April 9, 2001 02:16 PM | | Bookmark and Share

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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Under HR 8’s provisions, the estate tax is not fully repealed until 2011–the last year of the ten-year cost estimate.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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