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1 J. D. Foster, Analysis of the Dole Economic Program 1 (1996)

handle is hein.taxfoundation/srgcxz0001 and id is 1 raw text is: August 1996, No. 62 t >IW )'! D. Tl'oster, P/,1), ('b/el te I)irechor anid Cb i/ (,lco notist Figure 1 Average Tax Reduction $500 _ $400 - $300- $200 $100 15% Tax Cut RepubliCatn Presidential candidate Bob )ole utnvcilCd the heart of his economic program on August 5. The centerpiece of the plan is a set of tax cuts that, if enacted, are projected to re- (luce federal receipts by $ 12 billion in 1997, $123 billion in 200() when fully phased in, and $548 billion over six years. In addition to tax relief, Senator l)ole called for overhauling the federal income tax system, passage of the Bal- anCed Budget Amendment and enactment of a balanced budget by the year 2002, expansion of the federal role in job training, growth-ori- ented regulatory reform, 'tnd lawsuit reform. Per Major Element of Dole Tax Plan, 1999 $16 $41- Child Tax Credit Capital Gains Social Security SOLII*CC: T X FOtlidltiOll. The l)ole plan resolves the apparent con- flict between tax reduction and eliminating the deficit by restraining federal spending and throlgh inereased eC CnuCs from accler- ated economic growth. There are many controversial elements of the plan's fiscal components. This IReport presents soie key facts and observations surrounding some of these controversies. The Dole Tax Cuts The main elements of the l)ole tax cut packagc are: I) A reduction of personal income tax rates by 15% over 3 years. 2) A reduction of the top capital gains tax rate to 14' from 28%. The capital gains rate for taxpayers in the 15% income tax bracket would be set at 7.5%. 3) A $500 credit for cvery child 18 years of ige and1(1 younger for low- and middle-income families. 4) A $500 per child Education lnvestment Account. Accumulated earnings in these accounts would be tax free if the funds are left in the accounts for it least five years. Funds withdrawn from the accounts to pay for college education-related expenses would be tax-frcc. 5) An expansion of Individual Retirement Accounts. 6) Tax incentives for job training. 7) To allow low- and middlc-income parents and students to dCduct interest paid on stu- dent loans for post-secondary education. 8) To repeal the 1993 tax hike on Social Sc- curity benefits. Other minor tax provisions in the l)olc program include: capital gains indexing, estate ttx relief, ( 4 $600 ---

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