Order Code RL34425
Expiration and Extension of the Individual Income
Tax Cuts Enacted in 2001 Through 2007
March 26, 2008
Maxim Shvedov
Analyst in Public Sector Economics
Government and Finance Division

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Expiration and Extension of the Individual Income Tax
Cuts Enacted in 2001 Through 2007
Summary
This report traces the legislative history of the Economic Growth and Tax Relief
Reconciliation Act of 2001 (EGTRRA; P.L. 107-16) and its extensions, shows their
time line, and provides general overview of their implications and revenue effects.
The report focuses on the measures that extend or curtail the key tax relief provisions
of EGTRRA and the follow-up legislation, rather than modify the respective parts of
the tax code in some new way. Many aspects of the tax cuts, such as revenue
feedback effects, have been discussed at length elsewhere, including other CRS
reports referenced in the text, therefore the details of many issues are beyond the
scope of this report.
President Bush has advanced the idea of the across-the-board tax cuts as one of
the cornerstones of his economic policy since his first presidential campaign.
EGTRRA provided such relief, but all of the act’s provisions are scheduled to sunset
(revert to prior law levels) at the end of 2010. Thus, Congress faces the issue of
whether to let the tax cuts expire or extend them, and if so, how.
In 2001, EGTRRA reduced marginal income tax rates, provided marriage tax
penalty relief, provided temporary relief from the alternative minimum tax (AMT),
and increased the child tax credit. The Jobs and Growth Tax Relief Reconciliation
Act of 2003 (P.L. 108-27) accelerated the implementation of certain tax reductions
that were being phased-in under the 2001 act. The 2003 act also reduced the tax rate
on dividend and long-term capital gains income, effective through 2008. The
Working Family Tax Relief Act of 2004 (P.L. 108-311) extended many of the
EGTRRA and JGTRRA provisions scheduled to expire at the end of 2004. The Tax
Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222) extended the
capital gains and dividend tax reduction through 2010 and the AMT relief for one
year.
Additional tax reductions and extensions to these tax acts were included in the
Job Creation and Worker Assistance Act of 2002 (P.L. 107-147), the Tax Relief and
Health Care Act of 2006 (P.L. 109-432), and Tax Increase Prevention Act of 2007
(P.L. 110-166).
A number of bills, many of them listed in the body of the report, have been
introduced to extend all or some of the provisions of these acts. Notably, S.Con.Res.
70, adopted by the Senate on March 14, 2008, included AMT relief and an
amendment (S.Amdt. 4160) by Senator Max Baucus that would provide more than
$300 billion in middle class tax relief. The corresponding House measure
(H.Con.Res. 312) does not include similar language, except for the extension of the
AMT relief.
This report, which includes significant contributions from Gregg Esenwein, now
retired from CRS, will be updated to reflect legislative activity.

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Contents
Tax Legislation: 2001 Through 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Extending the Cuts Past 2010: Key Considerations . . . . . . . . . . . . . . . . . . . . . . . . 4
Legislative Initiatives in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
House Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Senate Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Appendix. Phase-in and Expiration Schedule of Select Major
Tax Cut Provisions Under EGTRRA, JGTRRA, WFTRA, TIPRA,
and Other Relevant Acts, 2001-2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
List of Tables
Table 1. Estimates Illustrating the Revenue Costs Associated with
Extending EGTRRA and JGTRRA and Reforming the AMT,
FY2009-FY2013 and FY2009-FY2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Table 2. Annual Projected Cost of Extending the Tax Cuts Including
the AMT Relief, as a Share of GDP, FY2012-FY2018 . . . . . . . . . . . . . . . . . 6
Table 3. Estimated Revenue Effects of Extending Certain Major
Expiring Tax Provisions of 2001 Through 2007 Acts . . . . . . . . . . . . . . . . . . 9
Table 4. Effective Individual Income Tax Rate for All Households,
by Comprehensive Household Income Quintile, 2000-2005 . . . . . . . . . . . . 10

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Expiration and Extension of the Individual
Income Tax Cuts Enacted in 2001 Through
2007
Tax Legislation: 2001 Through 2007
The Economic Growth and Tax Relief Reconciliation Act of 2001
(EGTRRA; P.L. 107-16) provided individual income tax relief to a very large share
of the population, reflecting President Bush’s emphasis on tax cuts. The act’s
provisions were scheduled to phase in over several years at an estimated total cost of
approximately $1.35 trillion over the FY2001-FY2011 period.1 EGTRRA reduced
marginal income tax rates, created a new 10% income tax bracket, provided
marriage-tax penalty relief, increased the child tax credit, increased the alternative
minimum tax (AMT) exemption, and changed other elements of the tax system.
All of the changes in EGTRRA were temporary, expiring after 2010 or earlier.
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 rule
prohibits “extraneous matter” in reconciliation legislation.2 Under the rule,
extraneous matter includes, among other things, language that would cause an
increase in the budget deficit (or reduce budget surpluses) in a fiscal year beyond
those covered by the reconciliation legislation. As a result of the Byrd rule,
EGTRRA contained language providing for the expiration of all of its provisions at
the end of calendar year 2010 — the end of the reconciliation budget window.
In 2003, Congress passed the Jobs and Growth Tax Relief Reconciliation Act
(JGTRRA; P.L. 108-27). JGTRRA accelerated the implementation of many of the
provisions that were being phased in under EGTRRA, including marriage-tax penalty
relief, expansion of the 10% tax bracket, and increases in the child tax credit to
$1,000 per qualifying child. The 2003 act also included an increase in the AMT
exemption (a so-called “AMT patch”). These JGTRRA changes were scheduled to
be in effect for only two years, 2003 and 2004.
In addition, JGTRRA lowered the maximum tax rate on qualified dividend
income and long-term capital-gains income to 15% (5% for taxpayers in the 10%
1 U.S. Congress, Joint Committee on Taxation, Estimated Budget Effects Of The Conference
Agreement For H.R. 1836, JCX-51-0, May 26, 2001.
2 For more information see CRS Report RL30862, The Budget Reconciliation Process: The
Senate’s “Byrd Rule,” by Robert Keith. Other procedural aspects related to the budget
process are discussed in CRS Report 97-865, Points of Order in the Congressional Budget
Process, by James V. Saturno; and CRS Report RL32835, PAYGO Rules for Budget
Enforcement in the House and Senate, by Robert Keith and Bill Heniff Jr.

