ACTION

FROM THE COMMITTEE ON WAYS AND MEANS

FOR IMMEDIATE RELEASE, Contact: (202) 225-3625
March 2, 2001
No. FC 2-A

Thomas Announces Committee Action
H.R. 3, the "Economic Growth and Tax Relief Act of 2001"

Congressman Bill Thomas (R-CA), Chairman of the Committee on Ways and Means, today announced that on Thursday, March 1, 2001, the Committee ordered favorably reported, as amended, H.R. 3, the "Economic Growth and Tax Relief Act of 2001," by a recorded vote of 23 to 15.

DESCRIPTION OF RECOMMENDATIONS AS APPROVED:

The bill would create a new low-rate income tax bracket by reducing the current 15 percent tax rate on the first $12,000 of taxable income for couples and $6,000 of taxable income for singles. A new 12 percent rate would apply retroactively to the beginning of 2001 and for 2002. The rate would be reduced to 11 percent in 2003 through 2005 and to 10 percent in 2006. The taxable income levels for the new low-rate bracket would be adjusted annually for inflation beginning in 2007.

In accordance with the income tax rate reductions in President Bush's plan, the bill would reduce other income tax rates and consolidate rate brackets. By 2006, the present-law structure of five income tax rates (15 percent, 28 percent, 31 percent, 36 percent, and 39.6 percent) would be reduced to four rates (10 percent, 15 percent, 25 percent, and 33 percent). The 39.6 percent rate would be reduced to 38 percent in 2002, 37 percent in 2003, 36 percent in 2004, 35 percent in 2005, and 33 percent in 2006. The 36 percent bracket would be reduced to 35 percent in 2002 and 2003, 34 percent in 2004 and 2005, and 33 percent in 2006. The 31 percent bracket would be reduced to 30 percent in 2002, 29 percent in 2003, 28 percent in 2004, 27 percent in 2005, and 25 percent in 2006. The 28 percent bracket would be reduced to 27 percent in 2002 and 2003, 26 percent in 2004 and 2005, and 25 percent in 2006.

The bill would begin to address the growing problem of the alternative minimum tax by repealing the current-law provisions that offset the refundable child credit and the earned income credit by the amount of the alternative minimum tax.

The bill would provide that the long-term financial condition of the Social Security and Medicare Trust Funds would not be affected by the underlying bill.