Special Report No. 71
Executive Report Congress passed and President Clinton has signed 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. payer Relief Act of 1997. This is the first piece of legislation in 16 years to affect Americans’ tax bills noticeably. Over the next five years Americans can expect taxes to be $95.3 billion lower than they otherwise would have been as a result of this legislation. This translates to approximately $764 in tax savings for every individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. filer. Over 10 years these savings will climb to $275.4 billion, or roughly $2,136 for every filer.
Before examining the new law in detail, it is important to put these changes in perspective. As stated above, over 10 years this legislation is projected to reduce federal revenues by $275.4 billion. Prior to enactment of this law the Federal government was expected to take in more than $19.0 trillion over the same period. The amount of enacted tax relief, therefore, represents about 1.4 percent of the taxes that would have been collected during this period.Share