Joint Committee On Taxation Letter To Bill Archer On George W. Bush's Tax Plan

Tax Analysts -- Paull Letter to Archer With Revenue Estimates of Bush Tax Reduction Pl...
Page 1 of 16
Tax Notes Today

MAY 2, 2000
Paull Letter to Archer With Revenue Estimates

of Bush Tax Reduction Plan [Complete Full
Text in this issue]
A letter from Joint Committee on Taxation Chief of Staff Lindy Paull to Ways and Means
Chair Bill Archer, R-Texas, included 10-year revenue table and distributional tables relating
to the tax reduction proposal by Gov. George W. Bush, R-Texas.
=============== FULL TEXT ===============

May 2, 2000
Honorable Bill Archer
U.S. House of Representatives
1236 Longworth HOB
Washington, D.C. 20515
Dear Mr. Archer:
[1] We are providing the enclosed 10-year revenue table and distributional tables for 2002
through 2005 as backup information to supplement our response of May, 12000, relating go
the various provisions you described as the "George W. Bush Tax Reduction Proposal."
[2] I hope this information is helpful to you. If we can be of further assistance in this matter,
please let me know.
Sincerely,
http://services.taxanalysts.com/taxbase/archive/tnt2000.nsf/dockey/4CDE5AB5829910618... 2/23/2016
Tax Analysts -- Paull Letter to Archer With Revenue Estimates of Bush Tax Reduction Pl... Page 2 of 16
Lindy L. Paull
Congress of United States
Washington, D.C.
Enclosures: Tables #D-00-20 and #00-1 075
* * * * *
#00-1-075
VERY PRELIMINARY
2-May-00
-- Chairman Archer -ESTIMATED REVENUE EFFECTS OF VARIOUS PROVISIONS DESCRIBED AS THE
"GEORGE W. BUSH TAX REDUCTION PROPOSAL"
Fiscal Years 2001-2010
[Billions of Dollars]
______________________________________________________________________
Provision
[Effective]
2001
2002
2003
2004
______________________________________________________________________
1. Increase the child tax credit
to $600 in 2002, $700 in 2003,
$800 in 2004, $900 in 2005,
and $1,000 in 2006; apply child
credit to AMT in 2002; increase
starting point for phase-out for
singles (by $25,000 per year)
and joint filers (by $18,000 per
year) until it reaches $200,000
in 2008; no indexing for inflation; and change phase-out rate
from 5% to 2% in 2008
[tyba 12/31/01]
---
-1.1
-6.7
-11.3
2. Create new bracket for first

$6,000 of taxable income for
singles, first $10,000 for heads
of households, and first $12,000
for married couples; no indexing
bracket for inflation until 2007;
rate set at 14% in 2002, 13% in
2003, 12% in 2004, 11% in 2005,

and 10% in 2006
[tyba 12/31/01]
---
-5.8
-14.1
-22.5
3. Reduce the various income tax

rates (39.6% rate reduced to 38%
in 2002, 37% in 2003, 35% in 2004,
35% in 2005, and 33% in 2006; 36%
rate reduced to 35% in 2002 and
2003, 34% in 2004 and 2005, and
33% in 2006; 31% rate reduced to
30% in 2002, 29% in 2003, 28% in
2004, 27% in 2005, and 25% in
2006; and 28% rate reduced to 27%
in 2002 and 2003, 26% in 2004 and
2005, and 25% in 2006)
[tyba 12/31/01]
---
-12.5
-22.0
-34.8
4. 10% deduction for two-earner

families, up to $6,000 of lower
spouse's income; income cap raised
to $12,000 in 2003, $18,000 in
2004, $24,000 in 2005, and $30,000
in 2006; no indexing for inflation
[tyba 12/31/01]
---
-1.1
-4.5
-7.3
5. Allow taxpayers who do not itemize

