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Senate Proceeding 06-07-06 on Jun 7th, 2006 :: 0:00:26 to 0:19:26
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Jon Kyl

0:00:18 to 0:00:30( Edit History Discussion )

Jon Kyl: eliminate what some have called the most unfair tax of all. and i speak of what has been called the estate tax or the inheritance tax or more recently has become known as the death tax. i think

Jon Kyl

0:00:30 to 0:00:43( Edit History Discussion )

Jon Kyl: just a word of the history of this tax would be interesting to my colleagues before i discuss the process by which this consideration will occur and some of the reasons why we need to proceed with it.

Jon Kyl

0:00:43 to 0:00:56( Edit History Discussion )

Jon Kyl: it's very interesting that the history of the estate tax actually can be traced back to ancient times and the roman empire, but the more relevant history for purposes of the united states because

Jon Kyl

0:00:56 to 0:01:08( Edit History Discussion )

Jon Kyl: we borrowed this concept from england came from the middle ages when the sovereign or the state, of course, owned all of the assets, the land and even the personal property within the country. and

Jon Kyl

0:01:08 to 0:01:26( Edit History Discussion )

Jon Kyl: what would happen is that when the king owned all of the feudal property in england, he would grant the use of that property to the people within the kingdom, certain individuals during their

Jon Kyl

0:01:26 to 0:01:42( Edit History Discussion )

Jon Kyl: lifetimes, let's say a farmer who would have the land to till and the farm animals to take care of. when that farmer died, in effect his family would have to buy back that property from the king in

Jon Kyl

0:01:42 to 0:01:59( Edit History Discussion )

Jon Kyl: order to continue to farm that land, to raise those farm animals and so forth. when the king died, the kick would let the estate retain the property on which the payment of an estate tax called

Jon Kyl

0:01:59 to 0:02:15( Edit History Discussion )

Jon Kyl: a relief existed. and that would then enable the family to continue to run the family farm or the family business, to put it in modern-day terms. it seems very strange indeed that in the 21st century we

Jon Kyl

0:02:15 to 0:02:29( Edit History Discussion )

Jon Kyl: would retain this odd and clearly out-of-place custom of having to buy back our property from the king. we don't have a king anymore. there's never been a king in the united states of america. and our

Jon Kyl

0:02:29 to 0:02:48( Edit History Discussion )

Jon Kyl: right to property is guaranteed in the constitution. so it seems strange indeed that we should be following a custom which required us to buy back from the king our property when our father or our

Jon Kyl

0:02:48 to 0:03:02( Edit History Discussion )

Jon Kyl: mother dies. for our children to have to buy it back when we die. and yet that is theeth -- the etymology of the estate tax, that you pay the state to continue to enjoy the right to the property

Jon Kyl

0:03:02 to 0:03:17( Edit History Discussion )

Jon Kyl: you always thought was yours. it's a very expensive price indeed. in recent years it has been 55% for the largest estates, and clearly a lot of people could not afford this. people who put their life

Jon Kyl

0:03:17 to 0:03:29( Edit History Discussion )

Jon Kyl: savings into their farm or into their business. i had a friend from phoenix who owned a printing company, started it himself. after about 40 years he wilt -- built it up to a very prosperous printing

Jon Kyl

0:03:29 to 0:03:40( Edit History Discussion )

Jon Kyl: company. he took a modest sum out for he and his family but basically plowed everything back into the company because to stay ahead in the printing business you had to buy all the most mod everybody

Jon Kyl

0:03:40 to 0:03:52( Edit History Discussion )

Jon Kyl: printing equipment and technology. so on paper he had a lot of wealth when he died, but it was literally tied up in the company. and his family looked at the estate tax. they had spend a lot of money buying

Jon Kyl

0:03:52 to 0:04:07( Edit History Discussion )

Jon Kyl: insurance and so on, but when they found that they were going to basically have to pay over half of the value of this company to the government, they didn't have that money. they didn't have that

Jon Kyl

0:04:07 to 0:04:20( Edit History Discussion )

Jon Kyl: liquid cash, and so they had to sell this printing company in order to collect the money to pay the government about half of it in the form of an estate tax. what happened? well, this particular man

