New estimates from Congress’s Joint Committee on Taxation indicate that millionaires would benefit a disproportionate amount from extending the tax cuts for income at all levels.
According to the estimates released Monday, the average millionaire would see a tax cut of $74,505 in 2013 if all of the Bush tax cuts were extended. That yearly cut would grow to $188,407 by 2021.
In contrast, the JCT estimates that the average American with pre-tax earnings between $50,000 and $75,000 would see a tax cut of approximately $1,034 if the tax cuts were extended for them. Congressional Democrats and the Obama administration want to limit the tax cuts only to adjusted gross incomes above $200,000 for individuals and $250,000 for married couples.
The JCT estimates that 81 percent of the high-income Bush tax cuts, on income above those thresholds, would go to households with incomes over $1 million.
“An extension of the high-end Bush tax cuts would continue to reap a tremendous windfall on the very wealthiest and push our nation much deeper into debt,” said House Ways and Means ranking member Sander Levin, D-Mich., in a statement.
House Republicans on the Ways and Means Committee countered that, according to the JCT , individual rates also apply to pass-through businesses. If Congress “only” allowed the top two rates to rise in 2013 on incomes over $200,000 for individuals and $250,000 for couples. 940,000 small businesses would pay higher taxes, and 53 percent of small business income would be subject to higher taxes. They also cited a separate study from the Tax Foundation that found the top quintile of taxpayers pays 94 percent of all income taxes.
4 Comments
Sander Levin is the ranking Democratic member on the House Ways and Means Committee. The article incorrectly identifies him as a Republican.
Posted by: RussS | July 25, 2012 7:44 AM
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Okay, so the "wealthy" will save a lot more tax dollars than those with lower incomes. What about the percentage of total tax savings on income? This is really the key indicator. If the wealthy save a higher percentage of benefit on the taxes they pay, then adjustments might make sense. However, if the percentage of tax saved by the wealthy is equal to, or less than, the percentage of tax benefits received by lower income tax payers, then the cuts should be extended. Please, don't use numbers without putting them in perspective. It is inciteful, and misleading.
Posted by: debkalakis | July 24, 2012 2:03 PM
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Sticking to the story, do you mean to tell us that both Warren Buffet and the President are telling the truth? Can't be. I've been listening to all those political ads that would seem to indicate all would be good with continued tax cuts across the board forever. More trickle down dreams first brought to us by the Great Communicator.
Where is former Treasury Secretary Stockman when we need more folks that are clear at what the effects of tax legislation really means?
Posted by: topbeancounter | July 24, 2012 12:15 PM
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So what happens when you factor in the mandatory tax penalties associated with Obamacare the will kick in during the time frame of this analysis? What would the net overall tax bite comparison look like?
Posted by: Y | July 24, 2012 11:20 AM
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