CONGRESSIONAL RECORD - SENATE
MARCH 14, 1961
COORDINATION OF FEDERAL AND STATE INHERITANCE, ESTATE, AND GIFT TAXES
Mr. MUSKIE. Mr. President, I introduce, for appropriate reference, a bill to coordinate Federal and State inheritance, estate, and gift taxes.
Similar legislation has been introduced in the House of Representatives. I ask unanimous consent that the bill remain at the desk through Thursday, March 23, 196 1, to enable additional Senators to give consideration to joining as cosponsors.
The VICE PRESIDENT. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, this proposed legislation was drafted as the result of the first report to the President of the Advisory Commission on Intergovernmental Relations, of which I am a member. It represents an effort to correct inequities and restore the effectiveness of the Federal credit for inheritance and estate taxes paid to States. This credit provision was enacted by Congress 35 years ago to safeguard the States' share of these revenues and to facilitate interstate tax uniformity. These objectives have not been realized.
The bill which I have introduced would increase the Federal estate tax credit for taxes paid to States so as to reserve for the States a relatively large proportion of the estate tax in the low tax brackets and a small proportion in the middle and upper brackets. This will stabilize State collections from these taxes and improve their distribution among the States. The new credit would be available to the taxpayers only after their respective States simplified their tax laws and adjusted their tax rates to avail themselves of the estate tax revenues to be relinquished by the Federal Government.
Property bequests at death are now taxed by the Federal Government and by 49 States (all States except Nevada). Gifts are taxed by the Federal Government and 12 States. This group of taxes now contributes annually about $1.6 billion to Federal revenues and $400 million to State revenues.
The proposed legislation could ultimately represent a loss of several hundred million dollars in Federal revenues through relinquishing these revenues to the States. This loss of Federal revenue, however, will not begin for several years because the States will have to be given time to bring their tax laws into conformity.
The report which stimulated this proposal represents the unanimous recommendation of the Advisory Commission on Intergovernmental Relations.
Under Public Law 86-380, the Commission has the responsibility of recommending methods of coordinating and simplifying tax laws and administrative practices in order to achieve a more orderly and less competitive fiscal relationship between the levels of government and reduce the burdens of compliance for taxpayers.
The Commission selected this group of taxes for priority attention because of the long history of agitation for legislative remedy by Governors, legislators, tax experts, and various national organizations. The estate inheritance tax area is now characterized by tax overlapping and complexity, heavy tax compliance burdens for taxpayers, occasional multiple taxation, and relatively high administrative costs, out of all proportion to the small contributions these taxes make to most States' revenues.
It is to remedy these inequities that I sponsor this proposed legislation. I hope other Senators will join me in taking this practical step toward removing an important barrier to Federal-State cooperation and strengthening the operation of Federal and State revenue systems.
I ask unanimous consent that the text of the bill be printed in the RECORD following my remarks.
The VICE PRESIDENT. The bill will be received and appropriately referred; and, without objection, the bill will be printed in the RECORD.
The bill (S. 1344) to amend the Internal Revenue Code of 1954 to provide an increase in the amount for which a credit may be allowed against the Federal estate tax for estate taxes paid to States, introduced by Mr. MUSKIE, was received, read twice by its title, referred to the Committee on Finance, and ordered to be printed in the RECORD.
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