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26415446
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EITC [Earned Income Tax Credit]
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26415446
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EITC [Earned Income Tax Credit]
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Records of the Domestic Policy Council (Clinton Administration)
Jennifer Klein's Files
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Tax Provisions in the Senate Finance Committee
Chairman's Mark for Revenue Reconciliation and the
EITC Provisions Previously Adopted by the Committee (1)
(1996 Income Levels)
Federal Taxes Under Current Law (2)
Change in Federal Taxes (3)
Total Federal Taxes After Change
:
As a Percent As a Percent
As a Percent As a Percent
As a Percent
As a Percent
Family Economic
of Pre-Tax
of After-Tax
of Pre-Tax
of After-Tax
of Pre-Tax
of After-Tax
Income Class (4)
Amount
Income
Income
Amount
Income
Income
Amount
Income
Income
(000)
($B)
(%)
(%)
($B)
(%)
(%)
($B)
(%)
(%)
0 - 10
5.7
8.0
8.7
0.2
0.3
0.4
5.9
8.4
9.1
10 - 20
21.5
8.8
9.7
0.8
0.3
0.3
22.2
9.1
10.0
20-30
50.1
13.3
15.4
1.3
0.4
0.4
51.4
13.7
15.8
30-50
156.3
17.5
21.2
-5.7
(0.6)
(0.8)
150.6
16.8
20.4
50-75
224.0
19.9
24.8
-10.4
(0 9)
(1.1)
213.6
19.0
23.7
75-100
196.1
21.1
26.7
-100
(1.1)
(1.4)
186.1
20.0
25.3
100 200
303.0
22.0
28.1
-12.5
(0.9)
(1.2)
290.5
21.1
27.0
200 & over
316.6
23.7
31.1
-95
(0.7)
(0.9)
307 1
23.0
30.1
Total (5)
1,275.1
20.1
25.2
-45.8
(0.7)
(0.9)
1,229.3
19.4
24.3
Department of the Treasury
October 18, 1995
Office of Tax Analysis
(1) This table distributes the estimated change in tax burdens due to the tax provisions in the Senate Finance Committee Chairman's Mark
(JCX-44-95. September 16, 1995). and the EITC provisions adopted by the Committee on September 30. 1995
(2) The taxes included are individual and corporate income payroll (Social Security and unemployment). and excises. Estate and gift taxes and customs
duties are excluded The individual income tax is assumed to be Dorne by payors the corporate income tax by capital income generally. payroll taxes
(employer and employee shares) by labor (wages and self-employment income) excises on purchases by individuals by the purchaser and excises
on purchases by business in proportion to total consumption expenditures Taxes due to provisions that expire prior to the end of the Budget period
are excluded.
(3) The change in Federal taxes IS estimated at 1996 income levels but assuming fully phased in law and long-run behavior The effect of the IRA
proposal IS measured as the present value of tax savings on one years contributions The effect on tax burdens of the proposed capital gains
exclusion IS based on the level of capital gains realizations under current law Provisions which expire before the end of the budget period and
provisions which affect the timing of tax payments but not liabilities are not distributed The incidence assumptions for tax changes IS the same
as for current law taxes (see footnote 2)
(4) Family Economic Income (FEI) IS a broad-based income concept FEI is constructed by adding to AGI unreported and underreported income, IRA
and Keogn deductions; nontaxable transfer payments. such as Social Security and AFDC employer-provided fringe benefits. inside build-up on
pensions, IRAs. Keoghs, and life insurance tax-exempt interest and imputed rent on owner-occupied housing Capital gains are computed on
an accrual basis. adjusted for inflation to the extent reliable data 3110w inflationary losses of lenders are subtracted and of borrowers are added
There IS also an adjustment for accelerated depreciation of noncorporate businesses FEI IS shown on a family rather than on a tax return basis The
economic incomes of all members of a family unit are added to arrive at the family's economic income used in the distributions
(5) Families with negative incomes are included in the total line out not snown separately
Tax Provisions in the Senate Finance Committee
Chairman's Mark for Revenue Reconciliation and the
EITC Provisions Previously Adopted by the Committee (1)
(1996 Income Levels)
Federal Taxes Under Current Law (2)
Change in Federal Taxes (3)
Total Federal Taxes After Change
As a Percent
As a Percent
As a Percent As a Percent
As a Percent As a Percent
of Pre-Tax
of After-Tax
of Pre-Tax
of After-Tax
of Pre-Tax
of After-Tax
Family Economic
Amount
Income
Income
Amount
Income
Income
Amount
Income
Income
Income Quintile (4)
($B)
(%)