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CRS-2
and 15% marginal income-tax brackets, dropping to 0% for these taxpayers in 2008).
As originally enacted, these changes were effective through January 1, 2009. The
estimated cost of JGTRRA’s tax reduction provisions was $329.7 billion over the
FY2003-FY2013 period.3
The American Jobs Creation Act of 2004 (AJCA; P.L. 108-357), among
other things, contained a provision which allowed taxpayers to take an itemized
deduction for state and local general sales taxes in lieu of the itemized deduction for
state and local income taxes. This provision was to be in effect for two years, 2004
and 2005, at the cost of $3.6 billion.4
In 2004, Congress also passed the Working Families Tax Relief Act of 2004
(WFTRA; P.L. 108-311). WFTRA extended several tax provisions that were set to
expire at the end of 2004 under JGTRRA.
WFTRA extended the accelerated marriage-penalty tax relief provisions (the
standard deduction and 15% tax bracket for joint returns set at twice the level as
those for single returns) through 2008. In 2009 and 2010, this level of tax relief
would be maintained due to the full phase-in of the corresponding provisions of
EGTRRA. The 2004 act also extended the increase in the 10% income-tax bracket
through 2010.
WFTRA maintained the child tax credit at $1,000 through 2009 (for 2010, the
EGTRRA provisions apply and the child tax credit will remain at $1,000). In
addition, WFTRA accelerated, to 2004, the increase in the refundability of the child
tax credit. For 2004 through 2010, the child tax credit will be refundable to 15% of
a taxpayer’s earned income in excess of the applicable threshold. The 2004 act also
allowed including combat pay in earned income for purposes of computing child-tax-
credit refundability.5
WFTRA included a one-year extension in the increase in the basic exemption
for the alternative minimum tax (AMT) originally enacted under JGTRRA.
(EGTRRA also included a temporary increase in the AMT exemption which was
then superseded by the JGTRRA increases.) The AMT exemption for 2005 was set
at $58,000 for joint returns and $40,250 for unmarried taxpayers.
3 CRS calculation based on Joint Committee on Taxation, Estimated Budget Effects Of The
Conference Agreement For H.R. 2, The “Jobs And Growth Tax Relief Reconciliation Act
Of 2003,” JCX-55-03, May 22, 2003.
4 U.S. Congress, Joint Committee on Taxation, Estimated Revenue Effects of the Chairman’s
Amendment in the Nature of a Substitute to H.R. 4520, The “American Jobs Creation Act
of 2004,” Scheduled for Markup by the Committee on Ways and Means on June 14, 2004,
Fiscal Years 2004 - 2014, JCX-43-04, June 10, 2004.
5 For details see CRS Report RS21860, The Child Tax Credit, by Gregg Esenwein and
Maxim Shvedov.

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CRS-3
In total, the WFTRA provisions were estimated to cost $131.4 billion over the
FY2005-FY2014 time period.6
The Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222;
TIPRA), passed by Congress in May 2006, extended the dividend and capital gains
tax reductions through 2010. These reductions were enacted in 2003 and originally
scheduled to expire in 2008. The estimated cost of these extensions was $50.8
billion over the FY2006-FY2015 period.7
For 2006, TIPRA also increased the basic AMT exemption to $62,550 for joint
returns and to $42,500 for unmarried taxpayers. In addition, TIPRA extended
through 2006 the provision that allows taxpayers to apply their non-refundable tax
credits against their AMT tax liability. The combined cost of these AMT provisions
is $33.9 billion.8 These temporary increases in the basic exemption for the AMT and
changes in the treatment of non-refundable tax credits were once again enacted as a
means of mitigating the interaction between the reductions in the regular income tax
and the AMT. In 2007, the AMT exemption reverted to its pre-EGTRRA-law levels
of $45,000 for joint returns and $33,750 for unmarried taxpayers.
The Tax Increase Prevention Act of 2007 (P.L. 110-166; TIPA), passed by
Congress in December 2007, extended the AMT tax relief retroactively for one year
at a cost of $50.6 billion.9 TIPA set the 2007 AMT exemption levels at $66,250 for
joint returns and $44,350 for single returns. In addition, this bill allowed non-
refundable personal tax credits to offset AMT tax liability for 2007.
Additional broad tax reductions or extensions were enacted in the same time
frame as parts of the other acts: the Job Creation and Worker Assistance Act of
2002 (JCWAA; P.L. 107-147) and the Tax Relief and Health Care Act of 2006
(TRHCA; P.L. 109-432). JCWAA’s provisions modified depreciation rules at the
cost of $17.9 billion over FY2002-FY2012.10 TRHCA extended the sales tax
deductibility provision for tax years 2006 and 2007. The Joint Committee on
Taxation estimated that the two-year extension of this provision would reduce federal
revenues by approximately $5.5 billion.11
6 U.S. Congress, Joint Committee on Taxation, Estimated Revenue Effects Of The
Conference Agreement For H.R. 1308, The “Working Families Tax Relief Act Of 2004,”
JCX-60-04, September 23, 2004.
7 U.S. Congress, Joint Committee on Taxation, Estimated Revenue Effects Of The
Conference Agreement For The “Tax Increase Prevention And Reconciliation Act Of 2005,”
JCX-18-06, May 9, 2006.
8 Ibid., p. 2.
9 U.S. Congress, Joint Committee on Taxation, Estimated Revenue Effects of H.R. 4351, the
“Amt Relief Act of 2007,” Scheduled for Consideration by the House of Representatives on
December 12, 2007, JCX-114-07, Dec. 12, 2007.
10 U.S. Congress, Joint Committee on Taxation, Estimated Revenue Effects Of The “Job
Creation And Worker Assistance Act Of 2002,” JCX-13-02, March 6, 2002.
11 U.S. Congress, Joint Committee on Taxation, Estimated Revenue Effects Of The Revenue
(continued...)

