What expiring Bush Tax Cuts would mean to average person - best explanation I have found

[Bill USA]

The Washington Post has an interactive chart which shows how various tax plans proposed impact the different income groups.
Click on tab "Let all (Tax) Cuts expire" to see impact of letting Bush Tax cuts expire by income group.

The highest income groups got the largest percentage cut so they would see the largest increase percentage-wise of all brackets. The middle income group ($37,493-$65,656) would see their income tax go up about $1,000. Those in the $65,656 to $111,659 would see their income tax go up $2,124.

(note: this chart was prepared in late Dec 2010)
http://www.washingtonpost.com/wp-srv/special/business/comparing-the-tax-plans/


The impact of the end of the Bush Tax cuts falls heaviest on the highest tax brackets as they enjoyed the biggest cuts percentage-wise. The Tax policy Center did an analysis of the Bush tax Cuts that is summarized in the table at the link below. It shows that the middle quintile in income got a 1.8% point reduction in their income tax rate, while the top 1% got a 4.6% point reduction in their tax rate.

http://www.taxpolicycenter.org/briefing-book/background/bush-tax-cuts/ignore.cfm

[Indydem]

1. I don't have $2124 laying around.

Perhaps you can afford to pay more in taxes, but in this economy, with the way things are going it is exceptionally tight.

Taxes should increase on those making $250k and up.

Why is there suddenly so much being written about raising taxes on the middle and lower classes? Is this to prepare us for the inevitable battle with Republicans where we will cede to their demands and raise taxes on everyone rather than suffer the indignation of defeat and leaving the taxes for the wealthy alone?

[unblock]

2. but it won't really cost you that much. nothing happens in isolation.

much depends on how it's used, but if the federal government gets more revenue due to the shrub cuts expiring, then they're less likely to hike other fees (saving you money) and less likely to borrow as much (lowering interest rates, again saving you money, at least to the extent you're a borrower), and more likely to spend (which may help you get a job or a raise).

ideally, i want the entire tax structure to be FAR more progressive than it is today, but it's been made increasingly regressive over the last 30 years, and we're not going to fix it overnight. ideally the top 2 brackets could stand hikes up to something like 40% and 55% or even higher, but politically, that's not going to happen. letting the shrub cuts expire is the best chance we have of restoring a modicum of progressivity to the tax structure.

[Igel]

7. ?

If they increase taxes instead of fees, I don't see where money's saved. Money's just extracted in a different way.

If the fees aren't as gret as the new taxes, money's still not saved--just less is taken.


We have had record government borrowing. We've had, at the same time, record (or near record) low interest rates. How, exactly, is federal borrowing and the private sector interest rate related?

[unblock]

8. my point is that the top line amount paid in extra income taxes isn't the bottom line net cost.

someone who pays an extra $2124 or whatever due to expiration of the shrub cuts may also save money for various other reasons as i mentioned earlier. not that it would 100% offset it, and it clearly depends on the particular situation, but it isn't likely to be quite as expensive as the full $2124.

as for interest rates, all things being equal, more borrowing means higher interest rates. right now, all things aren't remotely equal, due to wacky economic and financial circumstances pushing interest rates down, overwhelming the upward effect on interest rates that federal borrowing has.

[Bill USA]

3. of course Obama's original plan in his 2011 budget kept the tax cuts for everyone making less than

$250,000. But the GOP would have none of that.

[RainDog]

5. It comes out to 41 dollars a week

no doubt times are tight - but for most people in that tax bracket - it would mean forgoing one movie date per month - tickets, popcorn, drinks...

[JayhawkSD]

4. What about the lowest bracket?

You didn't mention that the lowest bracket would see a 50% increase in their income taxes. Their rate would jump from 10% to 15%. I realize that doesn't fit your narrative of Bush benefiting only the rich very well, but facts are facts.

[Bill USA]

6. the chart at TPC only looks at tax reciepts/payments. They take a more complete look at the whole

Last edited Wed Jun 13, 2012, 05:38 PM - Edit history (1)

picture in other charts such as this one: http://www.taxpolicycenter.org/briefing-book/background/bush-tax-cuts/account.cfm
(The Bush Tax Cuts: If we account for how the cuts are paid for, who benefits from them?)

when you consider how the tax cuts will be paid for (GOP way is to cut programs provided by us taxpayers to those who are financially hurting). The lowest income brackets are more likely to be helped out by Medicaid and Foodstamps and other Gov (i.e. the community we live in - the USA) social welfare programs. Now if these are cut, this would represent losses to the lowest income group (who admittedly are not making enough to surive on).

The table at ( http://www.taxpolicycenter.org/briefing-book/background/bush-tax-cuts/account.cfm ) shows that the lowes income group will end up with their after tax income going DOWN -21.7% with 'equal dollar' financing of tax cuts, or a loss of after-tax income of -2.4% with proportional financing. The top 1% sees no after-tax income loss with "equal dollar" financing of tax cuts, and a gain of 2.5% in after-tax income.

(NOTE: The first table shows 'equal dollar' financing. the second table shows proportional financing of tax cuts)