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Sat June 10, 2000 01:24 EDT

Clinton: I'll Veto Estate Tax Bill

CURT ANDERSON
AP Tax Writer

WASHINGTON (AP) _ President Clinton is holding tough on his threat to veto House-passed legislation that eventually would abolish the federal inheritance tax, calling it too expensive and a ``windfall'' for the rich.

``If this bill were presented to me in its current form, I would veto it without hesitation,'' the president said Friday after the House Republicans brushed aside a Democratic alternative and passed their bill 279-136.

It would repeal the tax gradually by 2010. Clinton's statement on the vote said it would cost losses of $750 billion in the decade after repeal is fully in place.

``We're talking about a tremendous amount of money,'' said Senate Minority Leader Tom Daschle, D-S.D. ``If they want the accomplishment, they're going to have to compromise.''

Joined by 65 Democrats, Republicans ignored Clinton's veto threat and sent the repeal bill to the Senate. Supporters said they were acting to prevent taxes from ruining family farms and small businesses, but detractors decried it as a costly giveaway to the wealthiest Americans.

The bill would cost $105 billion during the 10-year phaseout by cutting the top 55 percent federal rate in 2001 and gradually reduce all other rates until 2010. While the bill doesn't directly affect state inheritance taxes, many link collections to the federal tax and would have to be rewritten to continue in force.

Only about 2 percent of families of people who die pay the estate tax, which applies this year to estates above $675,000 for an individual. In 1997, about 43,000 estates out of 2.3 million adult deaths were taxable. Because of more generous exemptions, only a tiny fraction of farm and small business heirs are affected.

Sponsors of the repeal bill said the threat of the tax forces people to do costly estate planning, restrains expansion and investment and jeopardizes jobs.

``The death tax is a natural-born killer of everything they have worked for their entire lives,'' said Rep. Bill Archer, R-Texas, chairman of the House Ways and Means Committee. ``This isn't a rich against the poor issue. This is a jobs issue and a fairness issue.''

Although repeal is a top GOP priority, co-sponsors included many black and Hispanic Democrats and liberals not normally allied with such tax cuts. They agreed the tax was causing headaches for minorities and other middle-class entrepreneurs who are taking advantage of the booming economy to build successful enterprises and create jobs.

``Who hires the workers in America? Is it the guy on the street corner or the people who achieve some success?'' said Rep. James Traficant, D-Ohio.

Sixty-five Democrats and one independent joined Republicans in voting for the measure, sponsored by Rep. Jennifer Dunn, R-Wash., and John Tanner, D-Tenn. The margin was just enough to override a veto, but Democratic leaders said a combination of absentees and members promising to switch would give them the 10 more votes necessary to sustain a veto.

Democratic opponents said their alternative would better help family farms and small businesses by raising exemptions and cutting all rates by 20 percent in 2001. At a cost of $22 billion over 10 years, they argued their measure would leave more of the projected future budget surplus for spending priority programs, paying down public debt and ensuring Social Security and Medicare don't go broke as baby boomers retire.

Democrats also pointed to Internal Revenue Service figures showing that almost half the inheritance tax revenue comes from estates over $5 million and contended that many of these wealthy people could escape taxes entirely through shelters that protect their incomes while alive.

``We take care of the problem, but we don't take care of the multibillion dollar estate,'' said Rep. Charles Rangel of New York, senior Democrat on the Ways and Means Committee. The House rejected the Democratic alternative on a 222-196 vote.

Like several other tax bills moving in the House this year, estate tax repeal was part of the $792 billion tax cut vetoed last year by Clinton. Republicans have carved up that bill and are pushing its individual pieces to the floor, forcing some Democrats to take uncomfortable votes as both parties vie for control of the House in the November elections.


The bill is H.R. 8.

On the Net: Congress: http://thomas.loc.gov/

Copyright © 2000 The Associated Press

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