Representative Charles B. Rangel (D-NY), ranking Democratic member of the House Ways and Means Committee, met with ACCF supporters for an ACCF Capital Formation Forum on May 16.

Speaking the day before the Ways and Means Committee met to vote on permanent normal trade relations (PNTR) with China, Representative Rangel told ACCF supporters that he thought the trade agreement would benefit American business. "I believe this bill offers a great opportunity to American farmers, our high tech companies, pharmaceutical companies, manufacturing, banking, and the business community in general," he noted.

Addressing the issue of human rights in China, one of the principal concerns voiced by the measure's opponents, the New York congressman said he thought the Chinese, with their enormous population, had to be concerned about human rights. "We don't want to ignore this issue," he said but added, "The U.S. also has blemishes in the human rights area. Let's break down those barriers, monitor how China treats its people, and give America the opportunity to be all she can be."

Representative Rangel, who had been officially undecided on the China trade bill, announced later on May 16 that he would vote for the measure. (The China trade bill, H.R. 4444, passed the House by a vote of 237-197 on May 24.) However, while he stressed that he thought PNTR for China was in the best interests of the United States, he said he did not understand why the measure had to be taken up now. "President Clinton told us that he thinks the China trade bill is the right thing to do. The Democrats in the House think the right thing to do is to take back the House of Representatives in the 2000 election. This complicates their perspective on the China trade bill because important Democratic constituencies—notably labor unions—oppose the bill and are prepared to go against members of Congress who support it. It's not a simple issue."

"If members of Congress talked with one another more, we could have a more productive discourse on the issues and a better understanding on the China trade bill, as well as the other important items on the congressional agenda. That way, we could make more progress," Congressman Rangel said.

Turning to tax policy in the question-and-answer session, Mr. Rangel emphasized that tax cuts to promote investment should be considered as part of an over-all package of cuts to benefit all Americans. "I've even considered a zero capital gains tax rate as part of a package of tax incentives directed at poor communities. If tax cuts could be focused on the risk takers and benefit the American people, that's the direction we should go. At the same time, tax cuts should be good not just for investors, but also for all Americans. And we must not use such cuts as a reason to reduce services such as education and health care.

Historical Bipartisan Vote on Estate Tax Repeal in the U.S. House of Representatives

MOMENTUM CONTINUES TO BUILD for congressional action this year to repeal the estate tax following the surprisingly large and almost veto-proof vote on June 9 by the U.S. House of Representatives. The House measure, which passed by a margin of 279 to 136, phases in repeals of federal estate, gift, and generation-skipping transfer taxes over ten years.

Members of Congress present voted almost two-to-one in favor of H.R. 8, the "Death Tax Elimination Act." Sixty-five Democrats joined in approving the measure, rejecting an alternative measure offered by the Democratic leadership that would have reduced estate tax rates by 20 percent across the board, raised to $4 million the exclusion for family businesses and farms, and increased the exemption immediately from $675,000 to $1 million. (Under current law, the lifetime exemption is raised in steps from $675,000 to $1 million by 2006.)

The measure passed by the House repeals the estate tax gradually over a ten-year period. Prior to repeal, beginning in 2001, the unified credit would be converted into a true exemption to ensure that taxpayers get the benefit of the lowest tax rate of 18 percent. In addition, the 5 percent surcharge on large estates, and rates in excess of 53 percent are repealed. In 2002, rates in excess of 50 percent are repealed. In 2003 through 2006, all rates are reduced by 1 percentage point per year. In 2007, all rates are reduced by 1.5 percentage points. In 2008 and 2009, all rates are reduced by 2 percentage points. State tax credit rates are proportionately reduced. Beginning in 2010, all these taxes are repealed. Carryover basis applies to transfers at death after December 31, 2009, for assets in excess of $1.3 million and spouse transfers in excess of $3 million.

President Clinton has threatened to veto any bill completely repealing the estate tax "rather than risk the fiscal progress that has contributed to the longest economic expansion in history," but he has also signaled some willingness to compromise with Congress on the estate tax. With or without a compromise, however, this year's momentum will not dissipate. Next year, the effort to repeal the estate tax will either expand on this year's "down payment" or begin anew.