Joint Committee on Taxation Agrees

June 19, 2001 05:40 PM | Permalink |

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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.

• 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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