The Effect of “Fast Tracking” Scheduled Tax Cuts on the Typical American Family of Four

December 18, 2002

Two items sure to be on the agenda of the 108th Congress are:

  1. Acceleration of key tax cuts currently scheduled to become active over the next eight years.
  2. Permanent extension of the Economic Growth and Tax Reform Reconciliation Act of 2001.

A typical family of four would receive tax relief of $1,133 (a tax cut of 22 percent) in 2003 if Congress and the President were to make the major provisions of the 2001 tax cut effective as soon as possible. Families of four earning less than $40,000 would have their entire federal income tax liability eliminated in 2003. Table 1 summarizes these findings by state.

On the other hand, if lawmakers do not make the 2001 Act permanent, the typical family of four will see their income tax bill increase by $2,222, or 42 percent, between 2010 and 2011.

Figure 1 shows the projected, annual tax liability of a typical family of four under current law and in the case that Congress and the President make key provisions of the 2001 cuts effective immediately and make all the cuts permanent. Such a move would benefit this family by reducing their total tax bill by $8,367, or 17 percent, over the period 2003 to 2011.

Table I. Tax Relief from Fast Tracking and Extending EGTRRA for a typical family of four earning the median income by state, 2003

Taxes Due- Current Law Taxes Due after Fast Tracking Total Tax Relief % Tax Cut Total Tax Relief % Tax Cut

United States

$5,170 $4,038 ($1,133) -22% ($8,364) -17%

Alabama

$3,440 $2,307 ($1,133) -33% ($8,364) -25%

*Alaska

$6,396 $4,784 ($1,612) -25% ($9,939) -17%

Arizona

$4,116 $2,984 ($1,133) -28% ($8,364) -21%

Arkansas

$2,329 $1,197 ($1,133) -49% ($8,364) -38%

*California

$5,335 $4,195 ($1,140) -21% ($8,398) -16%

Colorado

$6,323 $4,744 ($1,580) -25% ($9,829) -17%

Connecticut

$10,971 $8,330 ($2,641) -24% ($14,961) -15%

*Delaware

$7,114 $5,183 ($1,931) -27% ($11,309) -17%

Florida

$4,066 $2,934 ($1,133) -28% ($8,364) -21%

Georgia

$4,731 $3,598 ($1,133) -24% ($8,364) -18%

*Hawaii

$6,106 $4,623 ($1,483) -24% ($9,514) -17%

Idaho

$3,804 $2,672 ($1,133) -30% ($8,364) -23%

*Illinois

$6,755 $4,984 ($1,771) -26% ($10,613) -17%

Indiana

$5,146 $4,014 ($1,133) -22% ($8,364) -17%

Iowa

$4,479 $3,346 ($1,133) -25% ($8,364) -19%

Kansas

$4,296 $3,164 ($1,133) -26% ($8,364) -20%

Kentucky

$3,407 $2,275 ($1,133) -33% ($8,364) -25%

Louisiana

$2,783 $1,651 ($1,133) -41% ($8,364) -31%

Maine

$4,200 $3,068 ($1,133) -27% ($8,364) -20%

Maryland

$9,485 $6,954 ($2,531) -27% ($14,536) -17%

Massachusetts

$9,619 $7,078 ($2,541) -26% ($14,574) -17%

*Michigan

$6,935 $5,084 ($1,851) -27% ($10,951) -17%

*Minnesota

$7,459 $5,375 ($2,084) -28% ($12,094) -18%

Mississippi

$2,618 $1,485 ($1,133) -43% ($8,364) -33%

Missouri

$5,001 $3,868 ($1,133) -23% ($8,364) -17%

Montana

$2,587 $1,455 ($1,133) -44% ($8,364) -34%

Nebraska

$4,337 $3,205 ($1,133) -26% ($8,364) -20%

Nevada

$4,751 $3,618 ($1,133) -24% ($8,364) -18%

*New Hampshire

$7,779 $5,553 ($2,227) -29% ($12,845) -18%

New Jersey

$9,774 $7,221 ($2,553) -26% ($14,619) -17%

New Mexico

$2,775 $1,643 ($1,133) -41% ($8,364) -31%

*New York

$5,715 $4,406 ($1,309) -23% ($8,948) -16%

North Carolina

$4,363 $3,231 ($1,133) -26% ($8,364) -20%

North Dakota

$3,711 $2,578 ($1,133) -31% ($8,364) -23%

Ohio

$5,174 $4,042 ($1,133) -22% ($8,364) -17%

Oklahoma

$2,959 $1,827 ($1,133) -38% ($8,364) -29%

Oregon

$4,542 $3,410 ($1,133) -25% ($8,364) -19%

*Pennsylvania

$5,973 $4,549 ($1,424) -24% ($9,321) -16%

*Rhode Island

$6,842 $5,032 ($1,810) -26% ($10,776) -17%

South Carolina

$4,217 $3,085 ($1,133) -27% ($8,364) -20%

South Dakota

$4,034 $2,901 ($1,133) -28% ($8,364) -21%

Tennessee

$3,993 $2,861 ($1,133) -28% ($8,364) -22%

Texas

$3,771 $2,638 ($1,133) -30% ($8,364) -23%

Utah

$4,338 $3,205 ($1,133) -26% ($8,364) -20%

Vermont

$4,672 $3,540 ($1,133) -24% ($8,364) -18%

*Virginia

$6,737 $4,973 ($1,763) -26% ($10,579) -17%

*Washington

$5,440 $4,253 ($1,187) -22% ($8,549) -16%

West Virginia

$2,608 $1,475 ($1,133) -43% ($8,364) -33%

*Wisconsin

$6,353 $4,760 ($1,593) -25% ($9,871) -17%

Wyoming

$4,148 $3,015 ($1,133) -27% ($8,364) -21%

*District of Columbia

$5,393 $4,227 ($1,166) -22% ($8,481) -16%
*Typical families of four in these 16 states will see their marginal tax rate drop from 27% to 15% under this proposal.

Topics


About the Author


Related Research