Expiration of the 2001 Through 2006 Tax Cuts
Order Code RL34090
Expiration of the 2001 Through 2006 Tax Cuts
July 19, 2007
Gregg A. Esenwein
Specialist in Public Finance
Government and Finance Division
Maxim Shvedov
Analyst in Public Sector Economics
Government and Finance Division
Expiration of the 2001 Through 2006 Tax Cuts
Summary
The Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16)
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. 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 (P.L. 108-27) accelerated the implementation of certain tax reductions
originally enacted in the 2001 act.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 tax 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 contained a one-year patch for the alternative
minimum tax.
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) and the Tax Relief
and Health Care Act of 2006 (P.L. 109-432).
Since all of the tax reductions expire at some point in the not-too-distant future,
Congress faces the issue of whether to extend or make the reductions permanent.
This report will be updated to reflect legislative activity.
Contents
Tax Legislation: 2001 Through 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Extending the Cuts Past 2010: Key Considerations . . . . . . . . . . . . . . . . . . . . . . . . 3
Legislative Initiatives in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
House Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Senate Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Legislative Initiatives in the 109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
House Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Senate Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Appendix. Phase-in and Expiration Schedule of Select Major
Tax Cut Provisions Under EGTRRA, JCWAA, JGTRRA,
WFTRA, AJCA, TIPRA, and TRHCA, 2001-2011 . . . . . . . . . . . . . . . . . . 12
List of Tables
Table 1. Order of Magnitude Estimates of the Revenue Costs Associated
with Extension of EGTRRA/JGTRRA and Reform of the AMT . . . . . . . . . 5
Table 2. Estimated Revenue Effects of Extending Certain Expiring
Tax Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Expiration of the 2001 Through 2006
Tax Cuts
Tax Legislation: 2001 Through 2006
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, increased the alternative minimum tax (AMT) exemption, and changed other
elements of the tax system. These changes were scheduled to phase in over several
years at an estimated total cost of approximately $1.35 trillion over the FY2001-
FY2011 period.1
All of the changes in EGTRRA are 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 originally enacted in 2001, including marriage tax penalty relief,
expansion of the 10% tax bracket, and increases in the child tax credit (the child tax
credit was increased to $1,000 per qualifying child). The 2003 act also included an
increase in the AMT exemption. 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 gain income to 15% (5% for taxpayers in the 10% 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
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 97-86, 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.
CRS-2
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, EGTRRA provisions will
maintain the level of the standard deduction and the 15% tax bracket for joint returns.
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
contained a provision 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.
In total, the WFTRA provisions were estimated to cost $131.4 billion over the
FY2005-FY2014 time period.6
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 See CRS Report RS21860, The Child Tax Credit, by Gregg Esenwein.
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.
CRS-3
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 nonrefundable 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 nonrefundable 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.
Additional tax reductions or extensions were enacted in the same time frame
as parts of other acts: 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-FY2012.9 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.10
The phase-in and expiration schedules of the various tax provisions enacted
under the 2001 through 2006 tax acts are shown in the appendix.
Extending the Cuts Past 2010: Key Considerations
Proposals relating to the future of the 2001-2006 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.
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 The “Job
Creation And Worker Assistance Act Of 2002,” JCX-13-02, March 6, 2002.
10 U.S. Congress, Joint Committee on Taxation, Estimated Revenue Effects Of The Revenue
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, December
7, 2006.
CRS-4
In addition, the extension of the tax cuts is intertwined with modifying the
AMT. Absent congressional action, the AMT will “take back” most of the tax relief
granted through the regular income tax.11 Hence, Congress faces not only the issue
of whether or not to extend or make permanent the reductions in the regular income
tax, but more urgently, it must face the issue of how to coordinate the changes in
these two parallel tax systems.12
Modifying the AMT is probably the most pressing individual income tax issue
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 will increase
from about 1.8 million in 2001 to 24 million in 2007, and then to over 53 million in
2017.13
Counterbalancing congressional 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 2001 and 2003 tax reductions are
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) order of
magnitude estimates of the cost of extending the EGTRRA/JGTRRA tax reductions
and reforming the AMT. It should be noted that if these policy options are deficit
financed (that is, there are no offsetting tax increases or spending reductions), then
there will be additional revenue losses associated with servicing the increase in the
public debt that these policy options engender. The table presents estimates of both
the direct and indirect costs of these tax policy options.
