PRESIDENT CLINTON and VICE PRESIDENT GORE -- ECONOMIC STRATEGY
Providing Tax Relief to Middle-Income American Families
Because of President Clinton's and Vice President Gore's 1993 economic
plan and the 1997 balanced budget agreement, the typical middle-income
family has the lowest federal tax burden in over 20 years. The
President's FY2000 budget builds on this record and proposes targeted
tax relief for retirement saving, long-term health care, education,
child care, community revitalization, and the environment.
The 1993 Economic Plan -- Passed Without a Single Republican Vote --
Helped Slash the Deficit, While Providing Tax Cuts for Working Families
and Small Businesses.
Tax Cuts for 15 Million Working Families. In 1993, President
Clinton and the Democrats provided tax cuts to 15 million hard-pressed
working families -- the average family with two kids who received the
EITC got a tax cut of $1,026.
Tax Cuts for Small Businesses. Over 90% of small businesses are
eligible for tax reductions through the increased small business
expensing limit and capital gains tax relief targeted to small
The 1997 Balanced Budget Agreement Provided Tax Relief To Make It Easier
for Working Families To Raise Their Children and Send Them to College.
$500 Child Tax Credit To Help 27 Million Families. The balanced
budget agreement included a $500 tax credit for each child under 17
years old. This tax cut will help 27 million families with 45 million
children under 17. The President fought to ensure that 13 million
children from families with incomes below $30,000, such as young
teachers, police officers, farmers, and nurses, receive the child tax
$1,500 HOPE Scholarship Help To Make the First Two Years of
College Universally Available. The balanced budget agreement included
a $1,500 HOPE scholarship tax credit to help make the 13th and 14th
grades as universal as a high school diploma is today.
20 Percent Tuition Tax Credit for College Juniors, Seniors,
Graduate Students and for Working Americans Pursuing Lifelong Learning
to Upgrade Their Skills. The 20 percent Lifetime Learning Tax Credit
applies to the first $5,000 of a family's qualified education expenses
through 2002, and to the first $10,000 thereafter.
Because of this Strong Record, the Typical Middle-Income Family Will
Face the Lightest Federal Tax Burden in Decades:
For a Family of Four Earning $55,000: Lowest Federal Tax Burden in
Over 20 Years. In 1999, for the typical American family of four --
with income of about $55,000 -- the average federal income and
employee payroll tax burden will be the lowest in more than two
decades (since 1976). In 1999, the federal tax burden will be 15.1
percent -- down from 16.8 percent in 1992 and lower than in any year
Ronald Reagan was President. [Treasury Department, Office of Tax
Lowest Federal Tax Burden in Over 30 Years for Typical Family of
Four Earning $27,000. In 1999, for an American family of four with
income of about $27,000, the average federal income and employee
payroll tax burden will be the lowest in more than three decades
(since 1965). For this family, the average federal tax rate will be
6.5 percent -- down from 12.2% in 1992 and lower than any year Ronald
Reagan was President. [Treasury Department, Office of Tax Analysis,
The President's FY2000 Budget Takes the Next Step, Proposing Tax Relief
USA Accounts provide a Progressive Approach for Retirement Savings
for the Majority of Working Americans. These accounts will give 124
million Americans the opportunity to build wealth and to save for
their retirement through a progressive tax cut. A middle income
married couple that participated for 40 years, could accumulate over
$253,680 in today's dollars -- enough to produce $20,121 a year of
after-tax income in retirement.
A $1,000 Long-term Care Tax Credit to help pay for formal and
informal long-term care services for about 2 million Americans,
including 1.2 million older Americans, over 500,000 non-elderly
adults, and approximately 250,000 children. The budget includes $5.6
billion over five years.
A $1,000 Tax Credit for Work-related Expenses for People with
Disabilities to help cover the formal and informal costs that are
associated with employment, such as special transportation and
technology needs. This tax credit will help 200,000 to 300,000
Americans. The budget includes $700 million over 5 years.
Tax Credits to Build Modern Schools for Our Children. A
centerpiece of the President's tax cut agenda is to provide Federal
tax credits to pay interest on nearly $25 billion in bonds to build
and renovate public schools. Two types of bonds are being proposed:
School Modernization Bonds ($22.4 billion) and Qualified Zone Academy
Bonds ($2.4 billion). $400 million of the school modernization bonds
will go to tribes or tribal organizations for the construction and
renovation of BIA funded schools. The budget includes $3.7 billion
over 5 years for the tax credits on these bonds.
Tax Relief for Child Care for Three Million Working Families, Plus
Tax Relief to Parents Who Stay at Home. The President's proposal
increases the child and dependent care tax credit (CDCTC) for families
earning up to $59,000, providing an additional average tax cut of $345
for these families and eliminating income tax liability for almost all
families with incomes below 200% of poverty ($35,000 for a family of
four) that claim the maximum allowable child care expenses. The
President also proposes to enable parents who have children under one
year old to take advantage of the CDCTC by allowing them to claim
assumed child care expenses of $500. The President's budget proposal
will provide parents with young children an average tax credit of $178
and will benefit 1.7 million families. Overall, the budget includes
$6.3 billion over five years for this combined proposal.
Better America Bonds. The President is proposing Federal tax
credits to pay the interest on $9.5 billion in bonds over five years
for investments by state, local and tribal governments. The bonds can
be used to preserve green space, create or restore urban parks,
protect water quality, and clean up brownfields (abandoned industrial
sites). The budget includes $673 million over five years.
Increase the Low-Income Housing Tax Credit. To expand and improve
the supply of available low income housing, the budget raises the
allocation of low-income housing tax credits to States. The President
proposes to raise the State per capita cap from $1.25 to $1.75
beginning in 2000. The budget's $1.7 billion over five years will
lead to an additional 150,000 to 180,000 units of affordable housing
over five years.
Tax Credits For More Fuel Efficient Vehicles and Homes. The budget
contains $3.6 billion over the next 5 years in tax cuts for
energy-efficient purchases and renewable energy, including: tax
credits of between $1,000 and $4,000 for consumers who purchase
advanced-technology, highly fuel-efficient vehicles; a 15 percent
credit (up to $2,000) for purchases of rooftop solar equipment; and a
tax credit of up to $2,000 for purchasing energy-efficient new homes.