Plan B would extend all of the 2001/03 tax cuts
including the reduced ordinary income taxrates and the lower dividend and capital gains rates
on the first $1 million of income and wouldrepeal the pre-Bush tax expenditure limits - the Personal Exemption Phaseout (PEP) and theItemized Deduction Phaseout (Pease)
even for households with incomes over $1 million.
Plan B would raise about $300 billion from high-income households, based on apreliminary estimate.
This is less than one third of the revenue offered by Speaker Boehner. It even falls short of the roughly $400 billion that would be raised fromrepealing all of the 2001/03 tax cuts for incomes above $1 million.
Millionaires would get a $50,000 tax cut.
The largest additional tax cuts under the
an would go to households with incomes above $1 million (the top 0.3 percent of households), who would get a tax cut on the first $1 million of their income,rather than the first $250,000 of their income, and would avoid reductions in tax benefitsdue to the PEP and Pease provisions. In contrast, the average tax cut for households withincomes between $200,000 and $500,000 would be $360. (See Table.)
For this reason, 70 percent of the $400 billion lost by increasing the expirationthreshold from $250,000 to $1 million goes to households making more than $1million.
More than 90 percent would go to households with incomes over $500,000.
Tax Cuts Under Plan B Relative to the President’s
Approach(Preliminary Estimates)Income GroupAverage Annual Tax Cut
Relative to President’s Approach
Share of AdditionalTax Cuts
Below $200,000 0 0%$200,000-$500,000 360 6%$500,000-$1 million 11,000 25%Above $1 million 50,000 69%
Provides a tax cut of $1 million per estate for the wealthiest 3 in 1,000 estates, all valuedat more than $7 million per couple.
Plan B would spend $120 billion over the next 10 yearson additional tax cuts for the wealthiest 3 in 1,000 estate.
The large majority of that amountwould be spent on the 1 in 1,000 estates valued at more than $5 million.
Less than 0.5 percent
of the benefits of Plan B would go to business and farmestates valued at less than $5 million:
The Tax Policy Center estimates that only40 businesses or farms
in the entire country that are
valued at less than $5 millionwould owe any
estate tax under the President’s proposal. Less than 0.5 percent of
the additional tax cuts under the Plan B estate tax plan would go to these farmsand businesses.
Raises income taxes on 25 million middle-class families making less than $250,000 by anaverage of $1,000 apiece.