23‐Jun‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0203
Replace the Mortgage Interest Deduction with a Revenue‐Neutral 17.6 Percent Refundable Credit
Limit Mortgages Eligible for Credit to $500,000 on Primary Residences Only
Baseline: Current Law
Distribution of Federal Tax Change by Cash Income Percentile, 2011 1
Summary Table
Tax Units with Tax Increase or Cut 4
Cash Income Percentile2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
With Tax Cut
Pct of Tax Avg Tax Cut
Units
With Tax Increase
Pct of Tax Avg Tax Units
Increase
Percent Change in After‐Tax Income5
Average Federal Tax Change ($)
Average Federal Tax Rate6
Change (% Points)
Under the Proposal
14.2
28.8
46.8
46.0
14.5
29.2
‐294
‐450
‐550
‐615
‐484
‐505
0.0
*
1.2
12.9
53.2
9.9
0
**
173
573
1,937
1,603
0.5
0.6
0.7
0.3
‐0.5
0.0
‐42
‐130
‐255
‐209
961
11
‐0.5
‐0.5
‐0.6
‐0.3
0.4
0.0
0.4
5.2
12.0
16.3
23.4
18.1
23.0
7.5
4.4
2.6
2.2
‐484
‐459
‐494
‐710
‐1,660
44.7
65.8
61.3
45.8
23.5
976
1,552
3,596
5,289
8,222
‐0.3
‐0.7
‐0.9
‐0.2
0.0
325
988
2,183
2,403
1,896
0.3
0.5
0.7
0.2
0.0
19.4
21.6
23.7
27.8
30.8
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0411‐2)
Number of AMT Taxpayers (millions). Baseline: 4.3 Proposal: 4.7
* Less than 0.05
** Insufficient data
(1) Calendar year. Baseline is current law. Proposal: replaces the mortgage interest deduction with a revenue‐neutral 17.6 percent refundable credit; and limits mortgages eligible for the credit to $500,000 on primary residences only. We approximate the $500,000 limit on mortgages with a limit on mortgage interest eligible for the credit of $25,000. Estimates assume that individuals pay down their mortgage in response to a smaller tax benefit for mortgage interest.
(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 2011 dollars): 20% $16,812; 40% $33,542; 60% $59,486; 80% $103,465; 90% $163,173; 95% $210,998; 99% $532,613; 99.9% $2,178,886.
(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 o
average cash income. 23‐Jun‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0203
Replace the Mortgage Interest Deduction with a Revenue‐Neutral 17.6 Percent Refundable Credit
Limit Mortgages Eligible for Credit to $500,000 on Primary Residences Only
Baseline: Current Law
Distribution of Federal Tax Change by Cash Income Percentile, 2011 1
Detail Table
Percent of Tax Units 4
Cash Income Percentile
2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
With Tax Cut
With Tax Increase
14.2
28.8
46.8
46.0
14.5
29.2
0.0
*
1.2
12.9
53.2
9.9
23.0
7.5
4.4
2.6
2.2
44.7
65.8
61.3
45.8
23.5
Percent Change in After‐Tax 5
Income
Average Federal Tax Change
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate 6
Change (% Points)
Under the Proposal
Dollars
Percent
0.5
0.6
0.7
0.3
‐0.5
0.0
‐42
‐130
‐255
‐209
961
11
‐54.5
‐9.1
‐4.6
‐1.6
1.7
0.1
‐0.1
‐0.3
‐0.4
‐0.3
1.1
0.0
0.1
2.5
8.9
17.9
70.6
100.0
‐0.5
‐0.5
‐0.6
‐0.3
0.4
0.0
0.4
5.2
12.0
16.3
23.4
18.1
‐0.3
‐0.7
‐0.9
‐0.2
0.0
325
988
2,183
2,403
1,896
1.3
2.6
3.0
0.6
0.1
0.2
0.3
0.5
0.1
0.0
15.3
11.6
18.0
25.7
13.1
0.3
0.5
0.7
0.2
0.0
19.4
21.6
23.7
27.8
30.8
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, 2011 1
Tax Units
Cash Income Percentile
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
4
Pre‐Tax Income
Federal Tax Burden
After‐Tax Income 5
2,3
Number (thousands)
Percent of Total
Average (dollars)
43,661
36,819
32,344
26,761
23,243
163,869
26.6
22.5
19.7
16.3
14.2
100.0
9,187
24,603
44,639
79,524
251,746
65,357
11,775
5,676
4,619
1,173
120
7.2
3.5
2.8
0.7
0.1
130,276
183,757
320,086
1,530,773
6,859,873
Percent of Total
Average Federal Tax 6
Rate Average (dollars)
Percent of Total
Average (dollars)
Percent of Total
3.8
8.5
13.5
19.9
54.6
100.0
77
1,420
5,592
13,168
58,040
11,841
0.2
2.7
9.3
18.2
69.5
100.0
9,111
23,183
39,047
66,356
193,706
53,516
4.5
9.7
14.4
20.3
51.3
100.0
0.8
5.8
12.5
16.6
23.1
18.1
14.3
9.7
13.8
16.8
7.7
24,948
38,713
73,522
422,728
2,113,525
15.1
11.3
17.5
25.6
13.1
105,329
145,044
246,564
1,108,045
4,746,348
14.1
9.4
13.0
14.8
6.5
19.2
21.1
23.0
27.6
30.8
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0411‐2).