(%)
($B)
(%)
(%)
($B)
(%)
(%)
Lowest (5)
14.2
7.6
8.3
0.6
0.3
0.3
14.7
8.0
8.6
Second
61.2
12.4
14.2
1.7
0.3
0.4
62.9
12.8
14.6
Third
146.5
17.3
21.0
-5.1
(0.6)
(0.7)
141.4
16.7
20.3
Fourth
271.8
19.9
24.9
-12.7
(0.9)
(1.2)
259.1
19.0
23.7
Highest
779.5
22.4
28.9
-30.2
(0.9)
(11)
749.4
21.6
27.8
Total (5)
1,275.1
20.1
25.2
-45.8
(0.7)
(0.9)
1,229.3
19.4
24.3
Top 10%
565.3
22.9
29.8
-19.4
(0.8)
(1.0)
545.9
22.1
28.7
Top 5%
415.3
23.2
30.3
-13.2
(0.7)
(1.0)
402.1
22.5
29.3
Top 1%
221.9
24.5
32.5
-6.2
(0.7)
(0.9)
215.8
23.8
31.6
Department of the Treasury
October 18, 1995
Office of Tax Analysis
(1) This table distributes the estimated change in tax burdens due to the tax provisions in the Senate Finance Committee Chairman's Mark
(JCX-44-95, September 16. 1995). and the EITC provisions adopted by the Committee on September 30. 1995
(2) The taxes included are individual and corporate income, payroll (Social Security and unemployment), and excises Estate and gift taxes and customs
duties are excluded. The individual income tax IS assumed to be borne by payors. the corporate income tax by capital income generally, payroll taxes
(employer and employee shares) by labor (wages and self-employment income). excises on purchases by individuals by the purchaser. and excises
on purchases by business in proportion to total consumption expenditures Taxes due to provisions that expire prior to the end of the Budget period
are excluded.
(3) The change in Federal taxes IS estimated at 1996 income levels but assuming fully phased in law and long-run behavior The effect of the IRA
proposal IS measured as the present value of tax savings on one year's contributions The effect on tax burdens of the proposed capital gains
exclusion is based on the level of capital gains realizations under current law Provisions which expire before the end of the budget period and
provisions which affect the timing of tax payments but not liabilities are not distributed The incidence assumptions for tax changes IS the same
as for current law taxes (see footnote 2)
(4) Family Economic Income (FEI) IS a broad-based income concept FEI is constructed by adding to AGI unreported and underreported income IRA
and Keogh deductions, nontaxable transfer payments. such as Social Security and AFDC employer-provided fringe benefits inside build-up on
pensions, IRAs. Keoghs, and life insurance, tax-exempt interest and imputed rent on owner-occupied housing Capital gains are computed on
an accrual basis, adjusted for inflation to the extent reliable data allow inflationary losses of lenders are subtracted and of borrowers are added
There IS also an adjustment for accelerated depreciation of noncorporate businesses FEI is shown on a family rather than on a tax return basis The
economic incomes of all members of a family unit are added to arrive at the family's economic income used in the distributions
(5) Families with negative incomes are excluded from the lowest quintile out included in the total line
NOTE. Quintiles begin at FEI of. Second $15,604. Third $29,717 Fourth $48,660. Highest $79,056 Top 10% $106 704 Top 5% $145,412. Top 1% $349,438.
Tax Provisions in the Senate Finance Committee
Chairman's Mark for Revenue Reconciliation and the
EITC Provisions Previously Adopted by the Committee (1)
(1996 Income Levels)
Tax Change
Number
Total Tax Change
Tax Change
as a Percent
Family Economic
of
Average
Percent
as a Percent
of Current
Income Class (2)
Families
Tax Change
Amount (3)
Distribution
of Income
Federal Taxes
(000)
;
(millions)
($)
(SM)
(%)
(%)
(%)
0 10
12.5
19
239
-0.5
0.34
4.20
10 20
16.2
48
773
-1.7
0.32
3.60
20 30
15 1
88
1319
-2.9
0.35
2.63
30 50
22.7
-249
-5668
12.4
-0.63
-3.63
50 75
18.3
-565
-10363
22.6
-0.92
-4.63
75 100
10.8
-927
-10011
21.9
-1.08
-5.11
100 200
10.6
-1183
-12505
27.3
-0.91
-4.13
200 & over
2.8
-3416
-9496
20.7
-0.71
-3.00
Total (4)
109.4
-418
-45786
100.0
-0.72
-3.59
Department of the Treasury
October 18. 1995
Office of Tax Analysis
(1) This table distributes the estimated change in tax burdens due to the tax provisions in the Senate Finance Committee
Chairman's Mark (JCX-44-95. September 16. 1995). and the EITC provisions adopted by the Committee on
September 30, 1995
(2) Family Economic Income (FEI) is a broad-based income concept FEI is constructed by adding to AGI
unreported and underreported income: IRA and Keogh deductions. nontaxable transfer payments such
as Social Security and AFDC; employer-provided fringe benefits: inside build-up on pensions IRAs.
