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[House Document 106-292]
[From the U.S. Government Publishing Office]

                                     

106th Congress, 2d Session - - - - - - - - - - - - House Document 106-
292

 
     VETO MESSAGE ON H.R. 8, THE DEATH TAX ELIMINATION ACT OF 2000

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              TRANSMITTING

     HIS VETO OF H.R. 8, THE ``DEATH TAX ELIMINATION ACT OF 2000''

  September 6, 2000.--Message and accompanying papers referred to the 
         Committee on Ways and Means and ordered to be printed
To the House of Representatives:
    I am returning herewith without my approval H.R. 8, 
legislation to phase out Federal estate, gift, and generation-
skipping transfer taxes over a 10-year period. While I support 
and would sign targeted and fiscally responsible legislation 
that provides estate tax relief for small businesses, family 
farms, and principal residence along the lines proposed by 
House and Senate Democrats, this bill is fiscally irresponsible 
and provides a very expensive tax break for the best-off 
Americans while doing nothing for the vast majority of working 
families. Starting in 2010, H.R. 8 would drain more than $50 
billion annually to benefit only tens of thousands of families, 
taking resources that could have been used to strengthen Social 
Security and Medicare for tens of millions of families.
    This repeal of the estate tax is the latest part in a tax 
plan that would cost over $2 trillion, spending projected 
surpluses that may never materialize and returning America to 
deficits. This would reverse the fiscal discipline that has 
helped make the American economy the strongest it has been in 
generations and would leave no resources to strengthen Social 
Security or Medicare, provide a voluntary Medicare prescription 
drug benefit, invest in key priorities like education, or pay 
off the debt held by the public by 2012. This tax plan would 
threaten our continued economic expansion by raising interest 
rates and choking off investment.
    We should cut taxes this year, but they should be the right 
tax cuts, targeted to working families to help our economy 
grow--not tax breaks that will help only the wealthiest few 
while putting our prosperity at risk. Our tax cuts will help 
send our children to college, help families with members who 
need long-term care, help pay for child care, and help fund 
desperately needed school construction. Overall, my tax program 
will provide substantially more benefits to middle-income 
American families than the tax cuts passed by the congressional 
tax-writing committees this year, at less than half the cost.
    H.R. 8, in particular, suffers from several problems. The 
true cost of the bill is masked by the backloading of the tax 
cut. H.R. 8 would explode in cost from about $100 billion from 
2001-2010 to about $750 billion from 2011-2020, just when the 
baby boom generation begins to retire and Social Security and 
Medicare come under strain.
    Repeal would also be unwise because estate and gift taxes 
play an important role in the overall fairness and 
progressivity of our tax system. These taxes ensure that the 
portion of income that is not taxed during life (such as 
unrealized capital gains) is taxed at death. Estate tax repeal 
would benefit only about 2 percent of decedents, providing an 
average tax cut of $800,000 to only 54,000 families in 2010. 
More than half of the benefits of repeal would go to one-tenth 
of one percent of families, just 3,000 families annually, with 
an average tax cut of $7 million. Furthermore, research 
suggests that repeal of the estate and gift taxes is likely to 
reduce charitable giving by as much as $6 billion per year.
    In 1997, I signed legislation that reduced the estate tax 
for small businesses and family farms, but I believe that the 
estate tax is still burdensome to some family farms and small 
businesses. However, only a tiny fraction of the tax relief 
provided under H.R. 8 benefits these important sectors of our 
economy, and much of that relief would not be realized for a 
decade. In contrast, House and Senate Democrats have proposed 
alternatives that would provide significant, immediate tax 
relief to family-owned businesses and farms in a manner that is 
much more fiscally responsible than outright repeal. For 
example, the Senate Democratic alternative would take about 
two-thirds of families off the estate tax entirely, and could 
eliminate estate taxes for almost all small businesses and 
family farms. In contrast to H.R. 8--which waits until 2010 to 
repeal the estate tax--most of the relief in the Democratic 
alternatives is offered immediately.
    By providing more targeted and less costly relief, we 
preserve the resources necessary to provide a Medicare 
prescription drug benefit, extend the life of Social Security 
and Medicare, and pay down the debt by 2012. Maintaining fiscal 
discipline also would continue to provide the best kind of tax 
relief to all Americans, not just the wealthiest few, by 
reducing interest rates on home mortgages, student loans, and 
other essential investments.
    This surplus comes from the hard work and ingenuity of the 
American people. We owe it to them--and to their children--to 
make the best use of it. This bill, in combination with the tax 
bills already passed and planned for next year, would squander 
the surplus--without providing the immediate estate tax relief 
that family farms, small businesses, and other estates could 
receive under the fiscally responsible alternatives rejected by 
the Congress. For that reason, I must veto this bill.
    Since the adjournment of the Congress has prevented my 
return of H.R. 8 within the meaning of Article I, section 7, 
clause 2 of the Constitution, my withholding of approval from 
the bill precludes its becoming law. The Pocket Veto Case, 279 
U.S. 655 (1929). In addition to withholding my signature and 
thereby invoking my constitutional power to ``pocket veto'' 
bills during an adjournment of the Congress, to avoid 
litigation, I am also sending H.R. 8 to the House of 
Representatives with my objections, to leave no possible doubt 
that I have vetoed the measure.
    I continue to welcome the opportunity to work with the 
Congress on a bipartisan basis on tax legislation that is 
targeted, fiscally responsible, and geared towards continuing 
the economic strength we all have worked so hard to achieve.
                                                William J. Clinton.
    The White House, August 31, 2000.
    
    
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