    [Weekly Compilation of Presidential Documents Volume 36, Number 35 (Monday, September 4, 2000)]
    [Pages 1985-1987]
    [Online from the Government Publishing Office, www.gpo.gov]

    <R04>
    Message to the House of Representatives Returning Without Approval the
    Death Tax Elimination Act of 2000

    August 31, 2000

    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 residences 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

    [[Page 1986]]

    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

    [[Page 1987]]

    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.