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CRS-4
The phase-in and expiration schedules of the various tax provisions enacted
under the 2001 through 2007 tax acts are shown in the Appendix.
Recent Developments
On March 14, 2008, the Senate passed a budget resolution (S.Con.Res. 70). A
significant part of the bill was an amendment (S.Amdt. 4160) by Senator Max
Baucus that would provide more than $300 billion in tax cuts for the middle class,
homeowners, and active duty military personnel and pay for it with projected
surpluses from FY2012 and FY2013. The bill also includes an AMT patch.
In contrast, the corresponding House measure (H.Con.Res. 312), adopted on
March 13, 2008, only includes an AMT patch. Unlike in the Senate bill, the patch
is offset in the House bill.
Extending the Cuts Past 2010: Key Considerations
Proposals relating to the future of the 2001-2007 tax reductions range from their
early recision to unconditional permanent extension. Several aspects of this decision
play a key role in shaping the views of many policymakers. They include (1) general
desirability of providing tax relief, (2) the cost of the cuts in view of the budgetary
constraints, and (3) the distribution of the tax cuts’ benefits among different income
groups of taxpayers.
In addition, the extension of the tax cuts is intertwined with modifying the
AMT. In general, a taxpayer pays either the AMT or regular tax, whichever is
higher. Thus, absent congressional action, the AMT will “take back” most of the tax
relief granted through the regular income tax, as the AMT becomes higher than
ordinary tax for many taxpayers.12 Hence, Congress faces not only the issue of
whether or not to extend or make permanent the reductions in the regular income tax,
but it must face the issue of how to coordinate the changes in these two parallel tax
systems.13
Modifying the AMT is probably the most pressing individual income tax issue
currently facing Congress. It is estimated that, if the reductions in the individual
income tax are extended beyond 2010, the number of taxpayers subject to the AMT
11 (...continued)
Provisions Contained In H.R. 6408, The “Tax Relief And Health Care Act Of 2006,” As
Introduced In The House Of Representatives On December 7, 2006, JCX-51-06, Dec. 7,
2006.
12 For more information on the “take back” effect see CRS Report RS21817, The Alternative
Minimum Tax (AMT): Income Entry Points and “Take Back” Effects, by Steven Maguire.
13 See CRS Report RL34382, The Alternative Minimum Tax For Individuals: Legislative
Activity in the 110th Congress, by Steven Maguire and Jennifer Teefy.

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CRS-5
will increase from over 1 million in 2001 to about 26 million in 2008, and then to
almost 51 million in 2017.14
It is difficult to generalize about the economic effects of the 2001-2007 tax cut
provisions due to their diverse nature, but economic theory suggests that some of
them (for example, lower marginal tax rates) are likely to reduce economic
distortions — undesirable changes in behavior of economic agents resulting from
imposing a tax. Thus, policymakers will weigh the benefits of tax reduction
measures against their budgetary costs and other consequences. Ultimately, the
conclusion would depend on many factors: specifics of provisions, time horizon,
financing method, to name just a few. Detailed analysis of this issue, however, goes
beyond the scope of this paper.15 In addition, tax reductions might be attractive for
political or other reasons unrelated directly to economic performance.
Counterbalancing the desire to provide continued tax relief is the concern over
the current and projected size of the federal budget deficit. The revenue effects of
extending or making permanent the tax reductions would be substantial. Moreover,
once the costs of fixing the AMT are included, the revenue costs associated with
maintaining the current level of tax relief increase considerably.
For instance, Table 1 presents Congressional Budget Office (CBO) estimates
of the cost of extending the EGTRRA and JGTRRA tax reductions and reforming the
AMT.16 In addition to the direct costs of these policy options, the table also presents
associated debt service costs — indirect costs, which would arise if these policies are
deficit financed (that is, if there are no offsetting tax increases or spending
reductions). Due to strong interactive effects among various tax provisions and other
assumptions, these numbers should be treated as order-of-magnitude estimates.
According to Table 1, the estimated total cost of extending the EGTRRA and
JGTRRA tax cuts, reforming the AMT, and servicing related debt would be $4.3
trillion over the FY2009-FY2018 period, but only $1.3 trillion over the first five
years of this period. The projected cost of the second five years would be almost 2½
times that of the first five.
14 U.S. Congress, Joint Committee on Taxation, Present Law and Background Relating to
the Individual Alternative Minimum Tax, JCX-38-07, June 25, 2007, pp. 11, 17.
15 For more information see CRS Report RL32502, What Effects Did the 2001 to 2003 Tax
Cuts Have on the Economy? by Marc Labonte.
16 Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2008 to
2018, Jan. 2008, p. 12, and associated data contained in Backup Data for Table E-1: CBO’s
Year-by-Year Forecast and Projections for Calendar Years 2008 to 2018, Excel
spreadsheet, downloaded on March 18, 2008, from [http://cbo.gov/ftpdocs/89xx/doc8917/
8917_TableC-1.xls].

