Economic Growth and Tax Relief Reconciliation Act of 2001

2001Bush tax cuts2001 tax cutEGTRRA10-year tax cut2001 Bush Tax cutsacross-the-board tax cutBush's tax cutsBush-era tax cutsEconomic Growth and Tax Relief Reconciliation Act
The Economic Growth and Tax Relief Reconciliation Act of 2001 was a major piece of tax legislation passed by the 107th United States Congress and signed by President George W. Bush.wikipedia
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107th United States Congress

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The Economic Growth and Tax Relief Reconciliation Act of 2001 was a major piece of tax legislation passed by the 107th United States Congress and signed by President George W. Bush.

Bush tax cuts

Bush-era tax cutsBush administration tax cutsBush tax cut
It is also known by its abbreviation EGTRRA (often pronounced "egg-tra" or "egg-terra"), and is often referred to as one of the two "Bush tax cuts".
The 2001 act and the 2003 act significantly lowered the marginal tax rates for nearly all U.S. taxpayers.

George W. Bush

BushPresident BushPresident George W. Bush
The Economic Growth and Tax Relief Reconciliation Act of 2001 was a major piece of tax legislation passed by the 107th United States Congress and signed by President George W. Bush.
Facing congressional opposition, Bush held townhall style meetings across the U.S. in order to increase public support for his plan for a $1.35 trillion tax cut program—one of the largest tax cuts in U.S. history.

Reconciliation (United States Congress)

reconciliationbudget reconciliationByrd Rule
Due to the narrow Republican majority in the United State Senate, EGGTRA was passed using the reconciliation process, which bypasses the Senate filibuster. The sunset provision allowed EGTRRA to sidestep the Byrd Rule, a Senate rule that amends the Congressional Budget Act to allow Senators to block a piece of legislation if it purports a significant increase in the federal deficit beyond ten years.
Bills passed using the reconciliation process include the Consolidated Omnibus Budget Reconciliation Act of 1985, the Personal Responsibility and Work Opportunity Act of 1996, the Economic Growth and Tax Relief Reconciliation Act of 2001, the Health Care and Education Reconciliation Act of 2010, and the Tax Cuts and Jobs Act of 2017.

Individual retirement account

IRAIRAsindividual retirement accounts
The act also reduced capital gain taxes, raised raised pre-tax contribution limits for defined contribution plans and Individual Retirement Accounts, and eliminated the estate tax. Overall it raised pre-tax contribution limits for defined contribution plans and Individual Retirement Accounts (IRAs), increased defined benefit compensation limits, made non-qualified retirement plans more flexible and more similar to qualified plans such as 401(k)s, and created a "catch-up" provision for older workers.
Starting with the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), many of the restrictions of what type of funds could be rolled into an IRA and what type of plans IRA funds could be rolled into were significantly relaxed.

Jobs and Growth Tax Relief Reconciliation Act of 2003

2003Bush tax cuts2003 Bush Tax cuts
In 2003, Bush signed another bill, the Jobs and Growth Tax Relief Reconciliation Act of 2003, which contained further tax cuts and accelerated certain tax changes that were part of EGGTRA.
Among other provisions, the act accelerated certain tax changes passed in the Economic Growth and Tax Relief Reconciliation Act of 2001, increased the exemption amount for the individual Alternative Minimum Tax, and lowered taxes of income from dividends and capital gains.

American Taxpayer Relief Act of 2012

stepsAmerican Taxpayer Relief ActAmerican Taxpayer Relief Acts
Due to the rules concerning reconciliation, EGGTRA contained a sunset provision that would end the tax cuts in 2011, but most of the cuts were made permanent with the passage of the American Taxpayer Relief Act of 2012. After a two-year extension by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, the Bush era rates for taxpayers making less than $400,000 per year ($450,000 for married couples) were ultimately made permanent by the American Taxpayer Relief Act of 2012.
The Act centers on a partial resolution to the US fiscal cliff by addressing the expiration of certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (known together as the "Bush tax cuts"), which had been temporarily extended by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

2010 Tax Relief Act111-3122010 tax deal
After a two-year extension by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, the Bush era rates for taxpayers making less than $400,000 per year ($450,000 for married couples) were ultimately made permanent by the American Taxpayer Relief Act of 2012.
The Act centers on a temporary, two-year reprieve from the sunset provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), together known as the "Bush tax cuts."

Filibuster in the United States Senate

filibusterSenate filibusterfilibustered
Due to the narrow Republican majority in the United State Senate, EGGTRA was passed using the reconciliation process, which bypasses the Senate filibuster.

