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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