10‐Mar‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Click on PDF or Excel link above for additional tables containing more detail and breakdowns by filing status and demographic groups.
Table T11‐0025
Administration's FY2012 Budget Proposals
Major Individual Income and Corporate Tax Provisions Baseline: Current Policy
Distribution of Federal Tax Change by Cash Income Percentile, 2013 1
Summary Table
Percent of Tax Units4
Cash Income Percentile2,3
With Tax Cut
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
With Tax Increase
Percent Change in After‐Tax Income5
Share of Total Federal Tax Change
Average Federal Tax Change ($)
Average Federal Tax Rate6
Change (% Points)
Under the Proposal
8.9
20.0
23.7
23.1
20.0
18.4
13.2
22.9
32.5
46.9
65.5
32.8
0.1
0.2
0.1
‐0.1
‐2.4
‐1.3
‐0.3
‐1.3
‐1.1
1.4
101.1
100.0
‐10
‐44
‐42
65
5,325
782
‐0.1
‐0.2
‐0.1
0.1
1.8
1.0
2.8
9.6
16.3
19.5
27.8
22.3
17.1
25.2
25.2
2.7
0.1
60.8
63.0
72.5
97.0
99.9
‐0.2
‐0.2
‐1.3
‐6.3
‐7.9
2.2
1.6
13.6
83.7
46.1
231
346
3,602
87,285
472,806
0.2
0.2
1.0
4.4
5.2
22.2
23.5
26.5
34.9
38.8
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0509‐7).
Number of AMT Taxpayers (millions). Baseline: 5.2 Proposal: 3.7
(1) Calendar year. Baseline is current policy, which assumes that all the temporary provisions in place for calendar year 2011 are extended, with the exception of the payroll tax cut, and indexes the AMT exemption level after 2011. Proposal would a) index the parameters of the AMT to inflation after 2011 and allow non‐refundable credits against tentative AMT; b) extend parts of the 2001 and 2003 tax cuts, including marriage penalty relief, the 10, 15, 25, 28 and a portion of the 33 percent brackets, and the 0%/15% rate structure on capital gains and qualified dividends for taxpayers in those brackets; c) set the threshold for the 36 percent bracket at $200,000 (single), $250,000 (married), or $225,000 (head of household), indexed for inflation after 2009, less the standard deduction and one personal exemption (two if married); d) set the thresholds for PEP and Pease at $250,000 of AGI (married) and $200,000 (single), indexed for inflation after 2009; e) tax capital gains and qualified dividends at 20% for taxpayers in the top two brackets and repeal the 8%/18% rates for assets held more than 5 years; f) extend the $1,000 child tax credit, $3,000 (not indexed) refundability threshold, and allow against the AMT; g) extend the American Opportunity Tax Credit; h) extend the EITC's 45% phase‐in rate for families with 3 or more children and higher phase‐out thresholds for married couples; i) extend the maximum credit amount for the child and dependent care tax credit and increase the phase‐out threshold to $75,000 (not indexed); j) provide automatic enrollment in IRAs; k) limit itemized deductions to 28% for taxpayers in the top two brackets; and l) set the estate tax at its 2009 level ($3.5M exemption, 45% rate) and modify certain valuation discount rules. Business provisions include a) expand and make the R&E credit permanent; b) tax carried interest as ordinary income; c) repeal LIFO; d) expand section 179 expensing; e) reform international tax system; f) reform treatment of financial institutions; g) eliminate fossil fuel preferences; h) reinstate Superfund environmental income tax; and g) reform the treatment of insurance industry.
(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) The cash income percentile classes used in this table are based on the income distribution for the entire population and contain an equal number of people, not tax units. The breaks are (in 2009 dollars): 20% 19,829, 40% 38,180, 60% 66,963, 80% 114,669, 90% 167,030, 95% 236,580, 99% 643,739, 99.9% 2,961,299.
(4) Includes both filing and non‐filing units but excludes those that are dependents of other tax units.
(5) 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.
