H868 CONGRESSIONAL RECORD — HOUSE March 11, 1997 are there such evil ideas being put port was later issued by President Tru- same policy goal in this House, as forth? It is because so many people man’s Citizens Committee on Civil Members well know. have given up; so many people do not Rights in 1947 and eventually became The second part of the equation is recognize that when we put the coali- the basis for the 1957 Civil Rights Act. empowering people, how we are going tion forward, we are the majority, we Mr. Aronson was also one of the ten or- to empower the individual and not gov- do not have to be beggars. ganizers and leaders of the historic 1963 ernment. That is the logical second Arnold Aronson understood that. He march on Washington. part of the equation. understood the price we have to pay in Throughout his career, Aronson has energy and time and patience to make worked with many organizations span- First of all, putting the brakes to the coalitions work. I salute Arnold ning the entire spectrum of the civil government. I am pleased to sit on the Aronson, and I hope the young people rights movement. He was program di- Committee on the Budget under the will go searching; when they do their rector of the National Jewish Commu- chairman, the gentleman from Ohio book reports and they make their var- nity Relations Council and founder and [Mr. KASICH]. I am pleased to sit with ious presentations during Black His- president of the Leadership Conference Members from both sides of the aisle tory Month, as well as any other time, on Civil Rights Education Fund. He is who are serious about actually bal- that they single out people who have also noted for his attempts to rally ancing the budget, what should be a not been highlighted in the encyclo- Jewish and black communities in the noncontroversial goal in American po- pedias enough, people who have not interest of racial tolerance. litical discourse, but it is. An awful lot been portrayed on the calendars, but I salute the dedication and contribu- of folks we represent do not understand the people who have made history what tions of Arnold Aronson to civil rights. why it is so controversial. it is in terms of the positive movement f As I said earlier, Mr. Speaker, it is forward in America, people like Arnold GENERAL LEAVE Aronson. I congratulate Arnold the natural inclination of people to Mr. CLYBURN. Mr. Speaker, I ask Aronson on his 86th birthday. please. It is the natural inclination of unanimous consent that all Members folks in public office to please. We are b 2045 may have 5 legislative days within politicians. We run for elections. We I congratulate Arnold Aronson on his which to revise and extend their re- want votes from folks. Usually we get 86th birthday. I thank the gentleman marks on the subject of this special those votes by promising people some- for being here. order. Mr. CLYBURN. I thank the gen- thing. Unfortunately, on both sides of The SPEAKER pro tempore (Mr. the aisle over the last 3 decades in this tleman for his statement. Mr. Speaker, ROGAN). Is there objection to the re- town, we have garnered votes by prom- in closing this special order this quest of the gentleman from South ising more government. evening, I thought as I listened to the Carolina? remarks being made by my colleagues There was no objection. For whatever societal ill has come this evening, I thought about the last f about, whatever real or perceived prob- time I shared a lunch, I believe it was TAX AND SPEND lem is high on the national agenda, in Kansas City, with Arnold Aronson politicians have promised more govern- The SPEAKER pro tempore. Under and the things we talked about. ment because it is the easy thing to do. the Speaker’s announced policy of Jan- I thought about many of his succes- It is always easier to say yes than say uary 7, 1997, the Chair recognizes the sors as president of the National Asso- no. It is always easier to create one gentleman from Maryland [Mr. EHR- ciation of Human Rights Workers: Dick more law, to put out one more regula- Lexum in Michigan, Leon Russell, and LICH] for 60 minutes. Mr. EHRLICH. Mr. Speaker, I am tion, to create one more agency, to Albert Nelson in Florida, Mary Snead pass one more statute, because unfor- in South Carolina, Marjorie Connor in going to be joined by a number of our tunately, an awful lot of us run for Michigan, and many, many others. colleagues tonight on the majority side I thought about Martin Luther King, to talk about a couple of issues of great election on records, and those records Jr.’s letter from the Birmingham city importance to the American people. are composed of what bills we have jail. A lot of us read that letter. I try The gentleman from California [Mr. passed in the legislature. to read it at least once a year. There is COX] and I want to talk about an issue We do not measure success by how we a place in that letter where King spoke near and dear to our hearts, reform of have downsized government, we meas- or wrote about people like Arnold estate taxation and the way we tax ure success by how we have increased Aronson. He wrote at one place in his success in this country. the scope of government in our daily letter that we are going to be made to We are going to talk about the bal- lives. That is very unfortunate. I think repent in this generation, not just for anced budget, and the hope for cutting a lot of the folks elected around here in the vitriolic words and deeds of bad the capital gains tax rate in this coun- the last couple of terms understand people, but for the appalling silence of try. Mr. Speaker, what we are really talk- that is not the appropriate measure of good people. what we should be doing in this town, I am pleased to join with my col- ing about tonight is tax and spend: how because we simply cannot afford it. leagues tonight thanking Arnold we tax and why we spend so much in Aronson for being among the good peo- this country. There is a distinction between poli- ple who refused to remain silent. Be- There are really two issues, when we tics and leaders, between politicians cause he spoke up and because he stood think about it. One is how we put the and leaders. Politicians respond to the up, many of us are here in this body brakes on government, because the na- natural inclination for government to this evening, and many of us are in ture of government is to grow always, grow. Leaders will make the right deci- similar bodies all across this country. I at every level of government: local, sions. Leaders will say no, because part can think of no better way to help him State, and Federal. That is pretty nat- of leadership is saying no, and that is celebrate his 86th birthday than to ural when we think about it, because it where the Committee on the Budget is, have participated in this special order is the nature of elected officials to particularly in the 105th Congress. tonight. want to please their constituents. That is what we are going to deliver to Finally, Mr. Speaker, I want to wish Unfortunately, that desire to please the American people, a real balanced Arnold Aronson many, many more has given us an almost $6 trillion budg- budget with honest numbers. birthdays. et deficit in this country, an issue we Mr. BISHOP. Mr. Speaker, I rise will be talking about in greater detail The second part of the equation is, today to applaud the work and char- in the course of the evening. once we get government to stop grow- acter of Arnold Aronson. His distin- How do we put the brakes on the na- ing, how do we empower people? People guished career in civil rights spans ture of government? In Maryland, in want to be empowered. As government nearly 60 years. Mr. Aronson is most the Maryland Legislature, the Mary- loses power, individuals gain power. noted for being one of the founders of land General Assembly, where I came One, we empower people to put more the Leadership Conference on Civil from for 8 wonderful years, we have a money in their pockets so they can de- Rights in 1950 and his draft of the re- constitutional requirement for a bal- cide how they will spend their own port ‘‘To Secure these Rights.’’ This re- anced budget. We are striving for that hard-earned money. March 11, 1997 CONGRESSIONAL RECORD — HOUSE H869 There are two issues I would like to That would be a great thing if it happens? The job creating potential of discuss with my colleague, the gen- worked, but it does not, for two big that business is destroyed so no new tleman from California [Mr. COX] this reasons. First, it does not yield much people will be employed there. But evening, and we may be joined by an- revenue. Less than 1 percent of all of worse yet, the people who did work other colleague, the gentleman from our Federal revenues is provided by there lose their jobs. And what is their California [Mr. RADANOVICH]. They per- death taxes, even though every Amer- rate of tax? It is not even the 55 per- tain to two major issues in the 104th ican knows that there is an army of tax cent, which is a confiscatory rate for a Congress with a common goal: how we lawyers and tax accountants at work in tax on after-tax life savings. It is 100 will empower individuals, how we will the industry of avoiding this tax. percent. They pay a 100-percent tax be- empower people to be successful in life. The second thing is, to the extent it cause their entire income has been I am joined by Mr. COX, and I would is paid at all, rich people are not the wiped out. They have just lost their first like to compliment him on the ones paying it. Rich people like Jac- jobs. great leadership he has shown with re- queline Kennedy Onassis can avoid this This is what is happening to family spect to the first issue, which is the tax, as she did when she passed on her businesses, to small businesses, to way we penalize success in this country estate to her already wealthy heirs ranches, farms across America. It is re- through estate taxation at the Federal with a state-of-the-art trust. Most of sponsible for the loss of both new job level. that tax liability is thereby foregone. opportunities and existing jobs. I know the gentleman has a number Peter O’Malley, who many Ameri- The White House Conference on of comments on this subject, so I yield cans who live outside of California Small Business, whose conferees were to the gentleman from California [Mr. have now come to know as the owner of appointed by President Bill Clinton, COX]. the Dodgers, at age 59 decided that he made repeal of death taxes, not mod- Mr. COX of California. Mr. Speaker I had an estate planning problem. The eration of death taxes, not reform of thank the gentleman for yielding to Dodgers were a family owned business. death taxes, but repeal of death taxes me, and I thank the gentleman for co- They are a local franchise and a local their No. 4 priority out of over 50 legis- authoring this legislation with me. We asset for us in southern California. We lative proposals to help small business now have, as he knows, well over 100 certainly do not want it busted up. in America. This is how great a con- sponsors, Democrats and Republicans, But the O’Malley family, and Peter cern this issue is to small business. in this Congress to do what California O’Malley specifically, looked at the We talk a lot about tax simplifica- did by an initiative of the people; that problems that would be faced for that tion. Do you know how many pages of is, repeal death taxes, the taxes on family owned business if he were to die the Internal Revenue Code are clut- after-tax life savings, at the end of a and he had not liquidated or sold the tered up with the death tax alone? lifetime of hard work. Dodgers and passed them on to some Eighty-two pages of legalese that no A liberal, and I know he is a liberal corporate owner. So with the death tax American can possibly understand because he describes himself as such in at 55 percent, somebody like Peter without the help of a fancy tax lawyer testimony before Congress, professor O’Malley has a pretty big incentive to and tax accountant. That is just the from the University of Southern Cali- convert that tax liability into a capital Code itself. fornia where I went to college said, as gains tax liability by selling the team Then there are several hundreds of an unrequited liberal he was opposed to while he is still alive, and then taking pages of tax regulations interpreting death taxes because they are so anti- those liquid assets and putting them in those 82 pages that, again, you have liberal. He called them virtue taxes. the form of a trust or whatever, the got to have paid professionals to inter- If we think about it, it makes sense. fancy tax lawyers and accountants pret and understand. We are familiar with the notion of a sin come up with to avoid the tax at death, So what happens is that while the tax, taxing tobacco or taxing alcohol as wealthy people are wont to do. Government does not get the revenue or taxing gambling. These are called Rich people do not pay it, and it does from the tax, as I said, less than 1 per- sin taxes. But a virtue tax would be a not provide any revenues. It does not cent of our Federal revenues comes levy by the government on virtuous be- work. It fails the test of empiricism, from this source, tax lawyers are get- havior, such as saving, investing, work- but what it does do is change behavior ting some money. Tax accountants are ing, avoiding conspicuous consumption all over America. Even worse than getting some money. There are a lot of and instead helping other people. that, it busts up small businesses; not, trusts and avoidance techniques that That, however, is what the death tax typically, Peter O’Malley’s Dodgers. are set up that people are investing in. is. It tells someone during her or his They will not be busted up by the es- All of it is make work. No economic life that what they should really do if tate tax on Peter O’Malley’s death, al- product as a result of all this. It is an they can acquire any earnings from though they might be moved out of insipid, wasteful and, I daresay, im- their work is consume it. Do not save L.A. as a by-product of the death tax. moral system. it, do not invest it; use it up, use it up, But family farms, ranches, small busi- I will close with this point and yield but surely do not try and use it for the nesses run by people who are cash-poor, back to the gentleman by explaining purpose of making your family better who have trouble meeting the payroll why I go so far as to say this is im- off. on a weekly basis, will get busted up. moral. I mentioned the reasons that It is ironic, because what that does is Seven out of 10 family businesses, 7 out this is a virtue tax, that it directly dis- act as a