Whitehouse and Brown Discuss Estate Tax Plan
June 22, 2010
Mr. WHITEHOUSE. Mr. President, Senator Brown and I have come to the floor today to talk about the estate tax. Today's discussion was prompted by a recent New York Times report that an estate of a Texas natural gas tycoon--Mr. Duncan of Houston--is worth $9 billion. That is a nine with nine zeros after it. It is a big number, and it is going to go without tax to his heirs. Without any tax at all. It is hard to know what his tax planning is, but if the ordinary rates applied, the tax that would be paid by this estate might be as much as $4 billion.
I think it is important to put that in counterpoint with the discussion we have been having on the floor today, where our friends on the other side of the aisle are blocking unemployment insurance for Americans who, through no fault of their own, lost their jobs. Because of what Wall Street did to wipe out the economy, they are out there on their own. They can't find work. In Rhode Island, we have 70,000 people unemployed in our small State. Our unemployment rate is 12.3 percent. And if you don't have unemployment insurance to protect you at a time such as that, you are stuck. Unemployment insurance goes to pay for food. It goes to pay for gas in the tank, to look for the next job. It goes to pay for shoes for your children. It goes to pay for clothing and rent and heat or electricity--all the basics. They are blocking it. They are blocking it because it is not paid for, as if this were not an emergency.
But they are perfectly happy--in fact, we haven't heard a peep out of them--with the Duncan estate going tax free to his heirs. I don't know how many of them there are, but if there are any less than nine, they all just became billionaires, tax free. That is the kind of contrast that is so remarkable about this building. We have an entire party that is dedicated to preventing working people, who have lost their jobs through no fault of their own as a result of this economic meltdown, from getting unemployment insurance, and that has actually already expired and we are trying to backfill it for that period, but they are completely satisfied with an oil tycoon worth $9 billion having his estate go completely tax free to his heirs. That situation is happening because of a glitch in the Tax Code that we could not fix. It is part of the Bush tax cuts having run to their conclusion.
The estate tax goes back to 1789 in its first incarnation. It has been permanent since 1916. John D. Rockefeller paid estate taxes in 1937 when he died. He was taxed at a 70-percent rate. Today, we are having a debate about whether we should continue at a rate of only 45 percent. The Duncan estate went through at zero percent.
This cut, which took $4 billion out of the economy to pay this one family with a tax-free estate, was pushed through by the Republicans using reconciliation. If you have been listening on the floor, you have heard a lot of critique about what a terrible procedure reconciliation is when it is used to do anything to help regular Americans. But when it comes to cutting the estate tax so that the Duncan family can have a $9 billion estate pass tax free, well, that is a perfectly fine use of reconciliation, according to our Republican friends.
At this point, at exemption levels of $3.5 million per individual, $7 million per couple, only a few thousand estates each year pay any estate tax at all. It is a tax that only hits not the rich but the superrich--the billionaires, such as the Duncan family. And while we are in this period of economic turmoil, while we are in this period where one party is trying to keep regular workers from getting access to unemployment insurance in the middle of this economic disaster, they are all for an unpaid-for zeroing out of the estate tax so that a $9 billion estate passes completely tax free.
I think that is wrong. I think it shows priorities that are completely topsy-turvy--completely upside-down. I know that Senator Brown wanted to join me, and I have gone on for a bit, so I will quiet down for a second so he can be heard. But it is immensely frustrating that that is the priority around here--let the working family lose the basic paycheck that holds the family together but have the billionaires get $9 billion tax free.
Mr. BROWN of Ohio. I thank Senator Whitehouse for his comments. As Senator Whitehouse said, I have been in this body only since January of 2007. Most of the damage from the estate tax was done prior to our being here. But I spent some years before being elected to the Senate in the House of Representatives, and anytime we talked about the estate tax in the House, my Republican colleagues would use two terms. They would talk about the ``politics of envy'' and they would talk about ``class warfare;'' that Democrats were envious of success and that we were engaging in class warfare, wanting to turn one social class against another.
But the issue here isn't any strong desire for us to engage in retribution against anybody or any class envy. The situation is this, and let's start with this chart. This is a percentage of estates subject to tax. The estate tax, which the Republicans called the ``death tax,'' does not impact 99.3 percent of people who die in this country. Their families pay zero estate tax. It is only, as Senator Whitehouse said, the absolute mega superrich. It is not people worth just a few million but only seven-tenths of 1 percent. That means it is 7 out of 1,000 who will pay any estate tax at all. And so this issue--not aimed at any one person--raises the question of: What do we do instead?
The Duncan family--this is Mr. Duncan, whom Senator Whitehouse talked about--died with $9 billion, and his family pays no estate tax whatsoever. Senator Whitehouse pointed out that if there are fewer than nine members of that family, they all woke up the next morning certainly very sad about their father or their uncle or their brother, but they also woke up as billionaires the next day, and our condolences go out to that family, but something has to replace this. If the estate tax was where it should have been, he would have--his family would have--paid the Federal Government $3 billion or $4 billion.
