Notes and Sources
Cost of Tax Cuts:
All tax cut and income figures were produced by Citizens for Tax Justice and the Institute for Taxation and Economic Policy.
For a detailed explanation of the model used to calculate these figures, visit the Institute for Taxation and Economic Policy.
Changes to the tax code enacted in 2001 and 2003 and extended in 2010:
- reduction of the 28%, 31%, 36% and 39.6% rates to 25%, 28%, 33% and 35%
- introduction of the ten percent tax bracket (lowest bracket was previously 15 percent)
- rate reduction for capital gains and dividends
- expansion of Child Tax Credit
- elimination of “marriage penalty” in the standard deduction
- elimination of “marriage penalty” in the 15 percent rate bracket
- reduction in “marriage penalty” in the Earned Income Tax Credit.
- expansion of the Dependent Care Credit
- repeal of the personal exemption phase-out
- repeal of the itemized deduction disallowance
- increase in the exemptions in the Alternative Minimum Tax (AMT)
Change to the tax code enacted in 2001 and partially extended in 2010:
- The tax cuts enacted in 2001 gradually repealed the estate tax, until it was complete eliminated in 2010. The extension signed by President Obama in December 2010 did not fully extend the repeal of the estate tax, but instead raised the estate tax exemption to $10 million for a married couple and reduced the estate tax rate to 35 percent.
Income figures include wages as well as capital gains, dividends, and other types of income.
"Households" refers to the number of tax returns submitted in each income group.
Figures for lost revenue from the tax cuts are expressed in nominal terms for each year of projected lost revenues.
Richer & Poorer:
Income figures include wages, capital gains, dividends, and other types of income.
Numbers are current for 2011.
Racial data by income group was collected by the U.S. Census Bureau and compiled in Money Income of Households--Distribution by Race, 2009.
What about Corporate Taxes:
Additional $165 billion in FY2012 if corporations had actually paid 35% of profits in taxes:
Calculation reflects 35% of CBO’s projected FY12 corporate profits with inventory valuation adjustment and capital consumption adjustment, less income from Federal Reserve Banks and net income received from equities in foreign corporations (calculated as a share of projected profits by the chained dollar weighted share of net foreign equity income over 2003-2008). Projected corporate income receipts under the alternative fiscal scenario (i.e., adjusted for continuation of the business tax extenders) are netted out of this revenue figure, as are S-corporation individual income taxes, excluding capital gains (calculated from Tax Policy Center Table T11-0154, adjusted from 2011 to fiscal 2012 with projected growth in corporate profits). Dividends and capital gains tax receipts from S-corporation are also netted out, calculated as 40% of capital gains and dividends receipts (the share from pass-throughs in 2007) weighted by S-corporation income as a share of total pass-through income. Lastly, this net decrease in corporate profitability is adjusted for contemporaneously decreased dividends disbursements and capital gains realizations, using the statutory 15% tax rate and the rule of thumb that roughly half of capital gains realizations and half of dividends are not taxed a second time at the individual income level (for an effective net-of-tax rate of 92.5%). See http://www.cbo.gov/sites/default/files/cbofiles/attachments/Jan2012_EconomicBaseline_Release.xls; http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=3035; http://www.irs.gov/pub/irs-soi/10winbulcapitalassets.pdf; http://www.taxpolicycenter.org/UploadedPDF/1000460_dividend.pdf; and Bureau of Economic Analysis National Income and Product Accounts Tables 6.16.D, 7.16, 1.1.4, and 3.2.