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tax topics
 

2010 Budget Tax Proposal

Continue the 2001 and 2003 tax cuts

The 2001 and 2003 tax acts reduced tax rates on ordinary income, long-term capital gains, and qualified dividends; mitigated marriage penalties; expanded the child tax credit and the child and dependent care tax credit; and phased out limitations on itemized deductions and the phaseout of personal exemptions. All of those changes are scheduled to sunset in 2011, when the individual income tax will revert to its pre-2001 levels. The president includes permanent extension of the tax cuts beyond 2010 as part of his budget baseline. As a result, proposals that would impose pre-2001 tax rates on high-income taxpayers show up as tax increases, even though they would simply impose the same taxes on those taxpayers as would occur under current law.

The following table compares various aspects of the income tax in 2011 under current law and assuming that permanent extension of the 2001 and 2003 tax cuts.

Income Tax Provision

Current Law in 2011

2011 Assuming Extension of 2001 and 2003 Tax Cuts

 

Tax Rates (2011 income ranges for
single filers)

$0 - $8,425

15%

10%

$8,425 - $34,200

15%

15%

$34,200 - $82,850

28%

25%

$82,850 - $172,800

31%

28%

$172,800 - $375,700

36%

33%

$375,700 and over

39.6%

35%

Standard deduction and 15% tax bracket for joint filers

167% of single filers

200% of single filers

Child tax credit

$500

$1,000

Child and dependent care credit

Max. creditable amount

$2,400/child, max $4,800

$3,000/child, max $6,000

Credit rate

20% - 30%

20% - 35%

Phaseout of Personal Exemption

Over $122,500 range

No phaseout

Limitation of Itemized Deductions

Up to 80%

No limitation

Tax on
long-term
capital gains

15% bracket or lower

10%

0%

above 15% bracket

20%

15%

Qualified
Dividends

15% bracket or lower

Regular tax rate

0%

above 15% bracket

Regular tax rate

15%

Distribution tables
        Continue the 2001 and 2003 tax cuts
2012 versus current law by cash income
2012 versus current law by cash income percentiles

Additional Resources
Distribution of the 2001-2006 Tax Cuts: Updated Provisions, Greg Leiserson and Jeff Rohaly, Tax Policy Center, July 2008
Tax Topics: Distribution of the 2001 - 2006 Tax Cuts