(6) 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. 10‐Mar‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0025
Administration's FY2012 Budget Proposals
Major Individual Income and Corporate Tax Provisions Baseline: Current Policy
Distribution of Federal Tax Change by Cash Income Percentile, 2013 1
Detail Table
Percent of Tax Units4
Cash Income Percentile2,3
With Tax Increase
With Tax Cut
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Percent Change in After‐Tax 5
Income
Share of Total Federal Tax Change
Average Federal Tax Change
Dollars
Percent
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate6
Change (% Points)
Under the Proposal
8.9
20.0
23.7
23.1
20.0
18.4
13.2
22.9
32.5
46.9
65.5
32.8
0.1
0.2
0.1
‐0.1
‐2.4
‐1.3
‐0.3
‐1.3
‐1.1
1.4
101.1
100.0
‐10
‐44
‐42
65
5,325
782
‐2.9
‐1.5
‐0.5
0.4
6.9
4.6
0.0
‐0.2
‐0.5
‐0.7
1.5
0.0
0.5
3.6
9.9
17.0
68.9
100.0
‐0.1
‐0.2
‐0.1
0.1
1.8
1.0
2.8
9.6
16.3
19.5
27.8
22.3
17.1
25.2
25.2
2.7
0.1
60.8
63.0
72.5
97.0
99.9
‐0.2
‐0.2
‐1.3
‐6.3
‐7.9
2.2
1.6
13.6
83.7
46.1
231
346
3,602
87,285
472,806
0.7
0.7
3.9
14.4
15.6
‐0.5
‐0.4
‐0.1
2.5
1.4
13.4
10.0
16.2
29.4
15.1
0.2
0.2
1.0
4.4
5.2
22.2
23.5
26.5
34.9
38.8
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Baseline Distribution of Income and Federal Taxes
by Cash Income Percentile, 2013 1
4
Tax Units
Cash Income Percentile2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Average Income (Dollars)
Average Federal Tax Burden (Dollars)
Average After‐
5 Tax Income
(Dollars)
Average Federal Tax Rate6
Share of Pre‐
Tax Income
Share of Post‐
Tax Income
Share of Federal Taxes
Percent of Total
Percent of Total
Percent of Total
Number (thousands)
Percent of Total
40,401
35,545
32,339
27,031
23,705
159,683
25.3
22.3
20.3
16.9
14.9
100.0
11,561
29,518
53,265
91,335
295,351
79,379
332
2,882
8,701
17,715
76,702
16,896
11,229
26,636
44,564
73,620
218,649
62,484
2.9
9.8
16.3
19.4
26.0
21.3
3.7
8.3
13.6
19.5
55.2
100.0
4.6
9.5
14.4
20.0
52.0
100.0
0.5
3.8
10.4
17.8
67.4
100.0
11,940
5,860
4,707
1,197
122
7.5
3.7
3.0
0.8
0.1
142,598
204,431
366,652
1,983,475
9,019,082
31,381
47,703
93,397
604,997
3,028,194
111,217
156,728
273,255
1,378,477
5,990,888
22.0
23.3
25.5
30.5
33.6
13.4
9.5
13.6
18.7
8.7
13.3
9.2
12.9
16.5
7.3
13.9
10.4
16.3
26.9
13.7
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0509‐7).
Number of AMT Taxpayers (millions). Baseline: 5.2 Proposal: 3.7
(1) Calendar year. Baseline is current policy, which assumes that all the temporary provisions in place for calendar year 2011 are extended, with the exception of the payroll tax cut, and indexes the AMT exemption level after 2011. Proposal would a) index the parameters of the AMT to inflation after 2011 and allow non‐refundable credits against tentative AMT; b) extend parts of the 2001 and 2003 tax cuts, including marriage penalty relief, the 10, 15, 25, 28 and a portion of the 33 percent brackets, and the 0%/15% rate structure on capital gains and qualified dividends for taxpayers in those brackets; c) set the threshold for the 36 percent bracket at $200,000 (single), $250,000 (married), or $225,000 (head of household), indexed for inflation after 2009, less the standard deduction and one personal exemption (two if married); d) set the thresholds for PEP and Pease at $250,000 of AGI (married) and $200,000 (single), indexed for inflation after 2009; e) tax capital gains and qualified dividends at 20% for taxpayers in the top two brackets and repeal the 8%/18% rates for assets held more than 5 years; f) extend the $1,000 child tax credit, $3,000 (not indexed) refundability threshold, and allow against the AMT; g) extend the American Opportunity Tax Credit; h) extend the EITC's 45% phase‐in rate for families with 3 or more children and higher phase‐out thresholds for married couples; i) extend the maximum credit amount for the child and dependent care tax credit and increase the phase‐out threshold to $75,000 (not indexed); j) provide automatic enrollment in IRAs; k) limit itemized deductions to 28% for taxpayers in the top two brackets; and l) set the estate tax at its 2009 level ($3.5M exemption, 45% rate) and modify certain valuation discount rules. Business provisions include a) expand and make the R&E credit permanent; b) tax carried interest as ordinary income; c) repeal LIFO; d) expand section 179 expensing; e) reform international tax system; f) reform treatment of financial institutions; g) eliminate fossil fuel preferences; h) reinstate Superfund environmental income tax; and g) reform the treatment of insurance industry.
(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) The cash income percentile classes used in this table are based on the income distribution for the entire population and contain an equal number of people, not tax units. The breaks are (in 2009 dollars): 20% 19,829, 40% 38,180, 60% 66,963, 80% 114,669, 90% 167,030, 95% 236,580, 99% 643,739, 99.9% 2,961,299.
(4) Includes both filing and non‐filing units but excludes those that are dependents of other tax units.
(5) 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.
