DISTRIBUTIONAL EFFECTS OF H.R. 2488,

THE “FINANCIAL FREEDOM ACT OF 1999,”

AS PASSED BY THE HOUSE OF REPRESENTATIVES

Prepared by the Staff

of the

JOINT COMMITTEE ON TAXATION

July 22, 1999

JCX-54-99
DISTRIBUTIONAL EFFECTS OF 

H.R. 2488, THE "FINANCIAL FREEDOM ACT OF 1999"

AS PASSED BY THE HOUSE OF REPRESENTATIVES

Calendar Year 2000

CHANGE IN FEDERAL TAXES (3) FEDERAL TAXES (3) Effective Tax Rate (4)

FEDERAL UNDER UNDER Present

TAXES (3) PRESENT LAW PROPOSAL Law Proposal

Millions Percent Billions Percent Billions Percent Percent Percent

... (5) (6) $6 0.4% $6 0.4% 6.5% 6.5%

.... -$55 -0.2% 32 2.1% 32 2.1% 8.1% 8.1%

.... -163 -0.2% 81 5.3% 80 5.3% 15.4% 15.4%.... -242 -0.2% 102 6.7% 102 6.7% 17.8% 17.8%.... -254 -0.2% 120 7.9% 119 7.9% 19.6% 19.5%.... -664 -0.2% 270 17.8% 269 17.8% 21.6% 21.4%.... -686 -0.3% 221 14.5% 220 14.6% 24.2% 23.9%.... -996 -0.3% 304 20.1% 303 20.1% 26.3% 25.8%

.... -2,915 -0.8% 382 25.2% 379 25.1% 29.0% 26.9%

.... -$5,976 -0.4% $1,518 100.0% $1,512 100.0% 22.2% 21.7%

tee on Taxation

total due to rounding.

------------------------

al rate reduction, standard deduction for married couples, student loan interest deduction, interest and dividend

al capital gains, elderly caretaker exemption, self-employed health insurance deduction, and individual AMT. 

pt used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt 

yer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

ial security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, and

me of U.S. citizens living abroad. Categories are measured at 1999 levels.

equal to individual income tax (including the outlay portion of the EIC), employment tax (attributed to employees), 

attributed to consumers). Corporate income tax is not included due to uncertainty concerning the incidence of the tax. 

e dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

ate is equal to Federal taxes described in footnote (3) divided by: income described in footnote (2) plus additional 

e to the proposal.

0.

Page 1 of 5
DISTRIBUTIONAL EFFECTS OF 

H.R. 2488, THE "FINANCIAL FREEDOM ACT OF 1999"

AS PASSED BY THE HOUSE OF REPRESENTATIVES

Calendar Year 2001

CHANGE IN FEDERAL TAXES (3) FEDERAL TAXES (3) Effective Tax Rate (4)

FEDERAL UNDER UNDER Present

TAXES (3) PRESENT LAW PROPOSAL Law Proposal

Millions Percent Billions Percent Billions Percent Percent Percent

... -$8 -0.1% $7 0.4% $7 0.4% 6.8% 6.8%

.... -178 -0.5% 33 2.1% 33 2.1% 8.0% 7.9%

.... -575 -0.7% 82 5.2% 82 5.3% 15.4% 15.2%.... -893 -0.9% 105 6.7% 104 6.7% 17.8% 17.6%.... -1,049 -0.9% 121 7.7% 120 7.7% 19.4% 19.2%

.... -2,598 -0.9% 280 17.8% 277 17.9% 21.5% 21.2%.... -2,260 -1.0% 232 14.8% 230 14.8% 24.1% 23.8%.... -3,081 -1.0% 319 20.3% 316 20.4% 26.3% 25.8%

.... -6,786 -1.7% 392 25.0% 385 24.8% 29.1% 27.6%

.... -$17,428 -1.1% $1,571 100.0% $1,554 100.0% 22.2% 21.7%

tee on Taxation

total due to rounding.

------------------------

al rate reduction, standard deduction for married couples, student loan interest deduction, interest and dividend

al capital gains, elderly caretaker exemption, self-employed health insurance deduction, and individual AMT. 

pt used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt 

yer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

ial security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, and

me of U.S. citizens living abroad. Categories are measured at 1999 levels.

equal to individual income tax (including the outlay portion of the EIC), employment tax (attributed to employees), 

attributed to consumers). Corporate income tax is not included due to uncertainty concerning the incidence of the tax. 

e dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

ate is equal to Federal taxes described in footnote (3) divided by: income described in footnote (2) plus additional 

e to the proposal.

0.

Page 2 of 5
DISTRIBUTIONAL EFFECTS OF 

H.R. 2488, THE "FINANCIAL FREEDOM ACT OF 1999"

AS PASSED BY THE HOUSE OF REPRESENTATIVES

Calendar Year 2002

CHANGE IN FEDERAL TAXES (3) FEDERAL TAXES (3) Effective Tax Rate (4)

FEDERAL UNDER UNDER Present

TAXES (3) PRESENT LAW PROPOSAL Law Proposal

Millions Percent Billions Percent Billions Percent Percent Percent

... -$12 -0.2% $7 0.4% $7 0.4% 7.0% 7.0%

.... -267 -0.8% 34 2.1% 33 2.1% 8.1% 8.0%

.... -916 -1.1% 85 5.2% 84 5.2% 15.4% 15.2%.... -1,422 -1.3% 109 6.6% 107 6.7% 17.7% 17.5%

.... -1,704 -1.4% 123 7.5% 121 7.5% 19.3% 19.0%.... -4,114 -1.4% 290 17.8% 286 17.8% 21.4% 21.0%.... -3,400 -1.4% 241 14.7% 237 14.7% 24.0% 23.6%.... -4,148 -1.2% 339 20.8% 335 20.8% 26.3% 25.8%

.... -7,721 -1.9% 408 24.9% 400 24.8% 29.1% 27.8%

.... -$23,706 -1.4% $1,635 100.0% $1,611 100.0% 22.2% 21.7%

tee on Taxation

total due to rounding.

