Estate Tax Repeal Said Facing Veto
Monday, July 10th 2000, 12:00 am
By: News On 6
WASHINGTON (AP) â€” As Senate Republicans gear up for debate on repealing inheritance taxes, Treasury Secretary Lawrence Summers is warning that the measure is far too costly and faces a certain veto by President Clinton.
Summers estimated the 10-year revenue cost to the government of repealing the federal estate tax will be $750 billion after it takes full effect in 2010 â€” seven times its cost during a gradual phaseout from 2001 to 2010.
``It might be the most back-loaded piece of major tax legislation ever,'' Summers wrote in an opinion piece published Monday by The Washington Post.
This exploding cost in the later years, Summers added, ``would come early in the next decade just as the baby boomers start to retire. The result would be reduced pay-down of the debt, increased interest rates and reduced investment.''
In addition, Summers said the bill would siphon away resources needed to ensure the future solvency of Social Security and Medicare, could reduce charitable giving by $6 billion a year from people who now seek to avoid the tax and would mainly help the very richest 2 percent of families in America.
But if Republicans can overcome some procedural hurdles in the Senate this week, they will send the full repeal bill to Clinton and dare him to veto it. Even if they cannot override the veto, GOP leaders hope the measure's political popularity will work to their advantage in the fall elections.
``People are just genuinely unhappy about it,'' said Sen. William Roth, R-Del., chairman of the Senate Finance Committee, who added the issue often comes up at meetings with voters. ``They want some action. There's no issue that seems to bring more applause than that.''
Instead of complete repeal, Summers said the Senate should consider a less costly alternative to the House-passed bill that would concentrate tax relief on small businesses and farmers â€” the groups Democrats and Republicans alike say are most in need of help. House Democrats proposed raising exemptions for those groups and their Senate counterparts are working on a similar measure.
Yet repealing the tax is drawing significant support from Democrats, 65 of whom supported it in the House. Nine Democrats signed on as co-sponsors to a similar Senate bill â€” some of them in difficult re-election races where taxes are a critical issue â€” but leaders are hoping they will opt for the less costly version.
``We can do it for a lot less than $750 billion,'' said Senate Minority Leader Tom Daschle, D-S.D.
Democrats also want to use the estate tax debate to stage votes on some of their major issues, such as amendments that would create a Medicare prescription drug benefit and tax credits for tuition and long-term health care. The key hurdle could be a GOP attempt to limit amendments and debate â€” which requires 60 votes in favor â€” unless a deal is struck with Democrats.
``We haven't worked it out yet but that is always a possibility,'' said Senate Majority Leader Trent Lott, R-Miss.