(10) Another reason for encouraging the use of low lead or unleaded fuel by as many new vehicles as possible is that it appears that the lifetime characteristics of vehicles operated on unleaded fuels are more desirable from an emissions point of view than those vehicles operated on a fully leaded basis.

This difference is not very apparent in the early stages of automotive vehicle life but is more important in the later years when vehicle performance usually tends to degrade.

(11) The imposition of a lead tax at this time may have other benefits whose effects are difficult to estimate. As soon as the price of lead additive rises, all refinery operators will examine the economies of their gasoline production, trading off the price for lead against unused octanemaking capacity where it is available.

As a result, a number of companies might quickly reduce their lead content and produce gasolines of suitable quality that can satisfy a large percentage of the existing automotive population.

For example, the Union Oil Co. of California is now marketing a 93-octane gasoline containing a half gram of lead per gallon. Such a fuel can satisfy 60-50 percent of the existing automotive vehicles in the State of California.

If a number of major companies followed such a pattern on a national basis, one might very rapidly have on the market a lower lead fuel which could satisfy perhaps 50 percent of the existing automotive vehicles.

Benefits of even a 10-percent hydrocarbon emission reduction that would accrue from 50 percent of our vehicles and the resulting reduction of particulate emission are benefits not to be ignored.

If the tax worked in this way it would do exactly what it is intended to do, that is, reduce markedly and very rapidly the lead content in fuels and thus the lead entering the atmosphere.

In addition, it would not eliminate the leaded fuels that must be available for those vehicles in the automotive population that must have the high octane fuels obtainable only by the lead addition.

The number of people paying lead tax would decrease very rapidly and the revenue derived from this tax would very rapidly approach a small quantity and eventually disappear.

The above listing of benefits is substantial and cannot be ignored. I would also like to speak to several other points related to removing lead from gasoline as there has been considerable confusion on them. There has been some publicity that taking the lead out of gasoline can increase smog. It is true that if one took the lead out of gasoline and kept the same octane values, one would have to increase the aromatic content in gasolines considerably. There is data that indicates higher aromatic content fuels can produce more smog. However, it is intended to go to unleaded fuel of 91 octane number, and not 94 and 100, and this does not require significant amounts of aromatics to be added.

In addition, control devices contemplated for cars in the near future are such that they selectively eliminate the hydrocarbons that result from the high aromaticity components so that what comes out of the exhaust is independent of the aromatic content of what goes in.

However, this is not true for automotive vehicles presently on the road. Therefore, it is not recommended that all cars now operating

on a high octane fuel move immediately to unleaded high octane but that they continue using fuels with some lead in them.

There has been also considerable publicity that the use of unleaded gasoline will lead to the rapid deterioration of automobile engines.

It is true that some existing engines could be adversely affected if operated continuously on unleaded fuels in some kinds of service. The more severe the service, the more likely there is a problem. That is prolonged high-speed, high-power operation such as pulling trailers up long hills could lead to difficulties. However, the various manufacturers differ on the extent of this difficulty. Some indicate there is no problem at all and others indicate there is. I suspect that if unleaded fuels were to become widely available, the manufacturers would provide information that would allow individual consumers to make judgments as to how often they should use a gasoline with some lead in it if this were necessary.

Since we do not anticipate calling for outright ban on lead, but a gradual transition, we feel that all existing automotive vehicles could obtain low lead gasoline frequently enough to prevent any premature engine failures. Even if they continuously used low-level (1⁄2 gram) gasoline, this would represent an 80-percent reduction in lead use.

Mr. Chairman, we must act now, we cannot afford spasmodic and disorderly approaches to our environmental problem. We must begin to plan our actions to avoid unnecessary disruptions of our increasingly complex society and yet accomplish the job. The lead tax proposal before you now does just that.

I urge your support.

Thank you.

The CHAIRMAN. Thank you, Dr. Heffner, for your statement. We thank all of you for your very fine statements. Secretary Kennedy, you suggested that you had some draft language of minor changes. Secretary KENNEDY. Yes, sir; we have.

The CHAIRMAN. Without objection, that will be included at this point in the record.

