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![handle is hein.taxfoundation/srgdxz0001 and id is 1 raw text is: FOUN DAT ION
September 1996,
No. 63
Analysis of the Four New Tax Laws
Congress Pusses% Bills Prior to Augnst Rocess
Prior to its August recess, the Congress
passed four important pieces of legislation with
significant tax elements. The bills, all of which
were signed by the President, relate to health
care reform (II.R, 3103), providing taxpayers
with more effective protections against IRS ac-
tions (H.R. 2337), welfare reform (H.R. 3734),
and a combination minimum wage increase,
small business tax relief, and miscellaneous tax
provisions bill (IlR. 3448). Considered indi-
vidually, the bills' respective tax elements rep-
in Ie Four New lMx Bills
120~
100__
60L
40
0 a
Small
Business
Welfare Health
Taxpayer
Rights
resent narrow, but important, changes in tax
policy. Taken together, however, the tax pro-
visions in the four bills represent an important
correction in the direction of tax policy.
In total, the four bills make 170 changes
either directly affecting taxes owed or tax ad-
ministration. In purely dollar terms, the small
business tax relief bill is the largest of the
four, involving over $25 billion in tax increas-
ing provisions and $21 billion in tax reducing
provisions over the 1996 to 2006 time period.
Together, the four bills include $52.9 billion
in tax increases, $41.5 billion in tax reduc-
tions, and represents a net reduction in the
budget deficit of $ 11.4 billion over the period.
The largest tax increase provisions among
the four bills are (in billions):
Amount of
Increase
Provision
l)isallow interest deduction
for corporate-owned life insurance
Repeal the Possessions Tax Credit
Modify the Earned Income Tax Credit
Repeal the 50% interest income
exclusion for loans to Employee
Stock Ownership Plans
Apply math error rules for
dependency exemptions
Reinstate the Airport and
Airway Trust Fund excises
$16.0
$10.6
$ 6.7
$ 2.3
$ 2.2
$ 1.6
SouIrce: lax I Ot1Ifd ttI)f
By].). Foster, Ph.D
tI xeculie Direclor and
Chief l'conon isl
Figure I
Number o] Tax Provisions
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