[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
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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
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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.