to deduct charitable contributions
in addition to their standard deduction (subject to present-law
limitations including 50% of AGI
for cash and 30% of AGI for property; limit deduction for contributions up to the amount of the taxpayer's standard deduction to 20%
in 2002, 40% in 2003, 60% in
2004, 80% in 2005, and 100% in
2006 and thereafter)
[ca 12/31/01]
---
-0.2
-1.7
-3.6
6. Allow individuals 55 and over

tax-free and penalty-free withdrawals from IRAs for charitable
donations
[tyba 12/31/01]
---
-0.2
-0.3
-0.3
7. Raise the cap on corporate chari-
table contributions from 10% to

15% of taxable income
[cml tyba 12/31/01]
---
-0.2
8. Expand Education IRAs to allow

elementary, secondary, and afterschool programs, increase the
annual contribution limit to
$1,000 in 2002; $2002 in 2003,
$3,000 in 2004, $4,000 in 2005
and $5,000 in 2006
[1/1/02]
---
9. Permanent extension of R&E tax

credit
[7/1/04]
---
---
-0.2
-0.1
---
-0.2
-0.2
-0.4
10. Reduce all estate tax

rates by 5% in 2002, 10% in
2004, 15% in 2005, 20% in 2006,
30% in 2007, 40% in 2008; and
eliminate estate tax in 2009
[dda 12/31/01]
-----7.8
-8.3
______________________________________________________________________
NET TOTAL
---21.1
-57.4
-88.9
______________________________________________________________________
[table continued]
______________________________________________________________________
Provision
[Effective]
2005
2006
2007
2008
______________________________________________________________________
to $600 in 2002, $700 in 2003,
$800 in 2004, $900 in 2005,
from 5% to 2% in 2008
[tyba 12/31/01]
15.9
-20.8
-24.9
-25.9

2003, 12% in 2004, 11% in 2005,
and 10% in 2006
[tyba 12/31/01]
-31.0
-39.3
-42.5
-43.4

in 2002, 37% in 2003, 35% in 2004,
35% in 2005, and 33% in 2006; 36%
2003, 34% in 2004 and 2005, and
30% in 2002, 29% in 2003, 28% in
2004, 27% in 2005, and 25% in
in 2002 and 2003, 26% in 2004 and
2005, and 25% in 2006)
[tyba 12/31/01]
-43.6
-58.5
-64.8
-68.1

to $12,000 in 2003, $18,000 in
2004, $24,000 in 2005, and $30,000
[tyba 12/31/01]
-9.6
-11.6
-12.9
-13.2

in 2002, 40% in 2003, 60% in
2004, 80% in 2005, and 100% in
[ca 12/31/01]
-8.3
-9.5
-12.7
-13.3

donations
[tyba 12/31/01]
-0.2
-0.2
-0.2
-0.2
7. Raise the cap on corporate charitable contributions from 10% to

[cml tyba 12/31/01]
-0.2
-0.2
-0.2
-0.2

elementary, secondary, and afterschool programs; increase the
$1,000 in 2002, $2002 in 2003,
$3,000 in 2004, $4,000 in 2005
and $5,000 in 2006
[1/1/02]
-0.3
-0.4
-0.5
-0.5

credit
[7/1/04]
-2.5
-3.2
-3.8
-4.3

2004, 15% in 2005, 20% in 2006,
30% in 2007, 40% in 2008; and
[dda 12/31/01]
-15.9
-23.4
-30.7
-42.8
______________________________________________________________________
NET TOTAL
-125.5 -167.1
-193.2
-210.0
______________________________________________________________________
[table continued]
______________________________________________________________________
Provision
20012001[Effective]
2009
2010
2005
2010
______________________________________________________________________
to $600 in 2002, $700 in 2003,
$800 in 2004, $900 in 2005,

from 5% to 2% in 2008
[tyba 12/31/01]
-27.2
-28.5
-35.0
-162.3

2003, 12% in 2004, 11% in 2005,
and 10% in 2006
[tyba 12/31/01]
-44.4
-45.4
-73.4
-288.4