(6) 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. 10‐Mar‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0025
Administration's FY2012 Budget Proposals
Major Individual Income and Corporate Tax Provisions Baseline: Current Policy
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2013 1
Detail Table
Percent of Tax Units4
Cash Income Percentile2,3
With Tax Increase
With Tax Cut
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Percent Change in After‐Tax Income5
Share of Total Federal Tax Change
Average Federal Tax Change
Dollars
Percent
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate6
Change (% Points)
Under the Proposal
7.7
21.0
24.4
21.5
18.3
18.4
11.2
19.5
29.9
43.9
63.0
32.8
0.1
0.2
0.1
‐0.1
‐2.3
‐1.3
‐0.1
‐1.5
‐1.4
1.0
102.0
100.0
‐5
‐56
‐56
39
4,200
782
3.0
‐2.6
‐0.8
0.3
6.5
4.6
0.0
‐0.2
‐0.4
‐0.7
1.3
0.0
‐0.2
2.4
7.9
16.3
73.5
100.0
‐0.1
‐0.2
‐0.1
0.1
1.7
1.0
‐1.6
7.7
14.8
18.9
27.5
22.3
18.2
21.5
18.2
2.5
0.9
55.4
61.9
75.7
97.0
99.1
‐0.2
‐0.2
‐1.2
‐6.1
‐7.8
1.9
1.6
13.1
85.5
47.5
152
258
2,732
73,837
411,232
0.6
0.6
3.5
14.2
15.6
‐0.6
‐0.4
‐0.2
2.6
1.5
14.7
11.1
17.3
30.4
15.6
0.1
0.2
0.9
4.3
5.2
22.3
23.7
26.1
34.5
38.4
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Baseline Distribution of Income and Federal Taxes
1
by Cash Income Percentile Adjusted for Family Size, 2013 Tax Units4
Average Income (Dollars)
Cash Income Percentile2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Average Federal Tax Burden (Dollars)
Average After‐
Tax Income5 (Dollars)
Average Federal Tax Rate6
Share of Pre‐
Tax Income
Share of Post‐
Tax Income
Share of Federal Taxes
Percent of Total
Percent of Total
Percent of Total
Number (thousands)
Percent of Total
33,459
32,885
31,869
30,496
30,312
159,683
21.0
20.6
20.0
19.1
19.0
100.0
10,833
26,816
47,152
79,522
248,646
79,379
‐166
2,127
7,039
15,026
64,246
16,896
11,000
24,689
40,113
64,497
184,400
62,484
‐1.5
7.9
14.9
18.9
25.8
21.3
2.9
7.0
11.9
19.1
59.5
100.0
3.7
8.1
12.8
19.7
56.0
100.0
‐0.2
2.6
8.3
17.0
72.2
100.0
15,281
7,600
5,988
1,444
144
9.6
4.8
3.8
0.9
0.1
121,325
174,872
311,732
1,722,207
7,944,556
26,925
41,114
78,767
520,558
2,639,811
94,399
133,758
232,964
1,201,649
5,304,746
22.2
23.5
25.3
30.2
33.2
14.6
10.5
14.7
19.6
9.0
14.5
10.2
14.0
17.4
7.7
15.3
11.6
17.5
27.9
14.1
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0509‐7).
Number of AMT Taxpayers (millions). Baseline: 5.2 Proposal: 3.7
(1) Calendar year. Baseline is current policy, which assumes that all the temporary provisions in place for calendar year 2011 are extended, with the exception of the payroll tax cut, and indexes the AMT exemption level after 2011. Proposal would a) index the parameters of the AMT to inflation after 2011 and allow non‐refundable credits against tentative AMT; b) extend parts of the 2001 and 2003 tax cuts, including marriage penalty relief, the 10, 15, 25, 28 and a portion of the 33 percent brackets, and the 0%/15% rate structure on capital gains and qualified dividends for taxpayers in those brackets; c) set the threshold for the 36 percent bracket at $200,000 (single), $250,000 (married), or $225,000 (head of household), indexed for inflation after 2009, less the standard deduction and one personal exemption (two if married); d) set the thresholds for PEP and Pease at $250,000 of AGI (married) and $200,000 (single), indexed for inflation after 2009; e) tax capital gains and qualified dividends at 20% for taxpayers in the top two brackets and repeal the 8%/18% rates for assets held more than 5 years; f) extend the $1,000 child tax credit, $3,000 (not indexed) refundability threshold, and allow against the AMT; g) extend the American Opportunity Tax Credit; h) extend the EITC's 45% phase‐in rate for families with 3 or more children and higher phase‐out thresholds for married couples; i) extend the maximum credit amount for the child and dependent care tax credit and increase the phase‐out threshold to $75,000 (not indexed); j) provide automatic enrollment in IRAs; k) limit itemized deductions to 28% for taxpayers in the top two brackets; and l) set the estate tax at its 2009 level ($3.5M exemption, 45% rate) and modify certain valuation discount rules. Business provisions include a) expand and make the R&E credit permanent; b) tax carried interest as ordinary income; c) repeal LIFO; d) expand section 179 expensing; e) reform international tax system; f) reform treatment of financial institutions; g) eliminate fossil fuel preferences; h) reinstate Superfund environmental income tax; and g) reform the treatment of insurance industry.
(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) The cash income percentile classes used in this table are based on the income distribution for the entire population and contain an equal number of people, not tax units. The incomes used are adjusted for family size by dividing by the square root of the number of people in the tax unit. The resulting percentile breaks are (in 2009 dollars): 20% 13,627, 40% 25,365, 60% 42,896, 80% 70,063, 90% 101,583, 95% 145,293, 99% 386,366, 99.9% 1,826,435.
(4) Includes both filing and non‐filing units but excludes those that are dependents of other tax units.
(5) 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.