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CRS-6
Table 1. Estimates Illustrating the Revenue Costs Associated
with Extending EGTRRA and JGTRRA and Reforming the AMT,
FY2009-FY2013 and FY2009-FY2018.
(dollar amounts in billions of dollars)
Policy Alternative
2009-2013
2009-2018
Extend EGTRRA and JGTRRA (excluding
692
2,277
AMT-related provisions)
Debt service
46
444
Reform the AMT
313
724
Debt service
45
189
Interaction between the above provisions
148
598
Debt service
9
105
Total direct cost
1,153
3,599
Total cost
1,253
4,337
Source: Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2008 to
2018, and CRS calculations.
Better understanding of the cost-increase dynamics is helpful in assessing the
long-term revenue implications of extending the tax cuts. Table 2 uses the data for
FY2012, when most of the transitionary effects would become negligible, through
FY2018 to estimate annual cost relative to gross domestic product (GDP). It
demonstrates that the projected direct cost grows by over 20% over this six-year
span. The total cost, including the debt service cost, grows by almost 50% over the
same time period. Thus, it appears that if the tax cuts were extended, their cost
would likely grow rapidly over time both in real and nominal terms.
Table 2. Annual Projected Cost of Extending the Tax Cuts
Including the AMT Relief, as a Share of GDP, FY2012-FY2018
(dollar amounts in billions of dollars)
2012
2013
2014
2015
2016
2017
Nominal GDP
17,453
18,243
19,062
19,896
20,758
21,654
Total cost, including debt service
386
449
497
552
611
676
above, as a share of GDP
2.2%
2.5%
2.6%
2.8%
2.9%
3.1%
Total cost, excluding debt service
357
399
426
455
486
520
above, as a share of GDP
2.0%
2.2%
2.2%
2.3%
2.3%
2.4%
Source: Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2008 to
2018, and CRS calculations.
Recent CBO analysis of the effects of extending the tax cuts on the long-term
budget picture using a 75-year time horizon confirms that extending the tax cuts

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CRS-7
would represent a major long-term budgetary commitment.17 CBO conducted the
analysis in terms of the fiscal gap — “the immediate and permanent change in
spending or revenues that would reduce the government’s projected debt in 2082 to
its current level as a share of” GDP.18 Under the “extended-baseline” scenario, which
closely adheres to current law and thus assumes expiration of the tax cuts in 2010,
the fiscal gap would be 1.7% of GDP.
CBO analysis indicates that extending the individual income tax portion of the
2001-2007 tax cuts without providing AMT relief past 2007 would result in 0.7%
additional fiscal gap, yielding the total fiscal gap of 2.4% of GDP. Assuming AMT
relief measures are extended at 2007 levels and then indexed for inflation, the
reduction in revenue would double the incremental fiscal gap to 1.4%, leading to
3.1% total. Finally, adding the extension of the estate and gift tax reductions would
add 0.7% more to that total.
Some proponents of extending the tax cuts believe that incremental economic
activity generated by lowering taxes would largely offset the cuts’ cost. While many
of their opponents might agree that some positive revenue feedback effect is likely,
they believe that its magnitude is considerably smaller than the direct cost of the tax
relief. In addition, theory suggests that revenue feedback effects depend on the
design of the measures, implying that feedback for some of the provisions of
EGTRRA and follow-up legislation would be larger than for others.19
Partially extending the cuts might represent a compromise that would continue
to provide some tax relief, while keeping its costs lower. Some proposals limit tax
reductions by directly setting income limits for their recipients. Other proposals try
to extend only those tax reductions that benefit taxpayers at the target income range.
Table 3 reproduces CBO estimates of extending the tax reductions by individual
provision or a distinct group of provisions.20 The estimates provide the general
magnitude of the cost and relative size of extending each provision. However,
because of the interaction between the provisions, extending all of the tax provisions
would produce a greater revenue loss than the revenue loss indicated by summing up
the revenue costs of all the extended provisions.
Finally, there is always an option of providing tax relief through a different set
of policies, more loosely or not at all related to the 2001 through 2007 tax cuts. For
17 Congressional Budget Office, The Long-Term Budgetary Effects of Three Specified Policy
Scenarios, Letter to the Honorable John M. Spratt Jr., March 14, 2008.
18 Ibid., p. 2.
19 For more information on the revenue feedback effects and recent studies on the subject,
see CRS Report RL33672, Revenue Feedback from the 2001-2004 Tax Cuts, by Jane G.
Gravelle.
20 Congressional Budget Office, Updated Estimates for Table 4-9, “Effects of Extending Tax
Provisions Scheduled to Expire Before 2018,” in The Budget and Economic Outlook: Fiscal
Years 2008 to 2018, Jan. 2008, pp. 101-106, downloaded on March 21, 2008, from
[https://www.cbo.gov/ftpdocs/90xx/doc9040/ExpiringProvisions.pdf].

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CRS-8
example, the reductions of some of the marginal rates might be extended, while
others let expire, or modified for years after 2010. A large number of possible
alternatives are listed in the CBO Budget Options report,21 as well as in other
publications issued by various government and private entities.
21 Congressional Budget Office, The Budget Options, Feb. 2007, p. 922.

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CRS-9
Table 3. Estimated Revenue Effects of Extending Certain Major Expiring Tax Provisions of 2001 Through 2007 Acts
(dollar amounts in billions of dollars)
2009-
2009-
Tax Provision
Expiration
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2013
2018
Deduction of state and local
2007
-0.4
-2.4
-2.6
-2.7
-2.9
-2.9
-3.0
-3.0
-3.1
-3.1
-3.2
-13.5
-28.9
sales taxes
Increased AMT exemption
2007
-5.4
-72.7
-70.0
-64.1
-36.3
-42.0
-48.9
-56.7
-64.9
-73.5
-83.7
-285.2
-612.8
amount
Personal credits under the AMT
2007
-0.1
-0.4
-0.5
-0.5
-0.2
-0.2
-0.3
-0.4
-0.5
-0.6
-0.7
-1.9
-4.3
Child credit at $1,000
2010
n.a.
n.a.
n.a.
-7.1
-35.4
-35.6
-36.0
-36.4
-36.7
-36.9
-37.0
-78.1
-260.9
Earned income credit
2010
n.a. n.a. n.a. 0.1
-4.0
-4.0
-4.0
-4.0
-4.1
-4.2
-4.2
-7.9
-28.3
modification
Estate and gift tax changes
2010
n.a.
-1.4
-2.3
-30.5
-69.4
-77.0
-84.2
-90.7
-97.4
-104.9 -112.0
-180.6
-669.8
Expanded 10% bracket
2010
n.a.
n.a.
n.a.
-31.4
-44.9
-44.7
-44.1
-43.4
-43
-42.6
-42.1
-121
-336.2
Income tax rates of 25%-35%
2010
n.a.
n.a.
n.a.
-44.3
-65.7
-68.2
-71.0
-74.5
-78.3
-82.4
-86.6
-178.2
-571.0
Itemized deduction and personal
2010
n.a. n.a. n.a. -7.2
-14.9
-15.9
-16.9
-18.0
-19.2
-20.4
-21.8
-38.0
-134.2
exemption phaseout
Joint filers’ 15% bracket and
2010
n.a. n.a. n.a. -5.6
-7.9
-7.4
-6.9
-6.5
-6.3
-6.0
-5.7
-20.9
-52.3
standard deduction
Other provisions of EGTRRA
2010
n.a. n.a. n.a. -0.3
-1.3
-1.3
-1.4
-1.4
-1.5
-1.4
-1.5
-2.9
-10.2
Reduced tax rates on capital
2010
n.a. n.a. -2.3
-12.3
2.2
-14.7
-14.6
-14.7
-14.8
-15.1
-15.4
-27.1
-101.5
gains
Reduced tax rates on dividends
2010
n.a.
0.3
0.8
-5.4
-22.3
-26.2
-27.8
-29.7
-31.2
-32.8
-34.4
-52.8
-208.8
Interaction from extending all
provisions togethera
n.a.
0.0
0.0
0.0
-15.2
-52.0
-56.6
-60.5
-63.8
-66.5
-68.5
-69.8
-123.8
-453.0
Source: Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2008 to 2018.
a. “Interaction from extending all provisions together” accounts for all provisions expiring before 2018, including the ones not listed in Table 3.

