Over the past several months, Citizens for Tax Justice has published several reports to explain the various issues involved in the debate over which parts of the Bush tax cuts should be extended.
CTJ's recently updated reports on competing approaches to the Bush tax cuts compare S. 3773, the proposal introduced by Senate Republican Leader Mitch McConnell to make the Bush tax cuts permanent, and President Obama's proposal to make them permanent for all but the richest 2 percent of taxpayers. The main report includes tables showing the percentage of taxpayers in each Congressional district who are rich enough to lose some portion of the Bush tax cuts under Obama's plan. The tables also show the percentage of taxpayers in each district who have adjusted gross income in excess of $1 million. (About 80 percent of the revenue savings from Obama's plan would come from these taxpayers.)
Also included are state-by-state fact sheets illustrating the distribution of the two tax plans across income groups in each state.
Last month, 31 House Democrats signed a letter to House Speaker Nancy Pelosi in support of extending the Bush tax cuts for all taxpayers, and thus opposing President Obama's proposal to allow the tax cuts to expire for the very rich. New data from Citizens for Tax Justice show that two-thirds of the House Democrats who signed that letter represent districts that have less than the average share of taxpayers rich enough to face higher taxes under President Obama's plan. Further, the claim made in the letter that these very rich taxpayers "are responsible for 25 percent of national consumer spending" is simply incorrect.
Forty-seven House Democrats have reportedly written a letter to Speaker Nancy Pelosi calling for an extension of the Bush tax cuts on investment income for the richest two percent of Americans. These Democrats would preserve the historically low income tax rate of 15 percent for capital gains and stock dividends for the wealthiest taxpayers. This stance places them to the right of Ronald Reagan and illustrates a surprising lack of familiarity with history and economics.
Word on the street is that the Senate is considering including an unlimited farm exclusion from estate tax when it addresses the expiring Bush tax cuts. This report explains how this provision is not likely to help true family farms as much as extremely wealthy families who want to shelter their assets from the estate tax.
Douglas Holtz-Eakin, chief economic adviser for John McCain's presidential campaign and former director of the Congressional Budget Office, recently told the Senate Finance Committee that seniors at all income levels would be hurt if Congress did not make permanent the income tax cut enacted under George W. Bush for corporate stock dividends. As this report explains, only those seniors who are among the richest 2 percent of taxpayers would lose any portion of the Bush income tax cuts.
Nonetheless, Holtz-Eakin claims seniors at all income levels will be harmed. His argument is that corporations would stop paying dividends because the wealthiest individuals receiving them no longer would receive a tax break for them. The former CBO director has overlooked the fact that two-thirds of the dividends paid by corporations are to tax-exempt entities, meaning they would have little, if any, incentive to change their practices for paying dividends.
On July 14, Douglas Holtz-Eakin, chief economic adviser for John McCain’s presidential campaign and former director of the Congressional Budget Office, gave written and oral testimony to the Senate Finance Committee concerning the Bush tax cuts. To make his case, Holtz-Eakin endorsed several myths about the Bush tax cuts.