(6) 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. 10‐Mar‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0025
Administration's FY2012 Budget Proposals
Major Individual Income and Corporate Tax Provisions Baseline: Current Policy
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2013 1
Detail Table ‐ Single Tax Units
Percent of Tax Units4
Cash Income Percentile2,3
With Tax Increase
With Tax Cut
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Percent Change in After‐Tax 5
Income
Share of Total Federal Tax Change
Average Federal Tax Change
Dollars
Percent
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate6
Change (% Points)
Under the Proposal
8.8
15.8
19.3
17.4
12.2
14.5
10.5
21.5
29.4
39.1
60.4
28.7
0.1
0.2
0.1
0.0
‐2.1
‐0.9
‐0.5
‐2.3
‐2.0
0.7
103.8
100.0
‐6
‐32
‐31
14
2,444
323
‐1.4
‐1.6
‐0.5
0.1
5.8
3.4
‐0.1
‐0.2
‐0.5
‐0.7
1.4
0.0
1.2
4.6
12.1
20.4
61.5
100.0
‐0.1
‐0.2
‐0.1
0.0
1.5
0.7
5.7
9.9
16.5
20.9
27.7
21.8
13.6
10.5
12.5
1.5
0.3
51.1
63.3
75.8
97.4
99.7
‐0.2
‐0.3
‐1.0
‐6.9
‐9.2
2.7
3.1
12.3
85.8
47.1
118
300
1,538
54,290
336,278
0.6
1.0
2.9
15.1
16.7
‐0.4
‐0.3
‐0.1
2.2
1.2
15.4
10.4
14.3
21.4
10.7
0.1
0.2
0.7
4.7
5.9
23.9
24.9
25.4
35.9
41.4
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Baseline Distribution of Income and Federal Taxes
by Cash Income Percentile Adjusted for Family Size, 2013 1
4
Tax Units
Cash Income Percentile2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Average Income (Dollars)
Average Federal Tax Burden (Dollars)
Average After‐
5 Tax Income
(Dollars)
Average Federal Tax Rate6
Share of Pre‐
Tax Income
Share of Post‐
Tax Income
Share of Federal Taxes
Percent of Total
Percent of Total
Percent of Total
Number (thousands)
Percent of Total
18,053
16,001
14,578
11,876
9,681
70,516
25.6
22.7
20.7
16.8
13.7
100.0
8,179
20,442
35,077
57,277
159,815
45,439
471
2,051
5,831
11,979
41,830
9,563
7,709
18,391
29,247
45,298
117,985
35,876
5.8
10.0
16.6
20.9
26.2
21.1
4.6
10.2
16.0
21.2
48.3
100.0
5.5
11.6
16.9
21.3
45.2
100.0
1.3
4.9
12.6
21.1
60.1
100.0
5,163
2,344
1,814
360
32
7.3
3.3
2.6
0.5
0.1
87,005
124,519
215,516
1,152,428
5,673,795
20,688
30,684
53,291
359,615
2,010,792
66,317
93,835
162,225
792,813
3,663,003
23.8
24.6
24.7
31.2
35.4
14.0
9.1
12.2
13.0
5.7
13.5
8.7
11.6
11.3
4.6
15.8
10.7
14.3
19.2
9.5
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0509‐7).
(1) Calendar year. Baseline is current policy, which assumes that all the temporary provisions in place for calendar year 2011 are extended, with the exception of the payroll tax cut, and indexes the AMT exemption level after 2011. Proposal would a) index the parameters of the AMT to inflation after 2011 and allow non‐refundable credits against tentative AMT; b) extend parts of the 2001 and 2003 tax cuts, including marriage penalty relief, the 10, 15, 25, 28 and a portion of the 33 percent brackets, and the 0%/15% rate structure on capital gains and qualified dividends for taxpayers in those brackets; c) set the threshold for the 36 percent bracket at $200,000 (single), $250,000 (married), or $225,000 (head of household), indexed for inflation after 2009, less the standard deduction and one personal exemption (two if married); d) set the thresholds for PEP and Pease at $250,000 of AGI (married) and $200,000 (single), indexed for inflation after 2009; e) tax capital gains and qualified dividends at 20% for taxpayers in the top two brackets and repeal the 8%/18% rates for assets held more than 5 years; f) extend the $1,000 child tax credit, $3,000 (not indexed) refundability threshold, and allow against the AMT; g) extend the American Opportunity Tax Credit; h) extend the EITC's 45% phase‐in rate for families with 3 or more children and higher phase‐out thresholds for married couples; i) extend the maximum credit amount for the child and dependent care tax credit and increase the phase‐out threshold to $75,000 (not indexed); j) provide automatic enrollment in IRAs; k) limit itemized deductions to 28% for taxpayers in the top two brackets; and l) set the estate tax at its 2009 level ($3.5M exemption, 45% rate) and modify certain valuation discount rules. Business provisions include a) expand and make the R&E credit permanent; b) tax carried interest as ordinary income; c) repeal LIFO; d) expand section 179 expensing; e) reform international tax system; f) reform treatment of financial institutions; g) eliminate fossil fuel preferences; h) reinstate Superfund environmental income tax; and g) reform the treatment of insurance industry.
(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) The cash income percentile classes used in this table are based on the income distribution for the entire population and contain an equal number of people, not tax units. The incomes used are adjusted for family size by dividing by the square root of the number of people in the tax unit. The resulting percentile breaks are (in 2009 dollars): 20% 13,627, 40% 25,365, 60% 42,896, 80% 70,063, 90% 101,583, 95% 145,293, 99% 386,366, 99.9% 1,826,435.
(4) Includes both filing and non‐filing units but excludes those that are dependents of other tax units.
(5) 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.