(The draft language referred to follows:)

A BILL To amend the Internal Revenue Code of 1954 to accelerate the collection of estate and gift taxes, and for other purposes

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

SECTION 1. SHORT TITLE ETC.

(a) SHORT TITLE.-This Act may be cited as the "Estate and Gift Tax Amendments Act of 1970".

(b) Wherever in this Act an amendment is expressed in terms of an amendment to a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1954.

SEC. 2. GIFT TAX.

(a) AMENDMENTS TO SUBCHAPTER A OF CHAPTER 12.

(1) Section 2501.

(A) Paragraph (1) of subsection (a) of section 2501 (relating to imposition of tax) is amended to read as follows:

"(1) GENERAL RULE.-For the first calendar quarter of calendar year 1971 and each calendar quarter thereafter a tax, computed as provided in section 2502, is hereby imposed on the transfer of property by gift during such calendar quarter by any individual, resident or nonresident."

(B) Paragraph (4) of such subsection is amended by deleting “calendar year" and inserting in lieu thereof "calendar quarter".

(2) Section 2502.

(A) All of subsection (a) of section 2502 before the rate schedule is amended to read as follows:

"(a) COMPUTATION OF TAX.-The tax imposed by section 2501 for each calendar quarter shall be an amount equal to the excess of-

"(1) a tax, computed in accordance with the rate schedule set forth in this subsection, on the aggregate sum of the taxable gifts for such calendar quarter and for each of the preceding calendar years and calendar quarters,

over

"(2) a tax, computed in accordance with such rate schedule, on the aggregate sum of the taxable gifts for each of the preceding calendar years and calendar quarters.'

(B) Subsection (b) of section 2502 (relating to definition of calendar year) is amended to read as follows:

"(b) CALENDAR QUARTER.-Wherever used in this title in connection with the gift tax imposed under Chapter 12, the term 'calendar quarter' includes only the first calendar quarter of the calendar year 1971 and succeeding calendar quarters."

(C) Subsection (c) of section 2502 (relating to definition of preceding calendar years) is amended to read as follows:

"(c) PRECEDING CALENDAR YEARS AND QUARTERS.

"(1) The term 'preceding calendar years' means calendar years 1932 and 1970 and all calendar years intervening between calendar year 1932 and calendar year 1970. The term 'calendar year 1932' includes only the portion of such year after June 6, 1932.

"(2) The term 'preceding calendar quarters' means the first calendar quarter of calendar year 1971 and all calendar quarters intervening between such calendar quarter and the calendar quarter for which the tax is being computed."

(3) Section 2503.—

(A) Subsection (a) of section 2503 (relating to taxable gifts) is amended to read as follows:

"(a) GENERAL DEFINITION.-The term 'taxable gifts' means, in the case of gifts made after December 31, 1970, the total amount of gifts made during the calendar quarter, less the deductions provided in subchapter C (sec. 2521 and following). In the case of gifts made before January 1, 1971, such term means the total amount of gifts made during the calendar year, less the deductions provided in subchapter C."

(B) The heading and first sentence of subsection (b) of section 2503 (relating to taxable gifts) is amended to read as follows:

"(b) EXCLUSIONS FROM GIFTS.-In computing taxable gifts for the calendar quarter, in the case of gifts (other than gifts of future interests in property) made to any person by the donor during the calendar year 1971 and subsequent calendar years, $3,000 of such gifts to such person less the aggregate of the amounts of such gifts to such person during all preceding calendar quarters of the calendar year shall not, for purposes of subsection (a), be included in the total amount of gifts made during such quarter."

(4) Section 2504. Section 2504 (relating to taxable gifts for preceding years) is amended to read as follows:

"SEC. 2504. Taxable gifts for Preceding Years.

"(a) IN GENERAL.-In computing taxable gifts for preceding calendar years or calendar quarters for the purpose of computing the tax for any calendar quarter, there shall be treated as gifts such transfers as were considered to be gifts under the gift tax laws applicable to the years or calendar quarters in which the transfers were made and there shall be allowed such deductions as were provided for under such laws, except that the specific exemption in the amount, if any, allowable under section 2521 shall be applied in all computations in respect of previous calendar years or calendar quarters for the purpose of computing the tax for any calendar year or calendar quarter."