Jon Kyl

0:04:20 to 0:04:33( Edit History Discussion )

Jon Kyl: was one of the most generous people in the city of phoenix. he contributed millions of dollars. in fact, there is a boys and girls club named after him. and every year his wife and his daughter would be involved

Jon Kyl

0:04:33 to 0:04:43( Edit History Discussion )

Jon Kyl: in charitable activities. i know because my wife is one of the best friends of his daughter. and they headed up charity events raising millions of dollars for our communetism when his family had to sell

Jon Kyl

0:04:43 to 0:04:57( Edit History Discussion )

Jon Kyl: the business to pay testate tax to the government, they were no longer in a position to do the things for the community that they had always done. they've remained very active and very giving, but

Jon Kyl

0:04:57 to 0:05:08( Edit History Discussion )

Jon Kyl: not to the same extent that they were able to when they had a going business to rely upon. and so this community lost in many ways. it lost a great locally owned, family owned business. it lost the

Jon Kyl

0:05:08 to 0:05:18( Edit History Discussion )

Jon Kyl: patriarch of that business, a very generous person who supported the community, and the family, of course, has not been able to employ those people, over 200 people that were employed in the business.

Jon Kyl

0:05:18 to 0:05:30( Edit History Discussion )

Jon Kyl: one of the modern-day rationals for the estate tax is that it prevents the concentration of wealth in just a few families. well, if there is any country that you don't have to worry about that in, it's

Jon Kyl

0:05:30 to 0:05:42( Edit History Discussion )

Jon Kyl: the united states of america. we are a nation which n which anybody can make wealth. you can lose it quickly, but everybody aspires to get higher on the economic ladder. and the notion that somehow

Jon Kyl

0:05:42 to 0:05:53( Edit History Discussion )

Jon Kyl: there are just a few rich families in this country crog everything is -- controlling everything is, of course, a wild myth. so it's not necessary to break it up. what happens when people like my friend

Jon Kyl

0:05:53 to 0:06:06( Edit History Discussion )

Jon Kyl: jerry, when he passed away and his family had to sell his printing company, what happened to the concentration of wealth? well, it sure took it away from his family, all right, though nobody would

Jon Kyl

0:06:06 to 0:06:20( Edit History Discussion )

Jon Kyl: contend they were really among the elite of this country. he was a poor jewish kid from new york who came out west and made it good and employed a lot of people and did a lot for his community. no,

Jon Kyl

0:06:20 to 0:06:36( Edit History Discussion )

Jon Kyl: they sold to a big corporation, a public company. it's very difficult, and so the concentration of wealth, of course, was enhanced, not lessened as a result of the application of the estate tax. it's

Jon Kyl

0:06:36 to 0:06:49( Edit History Discussion )

Jon Kyl: very hard for small businesses these days or even small farms to compete with publicly owned businesses because when the c.e.o. of a publicly owned business passes on, nothing happens. the corporations

Jon Kyl

0:06:49 to 0:07:01( Edit History Discussion )

Jon Kyl: simply go chugging right along, but when the patriarch of a family owned business passes away and half of the mustmoney in the business has to be paid to uncle sam, it can crush that small business. it's

Jon Kyl

0:07:01 to 0:07:14( Edit History Discussion )

Jon Kyl: one of the reasons why we need to eliminate this tax. the small family owned business or farm can't compete with the giant corporation which doesn't suffer the same kind of tax. we should not have to

Jon Kyl

0:07:14 to 0:07:29( Edit History Discussion )

Jon Kyl: buy back the estate from the king any longer. we need to end this most unfair tax of all, the death tax. it's interesting that even though most americans will not have to pay the death tax because

Jon Kyl

0:07:29 to 0:07:44( Edit History Discussion )

Jon Kyl: their estates would fall within the amount that's exempted, by very large numbers they recognize that it is a very unfair tax, and so when public opinion surveys ask people their opinion on the tax,

Jon Kyl

0:07:44 to 0:07:58( Edit History Discussion )

Jon Kyl: the majority of people in this country say they would like to end the tax, that it's unfair and it should be eliminated. as a matter of fact, this applies to liberal voters to, conservative voters,

Jon Kyl

0:07:58 to 0:08:12( Edit History Discussion )