(6) 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. 10‐Mar‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0025
Administration's FY2012 Budget Proposals
Major Individual Income and Corporate Tax Provisions Baseline: Current Policy
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2013 1
Detail Table ‐ Married Tax Units Filing Jointly
Percent of Tax Units4
Cash Income Percentile2,3
With Tax Increase
With Tax Cut
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Percent Change in After‐Tax 5
Income
Share of Total Federal Tax Change
Average Federal Tax Change
Dollars
Percent
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate6
Change (% Points)
Under the Proposal
5.5
20.6
25.7
23.4
20.8
20.5
17.7
26.5
36.7
50.7
66.0
45.5
0.0
0.1
0.1
‐0.1
‐2.3
‐1.5
0.0
‐0.4
‐0.5
1.2
99.6
100.0
1
‐45
‐44
80
5,151
1,584
‐0.7
‐1.8
‐0.5
0.5
6.7
5.4
0.0
‐0.1
‐0.3
‐0.7
1.0
0.0
‐0.1
1.2
4.9
13.8
80.2
100.0
0.0
‐0.1
‐0.1
0.1
1.7
1.2
‐1.4
7.2
13.4
17.9
27.4
23.5
20.5
25.9
19.7
2.8
1.1
59.6
62.6
77.0
96.9
98.8
‐0.2
‐0.2
‐1.3
‐6.0
‐7.5
1.8
1.2
13.4
83.3
45.5
190
242
3,335
79,478
426,499
0.6
0.5
3.7
14.0
15.3
‐0.7
‐0.6
‐0.3
2.6
1.5
14.5
11.9
19.3
34.5
17.4
0.1
0.1
0.9
4.2
5.0
21.7
23.3
26.4
34.1
37.8
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Baseline Distribution of Income and Federal Taxes
by Cash Income Percentile Adjusted for Family Size, 2013 1
4
Tax Units
Cash Income Percentile2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Average Income (Dollars)
Average Federal Tax Burden (Dollars)
Average After‐
5 Tax Income
(Dollars)
Average Federal Tax Rate6
Share of Pre‐
Tax Income
Share of Post‐
Tax Income
Share of Federal Taxes
Percent of Total
Percent of Total
Percent of Total
Number (thousands)
Percent of Total
7,024
8,856
11,443
15,130
18,854
61,567
11.4
14.4
18.6
24.6
30.6
100.0
14,231
34,357
60,965
97,772
297,727
132,758
‐195
2,532
8,208
17,380
76,516
29,611
14,425
31,825
52,757
80,392
221,211
103,147
‐1.4
7.4
13.5
17.8
25.7
22.3
1.2
3.7
8.5
18.1
68.7
100.0
1.6
4.4
9.5
19.2
65.7
100.0
‐0.1
1.2
5.2
14.4
79.1
100.0
9,003
4,921
3,909
1,021
104
14.6
8.0
6.4
1.7
0.2
142,540
200,289
359,028
1,900,519
8,491,806
30,715
46,376
91,326
568,764
2,780,603
111,824
153,912
267,701
1,331,755
5,711,204
21.6
23.2
25.4
29.9
32.7
15.7
12.1
17.2
23.8
10.8
15.9
11.9
16.5
21.4
9.4
15.2
12.5
19.6
31.9
15.9
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0509‐7).
(1) Calendar year. Baseline is current policy, which assumes that all the temporary provisions in place for calendar year 2011 are extended, with the exception of the payroll tax cut, and indexes the AMT exemption level after 2011. Proposal would a) index the parameters of the AMT to inflation after 2011 and allow non‐refundable credits against tentative AMT; b) extend parts of the 2001 and 2003 tax cuts, including marriage penalty relief, the 10, 15, 25, 28 and a portion of the 33 percent brackets, and the 0%/15% rate structure on capital gains and qualified dividends for taxpayers in those brackets; c) set the threshold for the 36 percent bracket at $200,000 (single), $250,000 (married), or $225,000 (head of household), indexed for inflation after 2009, less the standard deduction and one personal exemption (two if married); d) set the thresholds for PEP and Pease at $250,000 of AGI (married) and $200,000 (single), indexed for inflation after 2009; e) tax capital gains and qualified dividends at 20% for taxpayers in the top two brackets and repeal the 8%/18% rates for assets held more than 5 years; f) extend the $1,000 child tax credit, $3,000 (not indexed) refundability threshold, and allow against the AMT; g) extend the American Opportunity Tax Credit; h) extend the EITC's 45% phase‐in rate for families with 3 or more children and higher phase‐out thresholds for married couples; i) extend the maximum credit amount for the child and dependent care tax credit and increase the phase‐out threshold to $75,000 (not indexed); j) provide automatic enrollment in IRAs; k) limit itemized deductions to 28% for taxpayers in the top two brackets; and l) set the estate tax at its 2009 level ($3.5M exemption, 45% rate) and modify certain valuation discount rules. Business provisions include a) expand and make the R&E credit permanent; b) tax carried interest as ordinary income; c) repeal LIFO; d) expand section 179 expensing; e) reform international tax system; f) reform treatment of financial institutions; g) eliminate fossil fuel preferences; h) reinstate Superfund environmental income tax; and g) reform the treatment of insurance industry.
(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) The cash income percentile classes used in this table are based on the income distribution for the entire population and contain an equal number of people, not tax units. The incomes used are adjusted for family size by dividing by the square root of the number of people in the tax unit. The resulting percentile breaks are (in 2009 dollars): 20% 13,627, 40% 25,365, 60% 42,896, 80% 70,063, 90% 101,583, 95% 145,293, 99% 386,366, 99.9% 1,826,435.
(4) Includes both filing and non‐filing units but excludes those that are dependents of other tax units.
(5) 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.
