPEAKER pro tempore. The question is on the passage of the bill.

The question was taken; and the Speaker pro tempore announced that the ayes appeared to have it.

A recorded vote was ordered.

The vote was taken by electronic device, and there were -- ayes 272, noes 162, not voting 1, as follows:

[Roll No. 102]

Mr. RUSH changed his vote from "aye" to "no."

So the bill was passed.

The result of the vote was announced as above recorded.

A motion to reconsider was laid on the table.