Number of AMT Taxpayers (millions). Baseline: 4.3 Proposal: 4.7
* Less than 0.05
(1) Calendar year. Baseline is current law. Proposal: replaces the mortgage interest deduction with a revenue‐neutral 17.6 percent refundable credit; and limits mortgages eligible for the credit to $500,000 on primary residences only. We approximate the $500,000 limit on mortgages with a limit on mortgage interest eligible for the credit of $25,000. Estimates assume that individuals pay down their mortgage in response to a smaller tax benefit for mortgage interest.
(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 2011 dollars): 20% $16,812; 40% $33,542; 60% $59,486; 80% $103,465; 90% $163,173; 95% $210,998; 99% $532,613; 99.9% $2,178,886.
(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. 23‐Jun‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0203
Replace the Mortgage Interest Deduction with a Revenue‐Neutral 17.6 Percent Refundable Credit
Limit Mortgages Eligible for Credit to $500,000 on Primary Residences Only
Baseline: Current Law
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2011 1
Detail Table
Percent of Tax Units 4
Cash Income Percentile 2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
With Tax Cut
With Tax Increase
16.8
26.0
42.7
47.4
14.5
29.2
0.0
*
0.4
6.6
48.1
9.9
21.9
9.6
4.6
2.6
2.1
41.6
55.3
56.9
42.4
21.7
Percent Change in After‐Tax Income5
Average Federal Tax Change
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate 6
Change (% Points)
Under the Proposal
Dollars
Percent
0.7
0.7
0.7
0.4
‐0.5
0.0
‐60
‐141
‐234
‐214
787
11
19.0
‐17.7
‐5.2
‐1.9
1.6
0.1
‐0.1
‐0.3
‐0.4
‐0.4
1.1
0.0
‐0.7
1.2
7.2
16.9
75.4
100.0
‐0.7
‐0.6
‐0.6
‐0.3
0.4
0.0
‐4.4
3.0
10.7
15.7
23.3
18.1
‐0.3
‐0.6
‐0.8
‐0.2
0.0
302
748
1,742
2,104
1,690
1.4
2.2
2.8
0.6
0.1
0.2
0.3
0.5
0.1
0.0
16.4
12.8
19.3
26.9
13.5
0.3
0.5
0.6
0.2
0.0
19.7
21.3
23.5
27.6
30.5
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, 2011 Tax Units4
Cash Income Percentile 2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Number (thousands)
Pre‐Tax Income
Percent of Total
Average (dollars)
36,119
34,184
32,894
30,355
29,277
163,869
22.0
20.9
20.1
18.5
17.9
100.0
8,514
21,971
39,696
68,751
214,472
65,357
14,737
7,285
5,822
1,433
144
9.0
4.5
3.6
0.9
0.1
109,930
160,327
274,602
1,320,449
5,985,092
Federal Tax Burden
Percent of Total
After‐Tax Income 5
Average Federal Tax Rate 6
Average (dollars)
Percent of Total
Average (dollars)
Percent of Total
2.9
7.0
12.2
19.5
58.6
100.0
‐314
797
4,480
11,003
49,209
11,841
‐0.6
1.4
7.6
17.2
74.3
100.0
8,828
21,175
35,217
57,747
165,264
53,516
3.6
8.3
13.2
20.0
55.2
100.0
‐3.7
3.6
11.3
16.0
22.9
18.1
15.1
10.9
14.9
17.7
8.0
21,318
33,328
62,661
362,091
1,824,792
16.2
12.5
18.8
26.7
13.5
88,613
126,999
211,941
958,358
4,160,300
14.9
10.6
14.1
15.7
6.8
19.4
20.8
22.8
27.4
30.5
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0411‐2).