(6) 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. 10‐Mar‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0025
Administration's FY2012 Budget Proposals
Major Individual Income and Corporate Tax Provisions Baseline: Current Policy
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2013 1
Detail Table ‐ Head of Household Tax Units
Percent of Tax Units4
Cash Income Percentile2,3
With Tax Increase
With Tax Cut
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Percent Change in After‐Tax 5
Income
Share of Total Federal Tax Change
Average Federal Tax Change
Dollars
Percent
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate6
Change (% Points)
Under the Proposal
7.0
32.9
36.3
28.9
28.1
24.5
6.9
7.5
17.8
31.7
42.4
14.0
0.1
0.4
0.4
0.1
‐1.4
‐0.1
‐11.2
‐168.9
‐146.6
‐36.7
462.8
100.0
‐8
‐120
‐154
‐70
1,975
22
0.5
‐7.0
‐2.0
‐0.5
4.2
0.4
0.0
‐0.7
‐0.7
‐0.3
1.6
0.0
‐9.0
8.5
27.2
30.4
42.8
100.0
‐0.1
‐0.4
‐0.3
‐0.1
1.1
0.1
‐11.6
5.1
14.8
19.6
26.1
13.4
23.7
35.7
41.5
5.4
0.9
39.6
40.4
47.7
94.2
98.9
0.0
‐0.1
‐0.8
‐6.0
‐7.8
‐0.2
6.7
58.9
397.4
207.8
‐1
146
1,761
62,321
396,180
0.0
0.4
2.5
13.7
15.6
‐0.1
0.0
0.2
1.5
0.8
14.9
6.6
9.0
12.4
5.8
0.0
0.1
0.6
4.2
5.2
23.0
23.8
24.8
34.6
38.5
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Baseline Distribution of Income and Federal Taxes
by Cash Income Percentile Adjusted for Family Size, 2013 1
4
Tax Units
Cash Income Percentile2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Average Income (Dollars)
Average Federal Tax Burden (Dollars)
Average After‐
5 Tax Income
(Dollars)
Average Federal Tax Rate6
Share of Pre‐
Tax Income
Share of Post‐
Tax Income
Share of Federal Taxes
Percent of Total
Percent of Total
Percent of Total
Number (thousands)
Percent of Total
8,120
7,619
5,177
2,860
1,273
25,098
32.4
30.4
20.6
11.4
5.1
100.0
13,842
31,582
51,476
78,894
187,085
43,104
‐1,598
1,734
7,774
15,492
46,775
5,755
15,440
29,847
43,702
63,402
140,310
37,349
‐11.6
5.5
15.1
19.6
25.0
13.4
10.4
22.2
24.6
20.9
22.0
100.0
13.4
24.3
24.1
19.3
19.1
100.0
‐9.0
9.2
27.9
30.7
41.2
100.0
808
249
182
35
3
3.2
1.0
0.7
0.1
0.0
115,728
161,060
289,763
1,499,445
7,613,791
26,659
38,229
69,946
455,722
2,534,198
89,069
122,831
219,818
1,043,723
5,079,593
23.0
23.7
24.1
30.4
33.3
8.7
3.7
4.9
4.8
2.0
7.7
3.3
4.3
3.9
1.5
14.9
6.6
8.8
10.9
5.0
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0509‐7).
(1) Calendar year. Baseline is current policy, which assumes that all the temporary provisions in place for calendar year 2011 are extended, with the exception of the payroll tax cut, and indexes the AMT exemption level after 2011. Proposal would a) index the parameters of the AMT to inflation after 2011 and allow non‐refundable credits against tentative AMT; b) extend parts of the 2001 and 2003 tax cuts, including marriage penalty relief, the 10, 15, 25, 28 and a portion of the 33 percent brackets, and the 0%/15% rate structure on capital gains and qualified dividends for taxpayers in those brackets; c) set the threshold for the 36 percent bracket at $200,000 (single), $250,000 (married), or $225,000 (head of household), indexed for inflation after 2009, less the standard deduction and one personal exemption (two if married); d) set the thresholds for PEP and Pease at $250,000 of AGI (married) and $200,000 (single), indexed for inflation after 2009; e) tax capital gains and qualified dividends at 20% for taxpayers in the top two brackets and repeal the 8%/18% rates for assets held more than 5 years; f) extend the $1,000 child tax credit, $3,000 (not indexed) refundability threshold, and allow against the AMT; g) extend the American Opportunity Tax Credit; h) extend the EITC's 45% phase‐in rate for families with 3 or more children and higher phase‐out thresholds for married couples; i) extend the maximum credit amount for the child and dependent care tax credit and increase the phase‐out threshold to $75,000 (not indexed); j) provide automatic enrollment in IRAs; k) limit itemized deductions to 28% for taxpayers in the top two brackets; and l) set the estate tax at its 2009 level ($3.5M exemption, 45% rate) and modify certain valuation discount rules. Business provisions include a) expand and make the R&E credit permanent; b) tax carried interest as ordinary income; c) repeal LIFO; d) expand section 179 expensing; e) reform international tax system; f) reform treatment of financial institutions; g) eliminate fossil fuel preferences; h) reinstate Superfund environmental income tax; and g) reform the treatment of insurance industry.
(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) The cash income percentile classes used in this table are based on the income distribution for the entire population and contain an equal number of people, not tax units. The incomes used are adjusted for family size by dividing by the square root of the number of people in the tax unit. The resulting percentile breaks are (in 2009 dollars): 20% 13,627, 40% 25,365, 60% 42,896, 80% 70,063, 90% 101,583, 95% 145,293, 99% 386,366, 99.9% 1,826,435.
(4) Includes both filing and non‐filing units but excludes those that are dependents of other tax units.
(5) 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.