repealer on human nature. of 10 small businesses in America do criminates against savings, work, in- After you get done putting food on the not survive the death of the founder. In vestment, the avoidance of conspicuous table and clothes on your back and a 9 out of 10 cases it is because of death consumption, so on, but it is even roof over your head, as a human being taxes. worse than that. It goes further than the most powerful incentive that you What happens is that if you own that in the injury that it inflicts on have to continue working is to help something that is an ongoing busi- Americans. those that you love. nesses, the death tax is applied not to I was talking to a city council rep- So Congress in its infinite wisdom your income, not to your wealth, not resentative in one of the cities that I came up with a tax on that virtuous to your cash or liquid assets, but to the represent. It is a part-time city coun- behavior, on continued hard work even property, and the only way to satisfy cil. And in his real life, in his working beyond what you need for yourself, on that tax is to sell the property in order life, outside of politics, he is an estate saving, on investment, on the avoid- to create a liquid asset, since the Gov- planner and a tax lawyer. He told me ance of conspicuous consumption, and ernment will not accept your business that in a recent day, just before I had called it a death tax, for the reason in exchange for the tax liability. They spoken with him, he had spent the that, I suppose, we could extract a want cash. afternoon with one of his clients on his third time from someone that we had client’s deathbed as that man was pass- already taxed on income during life, on b 2100 ing away. And in the hours that he capital gains during life, more money You have got to liquidate the busi- spent with him, he had him sign docu- for the benefit of everyone else. ness. You have to bust it up. And what ments. H870 CONGRESSIONAL RECORD — HOUSE March 11, 1997 This was at a time when his wife and more jobs would be created and private become commonplace, which ought to his children, his family would have capital would increase $630 billion sim- be considered either the extreme or the loved to be with him and spend their ply by the repeal of this very unfair absurd by us in this, in the form of last moments with him while he was tax. those types of taxes. spending his last day on Earth. But in- And I have to point out one further Granted, there are those that would stead he was with a lawyer signing doc- fact, the wonderful thing about meas- argue that income redistribution is uments. uring Government not by how much it good for the poor and gives a leg up to This lawyer said to me, this city grows but by how much it contracts is the poor and needy. And I just have to councilman who also represented his your bill, H.R. 902. How many pages did say that that is not the case and that neighbors on the city council, that you earlier state this particular tax the American people, who are very gen- none of the papers that he had his cli- takes up in the code? erous people and who are encouraged ent sign had any economic effect. Mr. COX of California. In the Inter- under freedom to take care of their There was really no real life con- nal Revenue Code, 82 pages. weaker neighbors, do not have to re- sequence to any of these things except Mr. EHRLICH. Your repeal takes up 7 sort to a government-imposed tax to this: that if you signed the papers, you lines. That is what we should be about redistribute wealth in this country. did not owe the tax and if you failed to in this town. It punishes accomplishment. It pun- sign the papers, your family would lose I know I have a small businessman, a ishes success. It is an infringement on the life savings that you had put to- good friend, Mr. RADANOVICH, waiting the rights of the family institution in this country and really is counter- gether so that they could keep on to speak on this issue. I welcome the productive. Unfortunately we have got- going. gentleman and I welcome my friend, ten to the point in this country, I guess So the man signed the papers, was Mr. HAYWORTH from Arizona. I yield to that is my observation, that this is ac- deprived of those final moments with the gentleman from California, Mr. cepted. This is the norm. I cannot help his family. The Government got no RADANOVICH. but think about those early explorers money. The tax lawyer got paid and Mr. RADANOVICH. Thank you very of this continent and the Founders of the tax lawyer came to his Congress- much, Mr. EHRLICH. this Nation who had, if they had any As my friend and colleague, CHRIS man and complained, this is not what idea what kind of taxes this Govern- Government should do to American COX from California is one of the many from the 52 Members of the California ment was imposing for the various rea- citizens in their final moments on sons that they do, they would be roll- delegation that traveled to his State Earth. ing over in their graves right now. It is an immoral tax besides being a back and forth, many of us spend long Mr. EHRLICH. I agree with the gen- failed exercise in collecting revenue. I hours, as do you from Arizona, on the tleman and I really think the gen- mentioned, less than 1 percent of the airplane back and forth. I managed to tleman has hit the bottom line. At revenues are provided by death taxes. get hold of an incredible book that I some point in this country, in this very Sixty-five cents of every dollar col- would spend my time reading going House, the collective decision was lected are consumed either in adminis- back and forth across this country. It made to punish success and punish risk trative costs by the IRS or compliance is called ‘‘Undaunted Courage.’’ It is by in the capitalistic society. When you costs by Americans who are seeking to Stephen Ambrose. It is the story of the think about that, it really makes no avoid their tax liability through legal discovery or actually the mapping of sense. means, hiring tax lawyers and account- the Louisiana Purchase by Meriwether I have another question for the gen- ants and so on, who are hiring tax law- Lewis. And he was sent out in the tleman from California, but first I yers and tax accountants to help them 1800’s, 1804, by the third President of want to recognize our good friend, Mr. fill out the paperwork so they can pay the United States, Thomas Jefferson, HAYWORTH of Arizona, who I know has the death taxes that the Government is to explore what was recently purchased some very articulate views on these not getting appreciable revenue from as an addition to the United States. I two issues. in the first place. read with fascination and interest the Mr. HAYWORTH. Well, I thank my This is a miserable idea to have on stories of risk that that man took, colleague from Maryland. the books. It is a failed exercise. What- Lewis and Clark, both of them, and Mr. Speaker, as I was listening to my ever good intention there may have their party, in coming across to dis- two colleagues from California, I been behind putting it on the books in cover this new land and map out this thought some incredibly valid points the first place, we now have nearly a continent. were made this evening in this Cham- century of experience with it. It de- I cannot help but think what either ber to the rest of the American