Citizens for Tax Justice

For release on September 17, 1998

CTJ Analyzes House Tax Plan

Citizens for Tax Justice today released a distributional analysis of the tax cut plan approved today by the House Ways and Means Committee on a party line vote of 22-15 (only one Committee Democrat voted for the bill).

CTJ's analysis shows that:

Most of the tax cuts in the Ways and Means tax bill would go to the best-off 15% of taxpayers, with average incomes of $163,000 each.
For the top 2% of all taxpayers (making an average of $525,000), the average tax cut under the Ways and Means plan would be $1,709 a year. For the bottom 60% of taxpayers, the average tax cut would be $34.

House Speaker Newt Gingrich and other Congressional leaders have promised that if elections are favorable to them, they will pass a tax cut next year much more skewed toward upper-income taxpayers.

A table detailing CTJ's findings follows.

**Effects of the 1998 Ways and Means Tax Bill in 1999**
Income Group	% of all Returns	Average Income	PIT changes $-billions	Estate tax & business	Total ($bill.)	Average All Returns	% of Total
<$10,000	12.2%	$ 6,600	$ –0.0	$ –0.0	$ –0.0	$ –2	0.2%
$10-20,000	20.0%	14,900	–0.3	–0.1	–0.3	–13	2.1%
$20-30,000	16.7%	25,000	–0.8	–0.1	–0.8	–39	5.2%
$30-40,000	11.5%	34,500	–1.3	–0.1	–1.4	–96	8.8%
$40-50,000	9.2%	44,800	–1.5	–0.1	–1.6	–135	9.9%
$50-75,000	14.6%	61,300	–3.2	–0.1	–3.3	–178	20.7%
$75-100,000	7.1%	85,800	–1.9	–0.2	–2.0	–228	12.9%
$100-200,000	6.1%	132,000	–1.5	–0.5	–2.0	–263	12.7%
$200,000+	2.0%	525,000	–0.6	–3.7	–4.3	–1,709	27.5%
ALL	100.0%	$ 49,600	$ –11.0	$ –4.8	$ –15.8	$ –125	100.0%
ADDENDUM:
Top 15%	15.1%	$ 163,000	$ –4.0	$ –4.4	$ –8.4	$ –439	53.1%
Bottom 60%	60.4%	19,700	–2.4	–0.2	–2.6	–34	16.4%
Personal income tax changes include the increase in the standard deduction for married couples; the acceleration of the scheduled increased in the self-employed health insurance deduction; the interest and dividend exclusion; and the changed treatment of tax credits under the AMT. The acceleration of the 1997 estate tax cut and the self-employed health insurance deduction increase are discounted to 1999 dollars. Business tax breaks are net of offsetting business tax increases. Source: Institute on Taxation & Economic Policy Microsimulation Tax Model, Sept. 17, 1998 Citizens for Tax Justice, Sept. 17, 1998

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