Table 1 also shows a rough estimate of the total cost (both direct and indirect)
of extending the EGTRRA/JGTRRA tax cuts and reforming the AMT will be $3.5
trillion over the FY2008-FY2017 period. As an alternative measure, an order of
magnitude estimate indicates that the out year per annum cost (including debt
servicing) of these tax policy options would be slightly larger than 2% of gross
domestic product (GDP). The cost would increase as a percentage of GDP as time
progresses.
Partially extending the cuts might represent a potential 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.
11 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 Gregg Esenwein.
12 See CRS Report RS22563, The Alternative Minimum Tax for Individuals: Legislative
Initiatives in the 110th Congress, by Gregg Esenwein.
13 For more information see CRS Report RL30149, The Alternative Minimum Tax for
Individuals, by Gregg Esenwein.
CRS-5
Table 1. Order of Magnitude Estimates of the Revenue
Costs Associated with Extension of EGTRRA/JGTRRA
and Reform of the AMT
(billions of dollars)
FY2008 through FY2017
Extend EGTRRA/JGTRRA:
$1,937
Reform the AMT:
$1,041
(Extension of increased AMT
exemption and indexation of AMT
exemption and tax brackets. Assumes
tax cuts extended)
Debt Service:
$549
Total:
$3,527
Source: Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years 2008 to
2017, Table 1.5, Jan. 2007.
Table 2 reproduces CBO estimates of extending the tax reductions by individual
provision or a distinct group of provisions.14 The estimates provide 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 the
revenue costs of all the extended provisions.
14 U.S. Congress, Congressional Budget Office, The Budget and Economic Outlook: Fiscal
Years 2008 to 2017, January 2007, Table 4-10, p. 102.
CRS-6
Table 2. Estimated Revenue Effects of Extending Certain Expiring Tax Provisions
(billions of dollars-fiscal years)
Total,
Total,
Expiration
Tax Provision
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2008-
2008-
Date
2012
2017
Increased AMT
December
-8.8
-55.3
-52.8
-60.7
-50.5
-30.5
-35.5
-41.4
-48.0
-54.8
-62.5
-249.7
-492.0
Exemption
31, 2006
Treatment of
December
Nonrefundable Personal
-0.1
-0.5
-0.5
-0.7
-0.7
-0.5
-0.7
-0.8
-1.1
-1.3
-1.6
-3.0
-8.5
31, 2006
Credits Under the AMT
Deduction of State and
December
n.a.
-0.3
-1.8
-2.1
-2.4
-3.8
-3.9
-3.9
-3.9
-4.0
-4.0
-10.4
-30.1
Local Sales Taxes
31, 2007
Estate and Gift Tax
December
n.a.
-2.1
-1.4
-3.1
-36.0
-59.8
-67.4
-73.5
-79.2
-85.0
-91.2
-102.4
-498.8
Changes
31, 2010
Income Tax Provisions of
December
n.a.
n.a.
n.a.
n.a.
-94.9
-171.9
-177.0
-180.4
-184.6
-190.5
-196.8
-266.8
-1,196.2
EGTRRA
31, 2010
Reduced Tax Rates on
December
n.a.
n.a.
n.a.
-1.9
-10.1
1.2
-9.6
-9.9
-10.1
-10.4
-10.8
-10.8
-61.4
Capital Gains
31, 2010
Reduced Tax Rates on
December
n.a.
0.4
1.4
0.7
-5.3
-18.1
-22.2
-24.2
-25.9
-27.4
-29.1
-20.9
-149.7
Dividends
31, 2010
Interaction from
Extending All Provisions
Together (Including
0
0
0
0
-18.5
-47.1
-50.4
-53.3
-55.4
-57
-58.4
-65.5
-340.0
Provisions Not Listed in
This Table)
Source: Congressional Budget Office
CRS-7
Legislative Initiatives in the 110th Congress
To date, a number of bills extending or curtailing all or parts of the 2001
through 2006 tax reductions have been introduced in the 110th Congress. Due to the
large number of separate provisions and various approaches to their modification, the
list is focused on bills that extend tax relief in the vein of EGTRRA and the follow-
up legislation, rather than generally modify the respective part of the Tax Code. For
example, bills increasing the AMT deduction are listed, but the ones 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. 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 credit
permanent.
! H.R. 1407. Introduced March 8, 2007, by Representative Phil
English. This bill would repeal EGTRRA sunset applicability to
certain education provisions.
! 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.
CRS-8
! 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.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 tax cuts enacted in 2001 and 2003.
! 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 EITC.
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 make 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.
! 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 EGTRRA sunset applicability to certain
education provisions.
