Killing the American Dream
Floor Speech
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Mr. KING of Iowa. Mr. Speaker, and I would ask the gentleman from Missouri if he would mind sticking around here for a seamless transition into this dialogue. And I appreciate being recognized to address you here on the floor of the House. It is always my privilege.
And I would pick this narrative up where it was left off in the transition component of it, and where I was, with 1,288 acres now required to sustain a unit of operation, that would be these acres, and a home place that was built with grain storage and transfer equipment and livestock facilities and those things that make it a system and a unit. Maybe some rented land out there, some rented pasture, some hay ground, some rented crop ground that keeps this system that is a viable and effective unit. And now, let's imagine that.
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Mr. KING of Iowa. And let's say five kids. That is a good number. Five kids, and they are raised on this farm.
Now, two sections of land, paid for, and the 90-year-old patriarch of this family has reached the end of his life and he is watching how his life's work that is the legacy of his predecessors, the life's work of almost a century of his memory adding all up to this point where, if he passes away in the first minute of next year, the taxman hovers over the death bed and reaches in and pulls out, aside from the $1 million exemption, 55 percent of the asset value.
That means that half of the land that has been accumulated goes to pay the taxman. The other half of that land, the five children that would inherit the balance of what is left, would have a 20 percent equity share in the land that is left, 20 percent equity share in 45 percent, roughly, of what was left. None of those children then, on that basis, have enough equity to hold that system, that unit, in place.
And so they look at this and they would think, do I want to be in debt the rest of my life trying to retire this debt, trying to borrow the money to buy the section of land that it takes to pay the taxman and buy the 80 percent that is left that they don't have equity in, that goes to their siblings, and to be able to turn the cash flow to retire it to serve the interest and principal on those two sections of land? And the answer that they will come away with, and a rational banker will tell them: You can't hold this land. I am sorry, but you have got to put it before the auction, sell this land off, pay the taxman, and then distribute the rest of the proceeds amongst your siblings and you get your 20 percent that is left over after taxes.
That means that a century of work, three generations or more that have compiled these assets, is gone, taken away, because of the class envy that comes from the leftists in this Congress and the people that think that the American dream isn't about building equity, and that you shouldn't be able to transfer wealth from generation to generation, and that somehow, because someone else worked and created the capital that this Nation thrives on, you should be punished in the transfer of that wealth into the next generation. The gentleman from Missouri knows this. I know this in the Midwest. They should know this all across America.
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Mr. KING of Iowa. The gentleman is completely correct on this. I would add to this point. Let's just say that a entrepreneur has a bright idea, and let's say 10 kids. That is a good start on a family, I tell them. And this bright idea from the entrepreneur starts a business, and they build their equity base because of the creativity and the energy and the conviction and the productivity and the competition that they put into the marketplace. This individual reaches that age of 45 or 50, and they can look ahead and say: I can check out of this. I can sell out my business and I can make the rest of this on really solid, stable investments, and I don't have to worry about the rest of my life. And, furthermore, if I continue to work, continue to take risk, continue to produce and expand the capital base of America, everything that I work for, for the rest of my life, is going to go off to the taxman to be redistributed among people across America, and I can't even give it to my children.
What does a rational person do in a case like that? And I will submit to the gentleman from Missouri and the Speaker that a rational person would come to the conclusion that it didn't pay to continue to produce once you reach the level that you could take care of yourself for the rest of your life, because you couldn't pass it along to the next generation. That destroys the American dream, and it blows the entire thing up.
I see my friend, the Judge and the gentleman from Texas, who concluded that legislating from the bench was the wrong thing, and coming to Congress to legislate from here is the right thing. And I yield to the gentleman from Texas.
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Mr. KING of Iowa. Well, I thank the gentleman from Texas.
Reclaiming my time, I look at the configuration of this proposal that is coming to the floor tomorrow and I am troubled by it. There are some good things in it.