people. serves to die. The death tax deserves to Meriwether Lewis or Thomas Jefferson My colleague from Orange County die, and we should repeal it. And that would have thought had they realized pointing out in a very poignant fashion is why I am so happy to see so many that this country had come to the the human toll, the emotional equation Members here on the floor fighting for point where the U.S. Government is that was sacrificed in the name of ac- that effort. taking away wealth from not even the counting brought about by this radical Mr. EHRLICH. Mr. Speaker, I again rich, I mean this is middle-class stuff redistribution of wealth, this success congratulate the gentleman on his here, and that they are actually into tax, this death tax, and my colleague great leadership with respect to this income redistribution. from northern California, the first issue. We have been joined by two of It was fascinating to make that com- vintner to work in elective office as a our great colleagues, Mr. RADANOVICH parison of when you go back and you constitutional officer since the third of California and Mr. HAYWORTH Of Ari- are privy to so much here in Washing- President of the United States, Mr. Jef- zona. What I would like to do is, Mr. ton about how this country started and ferson, history will provide us the an- COX, I would like for you to comment the founding principles and the people swer whether or not my colleague from on this question as well, because you and the ideas they had and such hope northern California will follow Mr. Jef- have pointed up some very pertinent that they had for the American people, ferson as time passes, but you ask the facts concerning the history of this then come to find out that we are in a question historically, what would our very unfair tax. situation where we are charging cap- founders say, not only explorers such You pointed out that it began as es- ital gains and we are imposing a death as Meriwether Lewis, not only figures sentially a tax on the very, very tax on the American people. Frankly, I such as Thomas Jefferson, but one of wealthy. And it has come to represent just do not think it was really what those great men who really had a life a real punishment scheme against mid- they intended when they put this coun- that in many ways paralleled Jeffer- dle class folks in this country, particu- try together with the ideas that they, son’s, overlapped, Jefferson’s indeed larly small business people. I will just the founding ideas that they came up one of the other founders of this Na- cite a recent study from the Center for with. tion, Dr. Franklin of Pennsylvania, the Study of Taxation wherein it is es- So it is unfortunate, I think, that we Benjamin Franklin, not only one of our timated that over a 7-year period, GDP have come to this position, what we founders but, at the time of this emer- would increase $79.2 billion, 228,000 the American people have allowed to gence on the American scene, one of March 11, 1997 CONGRESSIONAL RECORD — HOUSE H871 our great humorists and philosophers. sophical divide in this 105th Congress day, what we have lived. And my ques- And I believe it was Dr. Franklin, in amidst this era of good feelings and bi- tion to Mr. COX is, how did we get to his writings for Poor Richard’s Alma- partisanship, it is of course the notion where we are? How did the gentleman, nac, who said there were two cer- that our opponents believe, many of who has been a great leader on these is- tainties in this life: death and taxes. them, that a centralized government sues, and others in this body have been But I do not believe even Dr. Frank- redistributing the wealth knows what great leaders on these issues, how did lin, with his prescience, could have told is best. We say the contrary is true; we fail to send the right message to the us that today this constitutional re- that the American people, working American people that we will no longer public would tax people upon their families, since this tax extends now not penalize risk in this free society? death. Of course, in the wake of the to the super wealthy but to those of Mr. COX of California. Like so many largest tax increase in American his- moderate means, who have worked all things, and I thank the gentleman for tory visited upon the American Nation their lives, to, yes indeed, working yielding, these taxes were born of good of the 103d Congress, when our current families, by allowing those families to intentions. Like so many government majority was in the minority, when provide for themselves, by allowing the programs, they started out as simple three of us amongst the four were pri- fruits of their labor to be invested, we things and grew into complexity and, vate citizens, a retroactive tax increase will in fact continue to build this econ- in fact, inefficient complexity, so much at that. omy and continue to be the envy of the so that they fail utterly in achieving Mr. Speaker, colleagues, I have been world. the intended purpose. Capital gains is a across the width and breadth of the So I am honored to be here. I cer- perfect example. Sixth District of Arizona, visiting with tainly appreciate the efforts of my col- As recently as 1978, capital gains a variety of constituents in a variety of league from southern California, and I taxes were even higher than they are town hall settings. And from retire- thank the gentleman from northern now. And in 1978 there was a bipartisan ment communities in Sun Lakes to California, and my good friend, who effort to reduce that rate of tax on cap- high school classes in Fountain Hills to makes, in essence, a half an hour or 45- ital gains. Because back then, in 1978, gatherings in Flagstaff and, indeed, minute commute from his district in people knew if we called it capital this Saturday in Payson, AZ, on topic Maryland, and we invite him out West gains, the country might not under- continues to come up. It is this death to catch up on his reading from time to stand what we were talking about. tax so onerous, so oppressive that we time and also visit with some of our They understood it for what it really pay with a human toll that even as elo- constituents. I think we understand was, a penalty tax on savings and in- quent as the numbers my colleague what is a truth which stretches from vestment. from Maryland offered tonight, takes a coast to coast and, indeed, to the 49th On a bipartisan basis, I remember the human toll not only on the families af- and 50th States of our Union as well. gentleman from California, my Sen- fected, as my colleague from Orange Mr. EHRLICH. I thank the gen- ator, Alan Cranston, my Democratic County, CA pointed out, but also upon tleman for his invitation, it is accept- Senator, fought very hard to reduce what could be the creation of new jobs, ed. that penalty tax on savings and invest- the expansion of wealth, the preserva- Mr. HAYWORTH. Indeed. ment because it was depriving people tion of small businesses. Mr. EHRLICH. I wanted the gen- of the opportunity to work. It was kill- That is why I am so pleased that my tleman from Arizona and my class- ing jobs, to put it quite simply. colleague, Mr. COX, has introduced his mate, the gentleman from California, So we reduced the rate of tax in 1978 legislation. That is why I am honored, to respond to this question, but I will from a very punitive nearly 50 percent