America is the land of opportunity. Since the formation of our republic, hard-working men and women in search of a better life have arrived on our shores, inspired by the hope that they would one day pass the fruits of their labor on to their children and grandchildren. This is the American dream.
The death tax walks away from the American dream. Instead of rewarding hard work and saving, it interferes with freedom and free enterprise. Many of the members in Congress know this is true, and we are making progress in eliminating the un-American death tax permanently. Unfortunately, the wheels of progress often turn slowly, and in the Senate a majority of my colleagues and I were recently prevented by a minority of senators from moving forward.
Under the Tax Relief Act of 2001, the death tax has been gradually phased out, with a full repeal scheduled for 2010. However, the death tax is slated to return in 2011, when the government once again will seize up to 55 percent of savings that should rightfully be passed on to children and grandchildren. This is fundamentally wrong on both moral and economic grounds, and it breaks up family farms and businesses.
To combat the death tax’s unwelcome return, I co-sponsored a Senate bill that would repeal it permanently. The House of Representatives has already passed a bill that would put the death tax to rest once and for all, but the Senate version of the bill is being held up by technical procedures.
The rules of the Senate allow for unlimited debate on a topic. This tactic, known as a filibuster, can prevent bills from ever being put to a final vote. The only way to stop a filibuster is to have 60 votes in favor of ending debate, or invoking cloture. Compared to the simple majority of 51 votes that are required to pass a bill, it is often challenging to pass legislation when 60 votes, not 51, are required.
This is exactly what happened in the Senate on June 8 regarding the death tax. I was joined by 56 senators in voting for cloture, but we fell three votes short. We intend to try again and convince three senators allow the bill to proceed.
Death tax proponents contend that it affects only a small percentage of the population – the super-wealthy. In reality, the most affluent people are able to afford teams of attorneys and accountants to carefully navigate estate tax laws to minimize the exposure of their assets and estates. Those most affected by the death tax are not the super-wealthy but the ranchers, farmers and small-business owners whose primary assets are land, property and inventory.
Often, the only way for families to pay the death tax is to sell the land or business. Only 30 percent of all family-owned businesses are passed down to a second generation, and only 13 percent reach a third generation. These property and business owners have paid taxes on this property every year – income, capital gains and real estate taxes. To double- or triple-tax them upon their death is a final insult to a life of hard work.
When businesses are sold to pay taxes, the employees lose their jobs. This tax disrupts more people than the family forced to sell; it affects the livelihoods of the families who work for and supply the property that is sold.
Texans know the difference between right and wrong, and the death tax is wrong. I will not give up this fight until the true American dream is restored and the death tax is dead once and for all.