in 2002, 37% in 2003, 35% in 2004,
35% in 2005, and 33% in 2006; 36%
2003, 34% in 2004 and 2005, and
30% in 2002, 29% in 2003, 28% in
2004, 27% in 2005, and 25% in
in 2002 and 2003, 26% in 2004 and
2005, and 25% in 2006)
[tyba 12/31/01]
-67.5
-69.1
-112.9
-439.0

to $12,000 in 2003, $18,000 in
2004, $24,000 in 2005, and $30,000
[tyba 12/31/01]
-13.6
-13.9
-22.5
-87.7

in 2002, 40% in 2003, 60% in

2004, 80% in 2005, and 100% in
[ca 12/31/01]
-13.9
-14.6
-11.8
-75.8

donations
[tyba 12/31/01]
-0.2
-0.2
-1.1
-2.1
7. Raise the cap on corporate charitable contributions from 10% to

[cml tyba 12/31/01]
-0.2
-0.2
-0.7
-1.7

elementary, secondary, and afterschool programs; increase the
$1,000 in 2002, $2002 in 2003,
$3,000 in 2004, $4,000 in 2005
and $5,000 in 2006
[1/1/02]
-0.7
-0.8
-0.5
-3.5

credit
[7/1/04]
-4.7
-4.9
-2.9
-23.8

2004, 15% in 2005, 20% in 2006,
30% in 2007, 40% in 2008; and
[dda 12/31/01]
-52.0
-55.3
-32.0
-236.2
______________________________________________________________________
NET TOTAL
-224.5 -232.9
-292.8 -1,320.5
______________________________________________________________________
Joint Committee on Taxation
NOTE: Details may not add to totals due to rounding.
Legend for "Effective" column:
ca = contribution after
cml = contributions made after
dda = decedents dying after
tyba = taxable years beginning after

FOOTNOTE TO TABLE
1 Loss of less than $50 million.
END OF FOOTNOTE TO TABLE

* * * * *
#D-00-20
2-May-00
DISTRIBUTIONAL EFFECTS OF VARIOUS PROVISIONS
DESCRIBED AS THE "GEORGE W. BUSH TAX REDUCTION PROPOSAL" 1
Calendar Year 2002
_____________________________________________________________________
CHANGE IN
FEDERAL TAXES 3
FEDERAL
UNDER
3
INCOME
TAXES
PRESENT LAW
2
CATEGORY
____________________ _______________________
Millions
Percent
Billions
Percent
_____________________________________________________________________
Less than $10,000
-$19
-0.3%
$7
0.4%
10,000 to 20,000
-428
-1.6%
26
1.5%
20,000 to 30,000
1,082
-1.7%
63
3.6%
30,000 to 40,000
-1,726
-1.8%
97
5.6%
40,000 to 50,000
-2,173
-2.0%
109
6.3%
50,000 to 75,000
-5,669
-2.0%
287
16.5%
75,000 to 100,000
-5,275
-2.1%
257
14.8%
100,000 to 200,000
-9,871
-2.4%
417
24.8%
200,000 and over
-11,204
-2.4%
474
27.3%
_____________________________________________________________________
TOTAL, ALL TAXPAYERS
-$37,446
-2.2%
$1,738
100.0%
_____________________________________________________________________
[table continued]
_____________________________________________________________________
Effective Tax Rate 4
FEDERAL TAXES 3
______________________
INCOME
UNDER
Present
2
CATEGORY
PROPOSAL
Law
Proposal
____________________
______________________
Billions
Percent
Percent
Percent
Tax Analysts -- Paull Letter to Archer With Revenue Estimates of Bush Tax Reduction... Page 10 of 16
_____________________________________________________________________
Less than $10,000
$7
0.4%
9.0%
9.0%
10,000 to 20,000
26
1.5%
7.3%
7.1%
20,000 to 30,000
62
3.7%
12.4%
12.2%
30,000 to 40,000
95
5.6%
16.1%
15.8%
40,000 to 50,000
107
6.3%
17.6%
17.2%
50,000 to 75,000
281
16.5%
20.0%
19.6%
75,000 to 100,000
252
14.6%
22.5%
22.0%
100,000 to 200,000
407
23.9%
25.1%
24.5%
200,000 and over
463
27.2%
28.5%
27.8%
______________________________________________________________________
$1,700
100.0%
21.5%
21.0%
______________________________________________________________________
Source: Joint Committee on Taxation
Detail may not add to total due to rounding.
FOOTNOTES TO TABLE
1 Includes a phased-in increase in the child credit, reduction
in individual marginal rates, the creation of a 10% bracket, a second

