Month: June 2001

June 19, 2001 05:40 PM | Permalink |

Click here to see this analysis in PDF format.
Click here for a related analysis.

On May 26, 2001, the congressional Joint Committee on Taxation (JCT) released its estimates of the distributional effects of the 2001 tax act’s income tax cuts, on a year by year basis from 2001 through 2006.

The JCT estimates are not comprehensive, primarily because they ignore the tax act’s estate tax phase-out that begins in 2002, and exclude tax cuts that take effect after 2006. Nevertheless, the JCT figures show a very similar pattern to CTJ’s estimates regarding the share of the tax cuts that take full effect in the first year. Specifically:

• The JCT finds that its lowest income group–less than $10,000–will see virtually all of its total 2001-06 income tax cut take effect in the first year.

Joint Committee on Taxation: % of total 2001-06 income tax cut that takes effect in the first year
< $10K	99%
$10-20K	79%
$20-30K	74%
$30-40K	72%
$40-50K	73%
$50-75K	62%
$75-100K	49%
$100-200K	35%
$200K+	16%

• For its next four income groups–$10,000 to $50,000–the JCT finds that three-quarters of the income tax cuts through 2006 take effect in the first year.
• For the $50,000 to $75,000 income group, the JCT finds that 62 percent of the 2001-06 income tax cuts are fully in place by 2001.
• For the $75,000 to $100,000 income group, the JCT finds that 49 percent of the 2001-06 income tax cuts take effect in the first year.
• For the $100,000 to $200,000 income group, the JCT finds that a third of the income tax cuts take effect in the first year.
• For the 3.8 million taxpayers in JCT’s top income group, $200,000 or more, the JCT finds that only 16 percent of the 2001-06 tax cuts take effect in the first year. (Strikingly, more than half of the 2001-06 income tax cut for this top group is scheduled to take effect in 2006.)

Thus, like Citizens for Tax Justice, the Joint Committee on Taxation finds that four out of five taxpayers will get most of their income tax cuts from the 2001 tax act in the first year.

 

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June 18, 2001 05:39 PM | Permalink |

Click here to see this analysis in PDF format.
Click here for a related analysis.

The vast majority of American taxpayers will see the bulk of their Bush tax cuts take effect this year, leaving only a minority of taxpayers with a significant stake in the

Effects of the final Bush tax plan in 2001 & thereafter
Income Group	Average tax cut in 2001	Average tax cut still to come	2001 cut as % of fully-phased-in tax cut
Lowest 20%	$ –56	$ –10	85%
Second 20%	–269	–107	72%
Middle 20%	–405	–194	68%
Fourth 20%	–575	–449	56%
Next 15%	–739	–1,416	34%
Next 4%	–1,008	–2,316	30%
Top 1%	–3,120	–50,003	6%
ALL	$ –440	$ –950	32%
ADDENDUM
Bottom 60%	$ –243	$ –104	70%
Top 10%	–1,121	–6,771	14%

continued phase-in of the tax cuts after 2001. An analysis of the tax bill’s phase-ins released by Citizens for Tax Justice finds that:

• For taxpayers in the lowest fifth of income earners, 85 percent of the Bush tax cuts will show up on their 2001 tax returns or before.
• For the second fifth, 72 percent of the Bush tax cuts take effect in 2001.
• For the middle income group, 68 percent of the Bush tax cuts take effect in 2001.
• For the fourth quintile, 56 percent of the Bush tax cuts take effect in 2001.

Only the best-off fifth of the population will get most of its tax cut after 2001.

• Excluding the top one percent, about two-thirds of the tax cuts for the best-off fifth take effect after 2001.
• For the top one percent, 94 percent of the tax cuts take effect after 2001.

In 2001, seven percent of the total tax cuts go to the top one percent. But after 2001, more than half the remaining tax cuts will go to the top one percent.

