Senate Floor Speech
Senator Kay Bailey Hutchison
February 12, 2002 -- Page: S638

MRS. HUTCHISON. Mr. President, I appreciate very much what Senator Kyl and Senator Nickles are doing because most people think we are on a glidepath to eliminating the death tax. We have taken that vote.

The worst situation we could possibly have is not knowing. Can you imagine how debilitating it would be to plan for a family business or a family farm to think that you would have 9 years at lower inheritance taxes and then in the 10th year, unless you happened to die in the one year we have repealed, you would end up going back to 3 years ago? That just does not make sense.

The best tax policy is one that is stable, that people can count on; that when it is passed, people can plan according to that tax law or policy.

What we have now is the absolute opposite. We have a situation where people cannot plan. They do not know when they are going to die, so they do not know what the inheritance tax is going to be, and they do not know if it really will be repealed because Congress keeps talking back and forth about not repealing something we have already repealed. That is not consistent, and it is not good tax policy.

Family-owned farms and small businesses are the hardest hit because they have assets that are valued greater than the income they can produce. When someone who is the head of a small business or a family farm dies, many times the value of that farm or small business is very high and the family does not have the cashflow to pay the taxes. So what do they do? They sell the family business or family farm to pay the taxes.

This is not money that has never been taxed. No, it is money that was taxed when it was earned, and taxed every year that it has been invested. The money has already had its fair share of taxes taken out.

We have to make a decision in this Congress if we want small businesses to survive. I do. Small family-owned businesses are the basis of our country. Sometimes they grow and prosper and become big businesses. Sometimes they are passed to their children and create livelihoods for children.

Lost in a lot of this debate are the employees of these small businesses and family-owned farms, the people who own nothing but work for these small businesses. What happens when a business has to be sold to pay taxes? All the people relying on that business lose their job. We have heard story after story of a small family business that was the most important business in town and had to be sold. The people working there were out of jobs, in a very small community where one does not just walk across the street and get another job. We have heard that time and again.

I will never forget the letter I saw written by a man who happened to have a farm that his parents had worked very hard to buy, about 100 acres in a beautiful part of Texas, but it was a part of Texas in the old days that was just a farming area. It was not very expensive, not very well known. It was pretty and nice but not that big a deal. Today it is called the hill country, and it is the most expensive land in rural Texas.

When the parents died, the children inherited that farm, but they had to sell their own homes to pay the taxes on that farm because it had escalated to such a great value. They sold their homes and moved into an apartment to keep the family farm.

The bottom line is, going into the third generation, the man said: My children could not possibly get enough cash to pay the taxes for us to pass this farm to them in the third generation. The land is going for $6,000, $7,000 an acre, and the farm will eventually have to be sold.

Mr. President, who gains? Who gains from selling that farm? Who gains from a small business having to be sold to pay taxes? The employees who work for that business lose. They lose their jobs and their livelihoods in the community in which they want to live. Certainly not the family, not the patriarch and the matriarch who worked hard to put that business together. Certainly not the children who may have worked or wanted to be in the family business, who wanted to continue the tradition. They lose.

One might say Uncle Sam gains. But is it really a gain when you tear something out of our economy that is a thriving small business? It is a minuscule amount. It is an amount that has already had taxes paid on it. In fact, the only reason one would ever want to tax an inheritance is to level society, and America was not built on society leveling. America was built on the concept that one could come to this country, work hard, and make as good a living as they could make by the sweat of their brow, and pass on what they have to their children, if that is what they decide to do.

We are not a country that is entrepreneurial, that has a spirit that is looking at society leveling. What good does it do for us to tax at death and disrupt family businesses, family farms, family ranches, families? It does not make sense.

I hope we will pass the amendment offered by Senator Kyl and Senator Nickles that puts the Senate on record we are going to make permanent this tax cut. We have done it once. The Congress has voted for it and the President has signed the bill, but because of a process, it goes out of existence in 10 years and that is not stabilizing, it is destabilizing, and we need to correct it and do the right thing.

So I applaud Senator Kyl and Senator Nickles. I support them fully, and I hope Congress will speak once again. We passed it once; we can do it again. This time let us do it right, and let us do it within a process that says we are doing this and we really mean it; not we are doing this but because of a process that nobody cares about it is going out of existence in 10 years. Let us do it right so people can count on it, so they can plan and so these small businesses can continue to create jobs and be a part of our economy.