earner deduction, and a charitable deduction for non-itemizers.
2 The income concept used to place tax returns into income
categories is adjusted gross income (AGI) plus: [1] tax-exempt

interest, [2] employer contributions for health plans and life
insurance, [3] employer share of FICA tax, [4] worker's compensation,
[5] nontaxable social security benefits, [6] insurance value of
Medicare benefits, [7] alternative minimum tax preference items, and
[8] excluded income of U.S. citizens living abroad. Categories are
measured at 2000 levels.
3 Federal taxes are equal to individual income tax (including
the outlay portion of the EIC), employment tax (attributed to

employees), and excise taxes (attributed to consumers). Corporate
income tax is not included due to uncertainty concerning the
incidence of the tax. Individuals who are dependents of other
taxpayers with negative income are excluded from the analysis. Does
not include indirect effects.
4 The effective tax rate is equal to Federal taxes described
in footnote 3 divided by: income described in footnote 2 plus
additional income attributable to the proposal.
END OF FOOTNOTES TO TABLE
* * * * *
DISTRIBUTIONAL EFFECTS OF VARIOUS PROVISIONS
Calendar Year 2003
_____________________________________________________________________
CHANGE IN
FEDERAL TAXES 3
FEDERAL
UNDER
3
INCOME
TAXES
PRESENT LAW
2
CATEGORY
____________________ _______________________
Millions
Percent
Billions
Percent
_____________________________________________________________________
Less than $10,000
-$36
-0.5%
$7
0.4%
10,000 to 20,000
-851
-3.2%
27
1.5%
20,000 to 30,000
-2,098
-3.2%
65
3.6%
30,000 to 40,000
-3,331
-3.3%
100
5.5%
40,000 to 50,000
-4,062
-3.7%
111
6.1%
50,000 to 75,000
-10,146
-3.4%
299
16.5%
75,000 to 100,000
-8,868
-3.3%
270
14.9%
100,000 to 200,000
-14,822
-3.4%
441
24.3%
200,000 and over
-17,261
-3.5%
493
27.2%
_____________________________________________________________________
-$61,477
-3.4%
$1,813
100.0%
_____________________________________________________________________
[table continued]
_____________________________________________________________________
FEDERAL TAXES 3
______________________
INCOME
UNDER
Present
2
CATEGORY
PROPOSAL
Law
Proposal
____________________
______________________
Billions
Percent
Percent
Percent
_____________________________________________________________________
Less than $10,000
10,000 to 20,000
20,000 to 30,000
30,000 to 40,000
40,000 to 50,000
50,000 to 75,000
75,000 to 100,000
100,000 to 200,000
$7
26
63
97
107
289
261
426
0.4%
1.5%
3.6%
5.5%
6.1%
16.5%
14.9%
24.3%
9.3%
7.4%
12.4%
16.0%
17.4%
19.9%
22.4%
25.1%
9.2%
7.1%
12.0%
15.5%
16.7%
19.3%
21.6%
24.2%
200,000 and over