“For most Americans, the post-2001 Bush tax cuts offer little gain, but lots of pain,” said Robert S. McIntyre, director of Citizens for Tax Justice. “That’s because most people will get little more in tax reductions after the first year, while losing large amounts in public services as the remaining upper-income tax cuts are phased in.”

(President Bush’s March budget submission envisions cutting domestic appropriations by as much as a third as a share of the economy by fiscal 2011.)

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June 13, 2001 05:41 PM | Permalink |

Click here to see this analysis in PDF format.
Click here to see the summary table in PDF format.
Click here to see more detailed state-by-state tables in PDF format.

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Citizens for Tax Justice today released a state-by-state analysis of the final version of President Bush’s tax cut plan, as signed by the President on June 7. The analysis was performed using the Institute on Taxation and Economic Policy’s Tax Model.

The analysis shows how the tax cuts, when fully phased in by 2010, will affect taxpayers at various income levels in each state and the District of Columbia on an annual basis, in 2001 dollars.

Average tax cuts by state: Because the bulk of the Bush tax cuts are targeted toward upper-income taxpayers, citizens of wealthier states generally get larger average tax reductions, while residents of poorer states get smaller average tax reductions. For example:

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

The typical tax cuts–what taxpayers in the middle of each states income scale will save in taxes–range from a high of $851 a year in Alaska (once the cuts are fully in place) down to a low of $502 a year in Montana.

The tables that follow show the annual effects of the final version of the Bush tax plan as signed by the President, fully-effective at 2001 income levels in 2001 dollars, on a state-by-state basis.

The final bill’s tax changes include: reductions in the current 28%, 31%, 36%, and 39.6% rates to 25%, 28%, 33% and 35% (effectively to less than 34% for the top rate, including the repeal of the itemized deduction disallowance) by 2006; addition of a new 10% bracket on the first $14,000 in taxable income for couples, $10,000 for single parents, and $7,000 for childless singles and married persons filing separately, phased in by 2008 (unindexed until thereafter); an increase in the starting point for the (new) 25% tax bracket for couples to double the starting point for childless single taxpayers (phased in by 2008); an increase in the standard deduction for couples to double the childless single amount (phased in by 2009); increases in the starting and ending points for the phase-out of the earned-income tax credit for couples by $3,000, phased in by 2008 (unindexed until thereafter); doubling of the per-child credit to $1,000 (phased in by 2010, unindexed), with phased-in expanded rules for refundability of the credit; an increase in the individual Alternative Minimum Tax exemption of $4,000 for couples and $2,000 for singles, from 2001 to 2004; repeal of the personal exemption phase out and the partial disallowance of itemized deductions at high income levels (phased in by 2010); an increase in the maximum percentage for the dependent care credit to 35% below $15,001 in AGI, with phase-down rules (to 20%) like current law, along with an increase in the child-care expenses to which the percentage applies, from $2,400 to $3,000 (double that for two or more eligible children); retirement savings tax changes; and repeal of the federal estate tax on large estates. The bill’s new education tax breaks are not included in the tables.