"(b) EXCLUSIONS FROM GIFTS FOR PRECEDING YEARS.-In the case of gifts made to any person by the donor during preceding calendar years and calendar quarters, the amount excluded, if any, by the provisions of gift tax laws applicable to the years and calendar quarters in which the gifts were made shall not, for purposes of subsection (a), be included in the total amount of the gifts made during such years and calendar quarters.

"(c) VALUATION OF CERTAIN GIFTS FOR PRECEDING CALENDAR YEARS OR QUARTERS. If the time has expired within which a tax may be assessed under this chapter or under corresponding provisions of prior laws, on the transfer of property by gift made during a preceding calendar year or calendar quarter, as defined in section 2502 (c), if a tax under this chapter or under corresponding provisions of prior laws has been assessed or paid for such preceding calendar

year or calendar quarter, the value of such gift made in such preceding calendar year or calendar quarter shall, for purposes of computing the tax under this chapter for any calendar quarter, be the value of such gift which was used in computing the tax for the last preceding calendar year or calendar quarter, for which a tax under this chapter or under corresponding provisions of prior laws was assessed or paid.

"(d) NET GIFTS.-The term 'net gifts' as used in corresponding provisions o prior laws shall be read as 'taxable gifts' for purposes of this chapter." (b) AMENDMENTS TO SUBCHAPTER B OF CHAPTER 12.—

(1) Section 2512.-Subsection (b) of section 2512 (relating to valuation of gifts) is amended by deleting "calendar year" and inserting in lieu thereof "calendar quarter".

(2) Section 2513.

(A) Section 2513 (relating to gifts by husband or wife to third party) is amended by deleting "calendar year" each place it appears and inserting in lieu thereof "calendar quarter".

(B) Subparagraph (A) of subsection (b) (2) of section 2513 is amended to read as follows:

"(A) the consent may not be signified after the last day of the first month following the close of such calendar quarter, unless before such last day no return has been filed for such calendar quarter by either spouse, in which case the consent may not be signified after a return for such calendar quarter is filed by either spouse;".

(C) Subparagraph (B) of subsection (b) (2) of section 2513 is amended by deleting "such year" and inserting in lieu thereof "such calendar quarter".

(D) Subsection (c) of section 2513 is amended

(i) by deleting "15th day of April following the close of such year" and inserting in lieu thereof "last day of the first month following the close of such calendar quarter", and

(ii) by deleting "such 15th day" each place it appears and inserting in lieu thereof "such last day".

(E) Subsection (d) of section 2513 is amended by deleting "such year" and inserting in lieu thereof "such calendar quarter".

(3) Section 2515.-Subsection (c) of section 2515 (relating to tenancies by the entirety) is amended by deleting "calendar year" and inserting in lieu thereof "calendar quarter".

(c) Amendments to Subchapter C of Chapter 12.

(1) Section 2521.-Section 2521 (relating to specific exemption) is amended to read as follows:

"SEC. 2521. Specific Exemption.

"In computing taxable gifts for a calendar quarter, there shall be allowed as a deduction in the case of a citizen or resident an exemption of $30,000, less the aggregate of the amounts claimed and allowed as a specific exemption in the computation of gift taxes for the calendar year 1932 and all calendar years and calendar quarters intervening between that calendar year and the calendar quarter for which the tax is being computed under the laws applicable to such years or calendar quarters."

(2) Section 2522.-Section 2522 (relating to charitable and similar gifts) is amended by deleting "year" each place it appears and inserting in lieu thereof "quarter".

(3) Section 2523.-Subsection (a) of section 2523 (relating to gifts to a spouse) is amended by deleting "year" each place it appears and inserting in lieu thereof "quarter".

