[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.