Paid for by Gore/Lieberman, Inc.
18
APPENDIX DERIVATION OF TAX CUTS AND VALUE OF HEALTH PROPOSALS
Note that all examples assume the policies are fully phased in. The parameters are for tax year 2001,
adjusted based on CBO's projections of inflation.
Family #1: A Family With Two Small Children Making $35,000
Current Law
Gore-Lieberman Tax
Plan
Bush-Cheney Tax
Plan
Adjusted Gross Income
$35,000
$35,000
$35,000
Standard Deduction
-$7,600
-$9,100
26
-$7,600
Personal Exemptions
-$11,600
-$11,600
-$12,630
27
Exclusion for Savings
-$500
-$500
-$500
Taxable Income
$15,300
$13,800
$14,270
Marginal Tax Rate
15%
15%
15%
28
Pre-Credit Tax Liability
$2,295
$2,070
$1,541
Child Tax Credit
29
-$1,000
-$1,000
-$2,000
Childcare Tax Credit
30
-$480
-$1,080
-$480
RSP Tax Credit Match
31
n.a.
-$500
n.a.
Pre-EITC Federal Income Taxes
$815
-$510
$0
32
Earned Income Tax Credit
33
$0
-$303
$0
Federal Income Taxes
$815
-$-813
$0
Total Tax Cut
n.a.
-$1,628
-$815
26
Gore Marriage Penalty Relief. The Gore marriage penalty plan increases the standard deduction for married couples to
twice that of singles, a $1,500 increase.
27
Bush Marriage Penalty Relief. The Bush marriage penalty proposal provides an additional exemption of 10 percent of
the second earners income, up to a $3,000 exemption.
28
Marginal Tax Rate. Governor Bush has proposed creating a 10 percent rate that would cover the first $12,000 of taxable
income for a married couple.
29
Child Tax Credit. The Clinton-Gore Administration signed into law a $500 tax credit. Governor Bush has proposed
increasing this credit to $1,000.
30
Childcare Tax Credit. Under current law, a family with an income of $35,000 gets a 20 percent non-refundable credit on
the first $2,400 of work-related child care expenses per child. Al Gore proposes to increase this credit to 45 percent for
families with this income and make it refundable.
31
Retirement Savings Plus. This family would be eligible for a 1:1 tax credit match on their savings.
32
Because Governor Bush's tax credits are not refundable, their use is limited by the extent of their tax liability.
33
Earned Income Tax Credit. The Gore-Lieberman plan lowers the EITC phaseout rate for families with two or more
children.