Keoghs, and life insurance: tax-exempt interest; and imputed rent on owner-occupied housing.
Capital gains are computed on an accrual basis. adjusted for inflation to the extent reliable data allow
Inflationary losses of lenders are subtracted and gains of borrowers are added There IS also an
adjustment for accelerated depreciation of noncorporate businesses. FEI is shown on a family rather
than a tax-return basis. The economic incomes of all members of a family unit are added to arrive at
the family's economic income used in the distributions
(3) The change in Federal taxes is estimated at 1996 income levels but assuming fully phased in law and
long-run behavior. The effect of the IRA proposal IS measured as the present value of tax savings on one
year's contributions. The effect on tax burdens of the proposed capital gains exclusion IS based on the level
of capital gains realizations under current law. Provisions which expire before the end of the budget period
and provisions which affect the timing of tax payments but not liabilities are not distributed The incidence
assumptions for tax changes IS the same as for current law taxes
(4) Families with negative incomes are included in the total line but not shown separately
Tax Provisions in the Senate Finance Committee
Chairman's Mark for Revenue Reconciliation and the
EITC Provisions Previously Adopted by the Committee (1)
(1996 Income Levels)
Tax Change
Number
Total Tax Change
Tax Change
as a Percent
of
Average
Percent
as a Percent
of Current
Family Economic
Families
Tax Change
Amount (3)
Distribution
of Income
Federal Taxes:
Income Quintile (2)
(millions)
($)
($M)
(%)
(%)
(%)
Lowest (4)
21.4
26
562
-1.2
0.30
3.97
Second
21 9
77
1688
-37
0.34
2.76
Third
21 9
-233
-5110
11.2
-0.61
-3.49
Fourth
21.9
-578
-12658
27.6
-0.93
-4.66
Highest
21.9
-1380
-30195
65.9
-0.87
-3.87
Total (4)
109.4
-418
-45786
100.0
-0.72
-3.59
Top 10%
10.9
-1771
-19375
42.3
-0.79
-3.43
Top 5%
5.5
-2416
-13220
28.9
-0.74
-3.18
Top 1%
1.1
-5626
-6155
13.4
-0.68
-2.77
Department of the Treasury
October 18, 1995
Office of Tax Analysis
(1) This table distributes the estimated change in tax burdens due to the tax provisions in the Senate Finance Committee
Chairman's Mark (JCX-44-95. September 16. 1995), and the EITC provisions adopted by the Committee on
September 30. 1995.
(2) Family Economic Income (FEI) is a broad-based income concept FEI is constructed by adding to AGI
unreported and underreported income: IRA and Keogh deductions. nontaxable transfer payments such
as Social Security and AFDC: employer-provided fringe benefits. inside build-up on pensions. IRAs.
Keoghs, and life insurance: tax-exempt interest. and imputed rent on owner-occupied housing.
Capital gains are computed on an accrual basis. adjusted for inflation to the extent reliable data allow.
Inflationary losses of lenders are subtracted and gains of borrowers are added. There IS also an
adjustment for accelerated depreciation of noncorporate businesses. FEI is shown on a family rather
than a tax-return basis. The economic incomes of all members of a family unit are added to arrive at
the family's economic income used in the distributions.
(3) The change in Federal taxes IS estimated at 1996 income levels but assuming fully phased in law and
long-run behavior. The effect of the IRA proposal is measured as the present value of tax savings on one
year's contributions. The effect on tax burdens of the proposed capital gains exclusion is based on the level
of capital gains realizations under current law. Provisions which expire before the end of the budget period
and provisions which affect the timing of tax payments but not liabilities are not distributed The incidence
assumptions for tax changes IS the same as for current law taxes
(4) Families with negative incomes are excluded from the lowest quintile but included in the total line
NOTE: Quintiles begin at FEI of: Second $15,604; Third $29,717; Fourth $48,660; Highest $79,056.
10% $108 Ton 5% $145 412 Too 1% $349 438