Compared against revenues that the federal government would collect over the next decade if the 2001-2003 tax cuts all expire as scheduled under current law, the president’s proposal to extend the cuts primarily for low- and middle-income households would cost about $3 trillion while permanent extension of all of the tax cuts would cost about $3.7 trillion. Under either plan, tax savings would increase with income: the poorest quintile (or fifth) of households would get an average income tax cut of about $70 in 2012 under either plan, while households in the top quintile would save an average of about $2,900 under the president’s proposal and $9,000 if Congress extends all the cuts. At the very top of the income distribution, households in the top 0.1 percent—with income over $2.7 million and an average income of $8.4 million—would save an average of about $60,000 under President Obama’s plan and roughly $370,000 with complete extension.
Who would be affected compared to a full extension? more.
- Number of tax units affected. Here
- Descriptive statistics of these tax units. Here
- Distibutional estimates
The Debate over Expiring Tax Cuts: What about the Deficit?
- Explains the tradeoffs between deficit reduction and the impact on taxpayers of letting specific tax cuts to expire.
About 19 percent of the revenue loss from full extension of the tax cuts goes for provisions benefitting high-income households.
Distributional Effects of the Expiration of the Tax Cuts: From Current Law to the President's Proposal to Current Policy, 2012