FROM THE OFFICE OF PUBLIC AFFAIRS

Statement of Michele Davis, Treasury Assistant Secretary for Public Affairs:

In the Editorial/Op-Ed pages of today's New York Times, Paul Krugman's "The W Scenario," is totally incorrect in stating that last summer's checks from the IRS are about to be "snatched away" by the new line 47 on Form 1040. In fact, line 47 takes nothing away from any taxpayer, and instead provides a tax cut for millions of taxpayers.
Here's the true story behind line 47:

Last summer Congress passed, and the President signed into law, a bill that provided immediate tax relief for taxpayers. The bill created a new 10% bracket that did not go into effect until January 1, 2002. In order to give taxpayers the benefit of the new 10% bracket immediately, Advance Payment checks were sent in the maximum amounts of $300 for singles, $500 for head of households, and $600 for married filing jointly.

Line 47 of Form 1040 (line 30 of Form 1040A and line 7 of Form 1040EZ) provides a Rate Reduction Credit for those taxpayers who did not get the maximum benefit from last summer's Advance Payments, and whose 2001 income or tax amounts qualify them for an additional amount.

Contrary to the column's assertion, last summer's checks did not reduce refunds or increase tax bills. In fact, the most recent figures show that the average amount for nearly 23 million refunds processed has actually increased by $232, to $2,210.

Taxpayers who received the maximum Advance Payment for their filing status should leave line 47 blank. The Advance Payment check they received last year is theirs to keep. Period.