What does that mean? It means that during this previous Congress--the 2002 and 2003 Congresses--when the Bush administration ran up this huge debt, with tax cuts for the rich, not paid for but passed on to our children and grandchildren; the Iraq war, not paid for and passed on to our children and grandchildren; the giveaway to the drug and insurance companies in the name of Medicare privatization, passed on to our children and grandchildren; and the billions of dollars of cost that was added to the bill, this would have helped pay for some of that.
The $3 billion or $4 billion that would have been generated by the Duncan estate, where does that money come from? What do we replace that with? We either continue to tax middle-class people in this country too heavily or we cut programs for that $3 billion or $4 billion or we charge it to our grandchildren. And that is what has happened. As Senator Whitehouse said, it is a contrast.
What do we do? We can do as Republicans do: We can deny unemployment compensation; deny COBRA insurance coverage, so people can keep their health insurance; deny Pell grants for people, which could be paid for by this $3 billion or $4 billion, or should we tax more people to pay for it? The Republicans didn't care about the budget deficit when it was the Iraq war. They didn't pay for the Iraq war. They didn't care about the budget deficit when it was the giveaway to the drug companies. Now all of a sudden they do.
This is the face of people we deal with. This is a General Motors auto worker in Lorain, OH, somewhere near Dayton, where this GM plant closed in the last 2 years. These workers waiting here are losing their unemployment insurance because people on the other side of the aisle--our Republican colleagues--simply would rather protect the super wealthiest people in our society--they would rather protect these seven-tenths or 7 out of every 1,000 people--and helping them pay no taxes, rather than taking care of this unemployed worker. That is the tragedy of the choices they have made.
Those contrasts, as Senator Whitehouse said, are very clear, between Republicans wanting to protect the superrich and Democrats wanting to make sure that unemployment compensation is extended. These are human beings, each with a story. You can bet in this crowd some of these people not only lost their job but they lost their insurance, and some of them have lost their home as well. Because I know what has happened in the Dayton area, in Miami Valley. Far too many people have lost their homes.
So while the Republicans are trying to protect the Duncan estate, with billions and billions of dollars in that estate, people such as Senator Whitehouse, Majority Leader Reid, who is on the floor, and Senator Kaufman want to see us take care of the unemployed workers, take care of those who have lost their insurance, take care of those who are faced with foreclosure because of the economic situation. As Senator Whitehouse said, these people didn't choose to be in this situation.
As Warren Buffett said in 2007:
The average American went exactly nowhere on the economic scale in the last 20 years. They have been on a treadmill while the super rich have been on a space ship.
That is exactly what happened in this country. The wealthiest people have done better and better as their tax rate went down and down. Those middle-class kids who need Pell grants, the middle-class families who lost their jobs who are now on the unemployment line, those workers who have lost their insurance through no fault of their own--they lost their jobs--they are on this downward spiral which simply is not what our country stands for.
Mr. WHITEHOUSE. Two points I would like to make. One is echoing what Senator Brown just said. We always hear about the debt and the pay-for from the other side when it is convenient, when they are trying to stop something the administration wants to do. When it helps regular people who have lost their jobs through no fault of their own, then it becomes an international incident if it is not paid for. But when an estate of $9 billion is allowed to pass tax free because of a loophole, that is OK. That is a $4 billion unpaid-for loss to the government, through its revenues. That is just fine.
There is a disconnect there. If you are serious about the deficit, you have to be serious about it when it is billionaires and not just serious about it when it is regular working families. There is a one-sidedness and a convenience for their concern about the deficit. When it is their President in the White House, Katey, bar the door. By my calculation they blew $9 trillion during the Bush administration. Now they suddenly have had an epiphany about debt, but it does not quite extend to billionaires who are allowed to pass their estates through tax free. So much for the debt and the pay-for concern.
The other group they are very concerned about all the time is corporations. In this year, corporations have paid less tax compared to humans than ever before, since 1983, where there was a glitch and corporations paid less taxes relative to what humans pay than now. But other than that, 1 year, 1983, more than a quarter of a century ago, corporations are paying an all-time low in taxes compared to what humans pay.
If you go back, it is 70 years--1983 was just a 1-year exemption. So all this battle has driven down tax rates for corporations, tax rates for billionaires, and here we are with a deficit and they do not care about the billionaires.
I will close. I see the majority leader on the Senate floor, and I do not want to take time. I will close. America is a place of which we are very proud. It is the greatest country ever. It is a place where people can get fabulously rich. Not only is it a place where you can get fabulously rich, when you get fabulously rich you can still live a relatively normal life. You don't have to live like some Third World thug behind armed guards driving around in convoys with armed SUVs. You can live a normal life as a very rich person.
Everybody has a chance to get rich. Everybody has a chance to become a millionaire, a multimillionaire, a billionaire. But when they do, they have to pay their share.
The PRESIDING OFFICER (Mrs. Hagan). The time of the Senator has expired.
Mr. WHITEHOUSE. I thank the Chair.