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CRS-10
One of the key considerations in deciding how to proceed might be the
distributional effects of the enacted measures. Table 4 presents CBO data on the
effective individual income tax rates in 2000-2005.22 By 2005 most of the tax
reductions were phased in, thus the analysis may serve as a reasonably close
approximation to the effects of the fully phased-in tax cuts. The tax cuts were the
key, although not the only, factor determining the distribution of the tax burden over
the time span shown.
Examination of Table 4 shows that the effective tax rate for all taxpayers fell
by 2.8 percentage points, from 11.8% to 9%. However, the gains are distributed
unevenly among taxpayers belonging to different quintiles — groups of one-fifth of
all households, arranged by income. Whereas the lowest quintile received a 1.9
percentage point cut, the top quintile’s cut was 3.4 percentage points. None of the
bottom four quintiles received a cut exceeding 2.5 percentage points, but the
taxpayers in the top 1% received a reduction of 4.8 percentage points. Expanding the
analysis to include the reductions in the estate tax would likely exacerbate the
difference.
Table 4. Effective Individual Income Tax Rate for All
Households, by Comprehensive Household Income Quintile,
2000-2005
(percentage points)
Lowest
Second
Middle
Fourth
Highest
All
Top
Top
Top
Year
Quintile
Quintile
Quintile
Quintile
Quintile
Quintiles
10%
5%
1%
2000
-4.6
1.5
5.0
8.1
17.5
11.8
19.7
21.6 24.2
2001
-5.6
0.3
3.9
7.1
16.3
10.3
18.7
20.8 24.1
2002
-6.0
-0.2
3.6
6.7
15.5
9.7
17.9
20.0 23.7
2003
-6.0
-1.1
2.8
5.9
13.7
8.4
15.8
17.7 20.4
2004
-6.2
-0.9
3.0
5.9
13.9
8.7
15.9
17.6 19.7
2005
-6.5
-1.0
3.0
6.0
14.1
9.0
16.0
17.6 19.4
Change from
2000 to 2005
-1.9
-2.5
-2.0
-2.1
-3.4
-2.8
-3.7
-4.0
-4.8
Source: Congressional Budget Office, Historical Effective Federal Tax Rates: 1979 to 2005, and CRS
calculations.
Depending on the policymaker’s view, such a distribution might or might not
be desirable. At the same time, it is possible to make the cuts more affordable and
more evenly spread across taxpayers at all income levels, because the budgetary cost
of a single percentage point reduction in taxes for the highest-income taxpayers is
much higher than a single-point reduction for the lower-income taxpayers. Detailed
discussion of the trade-off involved goes beyond the scope of this report.23
22 Congressional Budget Office, Historical Effective Federal Tax Rates: 1979 to 2005,
December 2007, Data Files, Appendix: Detailed Tables for 1979 to 2005,
Appendix_tables_toc.xls, downloaded on March 24, 2008, from [http://www.cbo.gov/
ftpdoc.cfm?index=8885&type=2].
23 For more information see CRS Report RL32693, Distribution of the Tax Burden Across
Individuals: An Overview, by Jane G. Gravelle and Maxim Shvedov.

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CRS-11
Legislative Initiatives in the 110th Congress
To date, a number of bills extending or curtailing all or part of the tax reductions
enacted in 2001 through 2007 have been introduced in the 110th Congress. Due to
the large number of separate provisions and various approaches to their modification,
the list focuses on the measures that extend or curtail the key tax relief provisions of
EGTRRA and the follow-up legislation, rather than those that would modify the
respective parts of the tax code in some new way. For example, bills increasing the
AMT deduction are listed, but bills repealing the AMT completely are not.
House Bills
! H.R. 60. Introduced January 4, 2007, by Representative Brian
Baird. This bill would make the deduction for state and local sales
taxes permanent.
! H.R. 87. Introduced January 4, 2007, by Representative Judy
Biggert. This bill would extend and broaden certain educational
provisions.
! H.R. 163. Introduced January 4, 2007, by Representative Bobby
Jindal. This bill would make the marriage penalty tax relief
provisions permanent.
! H.R. 273. Introduced January 5, 2007, by Representative Dave
Camp. This bill would make the expansion of the adoption tax
credit and adoption assistance programs permanent.
! H.R. 411. Introduced January 11, 2007, by Representative Mario
Diaz-Balart. This bill would make the state sales tax deduction, the
increase in the child tax credit, the repeal of the estate tax, and the
change in the deduction for higher education expenses permanent.
! H.R. 471. Introduced January 12, 2007, by Representative Joe
Wilson. This bill would make the expansion of the adoption tax
credit and the adoption assistance programs permanent.
! H.R. 686. Introduced January 24, 2007, by Representative Earl
Pomeroy. This bill would make permanent the tax deduction for
qualified tuition and related expenses.
! H.R. 834. Introduced February 6, 2007, by Representative Jerry
Weller. This bill would make the marriage tax penalty relief
provisions permanent.
! H.R. 1074. Introduced February 15, 2007, by Representative Tim
Ryan. This bill would make, among other things, modifications
made by EGTRRA to the adoption credit permanent.
! H.R. 1112. Introduced February 16, 2007, by Representative
Thomas Reynolds. This bill would provide AMT relief.
! H.R. 1406. Introduced March 8, 2007, by Representative Brad
Ellsworth. This bill would make an increased child tax credit
permanent.
! H.R. 1407. Introduced March 8, 2007, by Representative Phil
English. This bill would repeal EGTRRA sunset applicability to
certain education provisions.