475
27.2%
28.6%
27.6%
______________________________________________________________________
$1,752
100.0%
21.5%
20.8%
______________________________________________________________________
FOOTNOTES TO TABLE




* * * * *
DISTRIBUTIONAL EFFECT OF VARIOUS PROVISIONS
Calendar Year 2004
_____________________________________________________________________
CHANGE IN
FEDERAL TAXES 3
FEDERAL
UNDER
TAXES 3
PRESENT LAW
____________________ _______________________
Millions
Percent
Billions
Percent
_____________________________________________________________________
INCOME
CATEGORY 2
Less than $10,000

-$57
-0.7%
$8
0.4%
10,000 to 20,000
-1,260
-4.7%
27
1.4%
20,000 to 30,000
-3,139
-4.7%
67
3.5%
30,000 to 40,000
-4,915
-4.8%
102
5.4%
40,000 to 50,000
-6,035
-5.3%
113
6.0%
50,000 to 75,000
-16,076
-5.1%
312
16.5%
75,000 to 100,000
-14,048
-5.0%
280
14.8%
100,000 to 200,000
-24,068
-5.1%
468
24.7%
200,000 and over
-26,029
-5.0%
517
27.3%
_____________________________________________________________________
-$95,627
-5.1%
$1,893
100.0%
_____________________________________________________________________
[table continued]
_____________________________________________________________________
FEDERAL TAXES 3
______________________
INCOME
UNDER
Present
2
CATEGORY
PROPOSAL
Law
Proposal
____________________
______________________
Billions
Percent
Percent
Percent
_____________________________________________________________________
Less than $10,000
$8
0.4%
9.5%
9.4%
10,000 to 20,000
26
1.4%
7.3%
7.0%
20,000 to 30,000
54
3.5%
12.4%
11.9%
30,000 to 40,000
97
5.4%
15.9%
15.2%
40,000 to 50,000
107
6.0%
17.3%
16.4%
50,000 to 75,000
296
16.5%
19.8%
18.8%
75,000 to 100,000
266
14.8%
22.2%
21.1%
100,000 to 200,000
444
24.7%
25.1%
23.8%
200,000 and over
491
27.3%
28.8%
27.3%
______________________________________________________________________
$1,798
100.0%
21.5%
20.5%
______________________________________________________________________
Source: Joint committee on Taxation
Detail may not add to total due to rounding
FOOTNOTES TO TABLE




* * * * *
DISTRIBUTIONALS EFFECT OF VARIOUS PROVISIONS
Calendar Year 2005
_____________________________________________________________________
CHANGE IN
FEDERAL TAXES 3
FEDERAL
UNDER
3
INCOME
TAXES
PRESENT LAW
2
CATEGORY
____________________ _______________________
Millions
Percent
Billions
Percent
_____________________________________________________________________
Less than
10,000 to
20,000 to
30,000 to
$10,000
20,000
30,000
40,000
-$78
-1,672
-4,104
-6,492
-1.0%
-6.2%
-6.1%
-6.2%
$8
27
67
105
0.4%
1.4%
3.4%
5.3%
40,000 to 50,000
-7,973
-6.7%
119
6.0%
50,000 to 75,000
-20,647
-6.4%
320
16.2%
75,000 to 100,000
-17,897
-6.1%
294
14.8%
100,000 to 200,000
-28,970
-5.8%
497
25.1%
200,000 and over
-32,245
-5.9%
543
27.4%
_____________________________________________________________________
-$120,079
-6.1%
$1,980
100.0%
_____________________________________________________________________
[table continued]
_____________________________________________________________________
FEDERAL TAXES 3
______________________
INCOME
UNDER
Present
2
CATEGORY
PROPOSAL
Law
Proposal
____________________
______________________
Billions
Percent
Percent
Percent
_____________________________________________________________________
Less than $10,000
$8
0.4%
9.8%
9.7%
10,000 to 20,000
26
1.4%
7.4%
7.0%
20,000 to 30,000
63
3.4%
12.2%
11.4%
30,000 to 40,000
99
5.3%
15.9%
14.9%
40,000 to 50,000
111
6.0%
17.3%
16.2%
50,000 to 75,000
300
16.1%
19.7%
18.4%
75,000 to 100,000
276
14.8%
22.1%
20.8%
100,000 to 200,000
468
25.2%
25.0%
23.6%
200,000 and over
510
27.4%
28.9%
27.1%
______________________________________________________________________
$1,860
100.0%
21.6%
20.3%
______________________________________________________________________
FOOTNOTES TO TABLE




4
The effective tax rate is equal to Federal taxes described

END OF FOOTNOTES
Tax Analysts Information

Jurisdiction: United States
Subject Areas: Legislation and lawmaking
Budgets
Index Terms: legislation, tax
tax relief
budget, federal, revenue estimates
Author: Lindy L. Paull
Institutional Author: Joint Committee on Taxation; House of Representatives; Senate
Tax Analysts Document Number: Doc 2000-12557 (7 original pages)
Tax Analysts Electronic Citation: 2000 TNT 90-14
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Tax Analysts -- Paull Letter to Archer With Revenue Estimates of Bush Tax Reduction Pl...

Tax Notes Today

Paull Letter to Archer With Revenue Estimates

=============== FULL TEXT ===============

2. Create new bracket for first

2003, 12% in 2004, 11% in 2005,

3. Reduce the various income tax

4. 10% deduction for two-earner

5. Allow taxpayers who do not itemize

6. Allow individuals 55 and over

7. Raise the cap on corporate chari-

table contributions from 10% to

8. Expand Education IRAs to allow

9. Permanent extension of R&E tax

10. Reduce all estate tax

2. Create new bracket for first

3. Reduce the various income tax

4. 10% deduction for two-earner

5. Allow taxpayers who do not itemize

6. Allow individuals 55 and over

tax-free and penalty-free withdrawals from IRAs for charitable

7. Raise the cap on corporate charitable contributions from 10% to

8. Expand Education IRAs to allow

9. Permanent extension of R&E tax

10. Reduce all estate tax

year) until it reaches $200,000

2. Create new bracket for first

3. Reduce the various income tax

4. 10% deduction for two-earner

5. Allow taxpayers who do not itemize

in 2002, 40% in 2003, 60% in

6. Allow individuals 55 and over

7. Raise the cap on corporate charitable contributions from 10% to

8. Expand Education IRAs to allow

9. Permanent extension of R&E tax

10. Reduce all estate tax

tyba = taxable years beginning after

END OF FOOTNOTE TO TABLE

in individual marginal rates, the creation of a 10% bracket, a second

categories is adjusted gross income (AGI) plus: [1] tax-exempt

the outlay portion of the EIC), employment tax (attributed to

additional income attributable to the proposal.

END OF FOOTNOTES TO TABLE

200,000 and over

in individual marginal rates, the creation of a 10% bracket, a second

categories is adjusted gross income (AGI) plus: [1] tax-exempt

the outlay portion of the EIC), employment tax (attributed to

additional income attributable to the proposal.

Less than $10,000

1 Includes a phased-in increase in the child credit, reduction

in individual marginal rates, the creation of a 10% bracket, a second

categories is adjusted gross income (AGI) plus: [1] tax-exempt

the outlay portion of the EIC), employment tax (attributed to

additional income attributable to the proposal.

END OF FOOTNOTES TO TABLE

in individual marginal rates, the creation of a 10% bracket, a second

categories is adjusted gross income (AGI) plus: [1] tax-exempt

Medicare benefits, [7] alternative minimum tax preference items, and

the outlay portion of the EIC), employment tax (attributed to

The effective tax rate is equal to Federal taxes described

Tax Analysts Information

Tax Analysts (2016)

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