March 8, 2001 11:40 AM | Permalink |
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The House of Representatives is set to vote next week on its version of the second part of the Bush income tax cuts. In combination with the Bush income tax rate reductions previously approved, the House tax measures put forward so far would provide 31.3 percent of their income tax cuts to the best-off one percent of all taxpayers. In contrast, only 6.3 percent of the tax cuts would go to the bottom 40 percent.
- For the typical taxpayer, the House measures put forward so far would provide a tax cut of $544 a year (in today’s dollars), once the measures are fully in place in 2009.
- For the poorest fifth of all taxpayers, the House bills offer an average annual tax cut of $50.
- 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 $28,608.
Earlier this month, 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 is now moving forward with HR 6, which would eventually double the $500 per child tax credit and partially address the “marriage penalty.” The House measures in HR 6 differ in detail from the President’s proposals in a number of ways, but the overall size and distribution of the House income tax cuts is almost identical to the income tax cuts proposed by the President.
According to the Joint Committee on Taxation, these first two stages of the Bush tax program would reduce revenues by $1.4 trillion over the next ten fiscal years. Still to come is the Bush proposal to repeal the estate tax on the wealthiest two percent, which has been previously estimated to reduce revenues by more than $300 billion over ten years. Counting some $400 billion in added interest on the national debt, that would bring the total cost of the Bush tax cut plan to about $2.1 trillion so far.
Both the Bush plan and the House bills would more than double the number of taxpayers subject to the Alternative Minimum Tax. The “AMT” effects would be somewhat more severe under the House bills, where one taxpayer in six would be subject to the AMT, compared to one out of seven under the Bush program.
Some 24 percent of taxpayers (31.2 million) would get no income tax cut from the House bills, compared to 26 percent (34.5 million) under the Bush program