Theme 2: Taxes in U.S. HistoryLesson 7: Tax Reform in the 1990s and 2000s

Three important acts of tax legislation from 1990-2009 were aimed at reducing the tax burden on individual taxpayers, small businesses, and corporations.

In 1997, President Clinton and Congress enacted the Taxpayer Relief Act.

The key measures included:

• A child tax credit of $500 (later increased to $1,000) per child per year
• Two nonrefundable education tax credits:
  • The Hope credit for the first two years of postsecondary education (later replaced with the four-year American Opportunity credit)
  • The Lifetime Learning credit for any number of years

In 2001, President Bush and Congress passed the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). The Act increased the child tax credit and expanded the education credits.

The Act created the Child and Dependent Care tax credit for employer-provided childcare expenses, and increased the existing dependent care and adoption credits.

President Obama and Congress passed the American Recovery and Reinvestment Act of 2009 (ARRA, or Recovery Act). The purpose of ARRA was to create and save jobs, jumpstart the economy, and build the foundation for long-term economic growth. To put more money in the pockets of consumers, ARRA also:

• Increased the First-Time Homebuyer credit
• Created the refundable Making Work Pay credit
• Replaced the Hope credit with the refundable American Opportunity tax credit