Comparing President Obama's and Senate Republicans' Tax Plans

State-by-State figures available at: www.ctj.org/bushtaxcuts2010.php

The tax cuts enacted during the presidency of George W. Bush, and modifications of those tax cuts included in the economic recovery act enacted last year, expire at the end of 2010.

Congress must soon decide which parts of these tax cuts to extend or make permanent, and which parts to let expire as scheduled.

President Obama proposes to make the Bush tax cuts permanent for all but the richest two percent of taxpayers. He also proposes to make permanent the modifications of the Bush tax cuts (expansions of the Child Tax Credit and Earned Income Tax Credit) that were included in the recovery act.

Senate Republicans have introduced a bill (S. 3773) to make permanent the income tax cuts enacted during the Bush administration for all taxpayers and to repeal most of the federal tax on the estates of millionaires. This bill would not make permanent the expansions of the Child Tax Credit and Earned Income Tax Credit included in the recovery act.

Under the Republican plan, the bottom 60 percent of U.S. taxpayers would pay $124 more in 2011, on average, than they would under President Obama's plan.

Under the Republican plan, the richest one percent of U.S. taxpayers would pay $45,893 less in 2011, on average, than they would under President Obama's plan.

Under the Republican plan, the richest one percent of taxpayers would receive 34.5 percent of the total tax cuts in 2011.

Source: Institute on Taxation and Economic Policy (ITEP) Tax Model, September 2010.

This report focuses on the Bush tax cuts and the modifications made to the Bush tax cuts in the recovery act. It includes the impact of the President's plan and the Senate Republicans' plan addressing these tax cuts.

Other Republican tax proposals are even more regressive. For example, Congressman Paul Ryan, the ranking Republican on the House Budget Committee, has proposed a radical budget that would first make permanent all the Bush tax cuts, then eliminate all income taxes on capital gains and dividends (a massive boon to the rich) while also creating a new consumption tax.

Bless their greedy, black little hearts...................DotCalm, Editor

The net impact of these changes would be higher taxes for all  but the richest ten percent of taxpayers.

Why Members of Congress want to act this year to address the Bush tax cuts:

Oh, do tell...we’re all ears!

The tax cuts enacted by President George W. Bush and his allies in Congress included a provision causing them to expire at the end of 2010.

Supporters of the Bush tax cuts have consistently demanded that they be made permanent but failed to achieve this goal during the Bush administration.

President Barack Obama campaigned on a pledge to allow all the Bush income tax cuts to expire for taxpayers with adjusted gross income (AGI) above $200,000 (and above $250,000 for married couples).

Only about 2.1 percent of taxpayers have AGI above that threshold, which means that President Obama has pledged to make permanent the Bush income tax cuts for 98 percent of taxpayers!

President Obama has also called on Congress to meet Bush halfway on the estate tax, meaning the estate tax would not be repealed but would be cut in half (in terms of the revenue it collects) compared to the pre-Bush estate tax.

Fewer than half of one percent of estates would be affected by the estate tax under Obama's proposal.

Finally, President Obama signed into law the American Recovery and Reinvestment Act (ARRA) in 2009, which included modifications of provisions in the Bush tax cuts related to the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) for working families.

President Obama has called on Congress to make permanent these changes in the CTC and EITC.

Senate Republicans have introduced their own proposal (S. 3773) to make all the Bush income tax cuts permanent, including the income tax cuts for the wealthy, and to cut the estate tax even more than President Obama proposes.

This is why the very rich would pay much less under the Senate Republicans' plan than under the President's plan.

At the same time, the Republicans' bill, S. 3773, would allow the expansions of the CTC and EITC in the recovery act to expire.

This is why low-income and middle-income taxpayers would pay more under the Senate Republican plan than under the President's plan.

Why the Bush Tax Cuts for the Rich Should Expire as Scheduled. Fiscal responsibility, job creation, and tax fairness all depend on Congress allowing the Bush tax cuts for the rich to expire at the end of this year as scheduled.

Extending the tax cuts for the rich would add over a trillion dollars to the ten-year federal budget deficit.

According to figures from the Treasury, extending the Bush income tax cut for the richest 2 percent would cost $678 billion over a decade.

The cost of the additional estate tax cut in the Senate Republican bill has not been officially estimated and made public yet but is likely to be in the neighborhood of $100 billion, based on previous proposals that were similar.

Since no one in Congress has even entertained the idea of offsetting the costs of any of these tax cuts, they would result in additional interest payments on the national debt that would likely bring the total additional cost (compared to the President's tax plan) to over $1 trillion.

