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Guest Commentary February 13, 2002
Estate Tax Favors Large Corporations
The Honorable Jeff Sessions
I speak to farmers frequently. When I first began to campaign for the Senate, they told me right upfront that one of their top priorities was the elimination of the death tax. It threatens everything they do.
What good does it do to preserve the farm, have a living wage for farmers, and then make them pay 50 or 55 percent of the value of the farm to the Government every generation?
Eliminating the death tax is about preservation of the farm. I think it is appropriate that we are considering it. It is certainly one of the highest priorities of every agricultural organization of which I know.
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The death tax is extraordinarily difficult to compute and collect by the Federal Government. It produces a lower return based on how much money the taxpayer has to pay than almost any other tax we pay. It is an extraordinarily complex thing. It causes individuals to go through the most intricate gyrations and causes them to make financial decisions they would never make otherwise except to attempt to avoid being decimated or having their heirs decimated by the death tax.
Let me tell you what I am really concerned about. This is an issue that I feel has not been talked about enough. There are a lot of different ideas that people have about why this tax is bad. I would like to talk about a purely economic argument that strikes me as a great unfairness about the death tax.
Let us say International Paper Company, or the Weyerhaeuser Company, owns 1,000 acres of land, and an individual owns 1,000 acres of land and saves some money and manages it well. Then the individual dies. They have to pay an estate tax. But Weyerhaeuser or International Paper, which may own 600,000 acres of land, or maybe multimillion acres of land, never pays a death tax. ...
These large corporations are never impacted by estate taxes, but they are competing with smaller farmers, smaller timber producers, and smaller landowners. Whenever a family member in one of those privately held companies dies, they get whacked by the Federal Government with a tax. It makes them less competitive.
In my State of Alabama, we have seen an extraordinary number of banks go out of business by selling out to larger banks. Small, closely held banks no longer exist today. One of the main reasons is that the family sits around the table and wrestles with what they are going to do about the future. They get an offer from a big holding company to buy them out. They consider how much in taxes they are going to have to pay and how they are going to keep the bank going while paying 55 percent tax on it. They end up selling out, and then we get bigger and larger corporations with more and more concentrations of wealth and less competitiveness in the American economy.
We need and desire more smaller motel companies. We need more small entrepreneurs. We need more stores selling material, like Home Depot or Wal-Mart. But those stores, if they are closely held, end up getting whacked in each generation by an estate tax.
I talked to a young man and his father. They had four motels. He told me they were paying $5,000 a month for insurance on the father's life, trying to make sure that if he were to die, they wouldn't lose their investment.
That is the reality of America. This tax is favoring large corporations in their competitiveness against small corporations and companies and closely held companies. It is not fair. It is not healthy for the economy. We can do better.
Jeff Sessions, a Republican, is a U.S. Senator from Alabama. The above commentary has been adapted from a speech Sen. Sessions delivered on the floor of the Senate, February 12, 2002. To contact him, Click Here.
The above column has been distributed by PoliticsOL.com.