The Final Version of the Bush Tax Cuts, by State
	Typical tax cut	% of natl. median (+ or –)	Rank	Average tax cut	% of natl. average (+ or –)	Rank
US AVERAGES	$ –600			$ –1,404
Alabama	–578	–4%	39	–1,186	–15%	36
Alaska	–851	+42%	1	–1,525	+9%	14
Arizona	–603	+1%	34	–1,420	+1%	20
Arkansas	–613	+2%	30	–1,045	–26%	47
California	–627	+5%	23	–1,555	+11%	13
Colorado	–656	+9%	14	–1,499	+7%	15
Connecticut	–699	+17%	8	–2,220	+58%	1
Delaware	–607	+1%	33	–1,379	–2%	21
District of Columbia	–583	–3%	37	–1,850	+32%	2
Florida	–510	–15%	50	–1,615	+15%	9
Georgia	–631	+5%	22	–1,307	–7%	27
Hawaii	–727	+21%	4	–1,170	–17%	40
Idaho	–697	+16%	9	–1,175	–16%	39
Illinois	–620	+3%	28	–1,697	+21%	5
Indiana	–623	+4%	25	–1,327	–5%	23
Iowa	–580	–3%	38	–1,184	–16%	37
Kansas	–667	+11%	13	–1,314	–6%	26
Kentucky	–566	–6%	43	–1,082	–23%	46
Louisiana	–640	+7%	20	–1,271	–9%	30
Maine	–571	–5%	41	–1,091	–22%	45
Maryland	–702	+17%	7	–1,486	+6%	17
Massachusetts	–578	–4%	40	–1,587	+13%	11
Michigan	–610	+2%	31	–1,355	–3%	22
Minnesota	–641	+7%	19	–1,423	+1%	19
Mississippi	–534	–11%	49	–941	–33%	49
Missouri	–569	–5%	42	–1,276	–9%	29
Montana	–502	–16%	51	–937	–33%	50
Nebraska	–556	–7%	45	–1,217	–13%	32
Nevada	–596	–1%	35	–1,739	+24%	4
New Hampshire	–712	+19%	6	–1,617	+15%	8
New Jersey	–654	+9%	15	–1,768	+26%	3
New Mexico	–668	+11%	12	–1,037	–26%	48
New York	–550	–8%	47	–1,643	+17%	6
North Carolina	–646	+8%	18	–1,201	–14%	34
North Dakota	–729	+22%	3	–1,122	–20%	43
Ohio	–583	–3%	36	–1,180	–16%	38
Oklahoma	–617	+3%	29	–1,127	–20%	42
Oregon	–650	+8%	16	–1,190	–15%	35
Pennsylvania	–561	–6%	44	–1,324	–6%	24
Rhode Island	–555	–7%	46	–1,202	–14%	33
South Carolina	–608	+1%	32	–1,096	–22%	44
South Dakota	–622	+4%	26	–1,150	–18%	41
Tennessee	–625	+4%	24	–1,322	–6%	25
Texas	–670	+12%	11	–1,586	+13%	12
Utah	–780	+30%	2	–1,444	+3%	18
Vermont	–622	+4%	27	–1,254	–11%	31
Virginia	–649	+8%	17	–1,491	+6%	16
Washington	–715	+19%	5	–1,604	+14%	10
West Virginia	–543	–10%	48	–908	–35%	51
Wisconsin	–637	+6%	21	–1,294	–8%	28
Wyoming	–694	+16%	10	–1,642	+17%	7

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June 1, 2001 05:43 PM | Permalink |

Click here to see this analysis in PDF format.
Click here to see the summary table in PDF format.
Click here to see more detailed state-by-state tables in PDF format.

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Citizens for Tax Justice today released a state-by-state analysis of the final version of President Bush’s tax cut plan, as signed by the President on June 7. The analysis was performed using the Institute on Taxation and Economic Policy’s Tax Model.

The analysis shows how the tax cuts, when fully phased in by 2010, will affect taxpayers at various income levels in each state and the District of Columbia on an annual basis, in 2001 dollars.

Average tax cuts by state: Because the bulk of the Bush tax cuts are targeted toward upper-income taxpayers, citizens of wealthier states generally get larger average tax reductions, while residents of poorer states get smaller average tax reductions. For example:

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

The typical tax cuts–what taxpayers in the middle of each states income scale will save in taxes–range from a high of $851 a year in Alaska (once the cuts are fully in place) down to a low of $502 a year in Montana.

The tables that follow show the annual effects of the final version of the Bush tax plan as signed by the President, fully-effective at 2001 income levels in 2001 dollars, on a state-by-state basis.