as the first Arizonan to serve on the first direct it to the senior member of down to 28 percent. And the truth is House Committee on Ways and Means, this group, the other gentleman from that, although all the government rev- where we have jurisdiction over these California, Mr. COX. enue estimators predicted that we issues of taxation. We have talked about the state of the would lose money, because after all we law. We have not talked about how it made the rate of tax lower, the next b 2115 got to be what it is. We talk about suc- year, what happened? The Treasury of While I am so enthralled with the cess, and the gentleman from Arizona the United States collected more majority on that committee, the gen- and the gentleman from California money in so-called capital gains taxes, tleman from Texas, Mr. ARCHER, and were very eloquent, but when we think it is actually a penalty tax on savings many others, who want to throw off about it, risk is really at the bottom of and investment, than they had the year the yoke of oppressive taxation to offer success, because what do we do in a before. And the same thing happened true compassion to the American peo- free society? We encourage folks, com- the next year and the next year. ple, not some formula for the radical panies, individuals, sole proprietors to It was $9 billion that the government redistribution of wealth that would tell go out and risk sometimes their life got in 1978. They were getting $11 bil- the American public that Washington savings to start a business, to expand lion from that tax at a lower rate of 28 knows best, but a notion that people their business. Within successful risk percent in 1980. could truly put their families first and we have jobs and jobs creation. Mr. KINGSTON. Would the gen- in so doing could provide for others I have a quote from Chairman Green- tleman yield for a question? through the virtues of our free market, span, who appeared before the House Mr. COX of California. Of course. Be that is the challenge that confronts us Committee on the Budget last week happy to yield to my colleague. today. and in front of the Senate Committee Mr. KINGSTON. Would the revenue From Fountain Hill to Sun Lakes to on Banking, Housing and Urban Affairs from capital gains taxes go up because Flagstaff, I am hearing from constitu- in February. On capital gains this there were more transactions, because ents of all ages of their very genuine time. Think about these words: ‘‘I people no longer hoarded their money concern about the death tax, their very think it is a very poor tax for raising but they went back into the market- real reservations about our entire sys- revenue.’’ This is a quote. ‘‘And, in- place and traded goods? tem of taxation, and a notion that, yes, deed, its major impact, as best I can Mr. COX of California. That is pre- some tax must be paid, of course, but judge, is to impede entrepreneurial ac- cisely what happened. Capital gains re- why would we punish success? Why tivity and capital formation. While all alization, and we have the data on that would we punish people who have taxes impede economic growth to one as well as we do on revenues, sky- taken risk, who have provided jobs, extent or another, the capital gains rocketed. So what happened in 1981? We who have helped to build the economy? tax, in my judgment, is at the far end passed the Economic Recovery Tax Act What is inherently selfish about that? of the scale.’’ and reduced that rate of tax still fur- For it is not greed; it is, instead, be- Think about those words from the ther, all the way down to 20 percent nevolence and true compassion through chairman. Think about what we know. from an initial high rate of 48 percent. the free market to offer jobs. Think about what the gentleman hears And once again the government reve- While many in this Chamber may dis- in Arizona, what the two gentlemen nue estimators said if we reduce the agree, and if there is a major philo- hear in California, what we hear every rate of tax on capital gains of course H872 CONGRESSIONAL RECORD — HOUSE March 11, 1997 we will get less taxes. And they ignored come in this business, we will take a peak of his income. He saved his money 3 years of history when they said that. look at their balance sheet and see all his life, buying Exxon stock or IBM, But we then found in 1981, 1982, 1983, what assets they have, and we will the blue chip stuff in the 1960’s and the 1984, 1985, all the way to 1986 that reve- force them to liquidate them and pay 1970’s. Now that stock has tripled in nues went up and up and up, from that taxes on their net asset value. value and he has accumulated assets basic $9 billion at the high rate of 48 So let us say that an individual is, as and he cannot sell it for a medical percent, to $50 billion at a rate of 20 farmers like to call themselves often, emergency or long-term care in his re- percent. cash poor and land rich. The only way tirement now because of the huge cap- And why did it stop in 1986? The gen- an individual could have any money is ital gains tax. tleman asked how we got here from to sell off the whole farm. That is what Another person. A widow. Lives out there. Because Congress decided this the Government wants them to do. on Whitmarsh Island. I represent the had been such a successful experiment That is what they want that family to coast of Georgia. Whitmarsh Island is a moving the rates down, they wondered do. They want the family farm to suf- beautiful barrier island. Actually, it is what would happen empirically if we fer. Bust it up, sell it, corporatize it, not a barrier island, but it is an island. raised them, and they raised the rate of get rid of it, as long as the Government Waterfront property. The woman tax on capital gains back up again. gets its death taxes. bought the land with her husband in Revenues fell off to $33 billion from $50 The only people that are unlucky the 1960’s, and in the 1960’s this prop- billion in 1 year. enough to be in this position are the erty, which is 2 or 3 acres, was worth And as of now, as we debate here to- folks who are cash poor because they $25,000. Today that same piece of prop- night, the Internal Revenue Service’s could not hire the tax lawyers, the erty is worth $500,000. Husband is dead. most recent data are that we still have fancy accountants to do the tax avoid- She is now a widow. She is on a fixed not got back up to the level of capital ance trusts that all the rich do to avoid income and she has a fixed income of gains revenues to the Treasury of the paying this tax, which is why less than about $15,000 a year. United States that we had in 1986, 10 1 percent of our Federal revenues come If she sells the property to raise years later. from this. money for long-term care, she is taxed That is how we got there from here, Even then this is the most inefficient at the $500,000 tax bracket or whatever with the best of intentions. And our way that the Government could imag- she can get for the property. Again, she Government revenue estimators, even ine to collect tax because, guess what? would be helped by a capital gains tax now in 1997, are telling this Congress We do not know what this is worth. We relief. that if we reduce the rate of tax on do not know what the property is b 2130 capital gains, the Government will lose worth. If it has been a family business