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CRS-12
! H.R. 1421. Introduced March 8, 2007, by Representative Lee Terry.
Among other things, this bill would eliminate the marriage penalty
in all income tax brackets and make permanent increases in the child
tax credit.
! H.R. 1437. Introduced March 9, 2007, by Representative Dan
Burton. This bill, among other education-related provisions, would
make the deduction for higher education expenses permanent.
! H.R. 1586. Introduced March 20, 2007, by Representative Mac
Thornberry. This bill would repeal the federal estate, gift, and
generation-skipping transfer taxes.
! H.Con.Res. 99. Introduced March 23, 2007, by Representative John
Spratt. This resolution, among other things, declares the policy on
middle-income tax relief, including the immediate AMT relief and
extension of select tax cuts.
! H.Con.Res. 109. Introduced March 29, 2007, by Representative
Paul Ryan. This resolution, among other things, calls for an
extension of the tax cuts enacted in 2001 and 2003.
! H.R. 1871. Introduced April 14, 2007, by Representative Kirsten
Gillibrand. This bill would extend, with modifications, the
provisions of EGTRRA related to the dependent care tax credit.
! H.R. 1923. Introduced April 18, 2007, by Representative Kevin
McCarthy. This bill would increase and index the basic exemption
for the AMT and increase the point at which the basic exemption is
phased out.
! H.R. 1942. Introduced April 19, 2007, by Representative Scott
Garrett. Among other things, this bill would increase and index the
basic AMT exemption.
! H.R. 2222. Introduced May 8, 2007, by Representative Bill
Pascrell. This bill would increase and make permanent the marriage
penalty relief for the earned income tax credit (EITC).
! H.R. 2312. Introduced May 15, 2007, by Representative Eric
Cantor. This bill would make the lower tax rates on capital gains
and dividends permanent.
! H.R. 2380. Introduced May 17, 2007, by Representative Kenny
Hulshof. This bill would permanently repeal the estate and
generation-skipping transfer taxes.
! H.R. 2588. Introduced June 6, 2007, by Representative Thelma
Drake. This bill would extend certain educational provisions.
! H.R. 2734. Introduced June 14, 2007, by Representative Timothy
Walberg. This bill would extend many of the provisions first
enacted by EGTRRA, JGTRRA, and other bills.
! H.R. 2902. Introduced June 28, 2007, by Representative Thomas
Allen. This bill would make the child credit permanent, expand the
dependent care credit, make changes to educational provisions, and
increase the AMT deduction.
! H.R. 3135. Introduced July 23, 2007, by Representative Dave
Weldon. This bill would make permanent the increase in the child
tax credit and provide for an annual inflation adjustment to child tax
credit amounts, beginning in 2007.

---

CRS-13
! H.R. 3170. Introduced July 24, 2007, by Representative Harry
Mitchell. This bill, among other things, would make permanent the
reduction in capital gains tax rates enacted by JGTRRA.
! H.R. 3192. Introduced July 26, 2007, by Representative Lincoln
Davis. This bill would make permanent modifications to the
adoption credit.
! H.R. 3388. Introduced August 3, 2007, by Representative Kirsten
Gillibrand. This bill would extend the deduction for higher
education expenses.
! H.R. 3418. Introduced August 3, 2007, by Representative Sander
Levin. This bill would make the exclusion of employer-provided
educational assistance permanent.
! H.R. 3475. Introduced September 5, 2007, by Representative
Michael Capuano. This bill, among other things, would repeal some
of the EGTRRA provisions related to the estate tax.
! H.R. 3590. Introduced September 19, 2007, by Representative Nick
Lampson. This bill would extend AMT relief for a year.
! H.R. 3592. Introduced on September 19, 2007, by Representative
Nick Lampson. This bill would make permanent the deduction for
state and local sales taxes
! H.R. 3758. Introduced October 4, 2007, by Representative John
Hall. This bill would make AMT relief permanent.
! H.R. 3818. Introduced October 10, 2007, by Representative Paul
Ryan. This bill, among other things, would make the lower tax rates
on capital gains and dividends permanent.
! H.R. 3831. Introduced October 15, 2007, by Representative Phil
English. This bill would make permanent amendments to the child
tax credit made by EGTRRA relating to offset against the alternative
minimum tax, refundability, and inflation adjustment, along with
increasing the credit amount.
! H.R. 3906. Introduced October 18, 2007, by Representative
Christopher Murphy. This bill, among other things, would make
permanent the tax deduction for state and local sales taxes and the
tax deduction for qualified tuition and related expenses as well as
EGTRRA provisions that increased dollar limitations on the tax
credit for dependent care expenses.
! H.R. 3970. Introduced October 25, 2007, by Representative Charles
Rangel. Along with numerous other changes to the tax code, this
bill would extend AMT relief provisions.
! H.R. 3996. Introduced October 30, 2007, by Representative Charles
Rangel. This bill became P.L. 110-166, extending AMT relief
provisions. It is described elsewhere in this report.
! H.R. 4039. Introduced November 1, 2007, by Representative John
Barrow. This bill would extend, with modifications, the provisions
of EGTRRA related to the dependent care tax credit.
! H.R. 4086. Introduced November 6, 2007, by Representative Ron
Klein. Among other things, this bill would extend the tax deduction
for state and local general sales taxes.