Jon Kyl: according to a gallup poll from april of this year, 58% of the respondents said the inheritance tax is unfair. and it's interesting this poll was taken when americans were filing their taxes, and the death

Jon Kyl

0:08:12 to 0:08:23( Edit History Discussion )

Jon Kyl: tax was called unfair by more people than the despised alternative minimum tax. only 42% of the a.m.t. said it was fair. and yet, of course, we know that to be also a very unfair tax. it was never

Jon Kyl

0:08:23 to 0:08:37( Edit History Discussion )

Jon Kyl: intended to apply to average americans. it was put in there to make sure that eventual the wealthiest americans with all of their deductions and exemptions and credits and places to park their money, that

Jon Kyl

0:08:37 to 0:08:47( Edit History Discussion )

Jon Kyl: even they would have to pay some tax, even if they didn't know what income tax they would owe an alternative minimum tax. now that alternative minimum tax, much like the death takts, is reaching down to -- the

Jon Kyl

0:08:47 to 0:08:59( Edit History Discussion )

Jon Kyl: death tax, is reaching down to take money from more and more and more americans. so we're recognizing whatever its good intentions originally, it's an unfair tax. interesting, but even though more

Jon Kyl

0:08:59 to 0:09:10( Edit History Discussion )

Jon Kyl: americans will be hit with the a.m.t., a greater number of americans believe that the death tax is unfair than even the alternative minimum tax. of course, they're both unfair. they both need to be eliminated.

Jon Kyl

0:09:10 to 0:09:27( Edit History Discussion )

Jon Kyl: but i think it shows the sense of fairness that americans have. there was a poll taken not long after the presidential election last year. it was interesting to me that while 89% of people who

Jon Kyl

0:09:27 to 0:09:47( Edit History Discussion )

Jon Kyl: identified themselves as bush voters believed that the death tax is somewhat or very unfair, 1% of the kerry voters also found the death tax at least somewhat or very unfair. 25% somewhat, 46% very

Jon Kyl

0:09:47 to 0:09:56( Edit History Discussion )

Jon Kyl: unfair. so this reaches across the economic spectrum and the political spectrum. americans know an unfair tax when they see it and they think it ought to be eliminated. of course, the economic theory

Jon Kyl

0:09:56 to 0:10:11( Edit History Discussion )

Jon Kyl: backs them up. they say it's unfair because it's a tax on hard work. it's a tax of thrift over consumption and it's a tax on ascents that have already been taxed at least once when they were earned

Jon Kyl

0:10:11 to 0:10:21( Edit History Discussion )

Jon Kyl: and sometimes multiple times as that money has been invested and returned. i think americans understand that we should be having a tax policy that encourages savings and encourages working more.

Jon Kyl

0:10:21 to 0:10:38( Edit History Discussion )

Jon Kyl: when people know that the next dollar that they earn is going to be taken by the federal government or that half of everything that's left in this estate could be taken by the federal government, what's

Jon Kyl

0:10:38 to 0:10:47( Edit History Discussion )

Jon Kyl: the incentive for them to continue to work? dr. edward prescott, a noble prize winner in economic from arizona state university got that prize by proving this phenomenon, that that there is a direct

Jon Kyl

0:10:47 to 0:10:57( Edit History Discussion )

Jon Kyl: relationship between how much more people will work and how much more they have to pay in taxes. when they know that most of what they earn they can put back into their business or save or invest

Jon Kyl

0:10:57 to 0:11:13( Edit History Discussion )

Jon Kyl: or give to their kids, they will continue to work. when they know that it's going to go to uncle sam, guess what, they don't work anymore. that's lost productivity. and it's lost productivity that

Jon Kyl

0:11:13 to 0:11:28( Edit History Discussion )

Jon Kyl: damages our entire country, our economy. it obviously hurts in job creation. it hurts in our ability to continue to enjoy the kind of growth that we have. the studies verify this. the studies verify,

Jon Kyl

0:11:28 to 0:11:42( Edit History Discussion )

Jon Kyl: according to the joint economic committee, for example, which has done one of these recent reports, that the estate tax has reduced the stock of capital in the economy by about $847 billion over the

Jon Kyl

0:11:42 to 0:11:56( Edit History Discussion )