revenues. Where have we heard that be- for a long time, they have not been Another one, a young person, some- fore? selling it back and forth, it is not a body who is about 38 years old, bought If we did not like all the empirical marketable asset. And if they are bust- some land in a commercial-residential evidence from America, we could look ing up the business, it is no longer a mix area, an area that was going com- at Mexico and other countries that going concern, so what is this asset mercial. It was a house. He paid $35,000 have had this same experience and we worth all by itself? for it 10 years ago. Today that land is could find that, as my colleague points So the family, the heirs, the people worth about $50,000. So he would have a out, there is more economic activity who are trying to carry on that busi- gain of about $15,000. Revco came in, stimulated. When we have a more mod- ness, but cannot, have to get in a law- the drug store, and offered to buy that erate rate of tax, the Treasury makes suit with the IRS. And how often does land from him. He did the math on it out better. this happen? Right now, as we debate and found out that after paying the So if we are worried about education, here tonight, there are 10,000 active capital gains on it, he would not have the environment, transportation, na- lawsuits over the question of valuing made any money off it after holding it tional defense, national security, any- the estate under the death tax. That for 10 years. So he says to Revco, ‘‘No, thing that we would expect our na- eats up all the money that the Federal I don’t choose to sell.’’ What does tional Government to do, we would Government might have gotten out of Revco do? They move elsewhere. That have more resources to do it by pluck- it because we have to argue for years in is two or three jobs right there in his ing the goose more gently. But these court about what the thing is worth. neighborhood that would have been punitive high rates of tax on savings It is a hideous example of govern- created, that needed to be created, that and investment are killing the coun- ment run amok. Perhaps with the best could not be created because the cap- try, killing job creation. of intentions it was put on the books in ital gains tax said no deal. Ultimately, the rich do not pay be- the first place, but it does not work The tax system is slowing down the cause the rich have salted away enough and the death tax deserves to die. economy, slowing up potential for already. The people that pay are the Mr. EHRLICH. I thank the gen- growth, and penalizing our elderly. ones who pay with their jobs. If we tleman for the history lesson. I appre- Those are 3 real life examples that I have a death tax that literally causes ciate it very much. I think we all do. know of. the business, their place of employ- Only in this town do people think Mr. EHRLICH. I thank the gen- ment to be busted up, of course they that when we raise taxes we generate tleman from Georgia. I think it is very lose their jobs. Of course they pay a additional revenue. It just does not important that we in these discussions 100-percent rate of tax. Of course they work that way, and the gentleman’s talk about real people in real life in are the ones bearing the entire burden numbers speak for themselves. History, real situations facing real problems be- on their shoulders. the empirical evidence, speaks for it- cause of the real burden we place on I wanted to make one more point and self. people in this town. yield back. We have talked about how We have been joined by our friend, Speaking of real small business peo- we are punishing success with the the gentleman from Georgia, Mr. ple, I know the gentleman from Cali- death tax. We are also not just punish- KINGSTON, who I know is over there fornia [Mr. RADANOVICH] recently mar- ing people of modest means, we are chomping at the bit as well. I welcome ried, and we all congratulate the gen- punishing people who can barely scrape him to our discussion here tonight. tleman, our good friend. He has a real by, because there is nothing in the Mr. KINGSTON. Mr. Speaker, I life story of his own. death tax that says you have to be thank the gentleman for yielding. I Mr. RADANOVICH. My appreciation making money. wanted to talk about three people who to the gentleman from Maryland and What the death tax says is even I know to be constituents and I have my wife in the gallery says to say though individuals paid property taxes changed their names only. hello. on their assets throughout the lifetime One is a man who worked hard all his Mr. Speaker, the comment that I did of their business, year in and year out, life and had a good income, was not want to make is that, first, in ref- even though they paid income taxes, wealthy, he made about $40,000 a year erence to starting business and what we do not care if they have any net in- his last couple of years. That was the you had eloquently said earlier about March 11, 1997 CONGRESSIONAL RECORD — HOUSE H873 the fact that those who take the risk they decided to get into the business of for the capital gains tax. As my col- should get the reward. social activism by imposing taxes of league from Maryland pointed out, One of the things I find very, very in- such an abnormal nature as these, they since people want to see a reduction in teresting in having taken a certain have made things worse and they have those rates, should we then rename amount of risk on my own in the pri- done a poorer job of it. that the success tax, because you are vate sector is that there are a lot of I think that is sum and total what we taxing and penalizing success. people that are there that want a piece face when we are in Washington, us Mr. COX of California. You might of that that may not have taken that being freshmen and having the privi- have to call a significant part of it the certain element of risk and it is very, lege of being here with the gentleman inflation tax because, just like with very important to understand that that from California [Mr. COX] and the gen- death taxes, there is no rule that says is part of the reward from stepping out tleman from Georgia [Mr. KINGSTON], is you have to be successful in order to and doing something that might be out that we have the ability now to change have to pay it. The capital gains tax, of the norm, in creating wealth or in something like that. But somebody has or what I prefer to call the penalty tax any venture. Those who take the risk to understand whose responsibility is it on savings and investment, might also deserve the reward. They should not be to create wealth in this country, whose be called the inflation tax because, as redistributed. responsibility is it to create jobs, and we all know, we have inflation in this The final point that I want to make, that is something that is a moral im- country and over time it adds up a unfortunately I have to leave the perative that should not be the respon- great bit. Chamber, it is when government begins sibility of the Government. If you buy a piece of land, you buy an to get too big, when it becomes too Mr. EHRLICH. Well put. I thank our asset, you start a small business, just large in the great scheme of things in colleague from California. to use an obvious example of a corner America, when it begins to assume too The gentleman from Arizona earlier