Friday, July 22, 2005

Greenspan Opposes Estate Tax Cuts without Compensating Offsets

From the CBPP:

Federal Reserve Chairman Alan Greenspan reiterated his opposition   to tax-cut proposals that increase the deficit and made clear that this   opposition applies to proposals that repeal or drastically reduce the estate   tax without fully offsetting the costs. 

With the reappearance of high deficits, Greenspan has called for   reinstating the “pay-as-you-go” rule (often-called PAYGO) that require the   cost of all entitlement expansions and tax cuts to be offset, so that they do   not increase the deficit.  Senator Charles Schumer (D-N.Y.) asked Greenspan   about the affordability of estate tax repeal if the cost were not offset.    Greenspan stated that, despite favoring “reducing taxes on capital,” he only   supports such tax cuts “under PAYGO” and would advise Congress not to repeal   the estate tax if the cost of repeal were not offset.

Schumer also asked Greenspan about estate tax reform proposals that cost   nearly as much as repeal.  For instance, Senator Jon Kyl has proposed allowing   the first $8 million of an estate to be tax free ($16 million for a couple)   and setting the estate tax rate equal to the capital gains rate, which is   currently 15 percent.  This proposal would cost 93 percent as much as repeal,   according to the Urban Institute-Brookings Institution Tax Policy Center.   Greenspan responded that he also would oppose such costly estate tax reform   proposals if they were not offset.

Get the facts on the budget consequences of "the Paris Hilton tax cut."

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