Citizens for Tax Justice For release on June 18, 1997

CTJ Offers Distributional Analysis of Archer Tax Plan

Wealthy are big winners, lower-income groups get nothing

Citizens for Tax Justice has released a detailed distributional analysis of the effects of the tax cut plan approved by the House Ways and Means Committee on June 13, 1997. Among the analysis's key findings:

• Most of the tax cuts under the plan would go to the very best-off taxpayers. Overall, 56% of the proposed tax cuts would go to the top 5% of all taxpayers. The average tax cut for the top 1% of taxpayers would be $24,070 a year. Tax reductions especially targeted to the well-off include the proposed reductions in capital gains taxes, estate taxes and corporate income taxes.

• Taxpayers in the bottom 40% of the income scale would receive no benefit from the proposed tax cuts.

• The plan would cost far more than advertised, with costs growing especially rapidly in years past the "budget window." Although billed as an $85 billion net tax cut over five years, the plan actually will cost more than $75 billion annually (in 1997 dollars) once it is fully phased in. As a result, the plan threatens to bust the budget not only in fiscal 2002 but to an ever-increasing extent in later years.

CTJ's analysis of the Archer plan was conducted using the Institute on Taxation and Economic Policy's Microsimulation Tax Model. The ITEP Model, based on a very large sample of tax returns, census data and other data, is similar to the tax models used by the congressional Joint Committee on Taxation and the Treasury Department. The methodological approach used in the ITEP model is very similar to the methodology outlined in the Joint Committee on Taxation's "Methodology and Issues in Measuring Changes in the Distribution of Tax Burdens," 1993. Brief Description of and Comments on the Major Provisions of the Ways and Means 1997 Tax Plan

Average Tax Cuts by Income Level

GOP Capital Gains Realization Estimates

Explanation of Difference Between CTJ and Ways and Means Distributional Tables

How the CTJ/ITEP Analysis of the Congressional 1997 Tax Plans Compares to Treasury's Analysis.

Back To Reports