The Tax Foundation today released Taxpayers Face Uncertainty in 2011 as Bush and Obama Tax Cuts Expire:
Below are tax calculations for a few sample taxpayers. Since it’s not clear how Congress and the President will deal with the expiration of all the tax cuts, we calculate them in three ways. The first is what taxes would have been in 2011 if neither the Bush nor Obama tax cuts ever existed (what we call ‘Pre-Bush’ policy). This is essentially the tax law that was in effect when President Bush was elected and what tax law would be if all the Bush tax cuts were allowed to expire on schedule at the end of 2010. The second scenario is what taxes would be if all Bush-era tax policies were still in effect in 2011. Finally, we look at what taxes would be in 2011 under Obama’s proposed tax policies.
Table 1 Summary: Taxes Owed (+ or -) on Typical Tax Returns | |||
Pre-Bush | Bush | Obama | |
Single Parent, One child, $25,000 | – $928 | – $1,881 | – $2,281 |
Married couple, two earners, three children, $45,000 | $1,020 | – $1,510 | – $3,183 |
Married couple, one earner, two children, $50,000 | $2,825 | $688 | $288 |
Married couple, two earners, two children, $85,000 | $7,235 | $5,383 | $4,583 |
Single, no children, $60,000 | $8,236 | $7,484 | $7,084 |
Single, no children, $150,000 | $29,962 | $26,996 | $26,996 |
Married couple, two earners, two children, $150,000 | $22,776 | $19,268 | $18,468 |
Married couple, two earners, two children, $300,000 | $64,181 | $61,292 | $61,292 |
Married couple, two earners, no children, $500,000 | $130,210 | $123,900 | $130,342 |
Married couple, two earners, no children, $1,000,000 | $298,510 | $254,167 | $307,342 |
Table 2 Summary: Effective Tax Rates (Taxes as a % of Income) of Typical Tax Returns | |||
Pre-Bush | Bush | Obama | |
Single Parent, One child, $25,000 | – 3.7% | – 7.5% | – 9.1% |
Married couple, two earners, three children, $45,000 | 2.3% | – 3.4% | – 7.1% |
Married couple, one earner, two children, $50,000 | 5.7% | 1.4% | 0.6% |
Married couple, two earners, two children, $85,000 | 8.5% | 6.3% | 5.4% |
Single, no children, $60,000 | 13.7% | 12.5% | 11.8% |
Single, no children, $150,000 | 20.0% | 18.0% | 18.0% |
Married couple, two earners, two children, $150,000 | 15.2% | 12.8% | 12.3% |
Married couple, two earners, two children, $300,000 | 21.4% | 20.4% | 20.4% |
Married couple, two earners, no children, $500,000 | 26.0% | 24.8% | 26.1% |
Married couple, two earners, no children, $1,000,000 | 29.9% | 25.4% | 30.7% |
