Download Special Report No. 46
Special Report No. 46
Executive Summary The taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. provisions in the “Contract with America,” if enacted, will reduce Americans’ tax burden by an estimated $188.8 billion over the five-year budget period from 1995 to 2000. At the same time, the provisions will slightly increase the share of the income tax burden borne by those taxpayers with $75,000 or more of adjusted gross incomeFor individuals, gross income is the total pre-tax earnings from wages, tips, investments, interest, and other forms of income and is also referred to as “gross pay.” For businesses, gross income is total revenue minus cost of goods sold and is also known as “gross profit” or “gross margin.” .
The estimated average tax reduction for all income tax filers amounts to $1,552 over the 1995 to 2000 time period. The only provision estimated to expose more taxpayer income to taxation is the American Dream Savings Account (ADSA). The assumption is that taxpayers will forego tax deductible contributions to other retirement-type accounts in order to make non -deductible contributions to an ADSA account that permits tax-free money growth and tax-free withdrawals for specified expenditures like college tuition. The revenues raised from the ADS accounts offset the $500 million in estimated tax relief provided by the spousal IRA provision.
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