DEATH TAX REPEAL PERMANENCY ACT OF 2005--MOTION TO PROCEED
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Mr. GRASSLEY. Mr. President, I speak in favor of doing away with the death tax. To follow a principle of taxation and not just for the sole purpose of doing away with the tax, but following on what the Senator from South Dakota said, an obvious one is that death should not be an incident of taxation--not because it is death, but because when you collect taxes in an instance like that, it is like a fire sale. When you force a sale at a particular time to pay taxes, the value is going to be less than if the marketplace works. So by letting the asset pass from one generation to the other and letting the succeeding generation sell it according to the willing buyer/willing seller, more money is going to come in. That is a principle that has been laid out by the Senator from South Dakota.
Another principle that hasn't been spoken about yet is when to tax for Government services--tax income the earliest it is made, and tax it once. Beyond that, you ought to let the marketplace decide the value of something and tax it accordingly. Under both circumstances, more money is going to come into the Federal Treasury.
So I believe that death should not be a taxable event. Since I have been in the U.S. Senate, I have been working on reform of the estate tax. Taxing people's assets upon their death is just plain wrong--not wrong to the heirs as much as it is wrong to think that you are going to get more money into the Federal Treasury that way than if you let the marketplace work and determine the true value of something with a willing buyer and a willing seller.
Heirs should not be forced to sell a single asset in order to meet an arbitrary tax due date--the due date caused by death. Assets should not have to be sold to pay taxes. The market should determine when things are bought and sold. That is the best measurement--when a willing buyer meets a willing seller and they agree on a price and a time when that asset should be sold.
Unfortunately, under existing law, we have it all wrong. Under current law, in 2011 when we will once again have an estate tax due and owing within 9 months of death of 55 percent, and even in some cases up to 60 percent, that is just not right. It is not right for the family involved and it is not the best thing for the Federal Treasury, because that is not going to bring in the massive amount of revenue that would come in if the marketplace were working. It is not right because we have forced many unwilling sellers to have to deal with a very willing shark of a buyer who is waiting in the murky waters of tax uncertainty.
Some people wonder why I care so much about this issue. I have reporters from big city newspapers calling me, because I am a U.S. Senator, to remind me that Iowa is somewhat economically poor compared to very so-called wealthy places, like New York City, and that land and companies in the Midwest are not worth much. They take great joy in calling up my constituents--probably very randomly--and maybe stopping by once or twice for a so-called investigation about the haves and the have-nots of our State. They do it trying to find out the grassroots feeling about this great tax debate.
I may not get to write on the front page of a fancy urban newspaper, but I do get to talk to a lot of my constituents because I visit every county every year to find out what is important to my constituents through my town meetings. I will give you, from those meetings, a couple of examples, as my colleague from South Dakota did for his State, of why I think this debate is so important and this bill is so important and this cloture vote should pass.
Unfortunately, we have it all wrong. Under current law, in 2011 we will once again have an estate tax due and owing within 9 months of death of 55 percent and even in some cases up to 60 percent. That just is not right. We have forced many unwilling sellers to have to deal with a very willing ``shark'' of a buyer waiting in the murky waters of tax uncertainty.
These are real people who live in Iowa. They have devoted their entire lives, for multiple generations, to building businesses and creating good jobs for people of rural Iowa.
Over 40 years ago, Eugene and Mary Sukup started a grain handling and storage manufacturing company in Sheffield, IA. On my family farm, my son and I used Sukup equipment to store our corn and soybeans and to use drying equipment for drying corn for storage. So I know that the Sukups, as a family manufacturing business, have a quality product and they serve their customers well, and they serve all Iowa well in the sense of jobs. Today, the Sukup family and the next generation of two sons and their families are involved; they are still headquartered in this little community of Sheffield, IA, with a population of 968 people. But they employ over 300 people from 5 different counties, in good-paying jobs, with good retirement plans. In fact, the original employee team that started with them 40 years ago is still there today, and, in many cases, the next generation of that family has also joined the team.
In addition, the Sukups' facilities in other States, also contributing to the economy of those other States, like Defiance, OH; Jonesboro, AR; Arcola, IL; Aurora, NE; and Watertown, SD-- places where good jobs and hard work that isn't flashy and doesn't make the scandal page of big city papers are valued as important ingredients of down-home, good living. These are the places where people invest in the local economy and contribute to the community as good taxpaying citizens.
Let me tell you about another little Iowa town, Shenandoah. That is where Lloyd Inc. is located. It, too, is not a flashy company. They started making animal dietary mixes in 1958 and now is a significant provider of veterinary drugs. Eugene Lloyd is a doctor of veterinary medicine and the CEO of the company. He tells me that the company has never laid off employees due to poor business cycles and employs over 80 well-educated people in Shenandoah, a town of less than 6,000 people.
The company has also provided generous health care and retirement plans to their employees and, like I said, in rural America, those benefits are very important.
Unfortunately, even after vigilant estate planning, these two family-owned companies will be facing a combined estate tax bill of well over $40 million. That is $40 million that will leave the State of Iowa. The companies will probably face a fire sale and so often, it is sold to someone with no interest or desire to maintain the current location or contributions to the community. So there are two companies, two towns, 6 counties, 4 families and hundreds of employees, all of which will be hurt if we don't do something about the death tax. Businesses will be sold, locations will be shut down, and real people will lose good jobs and the State of Iowa will lose $40 million of hard capital invested for almost 90 years between the two companies. Not to even mention how much salary, retirement plans and charitable contributions they have made to those little Iowa communities.
So when the multinational or foreign companies come calling, we have no one else to blame but ourselves for letting these family owned companies committed to the community go away.
All of us from rural America are trying to battle what is called out-migration. If we leave the death tax in place in its punitive form in 2011, it will suck jobs, businesses, and people out of rural America.
That is why I care about this death tax debate--real people, in real Iowa counties that have entire communities that would care. It is strange, in New York City, how many multimillionaires live on any one block in Manhattan?
Those so-called multimillionaires seem a little different when you check out the Iowa corn crop, or you sit together at church or the grandson's baseball game. They are, as the popular book says ``the millionaire next door,'' they are the pillars that help hold up all those 99 counties that I visit every year. I know these are not the kind of stories that make the front page of the big city papers, but when family businesses get sold and shut down or moved out of State or even out of the United States, it certainly makes the front page of the newspapers about which I really care.
So when you hear about the number of estates affected, keep in mind, to some extent, that statistic is only a snapshot. The estate tax return is filed by the representative of the dead person. Those statistics, so often dwelled on by many of the proponents of the death tax, don't capture the full picture. The statistic is only a look at the dead person who owned the business or farm. It doesn't take into account the dead person's family, employees, or neighbors. All of those folks are affected if the death tax burdens that family business or farm.
I plan to vote for cloture, and I hope 60 other Senators also vote for cloture on Thursday. It is time we had a real debate on a reasonable solution to this problem. Kicking the can of tax uncertainty is draining dollars out of these family owned businesses, just as well as the estate tax, only the expense of planning for these uncertainties takes money every month and not just all of it within 9 months of death. Vote yes on cloture. We owe these folks an answer.