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Mrs. MURRAY. Mr. President, I rise today to express my support for S..1128, the Estate Tax Elimination Act.
Mr. President, I came to understand the impact of the federal estate tax during my first campaign for election to the U.S. Senate. As I met with hundreds of small businessmen and women, timber lot owners, and farmers and ranchers, I consistently heard the federal estate tax was a major road-block to the long-term success of their family operations.
But when I came to the Senate in 1993, it appeared it would be a long time before Congress could take action on the estate tax, or any other tax issue for that matter. We faced deficits as far as the eye could see. We had to make hard choices about spending cuts and tax relief for the neediest families. I'm pleased that my colleagues and I on the Democratic side made those tough choices in 1993 and in subsequent years. Combined with a strong economy, those tough choices gave us the opportunity to be in the position we are in today.
The effort to roll back the federal estate tax, and provide relief for farms and small businesses, started slowly. In 1995, I joined those efforts by introducing S..161, the American Family Business Preservation Act. Senator Bob Dole was the prime Republican cosponsor of this measure. With respect to the estate tax, the Murray-Dole bill would have reduced the maximum estate tax rate from 55 percent to 15 percent if the heirs continued to own and operate a business for ten years after the death of the primary owner. Given the limited resources we had, I believed this modest bill was a good step forward.
In 1997, Congress passed the Taxpayer Relief Act, a bipartisan effort to reduce taxes for working Americans. The bill provided for an increase in the estate tax exemption over ten years, and created an additional exemption for small business and farm assets. I supported this bipartisan initiative to provide estate tax relief to my constituents. As it is phased in, this law will help to ensure the very small percentage of estates subject to the estate tax bill grow even smaller.
But we should all recognize the environment has changed. As projected surpluses have grown, the debate about the estate tax has turned from increasing the exemption to outright repeal. Estate tax opponents have made their case for elimination, and it's compelling. The question for me is no longer whether the estate tax will or should be repealed, but how and when it will be repealed. I believe one of the appropriate roles for Democrats in this debate--the same Democrats who helped balance the budget--is to ensure that we promote as progressive an end to the estate tax as possible.
At this moment in time, I believe S..1128 is the most progressive estate tax repeal vehicle that is under consideration. Instead of taxing an estate when it is transferred to the next generation, it
would require heirs to pay a capital gains tax on appreciated value when the asset is sold. This provides an effective mechanism for transferring farm and business assets, while still maintaining a reasonably progressive tax structure.
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I understand there is some debate about whether S. 1128 or similar proposals will increase the tax code's complexity. Now that the House has overwhelmingly passed estate tax repeal, we have an ideal opportunity to engage in a serious, thoughtful debate about the current effects of the estate tax and the possible implications of various repeal proposals. I believe by the end of this year, Congress, the Administration, and the American public will have a better understanding of the complex choices we face.
I would like to make it clear that I do not believe estate tax repeal should be the only tax priority of this or future Congresses. There are many inequities, complexities, and inefficiencies in the tax code, many of which affect low- and middle-income working families who need tax relief the most.
In the spirit of helping those who need it the most, I have cosponsored legislation to address the alternative minimum tax and the marriage penalty. In addition, I have cosponsored tax legislation to expand health insurance, improve the infrastructure of our nation's public schools, encourage alternative energy sources, enhance the safety net for farmers and ranchers, and increase the availability of child care and long-term care. Last year, I sponsored tax legislation to protect forest and agricultural land, which passed the Senate in July.
Estate tax relief should certainly be an important component in any agenda to provide relief and economic opportunities to working families and family-owned businesses. Therefore, I support estate tax repeal in the context of a modest, targeted tax cut benefitting working families.
Before the end of the year, Congress and the Administration will likely reach agreement on a reconciliation package. Further reform--if not repeal--of the estate tax should be a part of that package. While repeal may not be possible this year, I look forward to strongly supporting increased exemptions for small business and farm assets. At the very least, we should guarantee a brighter and less complicated future for those families that need estate tax reform the most.
I urge my colleagues to cosponsor S. 1128, and to work toward meaningful action on the estate tax issue before Congress adjourns this fall.
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