FROM THE OFFICE OF PUBLIC AFFAIRS

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Attached is a table prepared by the Department of the Treasury that shows the distributional effects of the major individual income tax provisions in the President's proposal. The effects are shown for the proposal in 2003.

The average income tax reduction ranges from about 17 percent for taxpayers with income under $30,000 to just over 11 percent for taxpayers with income over $100,000.  The average income tax reduction across all income groups is slightly more than 12 percent.

Because the percentage reduction in income taxes is greatest for families with incomes under $50,000, these families will pay a smaller share of the total income tax burden under the President's proposal than they do under current law (compare the distribution of total individual income taxes under 2003 law and under the proposal).

Conversely, families with income of $100,000 or more receive a smaller than average percentage reduction in income taxes so they will pay a larger share of the total income tax burden under the President's proposal than they do under current law.  Under the proposal, the share of income taxes paid by families with income of $100,000 or more will rise to 73.3 percent.
 
The table also presents the average individual income taxes paid for the representative income groups under the President's plan.  Under the proposal, those in the lowest income group (under $30,000) will on average receive refundable credits in excess of tax payments of $416 and those in the second lowest income group will pay an average of $1,002 in income tax.  Those earning over $200,000 will on average pay approximately $99,000 in income taxes.

January 5, 2003

Distribution Table