Overview of the 1997 Tax Act

Overview of the 1997 Tax Act

Much smaller than 1981 Reagan cut

Makes for more complicated system

$150 billion in tax cuts

$50 billion in tax increases

Much smaller than 1981 Reagan cut

First tax cut in 16 years

In constant dollars, Reagan cut was 15 times larger

Reagan cut included significant cuts for businesses - 1997 cut doesn't

Reagan cut was across-the-board - 1997 cut is "targeted"

Makes for more complicated system

Same politicians who said they wanted a simpler tax system gave us many more complications

$500 child credit complex for lower income filers

Almost every tax break has accompanying phase-out range

Capital gains calculations much more complex

$150 billion in tax cuts

$500 child credit

Hope credit for college

Lifetime learning credit

Education IRA

Roth IRA

Capital gains cuts

$50 billion in tax increases

7.5 percent airline ticket tax extended

New $3 per flight segment tax

Tobacco tax increases by 60 percent

Adds 15 cents to a pack of cigarettes over 2000 - 2002