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Tax Topics

Tax Topics

2009 Tax Stimulus
2012 Election Tax Plans
2015 Budget
Alternative Minimum Tax (AMT)
American Jobs Act of 2011
Brief Description of the Model 2013
Camp Tax Reform Plan
Current-Law Distribution of Taxes
Deficit Reduction Proposals
Distribution of the 2001 - 2008 Tax Cuts
Earned Income Tax Credit
Economic Stimulus
Education Tax Incentives
Estate and Gift Taxes
Expiration of the Bush Tax Cuts
Explanation of Income Measures 2013
Federal Budget
Fiscal Cliff
Fiscal Crisis
Flow-Through-Enterprises
Guide to TPC Tables
Health Insurance Tax Incentives
Homeownership
How to Interpret Distribution Tables 2013
Marriage Penalties
Model FAQ 2013
Model Related Resources and FAQs
Payroll Taxes
Presidential Transition - 2009
Recent Tax Stimulus Legislation
Retirement Saving
Tax Encyclopedia Index
Tax Expenditures
Tax Reform Proposals
Value-Added Tax (VAT)
Who Doesn't Pay Federal Taxes?
Working Families

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tax topics
 
American Jobs Act of 2011

The American Jobs Act of 2011, President Obama’s proposal to help reduce unemployment, would temporarily cut individual and business taxes to promote job growth. It would also permanently raise taxes on high-income individuals and certain businesses to offset lost revenues. The Senate has introduced a bill with an alternative method of tax offsets. The Tax Policy Center has analyzed the distributional effects of selected tax cuts and increases in the proposal. TPC has also examined separately the effects of two of the proposed tax changes: 1) reducing the 2012 OASDI tax rate for employees to 3.1 percent and 2) limiting the value of certain deductions and exclusions to 28 percent.

Tax cuts analyzed:

  • Reduce the 2012 OASDI tax rate for employees to 3.1%
  • Reduce the 2012 OASDI tax rate for employers to 3.1% with a $5 million cap on total remuneration
  • Provide a temporary tax credit for increased payroll
  • Extend 100% bonus depreciation for certain business assets through 2012

President’s Version, Tax offsets analyzed:

  • Limit the value of all itemized deductions and certain other tax expenditures to 28 percent for high-income taxpayers
  • Tax carried interest in investment partnerships as ordinary income
  • Close loopholes for corporate jet depreciation
  • Repeal oil and gas subsidies

Senate Version, Tax offsets analyzed:

  • Impose 5.6% surcharge on modified AGI in excess on $1 million ($500,000 for married individuals filing a separate return). Modified AGI equals AGI plus excluded income earned abroad minus the investment interest expense deduction for itemizers.

American Jobs Act of 2011: Distribution Tables
Baseline: Current Law
All Tax Cuts
By Cash Income Levels
By Cash Income Percentiles

Reduction in Employee Share of Social Security Tax to 3.1%
By Cash Income Levels
By Cash Income Percentiles

President Version: All Tax Offsets
By Cash Income Levels
By Cash Income Percentiles
Senate Version: All Tax Offsets
By Cash Income Levels
By Cash Income Percentiles

28% Limitation on Certain Deduction and Exclusions
By Cash Income Levels
By Cash Income Percentiles



President Obama’s Proposal for the Joint Committee

President Obama proposed that the Joint Committee consider specific tax increases to fulfill revenue needs. Those increases include:

  • Provisions similar to the Administrations FY2012 Budget (see a more detailed explanation of these provisions here)
    • Allow the 2001-03 tax cuts to expire for all individuals making less than $200,000 ($250,000 for joint filers), indexed for inflation after 2009
    • Impose the estate tax at 2009 levels
    • Index the AMT exemptions and tax bracket and phaseout thresholds for inflation from their 2011 values
  • Limit the value of all itemized deductions and certain other tax expenditures to 28 percent for high-income taxpayers
  • Tax carried interest in investment partnerships as ordinary income
  • Close loopholes for corporate jet depreciation
  • Repeal oil and gas subsidies
  • Impose corporate and international offsets such as reforming international tax system, repealing LIFO, reforming treatment of insurance industry, and eliminating coal preferences


President’s Proposal for the Joint Committee:
Distribution Tables
Baseline: Current Law
By Cash Income Levels
By Cash Income Percentiles

Baseline: Current Policy
By Cash Income Levels
By Cash Income Percentiles


President’s Proposal for the Joint Committee:
Compared with Previous Tax Laws *
Average After-Tax Income
By Cash Income Percentiles

Average Effective Tax Rates
By Cash Income Percentiles

* Previous tax laws include: Pre-EGTRRA tax law, 2008 tax law, and 2011 tax law. Comparison is with the President’s proposal, both with and without the tax provisions in the Affordable Care Act of 2010.