! S. 554. Introduced February 12, 2007, by Senator Byron Dorgan.
This bill would repeal reduction in marginal and capital gains tax
CRS-9
rates, phaseout 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 adoption
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 sunset provisions of EGTRRA, make cuts to the capital
gains tax rates permanent, repeal AMT, make changes to the
expensing rules, and make other changes.
Legislative Initiatives in the 109th Congress
Several bills were introduced in the 109th Congress that would have made either
all of the 2001/2003 tax cut provisions or selected provisions permanent.
House Bills
! H.R. 8. Introduced on February 17, 2005, by Representative Kenny
Hulshof. This bill would have made the repeal of the estate tax
permanent.
! H.R. 183. Introduced on January 4, 2005, by Representative Joseph
Pitts. This bill would have made the repeal of the estate tax
permanent.
! H.R. 268. Introduced January 6, 2005, by Representative Dave
Camp. This bill would have made the changes to the adoption tax
credit permanent.
! H.R. 305. Introduced January 25, 2005, by Representative Joe
Wilson. This bill would have made the changes to the adoption tax
credit permanent.
CRS-10
! H.R. 347. Introduced January 25, 2005, by Representative Todd
Russell Platts. This bill would have made the changes to the
adoption tax credit permanent
! H.R. 351. Introduced January 25, 2005, by Representative Todd
Russell Platts. This bill would have made the changes to the
dependent care tax credit permanent and would have made it
refundable.
! H.R. 809. Introduced March 7, 2005, by Representative David
Dreier. This bill would have made the reduced tax rates on dividend
and capital gains income permanent.
! H.R. 1388. Introduced March 17, 2005, by Representative Wally
Herger. This bill would have made the increase in expensing of
certain depreciable assets permanent.
! H.R. 1500. Introduced April 6, 2005, by Representative David
Dreier. This bill would have made the reduction in the capital gain
tax rate permanent.
! H.R. 1692. Introduced April 19, 2005, by Representative Darlene
Hooley. This bill would make the changes to tuition programs
permanent.
! H.R. 2320. Introduced May 12, 2005, by Representative Jerry
Weller. This bill would have permanently extended the bonus
depreciation enacted in 2003.
! H.R. 2386. Introduced May 17, 2005, by Representative Melissa
Hart. This bill would have made the changes to qualified tuition
programs permanent.
! H.R. 2994. Introduced June 20, 2005, by Representative Mike
Rogers of Michigan. Among other things, this bill would have made
the changes to qualified tuition programs permanent.
! H.R. 3384. Introduced July 21, 2005, by Representative Bobby
Jindal. This bill would have made the marriage tax penalty relief
provisions permanent.
Senate Bills
! S. 6. Introduced January 24, 2005, by Senator Rick Santorum. This
bill would have made the marriage penalty and child tax provisions
permanent.
! S. 7. Introduced January 24, 2005, by Senator Jon Kyl. This bill
would have made the reductions in regular tax rates and capital
gains/dividends tax rates permanent. It would have also made the
repeal of the estate tax permanent.
! S. 78. Introduced January 24, 2005, by Senator Kay Bailey
Hutchison. This bill would have made the marriage tax provisions
permanent.
! S. 246. Introduced on February 1, 2005, by Senator Jim Bunning.
This bill would have made the changes to the adoption tax credit
permanent.
! S. 420. Introduced February 17, 2005, by Senator Jon Kyl. This bill
would have made the repeal of the estate tax permanent.
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! S. 988. Introduced May 10, 2005, by Senator Jeff Sessions. This
bill would have made the repeal of the estate tax permanent.
! S. 1112. Introduced May 24, 2005, by Senator Chuck Grassley.
This bill would have made the educational savings provisions
permanent.
! S. 1524. Introduced July 28, 2005, by Senator Mike Crapo. This
bill would have made the reduced tax rates on dividends and capital
gains permanent.
CRS-12
Appendix. Phase-in and Expiration Schedule of Select Major Tax Cut Provisions Under
EGTRRA, JCWAA, JGTRRA, WFTRA, AJCA, TIPRA, and TRHCA, 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:
the alternative
EGTRRA: Increase to
JGTRRA: $58,000 /
$58,000 /
$42,500 /
Reverts to $45,000 / $33,750 couple / single exemption structure.
minimum tax for
$49,000 / $35,750.
$40,250
$40,250
$65,550
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-13
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 phaseout 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: Congressional Budget Office and Joint Committee on Taxation