April 4, 2001

Lower-Cost Estate Tax Repeal Reflects Slow Phase-In

Cost in the Second Ten Years Could Reach $1.3 Trillion

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On April 3, the Center on Budget and Policy Priorities released Lower-Cost Estate Tax Repeal Reflects Slow Phase-In. The report explains that the House Ways and Means Committee bill (H.R. 8) to repeal the estate tax has a much lower cost than other repeal proposals — for example, it is less than one-third of the Joint Tax Committee's $662 billion estimate of a proposal for immediate repeal that is broadly similar to H.R. 8. The House bill achieves its lower cost by "backloading" — pushing off repeal to 2011 (two years later than the Bush proposal), and lowering the estate tax rate much more slowly in the intervening years than the Bush plan. The bill's new treatment of inherited capital gains ("carry-over basis") and anti-abuse measures are only effective once repeal takes affect in 2011, and thus have essentially no impact on the bill's ten-year cost. The report's findings include: