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President Bush's Tax Proposal: A Brief Overview, June 21, 2001 1 (June 21, 2001)

handle is hein.tera/crstax0548 and id is 1 raw text is: Order Code RS20819 Updated June 21, 2001 CRS Report for Congress Received through the CRS Web President Bush's 2001 Tax Proposal: A Brief Overview David L. Brumbaugh Specialist in Public Finance Government and Finance Division Summary On February 8, 2001, President Bush sent to Congress the outlines of a proposal to cut taxes by an estimated $1.6 trillion over 10 years. Additional details of the plan were included in budget documents the Administration released on April 9. The plan is similar in its essentials to a proposal then-Governor Bush made during the presidential campaign. Its principal components are: a reduction in marginal individual income tax rates; an increased child tax credit; a tax cut for married couples; elimination of the estate and gift tax; a permanent research and experimentation tax credit; a charitable contribution deduction for non-itemizers; and several tax benefits for health care and education. Tax cuts similar to the President's have been considered by Congress over the past several years, but were not enacted, in part because of opposition by the Clinton Administration. In March 2001, specific tax cut legislation along the lines of the Bush program began to move through the House as a set of stand-alone bills, and by early May the House had passed bills containing much of the President's proposal. On May 23, the full Senate approved an omnibus bill including similar tax cuts. A conference committee version of the tax cuts (H.R. 1836) was approved by the House and Senate on May 26; it was signed into law on June 7 and became P.L. 107-16, the Economic Growth and Tax Relief Reconciliation Act of 2001. This report will not be updated. For a detailed comparison of the President's proposal and P.L. 107-16, see CRS Report RL3 0973, Tax cuts: A Side-by-Side Comparison ofthe President's Proposal and House, Senate, and Conference Committee Bills. The Proposal's Overall Size and Shape The size and shape of the President's proposal can be inferred from the estimated impact it would have on federal revenues. Based on the revenue estimates, the centerpiece of President Bush's tax proposal is its reduction of marginal individual income tax rates. In the proposal's tenth year, by which time each of the proposal's provisions would be fully phased in, the reduction in tax rates would account for 43% of the plan's estimated revenue reduction. Other major elements of the plan are elimination of the estate and gift tax, which would account for 24% of the estimated revenue loss, and Congressional Research Service ** The Library of Congress

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