21-Mar-06
Preliminary Results
http://www.taxpolicycenter.org
Table T06-0058
Impose $10,000 Limit on Individual Income Tax Cuts in
EGTRRA, JGTRRA, and WFTRA With Extension of 2005 AMT Relief, Indexed for Inflation
1
Distribution of Federal Tax Change by Cash Income Class, 2007
Cash Income Class
(thousands of 2005
dollars)2
Less than 10
10-20
20-30
30-40
40-50
50-75
75-100
100-200
200-500
500-1,000
More than 1,000
All
Percent of Tax Units3
With Tax
Cut
With Tax
Increase
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
12.7
73.6
90.7
0.9
Percent
Change in
After-Tax
Income4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-0.2
-2.1
-4.8
-0.6
Share of
Total Federal
Tax Change
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
3.6
16.6
79.7
100.0
Average Federal Tax Change
Dollars
0
0
0
0
0
0
0
2
403
11,066
102,679
315
Percent
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.5
5.9
11.1
2.3
Share of Federal Taxes
Change (%
Points)
0.0
0.0
-0.1
-0.1
-0.1
-0.3
-0.3
-0.5
-0.3
0.2
1.4
0.0
Under the
Proposal
0.2
0.9
2.6
3.9
4.6
12.3
11.1
24.0
15.4
6.7
18.0
100.0
Average Federal Tax Rate5
Change (%
Points)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
1.6
3.4
0.5
Under the
Proposal
3.9
4.9
10.1
14.4
16.8
18.6
20.0
22.4
25.4
28.3
33.8
21.3
Baseline Distribution of Income and Federal Taxes
by Cash Income Class, 2007 1
Cash Income Class
(thousands of 2005
dollars)2
Less than 10
10-20
20-30
30-40
40-50
50-75
75-100
100-200
200-500
500-1,000
More than 1,000
All
Tax Units3
Number
(thousands)
18,336
25,141
20,692
15,679
12,242
21,460
12,836
15,976
4,220
700
362
148,223
Percent of
Total
12.4
17.0
14.0
10.6
8.3
14.5
8.7
10.8
2.8
0.5
0.2
100.0
Average
Income
(Dollars)
5,875
15,558
25,732
36,235
46,569
63,972
89,802
139,382
298,369
706,013
3,053,799
65,748
Average
Federal Tax
Burden
(Dollars)
227
758
2,610
5,221
7,830
11,919
17,976
31,179
75,469
189,022
928,730
13,695
Average
After-Tax
Income4
(Dollars)
5,648
14,800
23,122
31,014
38,739
52,053
71,826
108,203
222,900
516,991
2,125,069
52,053
Average
Federal Tax
Rate5
Share of PreTax Income
Percent of
Total
Share of PostTax Income
Percent of
Total
3.9
4.9
10.1
14.4
16.8
18.6
20.0
22.4
25.3
26.8
30.4
20.8
1.1
4.0
5.5
5.8
5.8
14.1
11.8
22.8
12.9
5.1
11.3
100.0
1.3
4.8
6.2
6.3
6.1
14.5
11.9
22.4
12.2
4.7
10.0
100.0
Share of
Federal Taxes
Percent of
Total
0.2
0.9
2.7
4.0
4.7
12.6
11.4
24.5
15.7
6.5
16.6
100.0
Source: Urban-Brookings Tax Policy Center Microsimulation Model (version 0305-3A).
(1) Calendar year. Baseline is current law with the extension of the 2005 AMT exemption levels ($58,000 for married couples and $40,250 for singles and heads of household), indexed for inflation after
2005; allowance of personal non-refundable credits regardless of tentative AMT; and extending the non-refundable credit for elective deferrals and IRA contributions (the "saver's credit"). Proposal
includes limiting the individual income tax cuts due to the following provisions in EGTRRA, JGTRRA, and WFTRA to $10,000: marginal tax rates; the 10-percent bracket; the child tax credit; the child
and dependent care credit; the standard deduction, 15-percent bracket, and EITC for married couples; tax rates on long-term capital gains and dividends; pension and IRA provisions; expansion of student
loan interest deduction (excludes other education provisions). The effect of these provisions is measured against a pre-EGTRRA baseline with the extension of the 2000 AMT exemption levels ($45,000
for married couples and $33,750 for singles and heads of household), indexed for inflation after 2000; and allowance of personal non-refundable credits regardless of tentative AMT.
(2) Tax units with negative cash income are excluded from the lowest income class but are included in the totals. For a description of cash income, see
http://www.taxpolicycenter.org/TaxModel/income.cfm
(3) Includes both filing and non-filing units. Tax units that are dependents of other taxpayers are excluded from the analysis.
(4) After-tax income is cash income less: individual income tax net of refundable credits; corporate income tax; payroll taxes (Social Security and Medicare); and estate tax.
(5) Average federal tax (includes individual and corporate income tax, payroll taxes for Social Security and Medicare, and the estate tax) as a percentage of average cash income.