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Extending the 2001, 2003, and 2004 Tax Cuts , Record No.: RS21992, Date: June 10, 2005 1 (June 10, 2005)

handle is hein.tera/crstax0425 and id is 1 raw text is: Order Code RS21992 June 10, 2005 CRS Report for Congress Received through the CRS Web Extending the 2001, 2003, and 2004 Tax Cuts Gregg Esenwein Specialist in Public Finance Government and Finance Division Summary The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) reduced marginal income tax rates, created a new 10% income tax bracket, provided marriage tax penalty relief, and increased the child tax credit. Many of the EGTRRA provisions were originally scheduled to be phased in over the 2001 to 2010 time period. All of the act's provisions are scheduled to sunset (revert to prior law levels) at the end of 2010. The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) accelerated the implementation of certain tax reductions originally enacted in the 2001 act. Several of these JGTRRA provisions were temporary and were scheduled to expire at the end of 2004. JGTRRA also reduced the tax rate on dividend and long-term capital gains income. The dividend and capital gains tax relief is scheduled to expire after 2008. The Working Family Tax Relief Act of 2004 (WFTRA), extended many of the JGTRRA tax provisions scheduled to expire at the end of 2004 (it did not, however, extended the capital gains/dividend tax reductions). The WFTRA tax reductions, however, are still scheduled to sunset after 2010 as per the original EGTRRA legislation required. Since all of the tax reductions provisions of all three of these acts expire at some point in the future, Congress faces the issue of whether to extend and/or make the reductions permanent. Extending these tax reductions, however, is likely to significantly reduce federal revenues in the future. This report will be updated as legislative action warrants or when new cost estimates become available. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16) reduced marginal income tax rates, created a new 10% income tax bracket, provided marriage tax penalty relief, increased the child tax credit, and increased the alternative minimum tax (AMT) exemption. These changes were scheduled to phase in over a period of several years. All of the changes in EGTRRA (including the tax rate changes) will expire (sunset) after 2010. Congress included the sunset in EGTRRA to avoid a Byrd rule (Section 313 of the 1974 Congressional Budget Act, as amended) violation in the Senate. The Byrd Congressional Research Service • -The Library of Congress

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