Citizens for Tax Justice
1311 L Street, NW
Washington, DC
 WEDNESDAY, JAN. 20, 1999
CONTACT: Bob McIntyre,
202/626-3780
Proposed 10% Income Tax Rate Cut Would Cost More Than a Trillion Dollars Over Next Decade

Almost Two-thirds of Tax Cuts Would Go to Best-off 10%

Click here to see a related CTJ analysis of the composition of the federal tax burden by income level.


A new analysis of the 10% income tax rate cut proposed by House and Senate leaders shows that the plan would reduce federal revenues by more than a trillion dollars over the next decade. The analysis also shows that 62% of the proposed tax cuts would go to the best-off tenth of all taxpayers.
Estimated Revenue Effects of a
10% Cut in Personal Income Tax Rates
Fiscal Years 2000-2009, $-billions
2000 $ -36
2001 -93
2002 -97
2003 -101
2004 -105
2005 -111
2006 -116
2007 -122
2008 -128
2009 -134
Total, 2000-2009 $-1,042
Note: Assumes effective date of 1/1/2000. Estimates are based on 8/98 CBO income tax projections and will change under upcoming new CBO figures.
The computer analysis of the proposed 10% income tax rate reduction was released by Citizens for Tax Justice, a non-partisan, non-profit group that favors fairer tax policies. The analysis also found: "The proposed 10% income tax rate cut is billed as an even-handed tax cut, but that's not the case at all," noted CTJ director Robert S. McIntyre. "In fact, this plan would reduce the federal government's most progressive tax, the income tax, while leaving other, generally regressive taxes in place. That approach, by definition, has to favor the best-off taxpayers at the expense of everyone else."

"Indeed," McIntyre continued, "by spending more than a trillion dollars on tax cuts, mostly for the highest-income people, this irresponsible income tax rate reduction plan will make it difficult or impossible to sustain important government programs that average families depend on, such as Social Security, in the future."

Distributional Effects of a 10% Cut in Personal Income Tax Rates
Income Group 1999 levels % of All Returns Average Income Tax Cut $-billions Average Tax Cut % of Total Cut
<$10,000 12.7% $ 6,600 $ –0.1 $ –4 0.1%
$10-20,000 20.3% 14,800 –1.3 –49 1.6%
$20-30,000 16.9% 24,900 –3.2 –146 3.9%
$30-40,000 11.4% 34,700 –3.8 –260 4.6%
$40-50,000 9.5% 44,800 –5.1 –424 6.3%
$50-75,000 14.4% 61,000 –12.2 –664 14.9%
$75-100,000 6.5% 86,200 –9.4 –1,138 11.5%
$100-200,000 5.7% 132,600 –15.0 –2,067 18.3%
$200,000+ 1.9% 546,900 –31.8 –12,874 38.9%
ALL 100.0% $ 48,700 $ –81.7 $ –640 100.0%
Addendum:
Top 1% > $ 301,000 $ 833,000 $ –26.2 $ –20,697 32.0%
Top 10% > $ 89,000 204,000 –50.6 –3,992 61.9%
Bottom 60% < $ 38,000 19,000 –7.6 –99 9.3%
Source: Institute on Taxation & Economic Policy Microsimulation Tax Model, Jan. 20, 1999

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