Research desk compares: Who gets hit hardest if the Bush tax cuts expire?
By Dylan Matthews
If we let the Bush tax cuts expire for those making more than $250,000, what will be the distribution of those increased taxes? How much of that increase will millionaire's pay? How much is the share of the increase paid by people making less than say $400,000, who are only paying an increase on the top end of their income? How much of it will be paid by small business owners? Thanks.
I answered the last part of this question, about the effect on small-business owners, a few days back. As for the rest, this chart from the Wall Street Journal demonstrates that not only do low-, middle- and even upper-middle-class people not suffer under President Obama's proposed tax changes, they actually benefit relative to if the Bush tax cuts were extended in full:
Unfortunately, this does not include the effect of letting the Bush tax cuts expire in their entirety, which CBO projections show would deal with much of the deficit problem in the medium to long term. Luckily, the Tax Foundation has crunched those numbers as well. Here's the WSJ graph modified to include the effect of letting the tax cuts expire as planned. S = single, M = married, *E indicates the number of earners in the household, and *C indicates the number of children:
The pattern here is fairly simple.Letting all the tax cuts expire produces the highest tax burden of the three for every group except the very rich, who pay the most under
Obama's plan. Below the $300,000-a-year group, the lowest burden comes from the Obama tax proposals, while above that group it comes from extending the Bush tax cuts. Extending the cuts in their entirety, then, would primarily benefit high earners, while the Obama plan both raises rates on very high earners, relative to the status quo, and reduces the burden of low- and middle-income taxpayers.
To see how these different scenarios would affect you, or another hypothetical household, check out the Tax Foundation's tax calculator at MyTaxBurden.org, which will produce a rough guess of how much you'll owe under the status quo, full extension of the Bush tax cuts, and Obama's proposals.
By Dylan Matthews
July 30, 2010; 1:57 PM ET
Save & Share: Previous: A rare bit of good news on the climate front
Next: When did Lindsey Graham change his mind on immigration?
Posted by: sash64 | July 30, 2010 2:58 PM | Report abuse
Posted by: theonionfisher | July 30, 2010 3:18 PM | Report abuse
Posted by: senglish887 | July 30, 2010 4:46 PM | Report abuse
Posted by: michaelh81 | July 30, 2010 4:53 PM | Report abuse
Posted by: slag | July 30, 2010 7:29 PM | Report abuse
Posted by: theamazingjex | July 31, 2010 12:51 AM | Report abuse
Posted by: homefried1 | July 31, 2010 9:30 AM | Report abuse
Posted by: prospector | July 31, 2010 11:58 AM | Report abuse
Posted by: hdc77494 | July 31, 2010 9:48 PM | Report abuse
Posted by: invention13 | August 1, 2010 10:12 PM | Report abuse
Posted by: Falmouth1 | August 2, 2010 6:58 AM | Report abuse
Posted by: josephpturner | August 2, 2010 12:14 PM | Report abuse
Posted by: garybucher | August 2, 2010 1:17 PM | Report abuse
The comments to this entry are closed.