Unfortunately, H.R. 8 does not effectively target the small businesses and family farms that are in greatest need of assistance.  It would allow the wealthiest two percent of our population to pass wealth to their heirs without taxation, while hard working families would continue to be taxed on every dollar earned.  It would also have a devastating impact on charities, foundations, universities and other philanthropic organizations.  This legislation would cause enormous revenue losses and threaten our ability to address national priorities like extending the solvency of Social Security and Medicare, reducing our national debt, implementing a prescription drug benefit for seniors and improving education and health care. 

As the third installment of President Bush’s $1.6 trillion tax cut package, H.R. 8 would gradually reduce and then fully repeal the estate tax over a ten-year period.  The Joint Committee on Taxation has estimated that this measure would reduce revenues by more than $192 billion over the next decade.  Moreover, repealing the estate tax will cost states about $6 billion annually, possibly forcing them to make up the revenue through other tax or fee increases.  Perhaps most important of all, the benefit of H.R. 8 to my constituents would be minimal.

Based on Internal Revenue Service data for 1998, estimates show that of 10,000 deaths in my home state, only 361 Rhode Island decedents filed estate tax returns and only 187 returns resulted in an estate tax liability.  In a similar study that same year, the IRS also found that only two percent of decedents nationwide -- or 47,483 estates -- were impacted by the federal estate tax.  In fact, 3,000 of the most affluent individuals in the country paid more than half of all the estate taxes that year. 

If we are truly concerned about the small business owners and family farmers who are adversely affected by the estate tax, we should pass the Democratic substitute.  This sensible reform would immediately exclude over 75 percent of estates by increasing the exemption to $2 million per individual and $4 million per couple.  As a result, only ½ of one percent of all decedents would pay the estate tax.  Additionally, 99 percent of all farms would be exempt.  Under our proposal, those eligible middle-income families, small business owners and family farmers truly in need would receive estate tax relief.  Furthermore, they would receive the benefit now, rather than waiting years for relief, as required under the Republican plan. 

This measure, included with the tax cut plan and budget resolution already passed by the House, would exceed the projected budget surplus and require deep cuts in non-defense discretionary funding.  Therefore, I urge my colleagues to vote against this fiscally irresponsible measure and support the Democratic substitute.   It ensures that small businesses and family farms can be preserved from one generation to the next, while retaining some of our budget surplus to pay down the debt, ensure the solvency of Social Security and Medicare, and allocate critical funding for our national priorities.