Thank you, Chairman Reichert, for permitting me to participate in today’s hearing. Thank you to the witnesses for sharing your stories with us today, especially my fellow Texan Bobby McKnight.
As you may know, I have been fighting to permanently repeal the death tax since my constituents first sent me to Washington in 1996. And I would like to make a very important point this morning.
This tax is not about reducing income inequality. Because it’s not the super-rich that pay this tax.
No, it’s the small business owner—the farmer, rancher, or courageous entrepreneur—whose assets are tied up in buildings, machines, and property that pays the estate tax. It’s his or her spouse and children that have to sell that business he built to pay Uncle Sam.
One Texas rancher I’ve known for a long time has paid the death tax three times. Her grandfather started their Texas cattle ranch in 1917—just one year after the death tax was put in place. In 2011, her husband passed away suddenly in a tractor accident. The price of hay was outrageous because of the drought and diesel was up at $4 a gallon. She had no idea how she was going to continue the ranch. Then the IRS swooped in and forced her to sell huge chunks of cattle stock to pay the death tax. All while she and her children were grieving their husband and father. Tell that family they’re exactly like Paris Hilton, tell that family.
A former staffer of mine returned to her family ranch in Texas in 2010 after her aunt passed to help settle her estate. This was a ranch that her great great grandfather had settled in the 1800s. She and her brother were able to keep that ranch in their family for the 5th generation, but at a huge cost. Thanks to the death tax, they had to sell 2/3 of the ranch’s 15,000 acres to do so. So tell this young woman she’s exactly like the Robber Barons of Teddy Roosevelt’s era.
The Death Tax is an immoral tax. It is an attack on the American dream. It disproportionately affects small businesses and start-ups. The tax burden on these business owners is already too high during their lifetime—most pay a marginal tax rate over 50%. And then when they die, the federal government swoops into the funeral home and takes another 40% of those assets—what they spent their entire life building—from their grieving families.
What is worse—if you can imagine it—is that this tax is especially destructive to minority-owned small businesses. They’re the fastest growing sector of our economy to date. Harry Alford, President and CEO of the National Black Chamber of Commerce, goes as far as calling this tax a Black Tax because of its destructive effect on black-owned small businesses.
A study by two Boston College professors several years ago estimated that between 2001 and 2055, the first half of this century, the death tax will wipe out between 11 percent and 15 percent of all African-American wealth. This one tax alone, the BC experts said, would cost African-American households between $192 billion and $257 billion. Imagine what that money could do if it was invested in education, businesses, and jobs.
As members of Congress, we are tasked with making our great country better, with ensuring that we leave our children a better nation than the one we received. The death tax betrays that oath. I urge my colleagues to work with me in eradicating this immoral tax once and for all.