New analysis compares competing tax cut extension plans
New analysis from the Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice (CTJ) provides in depth analysis of the differences between two competing proposals to extend the Bush tax cuts of 2001 and 2003. The plans, championed by Congressional Republicans and President Obama respectively, seek to extend the cuts, set to expire at the end of this year, but offer two distinct approaches.
The term “Bush tax cuts” commonly refers to the income tax cuts and estate tax cuts first enacted under President George W. Bush in 2001 and 2003. As part of the 2009 economic recovery act, President Obama expanded certain parts of the income tax cuts helping low-income families by increasing the Earned Income Tax Credit and Child Tax Credit.
President Obama’s plan proposes to make permanent the Bush income tax cuts for the first $250,000 a married couple makes annually and the first $200,000 that single person makes annually. This means a married couple with a $1 million annual income would enjoy the Bush tax cuts for at least their first $250,000 of income in a year but would pay higher rates on the remaining $750,000.
Under the Congressional Republican’s plan, the Bush income tax cuts for all levels of income would be extended but President Obama’s expansion of the Earned Income and Child Tax Credits would expire at year’s end.
Click here to access the ITEP/CTJ report, which contains data on the two proposals and their predicted effects in all fifty states and the District of Columbia. For information on the two proposals’ effects in Nebraska, click here.