To repeal the Federal death tax, including the estate and gift taxes and the tax on generation-skipping transfers.

January 7, 2003

Mr. COX introduced the following bill; which was referred to the Committee on Ways and Means

To repeal the Federal death tax, including the estate and gift taxes and the tax on generation-skipping transfers.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Family Heritage Preservation Act'.

SEC. 2. FINDINGS.

Congress finds that:

(1) Hard working American men and women spend a lifetime saving to provide for their children and grandchildren, paying taxes all the while. Throughout their lives, they pay taxes on the income and gains from their labor and their investment. Because of the heavy burden of income taxes, property taxes, and other levies, it is enormously difficult to accumulate savings for a family's future. Worst of all, when the purpose of that hard earned saving is about to be achieved, families discover that between 37 percent and 55 percent of their after-tax savings are confiscated by Federal death taxes.

(2) These transfer, estate, and gift taxes punish lifelong habits of thrift; they discourage entrepreneurship; they penalize families; and they have a negative effect on other tax revenue sources.

(3) These taxes raise almost no material revenue for the Federal Government. In fiscal year 2002, they produced about 1 percent of total Federal revenues.

(4) The waste and economic inefficiency caused by death taxes is well known. American families employ legions of tax accountants and lawyers each year to set up trusts and other prolix devices designed to avoid these onerous levies. The make-work imposed upon the economy comprises billions of dollars.

(5) To pay these excessive taxes, many small businesses must liquidate all or part of their assets. By causing business closures, these taxes constrict business activity, increase unemployment, and reduce tax revenues to the Federal Government.

(6) Independent analyses indicate that, were these onerous taxes repealed, the Nation's gross domestic product, Federal and State tax revenues, employment base, and capital formation would increase substantially. According to a recent study by the Joint Economic Committee, these taxes have reduced the stock of capital in the United States by $497,000,000,000, reduced annual Federal income tax receipts by $20,000,000,000, caused family businesses to divert resources from investment, and encouraged the development of environmentally sensitive land.

(7) Repealing these taxes will ensure economic fairness for all American families and businesses and economic growth and prosperity for the Nation as a whole.

SEC. 3. REPEAL OF FEDERAL TRANSFER TAXES.

(a) GENERAL RULE- Subtitle B of the Internal Revenue Code of 1986 (relating to estate, gift, and generation-skipping taxes) is hereby repealed.

(b) EFFECTIVE DATE- The repeal made by subsection (a) shall apply to the estates of decedents dying, and gifts and generation-skipping transfers made, after December 31, 2002.

END