Death Tax Repeal Sent to President - Chamber Urges Signing
Cattle rancher Lynn Cornwell of Glasgow, Montana, slowly mounted his ten foot high bright red tractor parked at the foot of the U.S. Capitol steps and headed down Pennsylvania Avenue Thursday weaving in and out of the busy traffic. In hand was the U.S. House and Senate passed Death Tax Elimination Act of 2000 (H.R. 8) that he was recruited to deliver to President Clinton.

Meanwhile, several blocks away at the U.S. Chamber of Commerce, a representative somberly walked across Lafayette Park from Chamber headquarters to the White House, carrying a message from Chamber President and CEO Tom Donohue to President Clinton urging him to sign the repeal of the Death Tax.

"Our members, the majority of which are small businesses, have been asking for the elimination of the egregious federal estate, gift and generation skipping taxes," stated Donohue in his letter. "Taxes triggered by the death of business owners penalize businesses and job growth, and impact all individuals, not just the wealthy. In fact, many small business owners have told us that in order to pay anticipated federal estate tax liabilities, their businesses will be forced to curtail operations, sell income-producing assets, lay off workers, or, in extreme cases, liquidate or be sold."

The repeal of the death tax is the crown jewel of small business tax reform and has been at the center of acrimonious debate in the highly charged election-year battle over tax cuts. The political potency of this issue was demonstrated by the number of Democrats who eventually sided with Republicans on the GOP-crafted bill, even after the Democratic leadership provided a costly alternative.

Following an aggressive effort by the U.S. Chamber of Commerce on Capitol Hill, the House passed the bill on June 9 by a vote of 279 to 136, with 65 Democrats breaking ranks. The Senate subsequently passed the measure on July 14 with a vote of 59 to 39. President Clinton has promised to veto the repeal that would provide $105 billion in tax relief over the next 10 years. A two-thirds vote of each house of Congress is needed to override the expected veto.

Both major presidential candidates have weighed in heavily on this contentious issue so important to small business. Vice President Gore’s tax proposals would provide only limited relief, $7 billion over 10 years. This is considerably less than the measures currently proposed by the administration as an alternative to the GOP endorsed bill.

Nominee George W. Bush, on the other hand, would repeal the tax in a fashion similar to the current proposal, but would do it even more quickly, thus costing the Treasury $236 billion over nine years. "On principle: Every family, every farmer and small businessperson, should be free to pass on their life’s work to those they love. So we will abolish the death tax," stated Bush in his acceptance speech at the Republican convention in Philadelphia this summer.

With estimates of the federal revenue surpluses well exceeding $4 trillion dollars over the next 10 years, it is increasingly more difficult to justify not providing some tax relief. Also, when it comes to the gift and estate tax, the cost estimates do not take into account that income-producing assets are depleted, jobs are lost and capital investment is reduced in order to circumvent or pay the tax. This is revenue that the federal government could be receiving to offset the cost of this tax.

Another issue that has been raised is the cost the government pays in collecting the tax. Some estimates figure that it costs the government up to 50% of the tax collected just in its collection.

The U.S. Chamber has led the effort on Capitol Hill in the fight for the total repeal of the "Death Tax". The business organization will aggressively work to encourage a tax code that provides small business the ability to invest their money into the growth of their enterprises and not in the growth of big government.

Small Business Liability Reform Unlikely to Surface in the Senate
Over 50 percent of the American workforce is employed by small businesses. However, most of these small business owners earn less than $50,000 annually. One lawsuit - frivolous or not - can put a small business out of business. "The Small Business Liability Reform Act of 2000" that passed the House of Representatives and was sent to the Senate for debate in March, would help to prevent lawsuit abuse, while protecting the rights of those with legitimate claims.

Regrettably, when the Senate returns for work in September, it will be highly unlikely that floor time will be given to this important issue. Considering that there are only 14 legislative days left in this session of Congress, most of the time in the Senate will be dedicated to appropriations measures, China PNTR, and the second tax reconciliation bill. Under threat of presidential veto and shy of the 60 votes in the Senate needed to avoid a filibuster, even if H.R. 2366 aired, it would have been doomed for a certain death.

The U.S. Chamber of Commerce has worked hard to provide legislative relief to the system of jack pot justice that provide claimants large awards and forces small business to submit to the settlement of specious claims.

Republican candidate George W. Bush has indicated that if elected, he would work with Congress to provide just such relief.

Currently, small businesses will operate in fear of being named as a defendant in a liability case. Though they may be found minimally responsible in the case, the weight of the legal expenses can crush a small enterprise. Also, innocent non-manufacturer product sellers in the distribution chain of a product are routinely embroiled in litigation in which their conduct is clearly not at issue. Even if they are found to be innocent of all charges, the business will likely incur substantial and unwarranted legal and litigation-related costs that are ultimately passed on to the consumer.

The Small Business Liability Reform Act, H.R. 2366, and its Senate counterpart, S. 1185, require:

Punitive damages: Awards against small businesses are capped at $250,000. In order to collect any punitive damages, a plaintiff must establish clear and convincing evidence that the small business defendant, through a conscious, flagrant indifference to the rights or safety of others was the proximate cause of the harm being litigated.

Proportional liability: In a civil action, a small business defendant will only be liable for the amount of non-economic loss allocated in direct proportion to the percentage of responsibility for the harm caused to the plaintiff by that defendant.

Limited liability: Liability would be limited for businesses engaged in the business of renting or leasing a product. All innocent non-manufacturing product sellers in the distribution stream of a product would be insulated from liability, provided that the manufacturer of the product is subject to service and is capable of satisfying the judgement by the claimant.

The U.S. Chamber has been at the forefront in fighting for fundamental changes to our legal system for small business that will allow the merits of the case to control the process and not deep pockets and trial lawyers.