Statement by U.S. Senator Dianne Feinstein on the Estate Tax Repeal
July 14, 2000

“On a very basic and fundamental level, I believe that the estate tax is unfair. It amounts to double taxation, taxing – at times at a confiscatory rate in excess of 50 percent – assets that were already taxed when the income was earned.

Regardless of how much or how little, if you have earned money and already paid taxes on it, you ought to be able to pass these assets on to your children without placing the children in jeopardy of not being able to pay additional taxes.

I fundamentally believe that it is critical to America’s continued economic growth and prosperity that small business owners and family farmers be given every incentive to work and grow their businesses and to be able to pass those businesses on to their children to run and grow.

If a family works for years to establish and grow a business or farm, an heir should not be forced to sell the business or farm simply to pay taxes on it, or be required to assume a crushing debt burden – which may well make the continued survival of the business untenable. This, I am told, is often the case in California.

That is not fair, not right, and not what the American dream is all about.

Simply put, many who inherit farms or small businesses do not have the cash to pay the tax, even when stretching if over years. The Democratic plan would immediately exempt the majority of these firms and businesses, which is why I supported it. In many respects it is preferable.

The Republican plan does not exempt these homes and businesses, but reduces the tax rate slowly over the next 10 years and then eliminates it.

In addition, because of soaring real estate prices, the estate tax is unfair to many residents of my state who never thought, planned, or expected to find themselves subject to the estate tax. And the simple fact of the matter is that the tax becomes a very large burden.

As I am sure many of my colleagues are aware, in recent years real estate prices in California have gone through the roof. And because of the soaring value of real estate – both land and homes – it is possible today for a family with a home, whose value has escalated dramatically, and with some investments to find that their heirs are faced with substantial estate taxes.

I am signaling by my vote that the ball is now in the Administration’s court to work out an acceptable plan to either phase out the tax with reducing rates, or, to both exempt immediately the bulk of farms and small businesses as well as reducing the rates over the next 10 years.”