(d) MISCELLANEOUS AMENDMENTS.—

(1) Paragraph (2) of subsection (d) of section 1015 (relating to increased basis for gift tax paid) is amended

(A) by deleting "calendar year" the first time it appears therein and inserting in lieu thereof "calendar quarter (or calendar year if the gift was made before January 1, 1971)", and

(B) by deleting "calendar year" every other place it appears therein and inserting in lieu thereof "calendar quarter or year". (2) Section 2012.-

(A) Paragraph (1) of subsection (b) of section 2012 (relating to credit for gift tax) and paragraph (1) of subsection (d) of such section are each amended by deleting "the year" and inserting in lieu thereof "the

calendar quarter (or calendar year if the gift was made before January 1, 1971)".

(B) Subsection (d) of section 2012 is amended by deleting "such year" each place it appears therein and inserting in lieu thereof "such quarter or year".

(3) Section 6019 (relating to gift tax returns) is amended by deleting "year" each place it appears and inserting in lieu thereof "quarter".

(4) Subsection (b) of section 6075 (relating to time for filing gift tax returns) is amended to read as follows:

"(b) GIFT TAX RETURNS.-Returns made under section 6019 (relating to gift taxes) shall be filed on or before the last day of the first month following the close of the calendar quarter."

(5) Paragraph (1) of subsection (c) of section 6212 (relating to notice of deficiency) is amended by deleting "calendar year" and inserting in lieu thereof "calendar quarter".

(6) Subsection (b) of section 6214 (relating to determination by Tax Court) is amended to read as follows:

"(b) JURISDICTION OVER OTHER YEARS OR QUARTERS.-The Tax Court in redetermining a deficiency of income tax for any taxable year or of gift tax for any calendar year or calendar quarter shall consider such facts with relation to the taxes for other years or calendar quarters as may be necessary correctly to redetermine the amount of such deficiency, but in so doing shall have no jurisdiction to determine whether or not the tax for any other year or calendar quarter has been overpaid or underpaid."

(7) Subsection (b) of section 6324 (relating to lien for gift tax) is amended by deleting "calendar year" and inserting in lieu thereof "period for which the return was filed".

(8) Paragraph (2) of section 6501 (e) (relating to limitations on assessment and collection) is amended by deleting "during the year" and inserting in lieu thereof "during the period for which the return was filed".

(9) Section 6512 (relating to limitations in case of petition to Tax Court) is amended by deleting "the same calendar year" each place it appears therein and inserting in lieu thereof "the sanie calendar year or calendar quarter".

(e) EFFECTIVE DATE.-The amendments made by this section shall be effective with regard to gifts made after December 31, 1970.

SEC. 3. ESTATE TAX.

(a) ALTERNATE VALUATION.-Section 2032 (relating to alternate valuation) is amended

(1) by deleting "1 year" each place it appears and inserting in lieu thereof "6 months", and

(2) by deleting "1-year" and inserting in lieu thereof "6-month".

(b) TIME FOR FILING ESTATE TAX RETURNS.-Subsection (a) of section 6075 (relating to time for filing estate tax returns) is amended by deleting “15 months” and inserting in lieu thereof "9 months".

(c) CERTAIN BEQUESTS SUBJECT ΤΟ POWER OF APPOINTMENT.-Section 2055(b)(2) (C) is amended by deleting "1 year" and inserting in lieu thereof "6 months".

(d) DISCHARGE OF FIDUCIARY FROM PERSONAL LIABILITY.—

(1) Section 2204 (relating to discharge of executor from personal liability) is amended

(A) by striking out "Executor" in the heading of such section and inserting in lieu thereof "Fiduciary";

(B) by striking out "If the executor: and inserting in lieu thereof "(a) General Rule.-If the executor";

(C) by amending the last sentence thereof to read as follows: "The executor, on payment of the amount of which he is notified and for which the time for payment is not extended under section 6161, 6163, or 6166, and on furnishing any bond which may be required under section 6165 for any amount for which the time for payment is extended, shall be discharged from personal liability for any deficiency in tax thereafter found to be due and shall be entitled to a receipt or writing showing such discharge."

(D) by adding at the end thereof the following new subsection: "(b) Fiduciary Other Than the Executor.-If a fiduciary (not including a fiduciary holding property included in the gross estate of a nonresident decedent) other than the executor makes written application to the Secretary or his delegate