---

CRS-14
! H.R. 4172. Introduced November 14, 2007, by Representative
Dennis Moore. This bill, among other things, would restore the tax
on estates and generation-skipping transfers.
! H.R. 4235. Introduced November 15, 2007, by Representative Nita
Lowey. This bill, among other things, would repeal some of the
EGTRRA provisions related to the estate tax.
! H.R. 4242. Introduced November 15, 2007, by Representative Earl
Pomeroy. This bill, among other things, would repeal some of the
EGTRRA provisions related to the estate tax.
! H.R. 4351. Introduced December 11, 2007, by Representative
Charles Rangel. This bill, among other things, would extend AMT
relief by one year.
! H.R. 5031. Introduced January 17, 2008, by Representative Thomas
Reynolds. This bill would increase the exemption from the AMT in
2008 and extend through 2008 the allowance of certain non-
refundable tax credits against AMT liability.
! H.R. 5105. Introduced January 23, 2008, by Representative David
Dreier. This bill would, among other things, repeal the sunset
provisions of EGTRRA and JGTRRA, repeal the estate and gift tax,
and adjust the increased AMT exemption amounts for inflation after
2007 and make such exemptions permanent.
! H.R. 5242. Introduced February 6, 2008, by Representative Bill
Young. This bill would make permanent the deduction of state and
local general sales taxes.
! H.Con.Res. 312. Introduced March 7, 2008, by Representative John
Spratt. This FY2009 budget resolution, approved by the House on
March 13, 2008, did not explicitly assume extension of all of the tax
cuts enacted in 2001 through 2007, but did provide an AMT relief
extension for one year.
! H.R. 5655. Introduced March 14, 2008, by Representative Anthony
Weiner. This bill would extend some of provisions of EGTRRA
related to the dependent care tax credit.
Senate Bills
! S. 102. Introduced January 4, 2007, by Senator John Kerry. This
bill would provide AMT relief and repeal the provisions lowering
the capital gains rates.
! S. 141. Introduced January 4, 2007, by Senator Maria Cantwell.
This bill would extend and broaden certain educational provisions.
! S. 143. Introduced January 4, 2007, by Senator Maria Cantwell.
This bill would make the deduction of state and local sales taxes
permanent.
! S. 157. Introduced January 4, 2007, by Senator Maria Cantwell.
This bill would extend and broaden provisions related to Coverdell
education savings account.
! S. 180. Introduced January 4, 2007, by Senator Kay Bailey
Hutchison. This bill would make the deduction for state and local
sales taxes permanent.

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CRS-15
! S. 181. Introduced January 4, 2007, by Senator Kay Bailey
Hutchison. This bill would make the marriage tax penalty relief
provisions permanent.
! S. 359. Introduced January 22, 2007, by Senator Edward Kennedy.
This bill, among other education-related provisions, would make the
deduction for higher education expenses permanent.
! S. 454. Introduced January 31, 2007, by Senator Susan Collins.
This bill would repeal the EGTRRA sunset for certain education
provisions.
! S. 502. Introduced February 6, 2007, by Senator Mike Crapo. This
bill would make the lower tax rates on capital gains and dividends
permanent.
! S. 554. Introduced February 12, 2007, by Senator Byron Dorgan.
This bill would repeal the reduction in marginal income tax and
capital gains tax rates, repeal the phase-out of limits on personal
exemptions and itemized deductions for taxpayers with incomes
over $1 million.
! S. 561. Introduced February 13, 2007, by Senator Jim Bunning.
This bill would make modifications made by EGTRRA to the
adoption tax credit permanent.
! S. 614. Introduced February 15 , 2007, by Senator Charles Schumer.
Among other things this bill would make an increased child credit
permanent, expand the dependent care credit, make changes to
educational provisions, and increase the AMT deduction.
! S. 816. Introduced March 8, 2007, by Senator Sam Brownback.
Among other things, this bill would eliminate the marriage penalty
in all income tax brackets and make permanent increases in the child
tax credit.
! S. 818. Introduced March 8, 2007, by Senator Bernard Sanders.
This bill would rescind EGTRRA and JGTRRA tax reductions after
2008 for taxpayers with gross incomes over $400,000.
! S. 851. Introduced March 13, 2007, by Senator Charles Schumer.
Among other things this bill would repeal the deduction for qualified
tuition and related expenses.
! S.Con.Res. 21. Introduced March 16, 2007, by Senator Kent
Conrad. This bill addresses certain issues related to extending tax
relief.
! S. 14. Introduced April 17, 2007, by Senator Jon Kyl. This bill
would repeal the sunset provisions of EGTRRA, make cuts to the
capital gains tax rates permanent, repeal the AMT, make changes to
the expensing rules, and make other changes.
! S. 1333. Introduced May 8, 2007, by Senator John Kerry. This bill,
among other things, would make permanent the reduction in the
marriage penalty applicable to the EITC.
! S. 2185. Introduced October 17, 2007, by Senator Lindsey Graham.
This bill would make permanent the reductions in individual income
tax rates enacted by EGTRRA.
! S. 2233. Introduced October 25, 2007, by Senator Kay Bailey
Hutchison. This bill would make permanent the tax deduction for
state and local sales taxes.