Number of AMT Taxpayers (millions). Baseline: 4.3 Proposal: 4.7
* Less than 0.05
(1) Calendar year. Baseline is current law. Proposal: replaces the mortgage interest deduction with a revenue‐neutral 17.6 percent refundable credit; and limits mortgages eligible for the credit to $500,000 on primary residences only. We approximate the $500,000 limit on mortgages with a limit on mortgage interest eligible for the credit of $25,000. Estimates assume that individuals pay down their mortgage in response to a smaller tax benefit for mortgage interest.
(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 2011 dollars): 20% $11,688; 40% $22,351; 60% $38,055; 80% $65,353; 90% $95,935; 95% $134,201; 99% $335,779; 99.9% $1,350,445.
(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. 23‐Jun‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0203
Replace the Mortgage Interest Deduction with a Revenue‐Neutral 17.6 Percent Refundable Credit
Limit Mortgages Eligible for Credit to $500,000 on Primary Residences Only
Baseline: Current Law
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2011 1
Detail Table ‐ Single Tax Units
Percent of Tax Units 4
Cash Income Percentile
2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
With Tax Cut
With Tax Increase
9.9
13.3
26.5
35.1
10.3
17.8
0.0
*
0.2
4.9
38.0
5.0
14.2
7.9
2.6
2.0
2.1
34.9
41.0
45.7
34.8
20.4
Percent Change in After‐Tax 5
Income
Average Federal Tax Change
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate
Change (% Points)
6
Under the Proposal
Dollars
Percent
0.3
0.2
0.3
0.2
‐0.4
0.0
‐20
‐34
‐82
‐94
393
‐1
‐8.8
‐3.1
‐2.2
‐1.1
1.2
0.0
‐0.1
‐0.1
‐0.3
‐0.2
0.7
0.0
1.1
4.2
12.2
21.0
61.4
100.0
‐0.3
‐0.2
‐0.3
‐0.2
0.3
0.0
3.1
6.1
12.1
17.4
23.8
17.2
‐0.3
‐0.4
‐0.6
‐0.2
‐0.1
169
363
906
1,325
1,442
1.0
1.5
2.2
0.5
0.1
0.2
0.1
0.3
0.1
0.0
18.0
8.2
15.1
20.1
9.8
0.2
0.3
0.5
0.2
0.0
21.2
22.0
23.0
28.9
33.6
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, 2011 1
Tax Units
Cash Income Percentile 2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
4
Pre‐Tax Income
Number (thousands)
Percent of Total
Average (dollars)
23,744
19,342
15,928
11,766
8,867
80,235
29.6
24.1
19.9
14.7
11.1
100.0
6,815
17,082
30,098
48,403
137,269
34,300
5,214
1,603
1,667
383
33
6.5
2.0
2.1
0.5
0.0
77,390
109,752
185,341
857,687
4,190,532
Federal Tax Burden
After‐Tax Income 5
Average Federal Tax 6
Rate Average (dollars)
Percent of Total
Average (dollars)
Percent of Total
5.9
12.0
17.4
20.7
44.2
100.0
230
1,070
3,715
8,536
32,330
5,895
1.2
4.4
12.5
21.2
60.6
100.0
6,585
16,012
26,383
39,867
104,939
28,405
6.9
13.6
18.4
20.6
40.8
100.0
3.4
6.3
12.3
17.6
23.6
17.2
14.7
6.4
11.2
12.0
5.0
16,196
23,782
41,793
246,343
1,407,004
17.9
8.1
14.7
20.0
9.8
61,193
85,971
143,548
611,344
2,783,528
14.0
6.0
10.5
10.3
4.0
20.9
21.7
22.6
28.7
33.6
Percent of Total
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0411‐2).