------------------------

al rate reduction, standard deduction for married couples, student loan interest deduction, interest and dividend

al capital gains, elderly caretaker exemption, self-employed health insurance deduction, and individual AMT. 

pt used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt 

yer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

ial security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, and

me of U.S. citizens living abroad. Categories are measured at 1999 levels.

equal to individual income tax (including the outlay portion of the EIC), employment tax (attributed to employees), 

attributed to consumers). Corporate income tax is not included due to uncertainty concerning the incidence of the tax. 

e dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

ate is equal to Federal taxes described in footnote (3) divided by: income described in footnote (2) plus additional 

e to the proposal.

0.

Page 3 of 5
DISTRIBUTIONAL EFFECTS OF 

H.R. 2488, THE "FINANCIAL FREEDOM ACT OF 1999"

AS PASSED BY THE HOUSE OF REPRESENTATIVES

Calendar Year 2003

CHANGE IN FEDERAL TAXES (3) FEDERAL TAXES (3) Effective Tax Rate (4)

FEDERAL UNDER UNDER Present

TAXES (3) PRESENT LAW PROPOSAL Law Proposal

Millions Percent Billions Percent Billions Percent Percent Percent

... -$15 -0.2% $7 0.4% $7 0.4% 7.2% 7.2%

.... -289 -0.8% 34 2.0% 34 2.0% 8.1% 8.0%

.... -1,052 -1.2% 88 5.1% 87 5.2% 15.3% 15.1%

.... -1,741 -1.5% 113 6.6% 111 6.6% 17.6% 17.4%.... -2,091 -1.7% 127 7.4% 124 7.4% 19.3% 18.9%.... -5,080 -1.7% 301 17.7% 296 17.7% 21.3% 20.9%.... -4,281 -1.7% 254 14.9% 250 14.9% 23.9% 23.5%.... -4,455 -1.2% 356 20.9% 352 21.0% 26.3% 25.8%

.... -7,694 -1.8% 423 24.8% 415 24.8% 29.2% 27.9%

.... -$26,698 -1.6% $1,703 100.0% $1,676 100.0% 22.2% 21.7%

tee on Taxation

total due to rounding.

------------------------

al rate reduction, standard deduction for married couples, student loan interest deduction, interest and dividend

al capital gains, elderly caretaker exemption, self-employed health insurance deduction, and individual AMT. 

pt used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt 

yer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

ial security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, and

me of U.S. citizens living abroad. Categories are measured at 1999 levels.

equal to individual income tax (including the outlay portion of the EIC), employment tax (attributed to employees), 

attributed to consumers). Corporate income tax is not included due to uncertainty concerning the incidence of the tax. 

e dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

ate is equal to Federal taxes described in footnote (3) divided by: income described in footnote (2) plus additional 

e to the proposal.

0.

Page 4 of 5
DISTRIBUTIONAL EFFECTS OF 

H.R. 2488, THE "FINANCIAL FREEDOM ACT OF 1999"

AS PASSED BY THE HOUSE OF REPRESENTATIVES

Calendar Year 2004

CHANGE IN FEDERAL TAXES (3) FEDERAL TAXES (3) Effective Tax Rate (4)

FEDERAL UNDER UNDER Present

TAXES (3) PRESENT LAW PROPOSAL Law Proposal

Millions Percent Billions Percent Billions Percent Percent Percent

... -$15 -0.2% $7 0.4% $7 0.4% 7.1% 7.1%

.... -347 -1.0% 35 2.0% 35 2.0% 8.1% 8.0%

.... -1,281 -1.4% 90 5.0% 89 5.1% 15.2% 15.0%

.... -2,069 -1.8% 116 6.5% 114 6.5% 17.6% 17.3%.... -2,603 -2.0% 130 7.3% 128 7.3% 19.3% 18.9%.... -6,773 -2.2% 314 17.6% 308 17.6% 21.2% 20.7%.... -6,057 -2.3% 269 15.1% 263 15.1% 23.9% 23.3%.... -7,286 -1.9% 377 21.1% 370 21.2% 26.2% 25.5%

.... -12,264 -2.8% 445 25.0% 433 24.8% 29.2% 27.7%

.... -$38,695 -2.2% $1,784 100.0% $1,745 100.0% 22.2% 21.6%

tee on Taxation

total due to rounding.

------------------------

al rate reduction, standard deduction for married couples, student loan interest deduction, interest and dividend

al capital gains, elderly caretaker exemption, self-employed health insurance deduction, and individual AMT. 

pt used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt 

yer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

ial security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, and

me of U.S. citizens living abroad. Categories are measured at 1999 levels.

equal to individual income tax (including the outlay portion of the EIC), employment tax (attributed to employees), 

attributed to consumers). Corporate income tax is not included due to uncertainty concerning the incidence of the tax. 

e dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

ate is equal to Federal taxes described in footnote (3) divided by: income described in footnote (2) plus additional 

e to the proposal.

0.

Page 5 of 5