Month: April 2001

April 25, 2001 11:37 AM | Permalink |

Click here to see this analysis in PDF format.

An April 24, 2001 press release from the Bush Treasury Department confirms previous estimates by Citizens for Tax Justice about the aggregate effects of the Bush tax proposals on various demographic groups. But the Bush release fails to tell average taxpayers what the Bush plan will actually mean for them.

Treasury offers summary statistics about the fully-phased-in size of the Bush income tax cuts and the number of taxpayers who would receive tax reductions–for all taxpayers and selected subgroups, including families with children, single parents, and seniors. Treasury’s findings are similar to figures released by CTJ earlier this year.

Unlike CTJ’s estimates, however, Treasury does not provide information about the large number of taxpayers who would receive no benefit from the Bush tax proposals. Treasury also fails to provide information on the median, or typical, tax cuts under the Bush plan for taxpayers in the various demographic groups.

• For example, while Treasury says that 13 million seniors would get an average income tax cut of $892 each under the Bush plan, it fails to note that almost half of all seniors would get nothing, and that the typical senior would get a tax cut of only $150.
• Likewise, Treasury says that 8 million “single moms” would get a tax cut of $712, but does not disclose that 48 percent of single parents would get nothing, and that the median tax cut for single parents would be only $326.

 

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April 16, 2001 11:38 AM | Permalink |

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On March 27, Democratic leaders in the Senate introduced a tax cut plan designed as an alternative to the $2.4 trillion tax cut plan proposed by President Bush. The bill, S. 629, would provide a retroactive cut in the bottom income tax rate beginning in tax year 2001, lowering the current 15 percent tax rate to 12.5 percent in 2001 and 10 percent in 2002. The bill would also provide a rebate of 2000 income and payroll taxes up to $600 for couples, $450 for single parents, and $300 for single taxpayers without children. CTJ’s analysis of the tax cuts in S.629 finds that the bottom 60 percent of the income distribution would receive 41.2 percent of the tax cuts from this proposal in tax year 2001. The wealthiest 10 percent of taxpayers, by contrast, would receive 15.2 percent of the tax cuts under the Democratic alternative plan.

• For the typical taxpayer–the twenty percent of taxpayers in the middle of the income distribution–S. 629 would provide a tax cut of $561 a year in 2001.
• For the poorest twenty percent of all taxpayers, the bill would provide an average tax cut of $146.
• The wealthiest 1 percent of taxpayers, with average incomes of $1.1 million, would see an average tax cut of $766 in 2001 under the Senate alternative plan. In contrast, the same group of taxpayers would see an average tax cut of $54,400 under the three components of the Bush tax plan passed by the House of Representatives so far.

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April 11, 2001 11:40 AM | Permalink |

Click here to see this press release in PDF format.
Click here to see the full analysis in PDF format.

A state-by-state analysis of the effects of President George W. Bush’s tax plan finds wide variations in the size of the tax cuts not only by income, but also among the states. In fact, because the Bush tax cuts are so concentrated on the best-off taxpayers and thus in the states where the wealthiest Americans tend to live, the average tax reduction in 31 states is noticeably lower than the national average.

The 35-page report, released by Citizens for Tax Justice, shows that the average tax reductions under the Bush plan, when fully phased in, would range from a high of $1,855 a year per taxpayer in Connecticut down to a low of $708 a year per taxpayer in West Virginia.

• The average tax reductions in Connecticut, Washington, D.C. and Nevada are each more than 25 percent higher than the national average tax cut.
• In contrast, the average tax cuts in West Virginia, Montana, Mississippi, New Mexico, Arkansas, South Carolina and Kentucky are all more than 25 percent below the national average.

The median annual tax cuts–what taxpayers in the middle of the income scale would get–range from a high of $796 a year per taxpayer in Alaska down to a low of $409 a year in Mississippi.

The percentage of taxpayers getting no tax cut at all under the Bush program is particularly high in some states. For example, one out of every three Mississippi taxpayers would get no tax reduction under the Bush plan. That compares to one in six taxpayers who would get no tax cut in New Hampshire, and the national total of 24 percent of taxpayers who would get nothing at all from the Bush program.

“Residents of states that are shortchanged under the Bush tax program might logically prefer something very different than what the President has proposed,” noted CTJ director Robert S. McIntyre. “Alternatives could include debt reduction, continued or enhanced federal services, tax reductions that are distributed differently, or some combination of these that is fairer and makes more economic sense.”

“It’s also plausible that many citizens of states that get above-average tax cuts under the Bush program might favor other options,” McIntyre continued. “They may find the concentration of the Bush tax cuts on the rich (even within their own states) to be unwise or unfair. Or they may find public services and the fiscal and economic health of our nation more important than tax reductions. After all, eight of the 14 states that are targeted for above-average tax cuts voted for Al Gore in the last election.”

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April 9, 2001 02:16 PM | Permalink |

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Other CTJ Analyses of Bush Plan
HR 6 Bush Tax Cuts Analyzed	3/22/01
HR 3 Bush Rate Cuts Analyzed	3/2/01
Cost of Bush Plan	3/8/01
Revised Analysis of Bush Plan	2/27/01
Bush Plan and Working Families	1/15/00

On April 4, the House of Representatives passed its version of the third part of the Bush tax cuts. The bill, HR 8, would repeal the estate and gift tax by 2011. In combination with the Bush plan’s income tax rate reductions and other income tax cuts previously approved, the three House tax measures put forward so far would provide 45.0 percent of their income tax cuts to the best-off one percent of all taxpayers. In contrast, only 4.8 percent of the tax cuts would go to the poorest 40 percent of taxpayers.

• For the typical taxpayer, the three House measures put forward so far would provide a tax cut of $552 a year if the measures were fully enacted in 2001.
• For the poorest twenty percent of all taxpayers, the three House bills offer an average annual tax cut of $51–less than 1 percent of the total tax cut.
• In contrast, for the wealthiest one percent of taxpayers, with average incomes of $1.1 million, the average annual tax cut under the House measures so far would be $54,400.

In March, the House approved HR 3, which would implement the President’s proposed reductions in income tax rates, including a cut in the top income tax rate from 39.6 percent to 33 percent and smaller reductions in other income tax rates. The House subsequently passed HR 6, which would eventually double the $500 per child tax credit and partially address the “marriage penalty.”

According to the Joint Committee on Taxation (JCT), the first two stages of the Bush tax program would reduce revenues by $1.4 trillion over the next ten fiscal years. The estate tax legislation in HR 8 has been estimated to cost $186 billion over ten years. Counting some $400 billion in added interest on the national debt, that brings the total ten-year cost of the Bush tax cut plan to almost $2 trillion.

Under HR 8’s provisions, the estate tax is not fully repealed until 2011–the last year of the ten-year cost estimate. This means that the real cost of full estate tax repeal is not included in any single year of the ten-year window included in the $186 billion cost estimate. While the JCT’s $186 billion estimate shows an impact of $49 billion in fiscal year 2011, the annual cost of full repeal in the first year after full repeal would be approximately $107 billion–double the fiscal 2011 cost.

Both the Bush plan and the House bills would more than double the number of taxpayers subject to the Alternative Minimum Tax.

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