26-Jun-06 Preliminary Results http://www.taxpolicycenter.org Table T06-0193 Maintain 2007 Estate Tax Rate (45 Percent) and Raise Exemption Level to $5 Million Baseline: Equal-Cost Alternative that Maintains 2007 Exemption Level ($2 million) and Reduces Rate to 23.5 Percent Distribution of Federal Tax Change by Cash Income Class, 2011 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 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 0.1 0.2 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.0 Percent Change in After-Tax Income4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.0 -0.4 0.0 Share of Total Federal Tax Change n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Average Federal Tax Change Dollars 0 -1 -2 -1 -1 0 -3 -118 -243 62 7,945 0 Percent -0.1 -0.1 -0.1 0.0 0.0 0.0 0.0 -0.3 -0.3 0.0 0.8 0.0 Share of Federal Taxes Change (% Points) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 -0.1 0.0 0.1 0.0 Under the Proposal 0.2 0.9 2.7 3.8 4.4 11.8 11.2 25.8 16.5 6.5 16.0 100.0 Average Federal Tax Rate5 Change (% Points) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 -0.1 0.0 0.2 0.0 Under the Proposal 4.3 6.0 12.0 16.1 18.5 20.9 22.6 25.1 27.4 28.6 32.3 23.3 Baseline Distribution of Income and Federal Taxes by Cash Income Class, 2011 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) 17,076 24,604 22,025 16,710 13,168 22,575 14,102 18,722 5,166 825 423 155,984 Percent of Total 11.0 15.8 14.1 10.7 8.4 14.5 9.0 12.0 3.3 0.5 0.3 100.0 Average Income (Dollars) 6,303 17,000 28,090 39,487 50,814 69,796 98,049 152,864 324,098 769,080 3,274,032 76,577 Average Federal Tax Burden (Dollars) 270 1,019 3,379 6,342 9,388 14,585 22,180 38,532 88,923 220,182 1,049,101 17,858 Average After-Tax Income4 (Dollars) 6,033 15,981 24,711 33,145 41,427 55,211 75,869 114,331 235,174 548,898 2,224,930 58,719 Average Federal Tax Rate5 Share of PreTax Income Percent of Total Share of PostTax Income Percent of Total 4.3 6.0 12.0 16.1 18.5 20.9 22.6 25.2 27.4 28.6 32.0 23.3 0.9 3.5 5.2 5.5 5.6 13.2 11.6 24.0 14.0 5.3 11.6 100.0 1.1 4.3 5.9 6.1 6.0 13.6 11.7 23.4 13.3 4.9 10.3 100.0 Share of Federal Taxes Percent of Total 0.2 0.9 2.7 3.8 4.4 11.8 11.2 25.9 16.5 6.5 15.9 100.0 Source: Urban-Brookings Tax Policy Center Microsimulation Model (version 0305-3A). (1) Calendar year. Baseline is current law plus the following provisions: $2 million effective exemption; single statutory rate of 23.5 percent; repeal the state death tax credit and replace with a deduction for state estate taxes paid; repeal the 5-percent surtax. Proposal would increase the exemption to $5 million and create a single statutory estate tax rate of 45 percent. (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.