Bill Overview
Title: To provide the equivalent of a 6-month Federal income tax holiday for certain individuals.
Description: This bill reduces the income tax of individual taxpayers for taxable years beginning after December 31, 2021, by the six-month federal income tax holiday amount. That amount is 50% of the income tax otherwise imposed and is phased out based upon taxpayer adjusted gross income.
Sponsors: Rep. Moore, Barry [R-AL-2]
Target Audience
Population: Individuals subject to federal income tax
Estimated Size: 152000000
- The bill targets individual taxpayers in the United States.
- The main beneficiaries are those who pay federal income tax, which generally includes employed individuals, self-employed workers, and contractors.
- The bill states that the reduction applies to taxable years after December 31, 2021, impacting taxpayers in the immediate subsequent taxable year.
- The tax holiday is phased out based on adjusted gross income, implying it is designed to benefit those within certain income brackets more.
- People not filing income tax returns, such as low-income individuals below the tax threshold and potentially undocumented workers, as well as retirees relying solely on social security, are less likely to be impacted directly.
Reasoning
- The policy targets individual taxpayers, particularly those within income brackets where a 50% income tax holiday is impactful.
- High-income earners who phase out of benefits will have minimal gains from the policy, whereas middle to lower-middle income individuals who pay federal taxes will benefit more substantially.
- Low-income individuals who don't pay federal income tax may not experience any direct benefit, aligning with IRS reports suggesting 152 million taxpayers.
- The population includes diverse demographics across urban and rural areas, various occupations, and family statuses.
- The budget constraints limit the policy's reach, ensuring it prioritizes individuals who actively contribute to federal income tax revenues.
Simulated Interviews
Software Engineer (Austin, TX)
Age: 26 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- I'm in favor of the tax holiday, as it's a great relief for someone just starting her career.
- With the high cost of living in Austin, extra financial ease allows me to budget better.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 4 |
Automotive Technician (Detroit, MI)
Age: 38 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- Any tax cut is welcome, but I worry it might mean less funding for important programs in the future.
- This will help with immediate household expenses.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 4 |
Freelance Graphic Designer (Miami, FL)
Age: 28 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 7.0 years
Commonness: 5/20
Statement of Opinion:
- I'm relieved that the policy includes self-employed people like me.
- These savings will allow me to invest more in my business.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 8 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 9 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Senior Accountant (New York City, NY)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 3/20
Statement of Opinion:
- The tax cut is not as beneficial as I'd hope due to my income level.
- It’s a dent, but appreciated with tuition payments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 4 |
| Year 10 | 4 | 4 |
| Year 20 | 4 | 4 |
Factory Worker (Des Moines, IA)
Age: 59 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- It's helpful but I'm concerned about impacts on social services funding my family relies on.
- This relief is timely as I prepare for retirement.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 5 | 4 |
Restaurant Manager (Atlanta, GA)
Age: 31 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 6.0 years
Commonness: 7/20
Statement of Opinion:
- It's such a relief to have a lower tax bill, makes saving up for a house a bit easier.
- I’m glad the government is considering the common people.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 4 |
| Year 2 | 7 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 6 | 3 |
| Year 10 | 6 | 3 |
| Year 20 | 4 | 3 |
Small Business Owner (Portland, OR)
Age: 52 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 8.0 years
Commonness: 6/20
Statement of Opinion:
- This policy is helpful as my business has been struggling post-pandemic.
- Extra funds can go towards the business and improving services.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 4 |
IT Consultant (Phoenix, AZ)
Age: 50 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 5/20
Statement of Opinion:
- I appreciate the limited tax burden during the period, but it doesn’t change much long-term.
- It's a nice short-term benefit, but I worry about fiscal sustainability.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
University Professor (Los Angeles, CA)
Age: 34 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- This reduction will help manage student loans better and aid savings for the future.
- Wishes the phase-out was less aggressive for those in educational sectors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Retired (Charleston, WV)
Age: 66 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- The policy won’t directly benefit me since I don’t pay federal taxes anymore.
- Concerned about long-term impacts on Medicare or Social Security.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 4 | 4 |
| Year 20 | 4 | 4 |
Cost Estimates
Year 1: $260000000000 (Low: $250000000000, High: $270000000000)
Year 2: $0 (Low: $0, High: $0)
Year 3: $0 (Low: $0, High: $0)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The bill's impact on tax revenues is significant, with a base estimate of $260 billion for one year.
- Short-term consumer spending stimulation is expected, but its impact on longer-term economic growth is uncertain.
- Administrative efforts to implement the tax holiday and ensure compliance will have short-term costs.