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American Morning
What the Tax Cut Legislation Means For You
Aired May 28, 2001 - 09:19 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Well, the check's not in the mail yet, but it will be, now that Congress has approved the tax cut bill. The 10-year $1.35 trillion tax cut will mean rebates for millions of taxpayers.
And CNN congressional correspondent Kate Snow joins us now from Capitol Hill with more on this legislation -- hi, Kate.
KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Hi, good morning, Kyra.
Some 100 million checks in the mail, this rebate from the Congress, going out later on this summer at a rate, we're told, of 11 million checks leaving the Treasury Department per week to go out to all of those taxpayers. Americans who filed in 2000 would get somewhere between $300 and $600 in that first rebate check.
But this legislation goes a lot further than that initial payment, it also reduces all income tax brackets for the coming years -- for the next nine years to come. It reduces and eventually repeals the estate tax and it doubles the child tax credit. Every Republican in the House voted for this legislation over the weekend along with 28 Democrats. On the Senate side, 46 Republicans were joined by 12 Democrats in supporting this legislation. And this vote came after days and days of negotiations between House and Senate, Republicans and moderate Democrats.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Tax relief was based on important principles, principles that are compassionate and conservative and principles that were preserved during the legislative process of give and take. We listened to the voices of those in my party and in the Democratic Party who wanted additional help for those at the lowest end of the economic ladder.
SEN. TOM DASCHLE (D-SD), MINORITY LEADER: We're glad that it's a little more titled to working families than the original Bush proposal, so there are some positive things. But unfortunately, there are so many negative things that it outweighs what little positive value we felt there was in the bill.
(END VIDEO CLIP) SNOW: Mr. Daschle, critical of the overall cost of this plan. He says that over the next 10 years eventually the cost could exceed $4 trillion. Mr. Daschle, of course, set to be the next majority leader of the Senate when the Democrats take control. He says he'd like to meet with President Bush this week.
Kate Snow, CNN live, Capitol Hill.
PHILLIPS: All right. Thanks so much, Kate.
And for more on how the tax cut is going to affect your finances, we're joined by Barbara Raasch who's a partner with Ernst & Young's Personal Financial Planning Group in New York.
Barbara, good to see you.
BARBARA RAASCH, ERNST & YOUNG: Nice to see you.
PHILLIPS: OK, we've received a number of e-mails, so I'm going to get right to it. These are questions for you from our viewers.
Here's the first one: With this tax give back of $300 per person, $600 per couple, that the government will be refunding -- I'm still skeptical -- will you have to pay taxes on this?
RAASCH: No, this is actually a check that you're receiving in advance of paying your taxes. It, in fact, is the refund you otherwise would have had to have waited until next April to receive, so it's not taxable income. It's the best kind of check you can get in the mailbox.
PHILLIPS: Yes.
RAASCH: Something you don't have to pay tax on.
PHILLIPS: Yes, no kidding! Great news.
All right. This is in reference to the $600 tax rebate. The question: The report says that the rebate is up to $600. Does this mean that the rebate can be 0 to $600?
RAASCH: What it means is that really how the $600 is calculated is, there's a new tax bracket -- a 10 percent tax bracket. So the first $12,000 of married filing joint's taxable income is now subject to a 10 percent bracket as opposed to a 15 percent bracket. So the up to means that if you don't have $12,000 of taxable income, you won't get the full $600 benefit, if you're married. If you only have $10,000, you'll only get $500.
PHILLIPS: All right. And we've also received a number of people want to know when these checks are get put into the mail? We've been reporting August-September and this...
(CROSSTALK)
RAASCH: Yes. PHILLIPS: ... viewer is saying is that when they definitely go out?
RAASCH: What the Treasury says is that it's going -- they estimate it's going to take them four months to get the software done and calculate the amounts and then produce all these 95 million checks. So the expectation is by September, but the Treasury says that it may take until December for some checks.
PHILLIPS: Barbara, do you know if they're calling in extra staff or paying for overtime to do this?
RAASCH: I don't know about that. I know that the check-writing machines are going to be doing it on their off time, but I don't know if there's additional costs associated with more people. I'm hoping that the answer to that is no, otherwise it defeats part of the purpose of the...
(CROSSTALK)
PHILLIPS: I would say we'll be paying for it, right?
RAASCH: Exactly.
PHILLIPS: All right. This question comes from Terry Guthrie. I've changed addresses since last year's filing. How do I tell the IRS so my refund will come -- or probably rebate -- will come to my new address?
RAASCH: There is a form that you can file with the IRS to report a change of address. I don't know the form number off of the top of my head. But if you go to www.irs.gov Web site, you should be able to find the form and fill it out and send it in quickly so that you can get it to the right address.
PHILLIPS: All right. James Ross wants to know: I don't have enough taxable income to file an income tax return and haven't for some time. Will I be included on the tax rebate of the tax cut bill?
RAASCH: There...
PHILLIPS: I -- you have to pay taxes in order to get the rebate, right, Barbara?
RAASCH: Right. This rebate is about the -- is a reduction, as I said before, in the 15 percent tax bracket down to the 10 percent tax bracket. So you probably won't -- you won't participate in that. But there is a tax credit for which is a refundable credit for the working poor and that is -- that is really -- it's a child credit. So if you have children, you could benefit from that, which you weren't able to benefit before. But this reduction in the 15 percent bracket down to 10 percent won't benefit someone that doesn't pay tax.
PHILLIPS: Right. I was looking at my notes about the 2001 increase in child tax credits from 500 to 600 and on up to 100 in 2010, right, which could be completely refundable for low-income families?
RAASCH: That's right. Yes, it's going to double up to 1,000 in 2010. And, right, that's where people that don't pay tax but do work will be able to get an additional stipend from the government.
PHILLIPS: Barbara Raasch with Ernst & Young's Personal Financial Group, thanks so much for being with us and hammering out those questions.
RAASCH: My pleasure.
PHILLIPS: Thank you.
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