PRESIDENT CLINTON: MAINTAINING
OUR FISCAL DISCIPLINE BY VETOING ONE IN A SERIES OF GOP TAX BREAKS THAT WOULD
BRING AMERICA BACK INTO DEFICITS
August 31, 2000
President Clinton today will veto the bill to repeal the estate tax, one
of a series of costly tax cuts passed by the majority in Congress that,
combined with the tax cuts supported by the Congressional majority for next
year, would cost $2 trillion, undermine our fiscal discipline, and plunge
America back into on-budget deficit. In addition, this approach would leave no
money for a Medicare prescription drug benefit, strengthening Social Security
and Medicare, paying down the debt by 2012, or investing in key priorities like
reducing class size and repairing crumbling schools. President Clinton will
urge Congress to pass his targeted tax cuts which provide substantially more
tax relief for middle class families at less than half the total cost of the
Congressional proposals. He will also emphasize his willingness to work with
Congress to pass fiscally responsible, fairer, simpler, and more efficient
estate tax relief targeted toward small businesses and family farms. Democrats
in Congress have offered better estate tax alternatives that provide immediate,
more-targeted, fiscally responsible tax relief.
THIS IS ANOTHER IN A $2 TRILLION SERIES OF GOP TAX BREAKS THAT TAKEN
TOGETHER WOULD DRIVE AMERICA BACK INTO DEFICITS
- According to Congress' own calculations, the tax cuts House
Republicans have passed this year would cost $734.2 billion over ten years,
which with interest would drain over $900 billion of the budget surplus. (This
assumes that the so-called marriage penalty legislation continues in effect
after 2004, which the Joint Committee on Taxation estimates would cost $292.5
billion over 10 years, rather than expiring as the Republican Congress
- Add this to the tax cuts proposed by the Republican nominee and
endorsed by many prominent Congressional Republicans, which would cost $1.3
trillion over 9 years, draining $1.6 trillion of the surplus (including
- Eliminate the duplicate provisions, and the tax cuts passed this year
and endorsed for next year by the Republican Party would drain over $2
trillion, more than the entire $1.8 trillion projected budget surplus.
THE REPUBLICAN ESTATE TAX REPEAL WOULD UNDERMINE OUR FISCAL
DISCIPLINE, AND BENEFIT ONLY THE MOST WELL-OFF. The majority in Congress
has taken the wrong approach. Repealing the estate tax would be fiscally
irresponsible, regressive, poorly targeted to small businesses and family
farms, and would undermine charitable giving.
- The cost of the backloaded bill passed by the House and Senate would
be $100 billion from 2001-10, but about $750 billion from 2011-20, just when
the baby boom generation begins to retire.
- In 2010, estate tax repeal would benefit only 54,000 estates
about 2 percent of decedents providing an average tax cut of
- More than half of the benefit of repeal would go to the top one-tenth
of one percent of families. That is an average tax cut of $7 million each for
the 3,000 wealthiest families in 2010.
- Small businesses and family farms would get only a tiny fraction of
the benefit of repeal:
- Only a tiny fraction of the benefit of repeal goes to small
businesses and family farms; in 1998 only 1,800 estates were composed primarily
of small businesses and family farms.
- Studies indicate that, without the estate tax, charitable donations
and bequests would fall by $5 billion to $6 billion per year.
THE DEMOCRATS IN THE HOUSE AND THE SENATE HAVE PROPOSED A MORE
TARGETED, RESPONSIBLE APPROACH. The House and Senate Democrats both had
estate tax proposals that were more fiscally responsible and targeted towards
those who need relief most.
- The House Democratic proposal ($22 billion) would take the majority
of the very few taxable small businesses and family farms off the estate tax
and provide a 20 percent reduction in estate tax rates.
- The Senate Democratic proposal ($60 billion) would eliminate estate
taxes for two-thirds of the people currently paying it and for virtually all
small businesses and family farms. Fully phased in, it is only one-fifth the
cost of repeal.
- Both the House and Senate Democrats would have provided most of their
estate tax relief immediately. That means that most small businesses and family
farms would have their estate taxes eliminated immediately under the Democratic
alternatives, while they would have to wait until 2010 for estate tax repeal
under the Republican plan.
- In 1997, President Clinton worked with Congress on a bipartisan basis
that exempted many farms and small businesses from tax. The President proposed
and Congress also passed an important provision allowing small businesses and
family farms to pay their estate taxes over 14 years at below-market interest
CONGRESS HAS FAILED TO ACT ON AMERICA'S PRIORITIES: At the
same time, the Republican Congress has failed to act on crucial priorities for
the American people:
- They have not moved forward on a minimum wage increase that would
benefit more than ten million workers.
- They have not moved forward on an affordable Medicare prescription
drug benefit that, when fully phased in, would cost substantially less than
repealing the estate tax but benefit more than 40 million Americans.
- And they have not acted on tax cuts that address priorities like
making college more affordable, helping families pay for child care and
long-term care, encouraging retirement savings, or expanding the Earned Income
Tax Credit to reduce poverty among families with three or more children.
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