Committee on Ways and Means

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NEWS
FROM THE COMMITTEE ON WAYS AND MEANS

FOR IMMEDIATE RELEASE
March 1, 2001
CONTACT: Trent Duffy or Greg Crist (202) 225-8933

Committee Passes Broad-Based Tax Relief Package

House of Representatives Could Consider Tax Relief Plan as Early as Next Week

WASHINGTON – The Ways and Means Committee today approved by a 23-15 vote the first income tax relief legislation to move through the House of Representatives in the 107^th Congress. The Economic Growth and Tax Relief Act of 2001 will provide approximately $958 billion over 10 years in income tax relief. Highlights of the plan follow, and a Joint Committee on Taxation description is available on its website at http://www.house.gov/jct. The House of Representatives could consider H.R. 3 as early as next week.

"This plan will put money into the pockets of American consumers in the short term and provide greater rewards to more work and entrepreneurship in the longer term. Hardworking income taxpayers are paying more in taxes than they should or need to pay. No one, no matter their income, should send more than one-third of their income to the IRS in taxes. By moving quickly, our hope is to have both monetary and fiscal policy pull this economy out of its nose-dive," said Chairman Thomas.

Highlights of H.R. 3 include:

Provides immediate tax relief by reducing the current 15 percent tax rate on the first $12,000 of taxable income for couples ($6,000 for singles). A new 12 percent rate would apply retroactively to the beginning of 2001 and also for 2002. The rate would be reduced even further to 10 percent as follows: 11 percent in 2003 through 2005 and 10 percent in 2006.

In accordance with President Bush’s income tax rate reductions, the plan reduces other income tax rates and consolidates rate brackets. By 2006, the present-law structure of five income tax rates (15 percent, 28 percent, 31 percent, 36 percent and 39.6 percent) would be reduced to four rates of 10 percent, 15 percent, 25 percent and 33 percent.

Begins to address the growing problem of the alternative minimum tax by repealing the current-law provisions that offset the refundable child credit and the earned income credit by the amount of the alternative minimum tax.

The reduction in the 15 percent bracket alone provides a tax reduction of up to $360 for couples in 2001 ($180 for singles), increasing to as much as $600 for couples in 2006 ($300 for singles).

According to the non-partisan Joint Committee on Taxation, savings to taxpayers over ten years would be $958 billion.

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