Jun 07 2006
Senator Shelby’s floor statement, as prepared, is included below:
Mr. President, I rise today to voice my strong and unwavering support for a full repeal of the Estate Tax – or the Death Tax as it is often referred.
Mr. President, until World War I the United States government only imposed an estate tax or inheritance tax to raise revenue to fund expenses directly related to the necessities of war. Even then, the rate was measured.
However, that practice changed after World War I and unlike four previous occasions, the tax was not repealed once a peace agreement was reached. In fact, the tax continued to increase until it reached 70 percent during Franklin Roosevelt’s Administration.
Mr. President, what was once a means to finance war, eventually became a significant revenue stream that funded all aspects of a burgeoning federal bureaucracy. Today, the estate tax continues to provide a significant revenue stream to the federal coffers and functions as a redistribution of personal wealth and punishment to those successful business owners seeking a better way of life.
The death tax places an undue burden on our nation’s family-owned farms and small businesses. These individuals work tirelessly day in and day out to make their own way, to contribute to society and the economy only to be told their loved ones will be punished when they die. Too often, I hear of sons and daughters forced to sell a piece, if not all, of the legacy that their parents worked to create and sustain, simply to pay estate taxes.
Mr. President, that scenario is just wrong. We should not punish hard work and entrepreneurship – we should reward it. We should reward those that choose to continue their family businesses rather than shut them down. These people work hard to promote prosperity and growth in their local communities – only to be told by the federal government that in addition to the taxes they have paid each and every year, they must now pay an additional tax, the death tax, because someone died.
Mr. President, taxing death has a negative impact on the desire of Americans to invest and save. A basic economics class will teach you that savings and investment are positive for individuals, families, and our economy. Punitive taxes such as the estate tax, capital gains tax, dividend tax and the gift tax all have a negative impact on our overall economic growth.
In 2001, Congress acted to eliminate the estate tax by January 1, 2010. Unfortunately, this provision sunsets in 2011, just one year after it is fully repealed. As it currently stands, in 2011, the tax code is set to completely reverse all progress we have made to reduce the tax burden on our nation’s entrepreneurs. So, those who are not fortunate enough to die in 2010, will be faced with the prospects of their loved ones being responsible for as much as 55% of the estate’s assets.
Whether it is a construction company, a cattle farm, a medical practice, or any of a hundred other businesses, they all require significant capital investment in land, equipment, and/or materials that quickly overcome the threshold we will return to in 2011. These investments are not part of the business -- they are the business.
I am also concerned, that like the other taxes I mentioned earlier, the estate tax serves as a second bite at the apple. Our current tax system too often taxes income and then asks for more. The estate tax is one of the more egregious examples of this situation.
Mr. President, I believe the Federal government should work to minimize the burden on the American taxpayer and simplify our tax system. The estate tax is contrary to both of these purposes. It not only taxes assets a second time, it also is one of the more complicated taxes to comply with in our bloated tax code.
Mr. President, I believe repeal of the estate tax is one of many steps we, as elected representatives of our respective states, should take to spur economic growth, remove the burden on small business, and simplify our tax system and I urge my colleagues to support immediate and full repeal.
I yield the floor.