To ensure that the current tax brackets can run for 2 years, that is a good thing. It is not as good as it needs to be. It mitigates the damage of the increase that is impending in the death tax, but it doesn't address and fix the problem. It just makes it less egregious. So those are the good things about it.
I am one who supports the credits for ethanol and biodiesel. I could make that argument, and it is not a bumper sticker argument. But the Federal Government has said we want you to invest your private sector capital in producing renewable fuels, and if you will do that, we will make sure there is enough there to get you started.
Well, they invested, at least in my district, 3 years in a row over $1 billion in renewable energy, and now we are looking at that rug being jerked out from underneath the people that trusted the Federal Government. We may or may not agree on that policy here, but I think the government needs to be consistent.
But in any case, here is what we are really looking at: We need to make the current tax structures permanent. We need to eliminate and abolish the death tax, because it is an immoral tax.
And into this bargain, what do we get? We get an increase in the death tax that goes from zero on up to a $1 million exemption with a 35 percent tax, and that ax that is hanging over the head instead is a $1 million exemption and 55 percent.
The current tax is zero. George Steinbrenner's heirs paid zero in death tax, and those who pass away in this year pay zero, no matter what the amount of their equity. Actually, these are the goods things about this proposal.
But the bad things are this: That the unemployment extensions that are there take it out to 99 weeks. We have gotten along for about three generations with 26 weeks of unemployment. We know that that bridges people over a seasonal job, it gives them half a year to find a job. And when you look at the time that people that are on unemployment spend to search for a job, it is about 20 minutes a day in the first weeks of their unemployment, and as that unemployment winds down into the 26th week, it is about 70 minutes a day that they spend looking for a job. They are far more likely to find a job the first week after their unemployment runs out than they are to find a job in the first week that their unemployment starts.
So there is a huge transfer of wealth that takes place there, paid for out of borrowed money that comes from the Chinese, the interest and principal that is dumped on our children, and that is about $56.5 billion that accumulated there.
Then we have about $40 billion with the transfer payments. These transfer payments come in the form of refundable tax credits. Refundable tax credits is money that goes off budget, 100 percent of it is borrowed, and a lot of it from the Chinese, that pays people that are do not have a tax liability for the child care tax credit that is there and about two other credits that transfer wealth.
You add this up, that is about $40 billion in that category, and $56.5 billion in the other category. So we are in the area of $101 billion or $102 billion in transfer of wealth, before you get to the pay control component this, which troubles me.
They lower the payroll tax by 2 percent on the employee side, but not on the employer side, which distorts the equation of a dollar out of the employee, a dollar out of the employer. And most of us see this as that is all money that is earned by the employee. As an employer, I will make that case. But when you distort the equation, then you are presuming that the employer is making money and the employee is not, and the favor goes to the employee side of this. It will take awhile for economics to balance that one out.
But in the end, we have a 2-year extension of current tax structure for personal income tax, which if you think about it from a business perspective, if you have a business plan and a business model and you are going to invest capital in order to try to get a return on that capital, which means make some money, and in the process of doing that you create jobs, if you have a business model that has a 2-year ROI, return on investment, if you have got that kind of a business model, you have already invested that as fast as you could come up with the idea and come up with the capital to invest it. But most of this on the other side, most capital investments are 10 or 15-year returns on investment.
So if you have got a 2-year extension and a tax increase on the other side of that, it doesn't release the capital in such a way that it is going to create the jobs. So we don't get anywhere near the kick out of this for our economy that some of the economists say that we do. And the day will come at the end of these 2 years, we are in the middle then of a presidential race, congressional races, House and the Senate, and the debate then engages again, do we do President Obama's Keynesian economics on steroids, do we continue and add to the $3 trillion in wasteful spending that has come from that? And they are going to say, well, we gave you your tax model for 2 years and it didn't work. Therefore, we need to go back to spending money like Morgenthau admitted was wrong.
I yield to the gentleman from Missouri. I see we have 3 minutes left.
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