Death Tax Repeal Permanency Act of 2005 - Motion to Proceed

DEATH TAX REPEAL PERMANENCY ACT OF 2005--MOTION TO PROCEED -- (Senate - June 07, 2006)

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Mr. KENNEDY. Mr. President, the audacity of the Bush administration and their congressional allies truly knows no limit. In spite of all of the urgent problems facing our Nation--from the ongoing war in Iraq, to the devastating hurricane damage along the gulf coast that has not yet been repaired, to the outrageously high gasoline prices that are squeezing American families--the top Republican priority is eliminating the estate tax for the richest families in the country. President Bush's policies have already added nearly $3 trillion to the national debt in the last 5 years. Now, they are proposing more of the same, more tax breaks benefiting only the wealthiest among us.

The first 10 years of estate tax repeal would cost $800 billion in lost revenue, nearly a trillion dollars when the cost of interest on the higher national debt that would result is included. It is unaffordable. It is the ultimate example of misplaced priorities. Repealing the estate tax would cost as much each year as the Federal Government spends on homeland security, and it would cost more than we spend on education. And, it would be grossly unfair.

Today, under current law, only 5 estates in 1,000 are subject to the estate tax. By 2009, only 3 estates in 1,000 will be subject to the estate tax. Only estates over $3.5 million will be taxed. Thus, repealing the estate tax would only benefit a few thousand heirs of the richest men and women in the country. One columnist recently called it the ``Paris Hilton Tax Break'' and that description accurately identifies who would benefit from such an enormous tax giveaway.

The notion of an estate tax is nothing new or radical. We have had an estate tax for over 100 years. During much of that period, it covered a far greater percentage of estates than we are taxing today. One of the strongest advocates of the estate tax was Teddy Roosevelt, who believed it was essential to a fair and democratic society. Those who have benefited most from the opportunities America offers have a special obligation to contribute something back to their country.

Advocates of repeal always claim that the estate tax forces the sale of large numbers of farms and small businesses each year. That claim is greatly exaggerated. CBO analyzed this issue. It concluded that if the 2009 exemption level of $3.5 billion had been in place in 2000, only 94 small businesses and 65 farms in the entire country would have owed any estate tax. Of those, most had sufficient liquid assets to cover the estate tax owed without touching the business or farm. The few that did not, have the option of paying the tax in installments over 14 years.

These small businesses and farms are being used as a sympathetic Trojan horse to conceal those who would really benefit from estate tax repeal. The real beneficiaries of repeal would be the heirs of the richest men and women in America.

If we eliminate the estate tax on the largest concentrations of wealth in our society, we will be permitting the very few who inherit huge amounts of money to receive their millions tax free while working Americans have to pay substantial taxes on their wages. It would be terribly unfair to tax work while giving inherited wealth a free ride.

The estate tax is the most progressive of all Federal taxes. At a time when the income gap between the wealth few and the middle class has grown disturbingly wide--wider than it has been in decades, why would we want to transfer more of the tax burden from the rich onto the shoulders of middle class families. Make no mistake, the trillion dollars that would be lost should the estate tax be repealed will have to be made up by increasing other federal taxes, taxes paid mostly by the middle class. That is the injustice of repealing the estate tax.

What we should do is make permanent the estate tax that will be in place in 2009--covering estates over $3.5 million--$7 million per couple--with a top tax rate of 45 percent. Only three-tenths of 1 percent of estates would owe any tax under that proposal. While the maximum rate of 45 percent may sound high, that figure is very misleading. Analyses show that the effective tax rate on these estates--the rate after the $3.5 million exemption and other available deductions are taken into consideration--would be, on average, only 17 percent.

I believe all the revenue from preserving the estate tax at the 2009--level should be statutorily dedicated to the Social Security trust fund. Saving Social Security for the many who depend on it is far more important than repealing the estate tax for the wealthiest few.

No Government program reflects the values of the American people better than Social Security. We are a community that takes care of our most vulnerable members: the elderly, the disabled, and children whose parents have died prematurely. Two out of every three retirees receive over one-half of their income from Social Security. Without it, many of them would be living in poverty. Social Security does much more than provide retirement income for seniors. It also provides lifetime disability insurance protecting those who become seriously injured or ill. When a worker becomes disabled before reaching retirement age, Social Security is there to help him and his family. And when a worker dies leaving minor children, Social Security provides financial support for those children until they reach adulthood.

The revenue from the estate tax would reduce the Social Security shortfall by more than 25 percent, according to the Social Security Administration's chief actuary. It would add years of solvency to the program. That would set the right priority for America.

The priorities of this Republican Congress have been wrong for our country. If we are serious about reducing the deficit and strengthening the economy, we must stop lavishing tax breaks on the rich, and start investing in the health and well-being of all families. These families are being squeezed unmercifully between stagnant wages and ever-increasing costs for the basic necessities of life. The cost of health insurance is up 56 percent in the last 5 years. Gasoline is up 75 percent. College tuition is up 46 percent. Housing is up 57 percent. The list goes on and on, up and up--and paychecks are buying less each year.

The dollars that Republicans now want to spend on the ultimate tax break for the rich--allowing the heirs of multimillionaires to inherit their enormous wealth tax free--are dollars that should be used to help all Americans. The American people deserve better; and in November they will insist on a new Congress that truly shares their values and cares about their needs.

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