The federal budget deficit is a long-term problem that cannot be addressed in one year, but must be addressed over several years.

The first step in addressing the deficit is to stop enacting tax cuts for the taxpayers who need them the least!

Extending the Bush tax cuts for the rich would limit resources that could be used to create jobs and improve the economy.

The non-partisan Congressional Budget Office (CBO) recently ranked making permanent the Bush tax cuts for all taxpayers (including the rich) as the least effective policy option for creating jobs over the next couple of years.

The CBO and most economists believe that short-term job creation is more likely to result from policies that put money in the hands of low-income and middle-income people, who are likely to immediately spend any new money on necessities that they have delayed purchasing.

This increase in consumer demand will allow businesses that make and sell these products to hire more workers or avoid layoffs that would otherwise occur.

In the long-term, many economists believe that investments in education, infrastructure, alternative energy and other public goods are far more beneficial to our economic growth than the parts of the Bush tax cuts that benefit the wealthy.

This should not be surprising. Federal taxes were higher for most Americans at the end of the Clinton years, and the economy was performing far better then than it is now.

At very least, one can conclude that the Bush tax cuts did not result in the economic prosperity that their supporters promised would result. Surprise! Surprise!

Requiring two percent of taxpayers to once again pay income taxes at rates in place during the Clinton years will not harm the economy, and neither will the President's proposal to cut the estate tax in half rather than permanently repeal it altogether.

Extending the Bush tax cuts for the rich will perpetuate the unfairness that President Bush added to the federal tax system. Bless his black little heart, that unAmerican little prick!

Before President George W. Bush took office, the federal income tax already included a special, low rate for income that takes the form of capital gains.

Since three fourths of capital gains income goes to the richest one percent of taxpayers, this means that some very wealthy taxpayers could pay federal income taxes at lower effective rates than middle-income people whose income takes the form of wages and salaries.

President Bush increased this unfairness by reducing the special top rate for capital gains from 20 percent to 15 percent, and by creating a new special rate for stock dividends (which had previously been taxed just like any other income), also set at 15 percent. Remember, these were his people.

Middle-income people who work pay federal income taxes at a top rate of 15 or 25 percent, and must also pay about 15 percent in federal payroll taxes on all their income.

This is why middle income people who work often pay more in federal income taxes than wealthy people who live off their investment income.

Why the Modifications of the Bush Tax Cuts Enacted as Part of the Recovery Act Should be Made Permanent:

Many middle-income and low-income taxpayers would end up paying more in taxes under the Republican plan than they would under President Obama's plan.

That's because President Obama proposes to make permanent some modifications of the parts of the Bush tax cuts that really did help working families (provisions related to the CTC and EITC) while Republican lawmakers would allow these modifications of the CTC and EITC to expire.

The CTC and EITC are both refundable tax credits, meaning that they often benefit families who don't earn enough to have any federal income tax liability.

These families pay other types of federal taxes (like payroll taxes, gas taxes, tobacco taxes and others) as well as state and local taxes.

These other types of taxes are particularly regressive, meaning they take a larger share of income from middle-income and low-income families than they take from the rich.

So it's entirely reasonable that Congress and the President would use refundable credits in the federal income tax like the CTC and EITC to offset some of the regressive impact of those other taxes.

If the improvements in the CTC and EITC are not made permanent, the poorest three fifths of taxpayers would lose $124 of tax cuts, on average.

The expansion of the CTC, which President Obama wants to make permanent, makes it more accessible to low-income families by lowering the earnings requirement for the refundable portion of the credit.

The expansion of the EITC, which President Obama also wants to make permanent, has two parts.

One part further reduces the "marriage penalty" that would otherwise make the EITC less generous for a married couple than for two unmarried individuals. The second part modestly increases the
EITC for larger families.

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Basic Web Portals

Several web sites focus directly on the gap between the rich and everyone else. They feature everything from stats on our grand divide to the latest on anti-inequality action opportunities.

www.extremeinequality.org

How unequal are we? Why does extreme inequality matter so much? Where can activists find tools for narrowing that inequality? This site, just created by the Working Group on Extreme Inequality, answers these questions and much more.

www.inequality.org

This information center for journalists, teachers, policy-makers and citizens features a wealth of facts and insights.

www.faireconomy.org

For more than a dozen years United for a Fair Economy has been helping community, labor and religious groups understand how inequality impacts us all. This site offers free inequality workshop materials and dissects the nation's growing wealth divide.

Look folks...unless you’re stinkin’ rich, stay with a president who has our best interests at heart.
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