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
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