The final bill’s tax changes include: reductions in the current 28%, 31%, 36%, and 39.6% rates to 25%, 28%, 33% and 35% (effectively to less than 34% for the top rate, including the repeal of the itemized deduction disallowance) by 2006; addition of a new 10% bracket on the first $14,000 in taxable income for couples, $10,000 for single parents, and $7,000 for childless singles and married persons filing separately, phased in by 2008 (unindexed until thereafter); an increase in the starting point for the (new) 25% tax bracket for couples to double the starting point for childless single taxpayers (phased in by 2008); an increase in the standard deduction for couples to double the childless single amount (phased in by 2009); increases in the starting and ending points for the phase-out of the earned-income tax credit for couples by $3,000, phased in by 2008 (unindexed until thereafter); doubling of the per-child credit to $1,000 (phased in by 2010, unindexed), with phased-in expanded rules for refundability of the credit; an increase in the individual Alternative Minimum Tax exemption of $4,000 for couples and $2,000 for singles, from 2001 to 2004; repeal of the personal exemption phase out and the partial disallowance of itemized deductions at high income levels (phased in by 2010); an increase in the maximum percentage for the dependent care credit to 35% below $15,001 in AGI, with phase-down rules (to 20%) like current law, along with an increase in the child-care expenses to which the percentage applies, from $2,400 to $3,000 (double that for two or more eligible children); retirement savings tax changes; and repeal of the federal estate tax on large estates. The bill’s new education tax breaks are not included in the tables.

The Final Version of the Bush Tax Cuts, by State
	Typical tax cut	% of natl. median (+ or –)	Rank	Average tax cut	% of natl. average (+ or –)	Rank
US AVERAGES	$ –600			$ –1,404
Alabama	–578	–4%	39	–1,186	–15%	36
Alaska	–851	+42%	1	–1,525	+9%	14
Arizona	–603	+1%	34	–1,420	+1%	20
Arkansas	–613	+2%	30	–1,045	–26%	47
California	–627	+5%	23	–1,555	+11%	13
Colorado	–656	+9%	14	–1,499	+7%	15
Connecticut	–699	+17%	8	–2,220	+58%	1
Delaware	–607	+1%	33	–1,379	–2%	21
District of Columbia	–583	–3%	37	–1,850	+32%	2
Florida	–510	–15%	50	–1,615	+15%	9
Georgia	–631	+5%	22	–1,307	–7%	27
Hawaii	–727	+21%	4	–1,170	–17%	40
Idaho	–697	+16%	9	–1,175	–16%	39
Illinois	–620	+3%	28	–1,697	+21%	5
Indiana	–623	+4%	25	–1,327	–5%	23
Iowa	–580	–3%	38	–1,184	–16%	37
Kansas	–667	+11%	13	–1,314	–6%	26
Kentucky	–566	–6%	43	–1,082	–23%	46
Louisiana	–640	+7%	20	–1,271	–9%	30
Maine	–571	–5%	41	–1,091	–22%	45
Maryland	–702	+17%	7	–1,486	+6%	17
Massachusetts	–578	–4%	40	–1,587	+13%	11
Michigan	–610	+2%	31	–1,355	–3%	22
Minnesota	–641	+7%	19	–1,423	+1%	19
Mississippi	–534	–11%	49	–941	–33%	49
Missouri	–569	–5%	42	–1,276	–9%	29
Montana	–502	–16%	51	–937	–33%	50
Nebraska	–556	–7%	45	–1,217	–13%	32
Nevada	–596	–1%	35	–1,739	+24%	4
New Hampshire	–712	+19%	6	–1,617	+15%	8
New Jersey	–654	+9%	15	–1,768	+26%	3
New Mexico	–668	+11%	12	–1,037	–26%	48
New York	–550	–8%	47	–1,643	+17%	6
North Carolina	–646	+8%	18	–1,201	–14%	34
North Dakota	–729	+22%	3	–1,122	–20%	43
Ohio	–583	–3%	36	–1,180	–16%	38
Oklahoma	–617	+3%	29	–1,127	–20%	42
Oregon	–650	+8%	16	–1,190	–15%	35
Pennsylvania	–561	–6%	44	–1,324	–6%	24
Rhode Island	–555	–7%	46	–1,202	–14%	33
South Carolina	–608	+1%	32	–1,096	–22%	44
South Dakota	–622	+4%	26	–1,150	–18%	41
Tennessee	–625	+4%	24	–1,322	–6%	25
Texas	–670	+12%	11	–1,586	+13%	12
Utah	–780	+30%	2	–1,444	+3%	18
Vermont	–622	+4%	27	–1,254	–11%	31
Virginia	–649	+8%	17	–1,491	+6%	16
Washington	–715	+19%	5	–1,604	+14%	10
West Virginia	–543	–10%	48	–908	–35%	51
Wisconsin	–637	+6%	21	–1,294	–8%	28
Wyoming	–694	+16%	10	–1,642	+17%	7

