Contact: Anton Papich
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WASHINGTON, DC - - The U.S. House of Representatives today considered legislation to repeal the estate tax, a tax first enacted in 1916 at the onset of World War I. Two bills were debated - - one, a prop that would do absolutely nothing for working families and which would benefit the wealthiest 2% of Americans; the other, an alternative targeting relief to family owned businesses, farms and ranchers who need immediate estate tax relief and which does not threaten Social Security and Medicare. It is this latter alternative proposed by Ways & Means Ranking Minority Member Charles Rangel which Congressman Rubén Hinojosa (TX-15) supported.

"It is clear that America's small, family-owned businesses and farms need relief from the estate tax so that the businesses built with such hard work can be kept in the family," said Congressman Hinojosa. "The prosperity of the last decade has increased the value of many of these small businesses and farms enough that the prospect of paying the estate tax has become a significant burden. This is a real problem that must be addressed, and the Rangel alternative which I supported is definitely the right solution."

The Rangel alternative targets relief to family owned businesses, farms and ranchers who need estate tax relief. It does a much better job of targeting relief than H.R. 8, the Death Tax Repeal Act. It would exempt 99% of family farm estates from estate taxes, and reduce the number of estates subject to the estate tax by 50%. By contrast, H.R. 8 provides far greater benefits for a relative handful of large estates than it does for the small businesses and family farms it purports to help.

The Rangel alternative provides immediate estate tax relief. It provides immediate relief for family owned farms and businesses. The $4 million per family exclusion for farms and small businesses, the 20% across-the-board rate reduction and increase in the unified credit to $1.1 million in the Democratic alternative would all take effect immediately. By contrast, H.R. 8 would make small businesses and family farmers wait for ten years to receive the amount of relief that would be available immediately under the Rangel alternative.

The Rangel alternative is much more fiscally responsible than H.R. 8. H.R. 8 would cause an enormous long-term revenue loss which will undermine the fiscal discipline that has produced a strong economy, and jeopardize our ability to retire our national debt. It would cost more than $100 billion over the next ten years, with hidden costs which increase dramatically outside the budget window. The revenue loss under H.R. 8 in the second ten-year period will explode to more than $500 billion.

Unlike H.R. 8, the Rangel substitute does not threaten Social Security and Medicare. The exploding costs of H.R. 8 will threaten our ability to meet the challenges facing Social Security. This explosion in costs will come at the exact time the Social Security and Medicare trust funds will begin to face financial challenges and the Treasury will have to redeem the assets held by the trust funds to pay benefits.