* Less than 0.05
(1) Calendar year. Baseline is current law. Proposal: replaces the mortgage interest deduction with a revenue‐neutral 17.6 percent refundable credit; and limits mortgages eligible for the credit to $500,000 on primary residences only. We approximate the $500,000 limit on mortgages with a limit on mortgage interest eligible for the credit of $25,000. Estimates assume that individuals pay down their mortgage in response to a smaller tax benefit for mortgage interest.
(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 2011 dollars): 20% $11,688; 40% $22,351; 60% $38,055; 80% $65,353; 90% $95,935; 95% $134,201; 99% $335,779; 99.9% $1,350,445.
(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. 23‐Jun‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0203
Replace the Mortgage Interest Deduction with a Revenue‐Neutral 17.6 Percent Refundable Credit
Limit Mortgages Eligible for Credit to $500,000 on Primary Residences Only
Baseline: Current Law
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2011 1
Detail Table ‐ Married Tax Units Filing Jointly
Percent of Tax Units 4
Cash Income Percentile
2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
With Tax Cut
With Tax Increase
45.3
54.5
63.5
57.4
16.6
43.7
0.0
0.0
0.5
6.5
52.7
19.5
27.3
10.3
5.3
2.9
2.0
44.9
59.8
62.0
45.5
22.2
Percent Change in After‐Tax 5
Income
Average Federal Tax Change
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate
Change (% Points)
6
Under the Proposal
Dollars
Percent
1.9
1.4
1.0
0.5
‐0.5
‐0.1
‐259
‐428
‐447
‐325
976
78
25.2
‐46.0
‐8.4
‐2.5
1.7
0.3
‐0.1
‐0.2
‐0.4
‐0.4
1.1
0.0
‐0.4
0.2
4.0
14.3
81.7
100.0
‐2.0
‐1.4
‐0.9
‐0.4
0.4
0.1
‐10.1
1.6
9.3
14.8
23.1
19.6
‐0.4
‐0.6
‐0.9
‐0.2
0.0
374
848
2,106
2,407
1,764
1.5
2.3
2.9
0.6
0.1
0.2
0.3
0.5
0.1
0.0
15.9
14.8
21.5
29.5
14.6
0.3
0.5
0.7
0.2
0.0
19.1
21.1
23.6
27.2
29.9
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, 2011 1
Tax Units
Cash Income Percentile 2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
4
Pre‐Tax Income
Number (thousands)
Percent of Total
Average (dollars)
4,201
6,521
11,254
15,448
18,895
56,662
7.4
11.5
19.9
27.3
33.4
100.0
12,701
30,924
52,021
84,707
252,901
122,041
8,587
5,392
3,925
992
102
15.2
9.5
6.9
1.8
0.2
131,394
176,360
314,670
1,476,527
6,440,391
Federal Tax Burden
After‐Tax Income 5
Average Federal Tax 6
Rate Average (dollars)
Percent of Total
Average (dollars)
Percent of Total
0.8
2.9
8.5
18.9
69.1
100.0
‐1,028
931
5,304
12,829
57,515
23,791
‐0.3
0.5
4.4
14.7
80.6
100.0
13,729
29,993
46,717
71,878
195,386
98,249
1.0
3.5
9.4
20.0
66.3
100.0
‐8.1
3.0
10.2
15.1
22.7
19.5
16.3
13.8
17.9
21.2
9.5
24,661
36,341
72,066
399,482
1,921,834
15.7
14.5
21.0
29.4
14.6
106,733
140,019
242,604
1,077,044
4,518,557
16.5
13.6
17.1
19.2
8.3
18.8
20.6
22.9
27.1
29.8
Percent of Total
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0411‐2).
