FROM THE OFFICE OF PUBLIC AFFAIRS

Today the Treasury Department released the "General Explanations of the Administration's Fiscal Year 2002 Tax Relief Proposals," a document which outlines the President's tax relief plan.

"This plan reflects the President's vision and priorities for providing tax relief for American families. I look forward to the day when the tax overpayment that is sent to Washington is returned to the hardworking Americans who earned it," stated Treasury Secretary Paul O'Neill.

Replaces the current marginal income tax rates of 15, 28, 31, 36, and 39.6 percent with a simplified rate structure of 10, 15, 25, and 33 percent.

The five current tax rate brackets ranging from 15 percent to 39.6 percent would be replaced with four tax brackets ranging from 10 percent to 33 percent. The lower tax rates would be phased in between 2002 and 2006.

The current 15 percent tax rate bracket would be split into two rate brackets, 10 percent and 15 percent. The 10 percent tax rate would apply to the first $6,000 of taxable income for single taxpayers, the first $10,000 for unmarried heads of household, and the first $12,000 for married taxpayers filing jointly.
Create new 10-percent bracket: The tax relief is $310.6 billion over 10 years. Reduce individual income tax rates: The tax relief is $500.6 billion over 10 years.

Doubles the child tax credit to $1,000 per child and applies the credit to the Alternative Minimum Tax. (AMT)

The amount of the child tax credit would be doubled to $1,000 per child, and the credit would phase out more slowly and at higher incomes.

The tax relief of this provision is $200 billion over 10 years.

Reduces the Marriage Penalty by reinstating the 10 percent deduction for two-earner couples.

To reduce marriage penalties, the two-earner deduction that was in effect between 1982 and 1986 would be restored. Joint filers would be allowed to deduct 10 percent of the first $30,000 of the earned income of the lower paid spouse.

The tax relief of this provision is $112.8 billion over 10 years.

Expands the charitable deduction for non-itemizers.

Taxpayers who do not itemize would be allowed to deduct charitable contributions in addition to their standard deduction.

The tax relief of this provision is $52 billion over 10 years.

Eliminates the death tax.
The estate, gift and generation-skipping transfer taxes would be phased out between 2002 and 2008 and repealed in 2009.

The tax relief of this provision is $271.5 billion over 10 years.

Makes the Research and Experimentation (R & E) tax credit permanent.

The tax relief of this provision is $49.5 billion over 10 years.

http://www.treas.gov/taxpolicy/library/bluebk01.pdf