Unbalanced Acts, a joint analysis of the GOP proposal by Citizens for Tax Justice and the Economic Policy Institute, finds:

• Over the next decade, the proposed tax cuts will total $122.8 billion. Over the same period, wage increases stemming from the $1 boost in the minimum wage will total only $11.2 billion. This means that over ten years, for every dollar in higher wages for low-wage workers, $10.90 in upper-income tax breaks will be provided.
• Almost all the tax cuts (91.4%) would go to the best-off tenth of all taxpayers. In fact, the top one percent of all taxpayers, those making more than $319,000 a year, would get almost three-quarters of the tax reductions. Their average annual tax cut under the plan would be $6,128 each (in 1999 dollars). That compares to only a $4 average tax cut for the bottom 60 percent.
• While the tax bill's permanent tax cuts grow to $17.6 billion by 2010, the effect of the minimum wage proposals will be totally eroded by inflation after 2006.

"The minimum wage hike will allow low-wage workers to share in the gains of this economic recovery, while the proposed tax cuts will needlessly provide a second helping of the economic pie to the wealthiest taxpayers," said EPI Vice President Lawrence Mishel.

"It's ridiculous that a minimum wage bill supposedly designed to aid low-wage workers would actually give its biggest benefits to the highest-income people in the country," said Citizens for Tax Justice director Robert S. McIntyre.

EPI's minimum wage analysis compares the wage hikes under the GOP plan, which would boost the minimum wage by $1 over three years, to the wages that affected workers would earn if their wages merely keep up with inflation over the next decade. The GOP's three-year phase-in of the wage boost provides an $11.2 billion gain to these workers over ten years--$3.8 billion less than the Bonior-Kennedy proposal's two-year implementation plan, which would produce a total of $15 billion in higher wages.

The distributional effects of the tax cuts were analyzed by CTJ using the Institute on Taxation and Economic Policy Tax Model. The $123 billion estimated ten-year cost of the tax cuts is based on preliminary, March 1, 2000 estimates from the Joint Committee on Taxation. (The tax cut plan would, among other things: cut estate taxes by $79 billion over ten years--representing almost two-thirds of the total proposed tax cuts; increase the write-off for business meals to 60% of cost from 50% under current law; provide added tax breaks for pensions and 401(k) plans; increase the limits on immediate write-offs of business capital investments; speed up the date when 100% of self-employed health insurance can be deducted; restore a loophole for installment sales that was repealed in 1999; expand enterprise zones; expand the tax credit for investors in low-income housing; and augment tax breaks for private tax-exempt bonds.)

A table detailing the distributional effects of the tax cuts follows.

The report, Unbalanced Acts, is available on-line at both www.epinet.org and www.ctj.org. It can also be obtained by calling 1-800-374-4844.

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