July 11, 2000
The Administration believes that such a tax reduction would harm the important priorities of maintaining fiscal discipline, paying down the national debt, extending the solvency of Medicare and Social Security, and maintaining core government functions such as education and fighting crime. It is dangerously backloaded. This legislation would cost close to $50 billion when fully phased in 2011, and would cost more than $750 billion between 2011 and 2020 as the baby boom generation starts to retire. Resources devoted to the repeal of the estate tax would not be available to pay down the debt or fortify Social Security and Medicare.
The Administration supports efforts to appropriately target estate tax relief, particularly for small business, family farms, and principal residences. However, full repeal of the estate tax would undermine fairness in the tax system. Only the wealthiest two percent of estates pay any tax, and nearly half of estate tax revenue comes from the top 1 in 1,000 estates. In addition, recent studies suggest that repeal of the estate tax could reduce charitable gifts and bequests by close to $6 billion annually.
The Administration worked with the Congress in 1997 to lift the burden of the estate tax on the vast majority of small businesses and family farms. The Administration would be pleased to work with the Congress to continue to help relieve the estate tax burden on small businesses, family farms, and principal residences, and to make the estate tax simpler and fairer in a fiscally responsible way. The Administration understands that a Democratic alternative will be offered to advance these goals. The Administration would support these proposals as part of a balanced framework that pays down debt, strengthens Social Security and Medicare, provides tax relief to middle-income families, and funds critical initiatives.
H.R. 8 would affect receipts; therefore, it is subject to the pay-as-you-go requirements of the Omnibus Budget Reconciliation Act of 1990. The magnitude of the proposed tax cut ($2.5 billion in FY 2001, according to the Treasury Department) and the absence of any offsets could cause a significant sequester of Federal resources.
The Budget Legislative Information Management Reform/GPRA Grants Management Financial Management Procurement Policy Information & Regulatory Policy Contact the White House Web Master
T H E W H I T E H O U S E