June 8, 2006

REID: BUSH REPUBLICAN ESTATE TAX VOTE CONTINUES MISPLACED PRIORITIES

Washington, DC – Senate Democratic Leader Harry Reid delivered the following floor speech today on the Senate’s vote on the Estate Tax.

The text of Senator Reid’s speech, as prepared, is below.

Mr. President, today the latest in a series of Red Herring’s that the Republican majority will bring before the Senate this month. On Monday, it was the Marriage Amendment. Today, it is the Estate Tax. Later this month, we are told they will bring up a flag burning amendment.

While the issues change, my argument remains the same. There are a number of difficult issues facing the people of Nevada, but issues like estate tax are not high on that list. We are wasting precious days on these divisive issues when there are so many other matters that deserve and demand our attention.

A gallon of gasoline costs about three dollars today – double what it was when this Administration took office -- and there are no signs that this price will fall anytime soon. Families are pouring their savings into their tanks.

Why isn’t the Senate doing anything to help them?

The intractable war in Iraq wages on. While our soldiers continue to fight valiantly, their heroic performance and sacrifice has not been matched by this Republican-controlled Senate.

Why isn’t the Senate doing anything to get a handle on Iraq?

Nearly 46 million Americans are without health insurance. Costs are skyrocketing for businesses and families. Under this Administration, a typical family’s premium has increased by more than $4500.

Why isn’t the Senate doing anything to address this national crisis?

The national debt stands at nearly $8.4 trillion dollars and is scheduled to grow to nearly $12 trillion by 2011 – nearly double where it stood when President Bush took office. The national debt represents a “birth tax” for our children, their children and their children’s children.

Why isn’t the Senate doing anything to help relieve the burden of the “birth tax”?

Why?

Well, in fact, we know the answer. Senate Republicans don’t want to fix these problems - - because so many of them are problems they created, and they don’t want to call attention to them.

So instead, we have the Estate Tax on the Floor, and the latest effort to distort, distract and to confuse the American people.

The Estate Tax is an extremely costly tax break for a wealthy few that comes at the expense of every other American born and yet to be born for decades to come. How costly? Roughly $1 trillion. And for how few? About 12,000 estates.

Let me address a couple of the myths concerning the Estate Tax.

First, some proponents of estate tax repeal would have us believe that it is a fiscal free lunch. One group, the American Family Business Institute, even claims that repealing the estate tax could INCREASE federal revenues.

Wrong.

The Joint Committee on Taxation estimates the revenue loss over the next ten years for full repeal of the estate tax to be $370 billion. Even President Bush’s own Treasury Department says that repeal of the estate tax will reduce federal revenues. The Treasury Department puts the loss at $340 billion.

But that only tells half the story.

According to the Tax Policy Center, a joint project of the Brookings Institution and the Urban Institute the revenue loss associated with repeal of the estate tax over the first full ten years that it is in effect will be $750 billion. Since these revenue losses will almost certainly mean that the federal government will have to borrow more, the interest costs associated with these revenue losses will be about $250 billion.

Therefore, over the ten years that we can expect the national debt to increase by $1 trillion if the Estate Tax is repealed.

The second myth is that we need to repeal the Estate Tax to protect and preserve small businesses and family farms.

Wrong.

Very few small businesses and family farms pay any estate tax, and an even smaller fraction suffer any liquidity problems as a result of the tax.

In fact, the American Farm Bureau was asked to identify a single farm that was forced to sell as a result of the tax. To date, not a single one has been brought forward.

It’s a similar situation with small businesses. In fact, the Small Business Council of America has said that the “repeal of the estate tax will actually harm most small business owners” because of how it would change the tax benefits they currently receive.

The third myth being perpetuated here by the Majority is that the only way to reach a deal on estate tax lies through voting for the motion to proceed and forgoing your right to vote on all amendments save one – a vote on a so-called “compromise” proposal drafted by supporters of full repeal.

Let me say again, I support fiscally responsible reform of the estate tax. But anyone who knows the Senate and knows about this “compromise” proposal will quickly see the Majority’s proposal does not even pass the laugh test.

The best way to bring members together on a difficult issue is to let the Senate work as intended, with members of both parties able to offer any amendment they choose and to get a vote.

Yet, under the Majority’s offer, only the most ardent supporter of repeal of the estate tax would be permitted to draft and offer an amendment. All other members would be denied that opportunity. This fact alone should tell people our Majority friends are not serious about letting the Senate work its will to develop a true bipartisan compromise.

But it’s even worse than that.

No one I know has seen the actual language of the so-called compromise and there certainly has not been any official score of how much it costs. Based on descriptions of the amendment, credible outside analysts have indicated this new proposal would cost $825 billion or over 80 percent of the cost of full repeal. Only those trying to sell people a bill of goods could possibly call something a compromise when the costs are this large and this close to full repeal.

In short this is not a serious effort at compromise. It’s a pig in a poke and no one should buy it.

I will vote no on the motion to proceed, as it is not a measure meant to bring America together. Rather, it is an effort to cover and conceal the issues we should be focusing on.

I urge my colleagues to reject the misguided priorities reflected in this legislation as well.

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