The Presidents Proposals To Expand Tax Breaks
For Savings, Childcare, Families And Philanthropy
President Clinton announced four major elements of his Targeted Tax Cut
Package aimed at promoting savings, child care, family and philanthropy.
These targeted tax cuts are part of an overall budget plan that maintains
our fiscal discipline, makes investments in key priorities, strengthens
Social Security and Medicare, and pays down the debt by the year 2013.
Specifically, the Presidents targeted tax cut proposals include:
- Retirement Savings Accounts To Help Families Save and Invest And
Expand Pension Coverage for Small Businesses.
The Presidents Retirement Savings Accounts (RSAs) proposal will
give 76 million Americans the opportunity to build wealth and save for
their retirement through a progressive tax cut. The Presidents
proposal builds on the successful model of Individual Development Accounts
(IDAs), extending generous matches to all low- and moderate-income families
to encourage them to develop savings and assets. A person who participated
for 40 years in this savings program could accumulate over $266,000
enough to produce $24,000 a year of income in retirement. This
proposal would cost $54 billion over 10 years.
- In an effort to encourage more small businesses to offer pensions
for their employees, the President will also announce a proposal
to provide a 50 percent tax credit for qualified contributions to
employees pensions. This provision would cost $17 billion
over 10 years.
Reducing the Marriage Penalty for Married, Two-Earner Couples By
Increasing the Standard Deduction
by More Than $2,000.
The President will propose to increase the standard deduction for two-income
married couples to twice that of single filers, providing substantial
tax relief for 9.1 million married couples. When fully phased in, this
change would result in a $2,150 increase in the standard deduction.
The Presidents proposal would also increase the standard deduction
by $500 for single-earner married couples and by $250 for single filers.
Both elements of the Presidents plan would cost $45 billion
over 10 years and benefit 42.1 million families.
- Helping Families Afford Child Care.
President Clinton will include in his FY 2001 budget tax relief for
families struggling to pay for child care. As part of a comprehensive
child care initiative that includes subsidy assistance and new investments
in child care quality, the President will propose to:
- make the Child and Dependent Care Tax Credit refundable for the
- increase the level of the credit;
- extend the credit to parents who stay at home with their children.
The President will also propose tax incentives to encourage businesses
to provide child care for employees.
The child care package would benefit an estimated 8.1 million families
and would cost $30 billion over 10 years.
- Encouraging Philanthropy.
President Clinton today will unveil a package of new tax proposals to
First, he will propose allowing non-itemizers to take a tax deduction
for charitable giving.
Second, he will propose new rules to make it easier for charitable
foundations to make gifts in times of need.
And third, he will propose making it easier for individuals to donate
appreciated assets like securities and real property.
These proposals would cost $14 billion over 10 year.