Democratic Maneuvering Sends Death Tax Repeal to Defeat

Fossella Says Administration Blocked Common Sense, Middle-Class Tax Relief

Staten Island, NY -- Congressman Vito Fossella (R-NY13) today expressed disappointment over Democratic maneuvering that led to the defeat of an override of President Clinton's veto of legislation to repeal the death tax. Several Democrats reversed their vote of earlier this year during the override attempt today, dooming a common sense bill to reduce taxes that initially attracted significant bipartisan support.

"It is unfortunate that the American people will be forced to continue paying this unfair and exorbitant tax," Fossella said. "The Administration's relentless mission to defeat this bill has hurt small business men and women across the country. It is unfortunate that the President and his supporters were unwilling to stand up and do what is right for small business owners. Repealing the death tax is a reasonable and common sense measure aimed at helping families save more of their money. That is why more than a quarter of Democrats in Congress initially joined with Republicans to abolish this unfair tax. The only difference between today's vote and the original was politics, pure and simple."

According to the National Federation of Independent Businesses (NFIB), more than 70 percent of small businesses do not survive the second generation and 87 percent do not make it to the third generation. Sixty percent of small-business owners report that they would create new jobs over the coming year if estate taxes were eliminated.

The death tax ranges between 38% and 55%. Despite arguments by the Administration calling the tax cut too costly, the death tax produced less than 1% of total federal revenues in Fiscal Year 1996.

"With a non-Social Security budget surplus expected to top nearly $900 billion, we have an unprecedented opportunity to reduce taxes and still make investments in critical areas," Fossella said. "We can repeal both the marriage penalty and death taxes, protect and strengthen Social Security and Medicare and pass a prescription drug coverage plan for seniors. I believe that repealing these taxes could substantially increase economic growth, boost tax revenues, encourage capital formation and spur job production."

In 1987, current Treasury Secretary Lawrence Summers wrote, "Intergenerational transfers account for the vast majority of aggregate U.S. capital formation. Because of its many exemptions and tax avoidance schemes that are legally permissible, the [death] tax raises only a small amount of revenue."

A recent survey suggested that repealing the death tax would expand the nation's output by $77 billion, create more than one million new jobs and increase personal income by $56 billion over seven years.