(6) 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. 10‐Mar‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0025
Administration's FY2012 Budget Proposals
Major Individual Income and Corporate Tax Provisions Baseline: Current Policy
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2013 1
Detail Table ‐ Tax Units with Children
Percent of Tax Units4
Cash Income Percentile2,3
With Tax Increase
With Tax Cut
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Percent Change in After‐Tax Income5
Share of Total Federal Tax Change
Average Federal Tax Change
Dollars
Percent
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate6
Change (% Points)
Under the Proposal
6.9
33.5
37.7
30.8
28.6
27.3
7.6
9.9
23.0
39.5
58.1
26.2
0.0
0.3
0.2
0.0
‐2.5
‐1.2
‐0.1
‐2.6
‐2.7
‐0.1
105.5
100.0
‐6
‐116
‐125
‐5
5,923
945
0.3
‐6.1
‐1.3
0.0
6.8
4.6
0.1
‐0.2
‐0.5
‐0.9
1.5
0.0
‐2.0
1.7
9.2
18.8
72.2
100.0
0.0
‐0.3
‐0.2
0.0
1.8
1.0
‐13.6
5.0
15.1
19.4
28.6
21.8
24.9
45.3
23.9
1.7
0.1
53.8
46.2
74.8
98.2
99.9
‐0.1
0.0
‐1.8
‐6.8
‐7.9
0.7
0.3
19.0
85.5
42.8
80
76
5,510
104,409
556,230
0.2
0.1
4.9
14.8
15.5
‐0.7
‐0.5
0.1
2.6
1.3
15.0
10.5
17.8
28.8
13.9
0.1
0.0
1.3
4.7
5.2
22.9
24.2
28.0
36.2
39.0
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Baseline Distribution of Income and Federal Taxes
1
by Cash Income Percentile Adjusted for Family Size, 2013 Tax Units4
Average Income (Dollars)
Cash Income Percentile2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Average Federal Tax Burden (Dollars)
Average After‐
Tax Income5 (Dollars)
Average Federal Tax Rate6
Share of Pre‐
Tax Income
Share of Post‐
Tax Income
Share of Federal Taxes
Percent of Total
Percent of Total
Percent of Total
Number (thousands)
Percent of Total
10,404
10,419
10,279
9,803
8,309
49,348
21.1
21.1
20.8
19.9
16.8
100.0
15,026
35,671
63,686
106,014
325,807
99,630
‐2,032
1,902
9,717
20,556
87,211
20,790
17,059
33,770
53,969
85,458
238,595
78,840
‐13.5
5.3
15.3
19.4
26.8
20.9
3.2
7.6
13.3
21.1
55.1
100.0
4.6
9.0
14.3
21.5
51.0
100.0
‐2.1
1.9
9.7
19.6
70.6
100.0
4,326
1,997
1,604
382
36
8.8
4.1
3.3
0.8
0.1
162,746
233,966
425,182
2,235,730
10,656,644
37,146
56,436
113,583
704,488
3,599,393
125,600
177,530
311,600
1,531,241
7,057,252
22.8
24.1
26.7
31.5
33.8
14.3
9.5
13.9
17.4
7.8
14.0
9.1
12.9
15.0
6.5
15.7
11.0
17.8
26.2
12.6
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0509‐7).
Note: Tax units with children are those claiming an exemption for children at home or away from home.
(1) Calendar year. Baseline is current policy, which assumes that all the temporary provisions in place for calendar year 2011 are extended, with the exception of the payroll tax cut, and indexes the AMT exemption level after 2011. Proposal would a) index the parameters of the AMT to inflation after 2011 and allow non‐refundable credits against tentative AMT; b) extend parts of the 2001 and 2003 tax cuts, including marriage penalty relief, the 10, 15, 25, 28 and a portion of the 33 percent brackets, and the 0%/15% rate structure on capital gains and qualified dividends for taxpayers in those brackets; c) set the threshold for the 36 percent bracket at $200,000 (single), $250,000 (married), or $225,000 (head of household), indexed for inflation after 2009, less the standard deduction and one personal exemption (two if married); d) set the thresholds for PEP and Pease at $250,000 of AGI (married) and $200,000 (single), indexed for inflation after 2009; e) tax capital gains and qualified dividends at 20% for taxpayers in the top two brackets and repeal the 8%/18% rates for assets held more than 5 years; f) extend the $1,000 child tax credit, $3,000 (not indexed) refundability threshold, and allow against the AMT; g) extend the American Opportunity Tax Credit; h) extend the EITC's 45% phase‐in rate for families with 3 or more children and higher phase‐out thresholds for married couples; i) extend the maximum credit amount for the child and dependent care tax credit and increase the phase‐out threshold to $75,000 (not indexed); j) provide automatic enrollment in IRAs; k) limit itemized deductions to 28% for taxpayers in the top two brackets; and l) set the estate tax at its 2009 level ($3.5M exemption, 45% rate) and modify certain valuation discount rules. Business provisions include a) expand and make the R&E credit permanent; b) tax carried interest as ordinary income; c) repeal LIFO; d) expand section 179 expensing; e) reform international tax system; f) reform treatment of financial institutions; g) eliminate fossil fuel preferences; h) reinstate Superfund environmental income tax; and g) reform the treatment of insurance industry.
(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) The cash income percentile classes used in this table are based on the income distribution for the entire population and contain an equal number of people, not tax units. The incomes used are adjusted for family size by dividing by the square root of the number of people in the tax unit. The resulting percentile breaks are (in 2009 dollars): 20% 13,627, 40% 25,365, 60% 42,896, 80% 70,063, 90% 101,583, 95% 145,293, 99% 386,366, 99.9% 1,826,435.
(4) Includes both filing and non‐filing units but excludes those that are dependents of other tax units.
(5) 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.
