Senate Approves the Taxpayer Refund and Relief Act of 1999
$792 BILLION TAX CUT PASSES 50-49
WASHINGTON -- Today, the full Senate approved the conference report for H.R. 2488, the "Taxpayer Refund and Relief Act of 1999." The vote was 50 to 49. Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) released the following statement:
"Congress has spoken: the budget surplus belongs to the American people, not to Washington. This historic tax relief makes it clear that government is not automatically entitled to the surplus that is in large part due to the hard work, thrift, and risk-taking of the American people. This refund benefits nearly every working American. It helps restore equity to the tax code and provide families with resources to meet pressing concerns -- security in retirement, funding for education, insurance for the self-employed, and relief from the marriage tax penalty and death taxes. It is in the best interest of our families and future for the President to sign this bill. A veto will benefit no one," Roth stated.
The Taxpayer Refund and Relief Act of 1999 will:
• Reduce all marginal income tax rates by a point. In other words, for example the 15% tax bracket will drop to 14.5% in 2001 and 14% in 2003, and the 39.6% top rate will drop to 38.6. Additionally, the new 14% bracket will be extended upward to include millions of Americans who are now paying taxes in the 28% bracket.
•An individual with $40,000 of income will save over $700.
•An individual earning $50,000 will save over $800.
•An individual with $70,000 of income will save over $1,000.
•When fully phased in, a middle-class family of four, with an adjusted gross income of $80,000, will save almost $3,000 a year.
•Provide relief for the marriage tax penalty by doubling the standard deduction and 15% tax bracket for married couples filing jointly. For example, two individuals -- each making $35,000 a year -- face a penalty of almost $1,500 when they marry. This legislation, doubles the standard deduction; and, then doubles the 15% tax bracket to include their combined income. The legislation will also provide marriage penalty relief for people receiving the Earned Income Tax Credit.
•Phase out the Alternative Minimum Tax that denies middle income families the benefit of the $500 child credit, HOPE scholarship, and dependent care tax credit.
Make education more affordable by:
•Helping families with their education expenses by allowing taxpayers to increase their contributions to Education IRAs (Education Savings Accounts). Allowable contributions will rise from $500 to $2,000 annually. These funds will be available to meet expenses for all students, from kindergarten through college.
•Making interest earned on qualified state and private school higher education tuition plans tax free.
•Extending employer-provided educational assistance for undergraduate studies.
•Repealing the 60-month rule on student loan interest deductions. This will allow individuals to claim tax deductions on interest that they pay on their student loans, without the imposition of a time limit. In addition, the income limits would be raised so that more middle income graduates could deduct the interest.
Help families meet health care and long-term care needs by:
•Providing a 100% above-the-line deduction for those who pay more than 50% of their health insurance premiums. This includes the self-employed.
•Providing an additional personal exemption for those who care for an elderly relative in their home.
Create savings and investment incentives by:
•Providing capital gains tax relief by simplifying the rate structure, and reducing the individual capital gains tax rate from 20% to 18%, beginning with the current 1999 tax year. For those individuals taxed at the lowest individual rate, their capital gains tax rate is reduced from 10% to 8%.
•Phasing out and ultimately repealing the federal estate, gift, and generation skipping taxes. It also corrects technical problems in the House provision.
•Expanding Individual Retirement Accounts and Pension Programs.
•Increasing IRA contribution limits over the next seven years until they reach $5,000.
•Allowing for "catch-up" IRA contributions.
•Increasing the income threshold for conversions to a Roth IRA up to $200,000 for a couple filing jointly.
•Increasing contribution limits for employer-provided plans. This bill increases the maximum amount an individual can contribute to a 401(k) plan, a 403(b) plan or a 457 plan.
•Providing small businesses new incentives to establish a retirement plan for their employees.
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