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.

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