Extend the 2001 and 2003 Tax Cuts for Taxpayers at Incomes below Certain Thresholds
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 the limitation on itemized deductions and the phaseout of personal exemptions. All of those changes were originally scheduled to sunset at the end of 2010, but the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended the sunset to the end of 2012. Under current law, the individual income tax will now revert to its pre-2001 levels in 2013. The president proposes to extend those tax cuts for low- and middle income tax units (married couples with income below $250,000, singles under $200,000, both 2009 values, indexed for inflation). The following table shows how the president’s proposals would affect various tax provisions.*
*The "adjusted baseline" used in the president’s budget in place of current law assumes permanent extension beyond 2012 of all the 2001 and 2003 tax cuts, including those affecting high-income tax units.