Issue Brief

The tax proposals approved by the House Ways and Means Committee give 75 percent of the individual tax cuts to taxpayers with less than $75,000 in adjusted gross income (AGI). Because they only pay 38% of all income taxes, this makes the tax package progressive. Contrary to those critics who believe this is a tax cut for the rich, the bill achieves a delicate balance between growth and political considerations. Though most of the tax cuts are directed at the middle class, growth generated by the bill would essentially offset the revenue loss over the next ten years.

In his fiscal year 1998 budget, President Clinton has proposed a hodgepodge of targeted tax credits, tax deductions, tax cuts and tax increases. Problem is, the tax credits, tax deductions, and tax cuts have "sunset" provisions, meaning that if balanced budget goals are not achieved, they will expire in 2001. But--you guessed it--the tax increases go on indefinitely. There's no "sunset" for them if the budget balances.

An analysis of the likely economic and budgetary effects of the major provisions demonstrates that targeting tax cuts is a move in the wrong direction.

This is a comprehensive examination of the Kennedy tax cut program, beginning with the changes in depreciation rules in 1962. The conclusion is that the Kennedy tax cuts clearly stimulated the incredible economic growth and job creation of the 1960s, despite the charges of recent critics. And economic growth only slowed when taxes began rising again toward the end of the decade.

Candidates Bob Dole and Jack Kemp have proposed a dramatic tax cut plan that is designed to stimulate increased economic growth, remedy the decline in the value of the dependent deduction, and reduce the punitive treatment of capital gains. An analysis demonstrates that the plan is likely to achieve its goals, and only requires a spending cut of less than 2% to pay for itself.

President Clinton has proposed a 2-year, $1,500 per year refundable tuition tax credit for the first two years of post-secondary education. But for every new student drawn to postsecondary education, the President's proposal would spend $51,500. Because already today, over 62 percent of all high school graduates go to college, and because tuition rates have risen in correspondence to the increase in federal student aid, the President's proposal is at least an inefficient expenditure of taxpayer funds.

This is a 6-page analysis of the House Republican "Contract With America" proposal to reform business depreciation rules.

A 6-page analysis of the House Republican "Contract With America" proposals to expand the availability of IRAs, and to increase the unified estate tax credit.

An 11-page expose of the federal budget process, where spending is compared to an inflated current services budget, rather than to last year's spending. This is how a 4.5% spending increase over the previous year can be characterized as a "draconian cut."