The White House has announced some clarifications to the estate tax repeal proposed in President Bush’s $1.6 billion tax cut plan. According to a Treasury spokeswoman, the proposal is substantially similar to H.R. 8, drafted by House Ways and Means Committee members Jennifer Dunn (R-WA) and John Tanner (D-TN). The bill would repeal estate, gift, and generation-skipping transfer taxes by 2010, while the President’s proposal would phase the taxes out by 2006.

Both the bill and the proposal would replace the current transfer tax system with a silent increase in capital gains taxes by repealing the current step-up in basis of assets received from a decedent. Instead, the decedent’s basis would be carried over, generally resulting in increased capital gains when the assets are sold by the beneficiaries.

Some tax experts have criticized this plan, saying it will be even more complicated and costly than the current system.