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June 1, 2001 05:42 PM | Permalink |

Click here to see this analysis in PDF format.
Click here to see examples of how the rebate works.

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Some 39 percent of American taxpayers will not get the full amount of the highly-touted “rebate checks” that will be mailed this summer as a result of the President’s just-passed tax bill. That translates into 51 million taxpayers who will not get the full amount of the promised rebate checks. According to a new analysis by Citizens for Tax Justice:

• Thirty-four million taxpayers–26 percent– will get no rebate check at all
• Another 17 million taxpayers–13 percent–will get only partial rebates, averaging about half the advertised amounts of $600 for couples, $500 for single parents and $300 for other taxpayers.

The Check is Not in the Mail: Taxpayers with no rebate or only partial rebate this year from the 2001 tax bill
	All Taxpayers
Income Group (all taxpayers)	% with no rebate	% with partial rebate	Total % less than full	Average all taxpayers	# with less than full (000)
Lowest 20%	75%	22%	97%	$ 42	25,175
Second 20%	37%	22%	59%	179	15,324
Middle 20%	13%	17%	30%	335	7,724
Fourth 20%	2%	4%	6%	482	1,681
Next 15%	1%	—	1%	551	190
Next 4%	1%	—	1%	560	52
Top 1%	1%	—	1%	555	13
ALL	26%	13%	39%	$ 315	51,082
ADDENDUM
Bottom 60%	42%	20%	62%	$ 185	48,224
Top 10%	1%	—	1%	559	130

The taxpayers who get no or reduced benefits from the tax bill are concentrated in the bottom three-fifths of income earners. Sixty-two percent of the three-fifths of all taxpayers who make less than $44,000 a year will get less than the full rebate amounts, with 42 percent of these taxpayers getting nothing at all.

The tax rebates are supposed to reflect the tax savings from the new 10 percent income-tax bracket on the first $12,000 in taxable income for couples, $10,000 for single parents, and $6,000 for others. Payroll taxes, which are the largest federal tax for three out of four taxpayers, are not counted in computing the rebates.

Oddly, although most taxpayers in the bottom 60 percent of the income scale will get reduced or zero rebates, the tax bill extends the benefits of the rebate to about two million upper-income taxpayers who will not actually benefit from the new 10 percent rate bracket, due to the Alternative Minimum Tax.

“Like the rest of the Bush tax plan, the rebates have been carefully designed to give as little as possible to those who need the money, and as much as possible to those who don’t,” said Robert S. McIntyre, director of Citizens for Tax Justice.

On a state-by-state basis, the percentage of taxpayers with no or reduced rebates exceeds 50 percent in Mississippi (52%) and West Virginia (50.5%). Other states among the ten with the highest percentages of taxpayers with no or reduced rebates include: Louisiana (49%), Montana (49%), Arkansas (48%), Oklahoma (48%), Alabama (47%), Kentucky (45%), New Mexico (45%) and North Dakota (44%)

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