---

CRS-16
! S. 2318. Introduced November 7, 2007, by Senator John Ensign.
This bill, among other things, would make permanent the reductions
in income tax rates enacted by EGTRRA and capital gains and
dividends tax rates enacted by JGTRRA.
! S. 2407. Introduced December 4, 2007, by Senator Robert Casey.
This bill would make EGTRRA modifications to the adoption tax
credit permanent.
! S. 2416. Introduced December 5, 2007, by Senator Jim DeMint.
This bill would, among other things, make permanent the capital
gains and dividends rate reductions.
! S. 2547. Introduced January 23, 2008, by Senator Christopher Bond.
This bill would, among other things, repeal the sunset provisions of
EGTRRA and JGTRRA, repeal the estate and gift tax, and adjust the
increased alternative minimum tax (AMT) exemption amounts for
inflation after 2007 and make such exemptions permanent.
! S. 2648. Introduced February 14, 2008, by Senator Charles
Schumer. This bill, among other things, would extend some
EGTRRA provisions related to EITC.
! S. 12. Introduced February 29, 2008, by Senator Mitch McConnell.
This bill would, among other things, repeal the sunset provisions of
EGTRRA and JGTRRA.
! S.Con.Res. 70. Introduced March 7, 2008, by Senator Kent Conrad.
In addition to the AMT patch, this FY2009 budget resolution,
approved by the Senate on March 14, 2008, included the amendment
S.Amdt. 4160 that would extend some of the tax cuts for middle
income taxpayers.

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CRS-17
Appendix. Phase-in and Expiration Schedule of Select Major Tax Cut Provisions Under
EGTRRA, JGTRRA, WFTRA, TIPRA, and Other Relevant Acts, 2001-2011
Provision
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Tax Rates and Brackets
EGTRRA: $12,000 /
JGTRRA: $14,000 /
Create 10 percent tax
WFTRA: $14,000 / $7,000 for couples
EGTRRA: $14,000 / $7,000 for
Bracket
$6,000 brackets for
$7,000 for couples /
bracket
/ singles.
couples / singles. Index in 2009.
expires.
couples / singles.
singles. Index in 2004.
EGTRRA:
EGTRRA:
JGTRRA:
EGTRRA:
Reverts to:
39.1%
38.6%
35%
35%
39.6%
Reduce tax rates in top
35.5%
35%
33%
33%
36%
four tax brackets
30.5%
30%
28%
28%
31%
27.5%
27%
25%
25%
28%
Reduce tax rates on
Up to 20%
JGTRRA:
capital gains and
No change.
JGTRRA: 15% / 5% rate structure.
TIPRA: 15% / 0%
or regular
15% / 0%
dividends
tax rates.
Limits on Itemized Deductions and Personal Exemptions
Reduce or eliminate
EGTRRA:
limits on itemized
EGTRRA: Reduce limits
EGTRRA: Reduce limits
Limits
No change.
Repeal
deductions and personal
by one-third.
by two-thirds.
reinstated.
limits.
exemptions
Alternative Minimum Tax
Increase exemption for
WFTRA:
TIPRA:
TIPA:
the alternative
EGTRRA: Increase to
JGTRRA: $58,000 /
Reverts to $45,000 / $33,750 couple / single
$58,000 /
$65,550 /
$66,250 /
minimum tax for
$49,000 / $35,750.
$40,250
exemption structure.
$40,250
$42,500
$44,350
couples/singles
Deduction for State and Local General Sales Taxes
Allow deduction for
AJCA: allow the
TRHCA: extend the
No change.
Deduction expires.
sales taxes
deduction.
deduction.

---

CRS-18
Provision
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Bonus Depreciation
Increase first-year
JCWAA: Additional 30%
JGTRRA: Additional
Reverts to pre-2001 law.
depreciation allowance
allowance.
50% allowance.
Children and Married Couples
EGTRRA:
EGTRRA: Increase credit
Reverts to
Increase child tax credit
JGTRRA: $1000 credit.
WFTRA: $1000 credit.
$1000
to $600.
$500 credit.
credit.
EGTRRA: Expanded eligibility,
WFTRA:
Expand refundability of
Limited
Refundable up to 10% over indexed
Refundable
EGTRRA: Expanded eligibility, refundable up to 15% over indexed threshold.
child tax credit
eligibility.
threshold.
up to 15%.
Reverts to
Increase dependent care No change.
EGTRRA: Maximum credit of $3,000 for one child and $6,000 for two or more children.
$2400 /
credit
$4800.
Increase standard
JGTRRA: Deduction for
EGTRRA: Deduction for
WFTRA: Deduction for couples is 200% of the
Reverts to
deduction for married
No change.
couples is 200% of the
couples is 200% of the
deduction for singles.
167%.
couples
deduction for singles.
deduction for singles.
JGTRRA: Maximum
Expand 15 percent
WFTRA: Maximum income for
EGTRRA: Maximum income for
income for couples is
Reverts to
bracket for married
No change.
couples is 200% of the maximum for
couples is 200% of the maximum for
200% of the maximum
167%.
couples
singles.
singles.
for singles.
EITC phase-out income
EGTRRA: Increase by $3,000. Index
No
No change.
EGTRRA: Increase by $1,000.
EGTRRA: Increase by $2,000.
for married couples
in 2009.
increase.
Estate Tax
EGTRRA:
EGTRRA:
EGTRRA:
EGTRRA:
EGTRRA:
EGTRRA:
EGTRRA:
Changes to
Change exemption level
$1.5
EGTRRA: $2 million /
$3.5
No change.
$1 million / $1 million / $1.5 million
$2 million /
Estate tax
$1 million /
/ top rate structure
million /
45%
million /
50%
49%
/ 48%
46%
repealed.
55%.
47%
45%
Source: CRS adaptation of Congressional Budget Office and Joint Committee on Taxation tables and publications
Note: EGTRRA — Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16, 2001, introduced as H.R. 1836); JCWAA — Job Creation and Worker Assistance Act
of 2002 (P.L. 107-147, 2002, introduced as H.R. 3090); JGTRRA — Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27, 2003, introduced as H.R. 2); WFTRA —
Working Families Tax Relief Act of 2004 (P.L. 108-311, 2004, introduced as H.R. 1308); AJCA — American Jobs Creation Act of 2004 (P.L. 108-357, 2004, introduced as H.R. 4520);
TIPRA — Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222, 2006, introduced as H.R. 4297); TRHCA — The Tax Relief and Health Care Act of 2006 (P.L.
109-432, 2006, introduced as H.R. 6111); TIPA — Tax Increase Prevention Act of 2007 (P.L. 110-166, 2007, introduced as H.R. 3996).

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