1311 L Street, NW
Washington, DC
CONTACT: Bob McIntyre,
202/626-3780
|
Citizens for Tax Justice 1311 L Street, NW Washington, DC |
Tuesday, July 27, 1999 CONTACT: Bob McIntyre, 202/626-3780 |
Click here to see this analysis in PDF format.
The tax plan passed by the Senate Finance Committee has been described as less irresponsible, less
reckless and less tilted toward the well-off than the plan put together by House Republicans. All
true. But the Senate GOP tax plan still remains irresponsible, reckless and heavily tilted toward the
best-off taxpayers. According to an analysis of the plan released by Citizens for Tax Justice: The official revenue estimates show that the Senate GOP tax plan costs four times as much in its
second 5 years than in its first five. The total cost in the second five years, officially estimated at
$636 billion is just about exactly equal to the $635 billion cost assigned to the House-passed GOP
tax plan from 2005-2009. Such a huge number is frightening, given the numerous analyses that
have shown that most if not all of the supposed "budget surpluses" in the non-Social Security part
of the budget are dependent on assumptions about huge and improbable cuts in appropriations. The distributional estimates show the effects of the provisions fully phased in at 1999 levels, and
include the effects of cutting the bottom tax rate from 15% to 14%, raising the starting point for the
28% tax bracket, optional separate filing for married couples, a small increase in the earned income
tax credit, increases in the dependent care credit, raising the annual IRA contribution limit to
$5,000 and eliminating income limits for Roth IRAs; (7) increasing the 401(k) annual contribution
limit to $15,000 and other pension changes; (8) allowing deductions for health insurance premiums
for those with no employer plan; (9) reductions in the individual Alternative Minimum Tax; (10)
estate tax reductions; and (11) corporate tax reductions (equal to about $75 billion from 2000 to
2010). A table showing the distribution of the Senate GOP tax cut plan follows.
Effects of the 1999 Senate GOP Tax Plan (As Passed by the Finance Committee; 1999 levels; $-billion except averages)
Income Group
Income Range
Average Income
Total Tax Cuts
Average Tax Cut
% of Total Tax Cut
Lowest 20%
Less than $13,300
$ 8,400
$ –0.6
$ –22
0.6%
Second 20%
$13,300–23,800
18,300
–3.1
–121
3.0%
Middle 20%
$23,800–38,200
30,300
–7.1
–279
7.0%
Fourth 20%
$38,200–62,800
49,100
–13.6
–536
13.5%
Next 15%
$62,800–124,000
83,600
–28.9
–1,521
28.8%
Next 4%
$124,000–301,000
173,000
–17.6
–3,476
17.6%
Top 1%
$301,000 or more
837,000
–29.5
–23,344
29.4%
ALL
$ 48,700
$ –100.4
$ –786
100.0%
ADDENDUM
Bottom 60%
Less than $38,200
$ 19,000
$ –10.7
$ –141
10.6%
Top 20%
$62,800 or more
139,100
–76.0
–3,001
75.8%
Note: Estimates include the effects of (1) cutting the bottom tax rate from 15 percent to 14 percent; (2) raising the starting point for the 28% tax bracket; (3) optional separate filing for married couples; (4) a small increase in the earned income tax credit; (5) increases in the dependent care credit; (6) increasing the annual IRA contribution limit to $5,000 and eliminating income limits for Roth IRAs; (7) increasing the 401(k) annual contribution limit to $15,000 and other pension changes; (8) allowing deductions for health insurance premiums for those with no employer plan; (9) reductions in the individual Alternative Minimum Tax; (10) estate tax reductions; and (11) corporate tax reductions. Figures show the effects of the provisions fully phased in, at 1999 levels.
Source: Institute on Taxation and Economic Policy Tax Model.
Citizens for Tax Justice, July 27, 1999
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