WASHINGTON — Here’s some pressure for lawmakers: If they don’t reach agreement on extending soon-to-expire Bush-era tax cuts, nearly all their constituents back home will get big tax increases come January.
A typical family of four with a household income of $50,000 a year would have to pay $2,900 more in taxes in 2011, according to a new analysis by Deloitte Tax LLP, a tax consulting firm. The same family making $100,000 a year would pay $4,500 more in taxes.
A family of four making $500,000 a year would pay $10,800 more in taxes. The same family making $1 million a year would pay $53,200 more.
The estimates are based on total household income, including wages, capital gains and qualified dividends. The estimated tax bills take into account typical deductions at each income level.
Democrats have been arguing for much of the past decade that tax cuts enacted in 2001 and 2003 under then-President George W. Bush provided a windfall for the wealthy. That is true, but they also reduced taxes for the working poor, the middle class and just about everyone in between.
Those tax cuts expire at the end of the year, setting the stage for a high-stakes debate just before congressional elections in November.
President Barack Obama wants to extend the tax cuts for individuals making less than $200,000 and joint filers making less than $250,000 in adjusted gross income.
On Thursday, House Republican leader John Boehner of Ohio said he wants an up-or-down vote on extending all the tax cuts before congressional elections in November.
House Speaker Nancy Pelosi, D-Calif., wouldn’t commit to vote on any tax proposals before the election. She did, however, pledge to address them by the end of the year.
Tax cuts’ impact
Highlights of tax cuts enacted in 2001 and 2003:
• Income-tax rates were reduced, to a bottom rate of 10 percent and a top marginal rate of 35 percent. If the cuts expire, the bottom rate would increase to 15 percent, the top rate would rise to 39.6 percent, and several rates in between would increase as well.
• The child tax credit was increased from $500 per child to $1,000 per child.
• Marriage penalty relief. The standard deduction for married couples was increased, easing the tax hit on many married couples.
Sources: Joint Committee on Taxation; Tax Policy Center
