Citizens for Tax JusticeJuly 7, 1997 (Modestly amending July 2 analysis)
Citizens for Tax Justice has completed a detailed distributional analysis of the effects of the
tax cut plan proposed by President Clinton on June 30, 1997. The analysis finds that the
Clinton plan differs sharply from the tax bills recently passed by the House and Senate, with
far more of the tax cuts under the Clinton plan going to the middle income ranges, and far less
going to the highest income taxpayers.
CTJ's analysis of the Clinton tax plan was conducted using the Institute on Taxation and Economic Policy's Microsimulation Tax Model. The ITEP Model, based on a very large sample of tax returns, census data and other data, is similar to the tax models used by the congressional Joint Committee on Taxation and the Treasury Department. The methodological approach used in the ITEP model is very similar to the methodology outlined in the Joint Committee on Taxation's "Methodology and Issues in Measuring Changes in the Distribution of Tax Burdens," 1993.
CTJ's analysis differs from Treasury's analysis of the Clinton plan primarily because CTJ's
analysis includes a number of items excluded from Treasury's analysis. These items include the small
proposed estate tax and corporate tax cuts, and the proposed excise tax increases.(1)
Notes: Estimates include almost all of the items in the President’s proposal, including: the child credit; education credits and education savings accounts; capital gains tax cuts; estate tax cuts; corporate and other business income tax changes; and excise tax increases (primarily on airline tickets and cigarettes). In general, provisions were analyzed using the Institute on Taxation & Economic Policy Microsimulation Tax Model. Estimates for the small proposed estate tax reductions are based on Joint Committee on Taxation, “Methodology and Issues in Measuring Changes in the Distribution of Tax Burdens,” 1993. Estimates for the education tax credits and savings accounts (ESAs) are estimated based on the proposed statutory rules, distribution of college-age children, college attendance rates, etc. Child credits are shown as the average amounts over the next five years, at 1997 levels. All other provisions are shown fully effective at 1997 levels.
Citizens for Tax Justice, July 7, 1997
Brief Description of and Comments on the Major Provisions of the President's June 1997 Plan
More CTJ Analysis of the '97 Budget Agreement Tax Bills