March 12,2008

Hearing Statement of Senator Max Baucus Regarding Alternatives to the Current Federal Estate Tax System

Hearing Statement of Senator Max Baucus (D-Mont.)
Regarding Alternatives to the Current Federal Estate Tax System

Edmund Burke once criticized his opponents by saying: “They defend their errors as if
they were defending their inheritance.”

We’re here today to examine the estate tax. We’re here today to consider whether taxing
estates is an error. And we’re here today to examine whether there are other ways to
address inheritance.

This is the second hearing in a series of hearings focusing on estate tax reform. We will
hold a third when we return in April.

Usually, when people talk about estate tax, they focus on the current system. They talk
about a little change here and a little change there.

They talk about turning one dial a quarter to the left, or turning another dial a quarter to
the right. They work on the issue as though they were tuning a radio.

In this hearing, we put the old radio aside. Today, we’re going to take a look outside of
the box.

Under current law, the estate tax changes every year through 2011. Every year, the law

The law phases out completely. And then it springs back to the original high rate and low
exemption level.

The law is complicated. It is intimidating to small businesses, ranchers, and farmers.
The law lacks certainty for the American people.

We seriously need estate tax reform.

I know that accomplishing an estate tax markup this year won’t be easy. But let’s work
toward that goal.

I’m committed to getting estate tax reform done. I’m ready to roll up my sleeves and
work with Senators to get a reform proposal that will benefit Montana and the rest of

These Finance Committee hearings will give us a view of some reform possibilities.

These Finance Committee hearings will begin a good policy debate. And I hope that the
debate will lead to a bipartisan estate tax compromise.

Today, we’ll hear about taxing the beneficiary rather than the estate.

Today, we’ll hear about an income inclusion system.

And today, we’ll hear about how other countries dealt with this issue and the results.

Now I do not endorse any of the proposals that the witnesses will present to us today.

But I do want the Committee to have thought widely about the possibilities for replacing
the estate tax.

So today, we’re not going to defend the tax law’s errors. Today we’re going talk about
fundamental change to the estate tax. And in so doing, we’ll see if we can leave a better
inheritance for everyone.