Menu
Tax Notes logo
HOMETax Notes ResearchFederalLegislative Documentscongressional news releases

Hulshof Release on Interest and Dividend Exclusions from Income

MAY 21, 1999

Hulshof Release on Interest and Dividend Exclusions from Income

DATED MAY 21, 1999
DOCUMENT ATTRIBUTES

 

=============== FULL TEXT ===============

 

INTEREST AND DIVIDEND EXCLUSION

 

A PROPOSAL BY

 

U.S. REPRESENTATIVE KENNY HULSHOF (R-MO)

 

 

WHAT WOULD THE HULSHOF PROPOSAL DO?

 

 

[1] Based on the premise that taxpayers should not be punished for saving and investing, U.S. Representative Kenny Hulshof (R-MO) is currency drafting legislation that would allow taxpayers to exclude the first $200 in interest and dividend income, $400 for joint filers, for income tax purposes. The exclusion would apply to any combination of interest and dividend income.

WHAT IS THE RATIONALE FOR THE HULSHOF PROPOSAL?

o Taxpayers should not be punished for saving and investing.

 

 

o Represents tax simplification. For taxpayers below the

 

$200/$400 exclusion levels, the need to add interest and

 

dividend earnings to income when calculating federal income

 

tax would be eliminated.

 

 

o Provides across-the-board tax relief to any taxpayer with an

 

interest-earning bank account.

 

 

WHAT IS THE BACKGROUND OF THIS IDEA?

[2] The tax code previously contained a similar provision. Prior to enactment of the Crude Oil Windfall Profit Tax Act of 1980, Section 116 of the Internal Revenue Code provided an exclusion from gross income for the first $100 of dividends received by an individual from domestic corporations, $200 for joint filers. The Crude Oil Windfall Profit Tax Act of 1980 expanded this exclusion to $200 for individuals, $400 for joint filers for both dividend and interest income.

[3] The Economic Recovery Tax Act of 1981 (Pl. 97-34) repealed the $200/$400 interest and dividend exclusion, replacing with a temporary All-Savers Certificate program and a 15% net interest exclusion of up to $3,000, $6,000 for joint filers. A $100/$200 exclusion for dividends remained. The 15% act interest exclusion was repealed for taxable years after 1984. The $100/$200 exclusion for dividends was repealed in tax year 1987 as a result of the 1986 Tax Bill.

HOW MANY TAXPAYERS WOULD RECEIVE RELIEF UNDER THIS PROPOSAL?

[4] Based on U.S. Treasury/IRS Source of Income reports, in the 1995 tax year, 66,551,439 taxpayers reported interest income. 26,234,029 taxpayers reported dividend income. The Joint Committee on Taxation has determined that over 30 million taxpayer would have their complete tax liability on savings and investment eliminated.

DOCUMENT ATTRIBUTES
Copy RID