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Mr. WICKER. I appreciate what my friend said about the drought. Much of my State at the last minute escaped it, but I happened to be in the State of Missouri in the past few days and saw the terrible drought conditions there.
I cannot think of a worse time, with our farm community being devastated by this drought, to talk about a huge tax increase on our agriculture community, particularly in the form of the estate tax. I just learned a remarkable thing. I would ask my colleagues if this is the state of the bill we will now be voting on at 4 this afternoon.
The result of this legislation would be to take the estate tax back up to 55 percent on all of the value of an estate over $1 million. This would be a devastating tax increase. I honestly do not believe the American people understand that this is the effect of the legislation our friends on the majority side have brought forward. But if this bill is passed the way it is currently configured, that would be the result. We would go back to the old law, 55-percent tax on all, the value of these southern and midwestern farms, of any small business across the country, would go up to 55 percent over values of $1 million. It is an unthinkable result. I frankly would not be surprised if the phones across the street in our offices are ringing off the wall at this result.
I ask my friend from South Dakota if I have misunderstood the effect of this legislation.
Mr. THUNE. Mr. President, if I might respond to my colleagues from Mississippi and from Indiana, the Senator from Mississippi is absolutely right. The proposal we will vote on as presented by the Democrats today would allow the death tax exemption to go back to $1 million, that is the pre-2001 level, and apply a 55-percent tax rate on top of that.
To give you an example of how that might work in a State such as mine, I represent South Dakota. The average size farm in my State is a little under 1,400 acres.
And if you look at the average value per acre of land and multiply it by the size of the average farm, you are talking about an average farm of between $2 million and $2.5 million in value. You could be talking about--and this is average, and we have a lot of farms that will be impacted more significantly than this. But you will be subjecting about $1.5 million of that farm's value to a 55-percent tax rate; and 84 percent of the value of farm assets, according to USDA, is in real estate. They are land rich but cash poor.
What happens? When the IRS comes calling after somebody passes away and says: Your farm is worth this amount, we are going to assess a 55-percent tax, they will say: We cannot pay that. We have it in land but not cash. So they have to sell land, assets, and equipment to pay the IRS. Here we are trying to promote the intergenerational transfer of farms and ranches as part of the tradition and backbone of our economy, and this is the absolute opposite of what we ought to be encouraging. We want policies that encourage the situation that family farms and ranches stay in the family.
Having a confiscatory tax like this that would apply a 55-percent tax to assets above $1 million will have a crushing impact on farms and ranches in my State and, I submit, to other States.
Mr. WICKER. If the Senator will yield for a moment, this has also the same effect on mom-and-pops, family businesses that may have been in a family for generations. We are going to impose a 55-percent confiscatory tax on them.
I am just speechless that this bill has now gotten to the point where it brings us back to the earlier punitive estate tax rates.
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Mr. WICKER. If I may, I will make one point. I know my friend from Kansas also wants to join in.
This could only hurt job creation among small businesspeople and small farmers. I can't imagine why they want to do this. We have had 42 months of unemployment at over 8 percent, the longest period in peacetime and modern history. To put this tax on farms that create jobs and small businesses that create jobs, which is where most of our new jobs come from, is just unthinkable. I cannot imagine that it would do anything, if it were signed into law as the President wants to do, other than make that 8.2 percent unemployment rate go even higher.
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