grocery store, although we do not have many responsibilities from the Amer- used the phrase that folks, quote, want too many of those, partly for this rea- ican people, when it becomes activist us to throw off the yoke of oppressive son, in America, but let us say you in social issues and begins to get in- taxation. have got a corner grocery store. And so volved in social engineering, you do My inquiry to my good friend is, is you buy the store. The Tax Code says have to dream up quite a few different there anybody in Arizona who thinks that is a capital asset. If you paid ways to raise revenue. What might be they could do better with a few more $10,000 for it 20 years ago, with infla- the norm, and how to levy taxes on, bucks in their pocket, who believes tion, what is that worth today? say, sales tax or income tax, which has that a cut in the capital gains rate, or I do not have my calculator, but any- even been accepted as the norm these elimination of capital gains differen- one can figure out it is not 10 grand days, you can go the extreme on issues tial in this country, will result in an anymore. If you sell the grocery store such as capital gains and estate taxes. awful lot more economic freedom and for less money than you paid for it in the first place, the nominal selling It is because I believe that government capital formation and jobs and wealth price, because of inflation, is going to has gotten far too involved in social is- creation? sues that they have gone so far as to Mr. HAYWORTH. I thank the gen- be more than you paid for it and you levy taxes in areas where the Constitu- tleman for yielding. To answer his are going to be taxed on the difference. tion never meant them to be in the question, what I hear from people of So even though in real life you lost first place. various political persuasions, indeed if money, you are not a rich person, they are going to start requiring you to pay Again, it is not the responsibility, I we return briefly to the political sea- tax on that sales price. think, of the Federal Government to be son, one of the areas of discussion was enhancing the social network or to be The truth is that because we have the notion of helping working families. not indexed for inflation a property getting involved in social activism. I As our colleague from southern Califor- tax, you do not have to make money, would read in the Good Book that nia has pointed out, as our colleague you can be losing money and still owe there is a story in the Bible that talked the gentleman from Georgia has re- a significant tax. It can be a tax that about the man who gave equal amounts counted with real-life experiences, as I wipes out any hope that you have of of money to three different people and hear in town hall meeting after town even surviving, particularly if that was he punished the one who hoarded the hall meeting, there is an insistence, your life savings, particularly if that is money. It is the responsibility of not born of greed but of genuine com- your only asset in life. To take some- Americans, I think, with the money passion and old-fashioned Yankee inge- one’s entire life earnings, their entire that they have been blessed to be able nuity, that people want to hang on to life’s work and tax it all in one ac- to earn, to regenerate that, to create more of their money to save, spend and counting period as if it is just income jobs with it, to reinvest it in their com- invest as they see fit on their families, from a job, particularly when they paid munity, to create jobs for many, many not rejecting the notion of compassion income tax on it all through their life, people. It is not up to the Government but to truly be compassionate. And so is not only double taxation but it is pu- to take that money away and penalize what I hear, to answer my colleague’s nitive and it is an inflation tax, QED. that person for their own initiative and question, is widespread interest in Mr. KINGSTON. If the gentleman somehow be responsible for that moral changing, repealing as my colleague will yield, there is also certainly class obligation of creating wealth and pro- from southern California says, death to envy in this to some degree that we do viding jobs in the community of the death tax, and rethinking and re- have certain politicians playing on Mariposa or Timonium or in Tempe or ducing the capital gains taxes. class envy because they can get re- in some of those other areas. It is not Indeed, we might point out, Mr. elected easier if they stir up income Government’s responsibility to be Speaker, for some of the American peo- groups against other income groups. doing that. It is the individual wealth ple who join us here, as my colleagues Nowadays it just seems to be horrible creator’s responsibility to be doing from Maryland, California, and Georgia to be successful. that. Again, it is just another example have been talking tonight, just a brief For example, in Atlanta we have of somehow, somewhere through the lapse into previous terminology. When CNN. Ted Turner brought it in. If we process of government getting way too we talk about the death tax, it is truth have a capital gains tax reduction, will big and getting involved in way too in labeling, because under the current Ted Turner make out? Yes, he will, and many things that they have dreamt up scheme, in the current lexicon, people I do not think it is a virtue for me to this idea that they should social engi- talk about estate taxes as if this were bash him for that. Is CNN good for At- neer this country and, oh, by the way some sort of palatial gains. It does not lanta? Yes. Has Ted Turner brought they are going to impose a death tax tell us the truth. It is a tax literally lots and lots of jobs to Georgia? He cer- and they are going to impose a capital upon people who die, there is a penalty tainly has. Has he taken lots of risk? gains tax to fund this thing and, by the for dying, and my colleague from Cali- Yes, he has. For that he has been re- way, is the social fabric of this country fornia pointed it out. warded through the accumulation of any better over the last 30, 40, 50 years? I just wonder, Mr. Speaker, if we personal wealth, and I do not think be- I say no, absolutely not. Not only have should also come up with a new term cause of that that I need to sit back H874 CONGRESSIONAL RECORD — HOUSE March 11, 1997 and say, well, let us tax him more be- b 2145 Mr. HAYWORTH. I thank my col- cause he has been successful. Not just Mr. Thigpen, the name of league from Maryland for organizing I was talking to a group of people one the man in this real life example, and this special order this evening, Mr. time, I said, ‘‘When you die, should his family and the people who work Speaker. I would simply point out an- your house be cut in half and part of it there who pay 100 percent tax when other real life example that reaffirms go to the Government? If you have two they lose their jobs, not just the loss to the fact that this even affects working cars, for example, should one go to society of this tree farm, which has families. your children and the other one go to won environmental awards, not just Once on national television, on C- Uncle Sam?’’ They said certainly not. I the fact that the whole business is SPAN I, one morning one of my con- said, ‘‘You realize,’’ and maybe the going to be wiped out, not just the un- stituents called in discussing his situa- gentleman could correct me if I am fairness of it all, but environmental de- tion in Pinetop/Lakeside, the fact that wrong, but I believe the threshold is $3 struction on top of it, improper stew- he was a working man, and as my col- million, ‘‘if you have an estate of $3 ardship of our natural resources, be- league from California pointed out, be- million, the tax rate becomes 53 per- cause the Government is so ham fisted cause of inflation involving some of his cent, I believe, or thereabouts.’’ and foolish about the way it collects land holdings, land that he had in- Mr. COX of California. Fifty-five per- revenue. vested in, pinching pennies, if you will, cent, actually. Mr. EHRLICH. Mr. Speaker, the gen- trying to take care of his family and Mr. KINGSTON. OK, 55 percent. So if tleman from Georgia brings up a really also provide for them. When he chose you have an estate of $3 million, when interesting point which was really part to sell that land, he was penalized; he you die Uncle Sam is going to get half of our earlier discussions concerning remained in essence cash poor. That is of it. Not your children, not your how we got here, how we got to where the unfairness of the success and infla- grandchildren, not your friends, not a we punish people who go out and take tion tax otherwise known as the cap- charity, but Uncle Sam. You talk to risks and accumulate capital and cre- ital gains tax. people about that, they do not realize ate jobs. And the gentleman talked I thank my colleague from California that, because most of us will not accu- about class jealousy, class warfare, and for giving us a real life example of mulate $3 million, unfortunately. But is it not true that unfortunately in what happens when a group of people still, just because they have been suc- American politics today class warfare, say death to the death tax. It can pro- cessful, they have to have a 55 percent successfully argued, leads to votes? Is vide new economic life and vitality for tax rate when they die. that not a proven formula? Is that not scores of Americans. It offers true com- Mr. COX of California. If the gen- unfortunate? Is that not an unfortu- passion not through the radical redis- tleman will yield, it is very important nate comment about the state of de- tribution of wealth, executed by Wash- to stress this point. It is the one that bate in our country today when it ington bureaucrats, but through the my colleague from Arizona just made a comes to what should be relatively— drive, energy, tenacity, and ingenuity moment ago. This is not a tax on es- and I understand the gentleman from of the American people who are willing tates as in mansions or what have you. Arizona talked about earlier there are to save, spend, and invest in their own Imagine, for example, a real-life ex- philosophical differences, legitimate families, give of their own hearts to ample of a tree farm. Let us imagine philosophical differences, on the other charity and in essence help provide for that the land that underlies the tree side, but the fact is and the evidence, the next generation. farm is worth $3 million. But let us as the gentleman from California has Mr. EHRLICH. Mr. Speaker, I thank imagine that this tree farm, as it cur- articulated tonight, the evidence is all my colleagues. rently exists, has been very carefully such that decreasing taxes, ceasing the f husbanded by, as is true in this case of punishment of success results in eco- TIME TO END CORPORATE the Mississippi tree farmer, the grand- nomic growth, but not necessarily WELFARE AS WE KNOW IT son of slaves, who has gotten not only votes. his family but a whole lot of the people Mr. COX of California. If I might just The SPEAKER pro tempore. Under a in the area employed there. interject, one of the reasons you see previous order of the House, the gen- And then let us imagine that this some Californians out here on the floor tleman from New York [Mr. OWENS] is man is getting on in his years, and he is that California repealed our death recognized for 5 minutes. is beside himself because he cannot tax by the initiative of the people, and Mr. OWENS. Mr. Speaker, it is time think of any fancy estate planning every time you hear somebody say to end corporate welfare as we know it, technique that will keep that tree farm class warfare, you know only some and many of the kinds of tax cuts we alive. When he dies, he is looking death small segment of the population will are talking about before for individ- in the eyes now because he is on in go for repealing death taxes, do not be- uals, certainly the capital gains tax on years, he knows that his family, his lieve it. The most populous State in homes, would be eliminated or could be sons and what he considers to be his the Union repealed our death taxes by eliminated if we were to go after our extended family, the people who work an initiative of the people, and we can Tax Code and make the necessary ad- on that farm, are going to lose their do it in the people’s House. justments and close the loopholes and opportunity to run it, the thing that he Mr. KINGSTON. If the gentleman end corporate welfare. It is time to end built up throughout his life, because will yield, you know what this is corporate welfare as we know it. Great they are going to have to liquidate it, about, as Mr. COX just said, this is not injustices have been done over the past sell it, put it on the auction block in about protecting the assets of wealthy 2 years as we have sought to cut back order to pay the tax man, and there families so that when the oldest person on expenditures. We have gone after will be no more tree farm. or whoever dies that it can be passed the poor, we have used a microscope Do you know what is going to happen on and then the rich can remain rich. and focused it on the weakest and poor- to that land? It is going to be devel- This is about economic prosperity, cre- est of Americans. oped. It is going to be subdivided, it is ating an American dream that is acces- A great injustice has been done in going to be purchased by somebody sible for everybody where the unem- the welfare cuts. It is estimated that as who is going to put houses on it, a ployed can get a job, get on the eco- many as 2 million children will go hun- shopping center, a strip mall or what- nomic ladder and go out and share in gry as a result of welfare cuts. A great ever it takes commercially to take ad- the American dream through upward injustice has been done in the immi- vantage of the fact that after capital mobility. We are talking about a tax gration reform. The cuts that take gains taxes, after death taxes and so system not to protect the rich but to place as a result of immigration reform on, this has some economic viability. create opportunities for everyone so are elderly people who are not citizens, So somebody who buys this property is that the American dream is accessible. who in large numbers will end up going going to want to make money on it, be- Mr. EHRLICH. I thank the gen- hungry, and some will starve, you cause that is life, and we now have, tleman from Georgia. know. And now we have a situation with death taxes, an additional cas- The last word goes to my colleague where we place a microscope on the ualty. from Arizona. poor who receive Social Security and