Jon Kyl: last several decades, the last 60 years. that's almost a trillion dollars in lost capital that could have been put to work creating jobs, creating products, making america more competitive. in comparison,

Jon Kyl

0:11:56 to 0:12:11( Edit History Discussion )

Jon Kyl: the estate tax raised $761 billion in inflation-adjusted dollars over that same period of time. the bottom line is this is a destructive tax. it's in the a tax that helps taxpayers very much. it's about

Jon Kyl

0:12:11 to 0:12:23( Edit History Discussion )

Jon Kyl: 1% of the revenues that we collect, and, according to estimates, americans actually pay about the same amount in money every year to avoid paying the death tax as it brings in to the federal treasury.

Jon Kyl

0:12:23 to 0:12:35( Edit History Discussion )

Jon Kyl: an economist has made that point. she was a member of president clinton's council of economic advisers. she estimated that the costs of complying with the estate tax laws are about the same as the

Jon Kyl

0:12:35 to 0:12:49( Edit History Discussion )

Jon Kyl: revenue raised. it's expected to raise about $28 billion in this fiscal year, and the bottom line is, therefore, it's a very inefficient tax. it costs actually twice as much as we think that it does. it

Jon Kyl

0:12:49 to 0:13:06( Edit History Discussion )

Jon Kyl: doesn't bring in that much revenue and certainly is very, very detrimental to economic growth and to capital formation. there's a way that we treat this phenomenon in the tax code, and it really tells us

Jon Kyl

0:13:06 to 0:13:18( Edit History Discussion )

Jon Kyl: how we should treat the estate tax. think about the unintended events that occur in you life, obviously death is the chief among them. you can't choose when you die. everybody knows they're going to

Jon Kyl

0:13:18 to 0:13:33( Edit History Discussion )

Jon Kyl: die, but it is not an event that is a voluntary event or that we decide when we're going to do it, certainly not for tax planning purposes. it's much like a couple of other things that are recognized

Jon Kyl

0:13:33 to 0:13:45( Edit History Discussion )

Jon Kyl: in the tax code as involuntary events. one of them is what happens when there's a theft, somebody breaks into your home and steals a lot of your property. now, you might get the insurance company

Jon Kyl

0:13:45 to 0:14:02( Edit History Discussion )

Jon Kyl: to give you that money back. should that money be taxed as income when you get it back from the insurance company? of course not. it's merely a replacement for what was stolen from you. and so the

Jon Kyl

0:14:02 to 0:14:15( Edit History Discussion )

Jon Kyl: tax code recognizes that this is what's called an involuntary conversion, and they don't force you to pay the ordinary income tax on the money that you get back when you suffer that loss. and it's the same thing

Jon Kyl

0:14:15 to 0:14:32( Edit History Discussion )

Jon Kyl: for death. death is not a planned event. death is not something like a sale of property for which you would expect to pay a capital gains tax, but rather something that occurs to you involuntarily

Jon Kyl

0:14:32 to 0:14:45( Edit History Discussion )

Jon Kyl: and certainly you shouldn't suffer a price when the estate is passed to you from your loved one, let's say.| it comes, of course, at the worst possible time in peoples lives to begin with, when you

Jon Kyl

0:14:45 to 0:15:01( Edit History Discussion )

Jon Kyl: are grieving the loss of a loved one and now you have to pay the king to get that loved one's estate. that is not something that americans believe is fair or right or just. there's a way we treat

Jon Kyl

0:15:01 to 0:15:12( Edit History Discussion )

Jon Kyl: this in the tax code, involuntary conversion, you don't get taxed. the same philosophy ought to apply to the estate tax. there's reasons why. there's purely economic reasons why. there's the american public

Jon Kyl

0:15:12 to 0:15:29( Edit History Discussion )

Jon Kyl: opinion, the philosophy of tax code. all of these things mitigate against having this very unfair death tax today. what we've done is therefore set up a process by which we can take up the house

Jon Kyl

0:15:29 to 0:15:42( Edit History Discussion )

Jon Kyl: bill, the house voted overwhelmingly to eliminate the death tax. this is house bill 8. what we're debating now is the taking up of house resolution 8 so that we can, too, can vote to repeal this