(6) 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. 10‐Mar‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0025
Administration's FY2012 Budget Proposals
Major Individual Income and Corporate Tax Provisions Baseline: Current Policy
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2013 1
Detail Table ‐ Elderly Tax Units
Percent of Tax Units 4
Cash Income Percentile 2,3
With Tax Increase
With Tax Cut
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Percent Change in After‐Tax Income5
Share of Total Federal Tax Change
Average Federal Tax Change
Dollars
Percent
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate 6
Change (% Points)
Under the Proposal
0.8
3.2
4.6
8.0
7.1
4.6
22.9
37.9
61.7
78.4
87.4
56.3
‐0.1
0.0
‐0.1
‐0.4
‐3.0
‐1.9
0.1
0.2
0.9
3.9
94.8
100.0
5
10
56
258
6,187
1,185
2.1
1.1
2.3
3.3
9.5
8.5
0.0
‐0.1
‐0.2
‐0.5
0.8
0.0
0.3
1.6
3.3
9.7
85.1
100.0
0.1
0.0
0.1
0.4
2.3
1.5
2.3
3.9
6.0
11.3
26.4
19.4
8.2
6.9
6.7
1.7
0.3
83.2
87.9
91.8
97.7
99.6
‐0.7
‐0.7
‐1.3
‐6.3
‐8.2
4.3
3.2
10.1
77.1
45.3
635
857
2,770
70,037
382,672
3.7
2.9
4.4
14.5
16.1
‐0.4
‐0.5
‐0.7
2.5
1.7
9.5
9.1
18.9
47.7
25.5
0.6
0.5
1.0
4.4
5.4
16.3
19.2
23.5
34.9
39.1
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Baseline Distribution of Income and Federal Taxes
1
by Cash Income Percentile Adjusted for Family Size, 2013 Tax Units4
Average Income (Dollars)
Cash Income Percentile 2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Average Federal Tax Burden (Dollars)
Average After‐
Tax Income5 (Dollars)
Average Federal Tax Rate6
Share of Pre‐
Tax Income
Share of Post‐
Tax Income
Share of Federal Taxes
Percent of Total
Percent of Total
Percent of Total
Number (thousands)
Percent of Total
5,313
8,515
6,190
5,603
5,686
31,333
17.0
27.2
19.8
17.9
18.2
100.0
10,822
22,986
41,540
72,670
269,484
78,111
248
876
2,448
7,944
64,974
13,985
10,575
22,110
39,092
64,726
204,510
64,126
2.3
3.8
5.9
10.9
24.1
17.9
2.4
8.0
10.5
16.6
62.6
100.0
2.8
9.4
12.0
18.1
57.9
100.0
0.3
1.7
3.5
10.2
84.3
100.0
2,520
1,400
1,357
409
44
8.0
4.5
4.3
1.3
0.1
109,880
159,960
281,390
1,589,526
7,053,610
17,299
29,890
63,346
484,615
2,377,870
92,581
130,070
218,043
1,104,911
4,675,741
15.7
18.7
22.5
30.5
33.7
11.3
9.2
15.6
26.5
12.7
11.6
9.1
14.7
22.5
10.2
10.0
9.6
19.6
45.2
23.9
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0509‐7).
Note: Elderly tax units are those with either head or spouse (if filing jointly) age 65 or older.
(1) Calendar year. Baseline is current policy, which assumes that all the temporary provisions in place for calendar year 2011 are extended, with the exception of the payroll tax cut, and indexes the AMT exemption level after 2011. Proposal would a) index the parameters of the AMT to inflation after 2011 and allow non‐refundable credits against tentative AMT; b) extend parts of the 2001 and 2003 tax cuts, including marriage penalty relief, the 10, 15, 25, 28 and a portion of the 33 percent brackets, and the 0%/15% rate structure on capital gains and qualified dividends for taxpayers in those brackets; c) set the threshold for the 36 percent bracket at $200,000 (single), $250,000 (married), or $225,000 (head of household), indexed for inflation after 2009, less the standard deduction and one personal exemption (two if married); d) set the thresholds for PEP and Pease at $250,000 of AGI (married) and $200,000 (single), indexed for inflation after 2009; e) tax capital gains and qualified dividends at 20% for taxpayers in the top two brackets and repeal the 8%/18% rates for assets held more than 5 years; f) extend the $1,000 child tax credit, $3,000 (not indexed) refundability threshold, and allow against the AMT; g) extend the American Opportunity Tax Credit; h) extend the EITC's 45% phase‐in rate for families with 3 or more children and higher phase‐out thresholds for married couples; i) extend the maximum credit amount for the child and dependent care tax credit and increase the phase‐out threshold to $75,000 (not indexed); j) provide automatic enrollment in IRAs; k) limit itemized deductions to 28% for taxpayers in the top two brackets; and l) set the estate tax at its 2009 level ($3.5M exemption, 45% rate) and modify certain valuation discount rules. Business provisions include a) expand and make the R&E credit permanent; b) tax carried interest as ordinary income; c) repeal LIFO; d) expand section 179 expensing; e) reform international tax system; f) reform treatment of financial institutions; g) eliminate fossil fuel preferences; h) reinstate Superfund environmental income tax; and g) reform the treatment of insurance industry.
(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) The cash income percentile classes used in this table are based on the income distribution for the entire population and contain an equal number of people, not tax units. The incomes used are adjusted for family size by dividing by the square root of the number of people in the tax unit. The resulting percentile breaks are (in 2009 dollars): 20% 13,627, 40% 25,365, 60% 42,896, 80% 70,063, 90% 101,583, 95% 145,293, 99% 386,366, 99.9% 1,826,435.
(4) Includes both filing and non‐filing units but excludes those that are dependents of other tax units.
(5) 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.
(6) 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.