Sunset provision

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One of the most notable characteristics of EGTRRA is that its provisions were designed to sunset (or revert to the provisions that were in effect before it was passed) on January 1, 2011 (that is, for tax years, plan years, and limitation years that begin after December 31, 2010.
In the Economic Growth and Tax Relief Reconciliation Act of 2001 the US Congress enacted a phaseout of the federal estate tax over the following 10 years, so that the tax would be completely repealed in 2010.

Congressional Budget and Impoundment Control Act of 1974

Congressional Budget Act of 1974Budget and Impoundment Control ActCongressional Budget Act
The sunset provision allowed EGTRRA to sidestep the Byrd Rule, a Senate rule that amends the Congressional Budget Act to allow Senators to block a piece of legislation if it purports a significant increase in the federal deficit beyond ten years.
For example, many of the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 would have expired as soon as fiscal year 2010 if not extended.

401(k)

401K401(k) plan401(k) plans
Overall it raised pre-tax contribution limits for defined contribution plans and Individual Retirement Accounts (IRAs), increased defined benefit compensation limits, made non-qualified retirement plans more flexible and more similar to qualified plans such as 401(k)s, and created a "catch-up" provision for older workers.
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) made 401(k) plans more beneficial to the self-employed.

403(b)

403b planssection 403(b) plan
EGTRRA allows, for the first time, for participants in non-qualified 401(a) money purchase, 403(b) tax-sheltered annuity, and governmental 457(b) deferred compensation plans (but not tax-exempt 457 plans) to "roll over" their money and consolidate accounts, whether to a different non-qualified plan, to a qualified plan such as a 401(k), or to an IRA.
It has tax treatment similar to a 401(k) plan, especially after the Economic Growth and Tax Relief Reconciliation Act of 2001.

457 plan

457457(b)457(b) and 457(f) plans
EGTRRA allows, for the first time, for participants in non-qualified 401(a) money purchase, 403(b) tax-sheltered annuity, and governmental 457(b) deferred compensation plans (but not tax-exempt 457 plans) to "roll over" their money and consolidate accounts, whether to a different non-qualified plan, to a qualified plan such as a 401(k), or to an IRA.
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) made a number of changes in how governmental 457 plans are treated, the most notable of which is that the coordination of benefits limitation was removed.

Capital gains tax in the United States

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That law also lowered the capital gains tax and taxes on dividends.
The Economic Growth and Tax Relief Reconciliation Act of 2001 reduced them further, to 8% and 18%, for assets held for five years or more.

Tax

taxationtaxeslevy
The Economic Growth and Tax Relief Reconciliation Act of 2001 was a major piece of tax legislation passed by the 107th United States Congress and signed by President George W. Bush.

2000 United States presidential election

20002000 presidential electionPresident
Bush had made tax cuts the centerpiece of his campaign in the 2000 presidential election, and he introduced a major tax cut proposal shortly after taking office.

Democratic Party (United States)

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Though a handful of Democrats supported the bill, most support came from congressional Republicans.

Republican Party (United States)

RepublicanRepublican PartyR
Though a handful of Democrats supported the bill, most support came from congressional Republicans.

Capital gain

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The act also reduced capital gain taxes, raised raised pre-tax contribution limits for defined contribution plans and Individual Retirement Accounts, and eliminated the estate tax.

Inheritance tax

estate taxdeath dutiesEstate
The act also reduced capital gain taxes, raised raised pre-tax contribution limits for defined contribution plans and Individual Retirement Accounts, and eliminated the estate tax.

Presidency of Bill Clinton

Clinton administrationClintonBill Clinton administration
A budget surplus had developed during the Bill Clinton administration, and with the Federal Reserve Chairman Alan Greenspan's support, Bush argued that the best use of the surplus was to lower taxes.

Alan Greenspan

Greenspan
A budget surplus had developed during the Bill Clinton administration, and with the Federal Reserve Chairman Alan Greenspan's support, Bush argued that the best use of the surplus was to lower taxes.

United States Senate

U.S. SenatorUnited States SenatorU.S. Senate
Due to the narrow Republican majority in the United State Senate, EGGTRA was passed using the reconciliation process, which bypasses the Senate filibuster. The sunset provision allowed EGTRRA to sidestep the Byrd Rule, a Senate rule that amends the Congressional Budget Act to allow Senators to block a piece of legislation if it purports a significant increase in the federal deficit beyond ten years.

Government budget balance

deficitfiscal deficitgovernment budget deficit
The sunset provision allowed EGTRRA to sidestep the Byrd Rule, a Senate rule that amends the Congressional Budget Act to allow Senators to block a piece of legislation if it purports a significant increase in the federal deficit beyond ten years.