President Obama's 2014 budget would taxes on the highest-income American households, Gleckman writes, but middle-income households would also pay slightly more in taxes than under today?s law.
A framed 1040 form hangs in the halls of the Internal Revenue Service building in Washington. Under President Obama's budget, households making between $100,000 and $200,000 would end up paying an average of about $380 more in taxes in 2023, up from $150 in 2015, Gleckman writes.
Ann Hermes/Staff
EnlargeThe revenue proposals included in President Obama?s 2014 budget would, as intended, significantly raise taxes on the highest-income American households. However, despite Obama?s long-standing pledge to protect individuals making below $200,000 (and couples making $250,000 or less) from any tax hikes, even many of those families would pay slightly more than under today?s tax law.
Skip to next paragraph Howard GleckmanHoward Gleckman is a resident fellow at The Urban-Brookings Tax Policy Center, the author of Caring for Our Parents, and former senior correspondent in the Washington bureau of Business Week. (http://taxvox.taxpolicycenter.org)
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According to?new estimates?by my colleagues at the Tax Policy Center, nearly everyone making $1 million and above would pay more in 2015. Obama?s tax changes (including individual, corporate, estate, and excise tax hikes), would boost their taxes by an average of almost $83,000. Such a change would trim their after-tax income by 3.8 percent.
Obama would boost their average federal tax rate to a hair above 41 percent, an increase of 2.3 percentage points from today?s law.
Overall, those making a million and up would pay 60 percent of the tax increases, and those in the top 5 percent (who make more than $227,000) would pay 85 percent of the new taxes.?
Middle-income households would also pay more than under today?s law, but not much more. Those making between $50,000 and $75,000 would face an average tax hike of about $60 in 2015, trimming their after-tax income by 0.1 percent. Overall, these households would pay about 2 percent of all the new taxes though they represent about one-sixth of all taxpayers.
Those making between $100,000 and $200,000 would also pay a bit more?about $150 on average?and their after-tax income would be cut by about 0.1 percent. While these households represent about 14 percent of all taxpayers, they?d pay roughly?4 percent of Obama?s proposed tax hike .
The story would be a bit different by 2023. A key provision of Obama?s plan?changing the way the income tax is indexed for inflation to a system known as the chained Consumer Price Index?would slowly but steadily raise taxes. Thus, middle-income households would pay a larger share of their incomes in taxes in a decade than in 2015. At the same time, Obama would extend his 2009 tax cuts for low-income families with children and those going to college beyond their 2017 expiration date, reducing taxes for those households.
Those households making between $100,000 and $200,000 would end up paying an average of about $380 more in 2023, up from $150 in 2015. And their share of the total tax hike would nearly double to a bit more than 7 percent.
Obama?s budget included dozens of changes to the revenue code?raising some taxes and cutting others. They include tax increases for high-income households and both tax cuts and tax hikes for others.
His proposed increase in the tobacco tax would disproportionately affect low- and moderate-income taxpayers, who spend a bigger share of their income on cigarettes than the wealthy. However, middle-income households would benefit from two other tax changes: a more generous child and dependent care tax credit, and Obama?s proposal to extend those relatively generous rules for the earned income credit, child tax credit, and education credit.
For high-income taxpayers, the news is nearly all bad. Obama would limit the value of itemized deductions and some other tax preferences to 28 percent, limit the benefits of large tax-favored retirement accounts, adopt a version of the Buffett Rule by imposing a Fair Share minimum tax of 30 percent of adjusted gross income over $1 million (less a charitable credit), and raise taxes on estates, gifts, and certain family trusts.
For the most part, Obama?s tax plan would do exactly what he promised: It would raise taxes by about $1 trillion (at least by his measure) over the next decade. And most, but not quite all, of those new revenues would come from those making $200,000 or more. The president stepped over his no-taxes line-in-the-sand for those making less, but not by much more than the length of his big toe.
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Source: http://rss.csmonitor.com/~r/feeds/csm/~3/_g87vLXXzRQ/Taxes-Who-would-pay-more-under-Obama-budget
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