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| 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 |
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President Clinton today will veto the bill to repeal the estate tax, one in
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 deficits. 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 assumes.)
? The tax cuts proposed by the Republican nominee and endorsed by many
prominent Congressional Republicans, would cost $1.3 trillion over 9 years,
draining $1.6 trillion of the surplus (including interest).
? After eliminating duplicate provisions, 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 $800,000.
? 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 rates.
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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