Estate and Gift Tax Phase-Out Act of 1997

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Estate and Gift Tax Phase-Out Act of 
1997''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The economy of the United States cannot achieve strong, 
        sustained growth without adequate levels of savings to fuel 
        productive activity. Inadequate savings have been shown to lead 
        to lower productivity, stagnating wages, and reduced standards 
        of living.
            (2) Savings levels in the United States have steadily 
        declined over the past 25 years, and have lagged behind the 
        industrialized trading partners of the United States.
            (3) These anemic savings levels have contributed to the 
        country's long-term downward trend in real economic growth, 
        which averaged close to 3.5 percent over the last 100 years but 
        has slowed to 2.4 percent over the past quarter century.
            (4) Repealing the estate and gift tax would contribute to 
        the goals of expanding savings and investment, boosting 
        entrepreneurial activity, and expanding economic growth.
            (5) Abolishing the estate tax would restore a measure of 
        fairness to the Federal tax system. Families should be able to 
        pass on the fruits of labor to the next generation without 
        realizing a taxable event.

SEC. 3. PHASE-OUT OF ESTATE AND GIFT TAXES THROUGH INCREASE IN UNIFIED 
              ESTATE AND GIFT TAX CREDIT.

    (a) Estate Tax Credit.--
            (1) In general.--Section 2010(a) of the Internal Revenue 
        Code of 1986 (relating to unified credit against estate tax) is 
        amended by striking ``$192,800'' and inserting ``the applicable 
        credit amount''.
            (2) Applicable credit amount.-- Section 2010 of such Code 
        is amended by redesignating subsection (c) as subsection (d) 
        and by inserting after subsection (b) the following:
    ``(c) Applicable Credit Amount.--For purposes of this section, the 
applicable credit amount is the amount of the tentative tax which would 
be determined under the rate schedule set forth in section 2001(c) if 
the amount with respect to which such tentative tax is to be computed 
were the applicable exclusion amount determined in accordance with the 
following table:

        ``In the case of estates of decedents
                                                         The applicable
          dying, and gifts made, during:
                                                   exclusion amount is:
                  1998...............................       $1,000,000 
                  1999...............................       $1,500,000 
                  2000...............................       $2,000,000 
                  2001...............................       $2,500,000 
                  2002...............................    $5,000,000.''.
            (3) Conforming amendments.--
                    (A) Section 6018(a)(1) of such Code is amended by 
                striking ``$600,000'' and inserting ``the applicable 
                exclusion amount in effect under section 2010(c) for 
                the calendar year which includes the date of death''.
                    (B) Section 2001(c)(2) of such Code is amended by 
                striking ``$21,040,000'' and inserting ``the amount at 
                which the average tax rate under this section is 55 
                percent''.
                    (C) Section 2102(c)(3)(A) of such Code is amended 
                by striking ``$192,800'' and inserting ``the applicable 
                credit amount in effect under section 2010(c) for the 
                calendar year which includes the date of death''.
    (b) Unified Gift Tax Credit.--Section 2505(a)(1) of the Internal 
Revenue Code of 1986 (relating to unified credit against gift tax) is 
amended by striking ``$192,800'' and inserting ``the applicable credit 
amount in effect under section 2010(c) for such calendar year''.
    (c) Effective Date.--The amendments made by this section shall 
apply to the estates of decedents dying, and gifts made, after December 
31, 1997.

SEC. 4. REPEAL OF FEDERAL TRANSFER TAXES.

    (a) In General.--Subtitle B of the Internal Revenue Code of 1986 is 
repealed.
    (b) Effective Date.--The repeal made by subsection (a) shall apply 
to the estates of decedents dying, and gifts and generation-skipping 
transfers made, after December 31, 2002.
    (c) Technical and Conforming Changes.--The Secretary of the 
Treasury or the Secretary's delegate shall not later than 90 days after 
the effective date of this section, submit to the Committee on Ways and 
Means of the House of Representatives and the Committee on Finance of 
the Senate a draft of any technical and conforming changes in the 
Internal Revenue Code of 1986 which are necessary to reflect throughout 
such Code the changes in the substantive provisions of law made by this 
Act.

Summary: Estate and Gift Tax Phase-Out Act of 1997 - Amends the Internal Revenue Code to phase-out and repeal, effective January 1, 2003, the estate tax, gift tax, and the tax on generation-skipping transfers.