H.R. 8: The Death Tax Elimination Act of 2001

Publication Date: April 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

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Abstract:

H.R. 8, the Death Tax Elimination Act of 2001, was passed by the House on April 4, 2001. The bill resembles a previous H.R. 8 that was approved in the second session of the 106th Congress, but vetoed by President Clinton. H.R. 8 would gradually reduce estate tax rates during calendar years 2002-2010, and fully repeal the tax after 2010. After 2010, it would also replace the step-up in basis of assets at death with a carryover basis, except for a step-up allowance of $1.3 million per decedent and an additional $3 million for assets transferred to a surviving spouse.

The revenue loss associated with full repeal does not take effect within the 10year forecasting window. Although the estate tax would be repealed effective in calendar year 2011, the accompanying revenue losses would not be reflected before fiscal year 2012. This is because the deadline for filing an estate tax return is nine months after a person's death, and is sometimes extended beyond that. Consequently, estate taxes are typically not paid until the first (or later) calendar year following a person's death.

The projected revenue losses for H.R. 8 have nearly doubled compared to those made in 2000. The 10-year revenue loss estimate is now $185.6 billion for FYs 20022011, compared with an estimate of $105 billion for FYs 2001-2010 made for H.R. 8 in the 106th Congress. This difference is largely due to a new estimation model being used by the Joint Committee on Taxation that takes account of possible effects of estate tax repeal on income tax revenue.

This report will be updated to reflect further congressional action on H.R. 8.