Jon Kyl

0:15:42 to 0:15:55( Edit History Discussion )

Jon Kyl: fundamentally unfair tax. we will have a cloture vote. it will occur sometime tomorrow. i urge my colleagues all to vote yes on cloture so that we can take up this house resolution. some of my colleagues

Jon Kyl

0:15:55 to 0:16:12( Edit History Discussion )

Jon Kyl: do not want to support the house resolution for full repeal. and i understand that. they are well aware of the fact that since there may not be the support for that to get the 60 votes that a lot of

Jon Kyl

0:16:12 to 0:16:25( Edit History Discussion )

Jon Kyl: work has been done to develop an alternative that would end the most pernicious impact of the tax but still allow some revenue to be collected from the estates of the most wealthy in the country

Jon Kyl

0:16:25 to 0:16:40( Edit History Discussion )

Jon Kyl: each year. the bottom line is to be able to vote on full repeal or to vote on the alternative to full repeal, we're going to have to support the first cloture motion to proceed to take up the house

Jon Kyl

0:16:40 to 0:16:54( Edit History Discussion )

Jon Kyl: bill. presumably then the majority leader would have a cloture vote on that underlying bill and people can vote yes or no as they play. i -- as they please. i will vote to repeal the estate tax. should

Jon Kyl

0:16:54 to 0:17:12( Edit History Discussion )

Jon Kyl: that fail, we will have the opportunity to vote on an alternative. that has been discussed. in very general terms, what it would do is to provide that most people won't have to spend this $30 billion

Jon Kyl

0:17:12 to 0:17:29( Edit History Discussion )

Jon Kyl: a year that is spent on insurance policies, lawyers, accountants, estate planners and the like to try to avoid paying most of the estate tax. for most people under this alternative compromise the

Jon Kyl

0:17:29 to 0:17:42( Edit History Discussion )

Jon Kyl: exempted amount would be large enough or even after the exempted amount their s kate would be covered. with the increase in real estate prices today and the value of insurance and farms going up,

Jon Kyl

0:17:42 to 0:17:56( Edit History Discussion )

Jon Kyl: a lot of he is kates could get caught even with a generous exempted amount. but what we have after that is a plan that only the capital gains tax rate would apply. if that's the case then, whether you

Jon Kyl

0:17:56 to 0:18:08( Edit History Discussion )

Jon Kyl: choose to sell the property before death or you are willing to pay whatever you have to after the exempted amount after death it's the same. it would be 15% today. after 2010 it would be 20%. if

Jon Kyl

0:18:08 to 0:18:20( Edit History Discussion )

Jon Kyl: that is not changed. everybody knows, therefore, that the penalty in effect of the government is the same. you pay on the gain if you sell the property before death, in your heirs have to sell the

Jon Kyl

0:18:20 to 0:18:33( Edit History Discussion )

Jon Kyl: property it would be -- if they inherit the property they would pay the same 15% or 20%. there may be an addition to ensure that the very wealthiest estates pay at a higher rate than that. and

Jon Kyl

0:18:33 to 0:18:46( Edit History Discussion )

Jon Kyl: that's something that we're discussing with colleagues. but the bottom line is that what we will do is make it clear that for most people they won't have to worry about the death tax anymore. and

Jon Kyl

0:18:46 to 0:18:59( Edit History Discussion )

Jon Kyl: for the very few who do, it would only be the very most -- the very largest estates which would clearly have the financial means of doing something about it. but i tell my colleagues that we're not

Jon Kyl

0:18:59 to 0:19:14( Edit History Discussion )

Jon Kyl: going to be able to get either a vote on the full repeal or the alternative unless we vote for cloture to take up the house bill. and that's the critical vote that will occur tomorrow. madam president,

Jon Kyl

0:19:14 to 0:19:24( Edit History Discussion )

Jon Kyl: i think we have a series of speakers who are going to be speaking next. i believe the senator from texas, senator cornyn is next and then senator talent, shelby and bunning, allen, thune and grassley

Jon Kyl

0:19:24 to 0:19:37( Edit History Discussion )

Jon Kyl: on the republican side. i would urge them to be here to ensure their place in line so that they have an opportunity to speak for at lotted -- for the allotted time on this very important issue, laying the

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