* Less than 0.05
(1) Calendar year. Baseline is current law. Proposal: replaces the mortgage interest deduction with a revenue‐neutral 17.6 percent refundable credit; and limits mortgages eligible for the credit to $500,000 on primary residences only. We approximate the $500,000 limit on mortgages with a limit on mortgage interest eligible for the credit of $25,000. Estimates assume that individuals pay down their mortgage in response to a smaller tax benefit for mortgage interest.
(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 2011 dollars): 20% $11,688; 40% $22,351; 60% $38,055; 80% $65,353; 90% $95,935; 95% $134,201; 99% $335,779; 99.9% $1,350,445.
(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. 23‐Jun‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0203
Replace the Mortgage Interest Deduction with a Revenue‐Neutral 17.6 Percent Refundable Credit
Limit Mortgages Eligible for Credit to $500,000 on Primary Residences Only
Baseline: Current Law
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2011 1
Detail Table ‐ Head of Household Tax Units
Percent of Tax Units 4
Cash Income Percentile
2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
With Tax Cut
With Tax Increase
21.7
32.4
45.5
44.4
13.3
31.9
0.0
*
0.8
12.8
49.7
3.6
17.9
6.4
6.4
1.6
3.1
46.5
53.0
58.4
49.1
29.7
Percent Change in After‐Tax 5
Income
Average Federal Tax Change
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate
Change (% Points)
6
Under the Proposal
Dollars
Percent
0.6
0.6
0.6
0.2
‐0.6
0.3
‐72
‐167
‐247
‐136
791
‐107
4.5
201.2
‐5.0
‐1.2
2.1
‐3.3
‐1.3
‐1.7
‐0.6
0.8
2.8
0.0
‐17.1
‐2.6
30.2
37.1
52.4
100.0
‐0.6
‐0.6
‐0.6
‐0.2
0.5
‐0.3
‐14.6
‐0.9
10.8
16.5
22.9
8.9
‐0.5
‐0.9
‐0.9
‐0.3
‐0.1
376
1,085
1,754
2,480
2,210
1.8
3.4
3.1
0.8
0.1
0.9
0.6
0.7
0.6
0.2
17.4
9.5
11.4
14.1
6.9
0.4
0.7
0.7
0.2
0.0
20.6
22.0
22.7
27.7
30.6
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, 2011 1
Tax Units
Cash Income Percentile 2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
4
Pre‐Tax Income
Number (thousands)
Percent of Total
Average (dollars)
7,953
7,879
4,968
2,487
1,050
24,414
32.6
32.3
20.4
10.2
4.3
100.0
11,391
26,611
43,368
69,930
167,924
35,432
643
223
151
33
3
2.6
0.9
0.6
0.1
0.0
101,291
148,577
255,857
1,194,732
5,612,443
Federal Tax Burden
After‐Tax Income 5
Average Federal Tax 6
Rate Average (dollars)
Percent of Total
Average (dollars)
Percent of Total
10.5
24.2
24.9
20.1
20.4
100.0
‐1,592
‐83
4,934
11,639
37,714
3,270
‐15.9
‐0.8
30.7
36.3
49.6
100.0
12,983
26,694
38,434
58,291
130,210
32,163
13.2
26.8
24.3
18.5
17.4
100.0
‐14.0
‐0.3
11.4
16.6
22.5
9.2
7.5
3.8
4.5
4.6
2.0
20,502
31,620
56,437
328,715
1,715,081
16.5
8.8
10.7
13.6
6.7
80,789
116,957
199,421
866,016
3,897,362
6.6
3.3
3.9
3.6
1.6
20.2
21.3
22.1
27.5
30.6
Percent of Total
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0411‐2).
* Less than 0.05
(1) Calendar year. Baseline is current law. Proposal: replaces the mortgage interest deduction with a revenue‐neutral 17.6 percent refundable credit; and limits mortgages eligible for the credit to $500,000 on primary residences only. We approximate the $500,000 limit on mortgages with a limit on mortgage interest eligible for the credit of $25,000. Estimates assume that individuals pay down their mortgage in response to a smaller tax benefit for mortgage interest.
(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 2011 dollars): 20% $11,688; 40% $22,351; 60% $38,055; 80% $65,353; 90% $95,935; 95% $134,201; 99% $335,779; 99.9% $1,350,445.
(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. 23‐Jun‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0203
Replace the Mortgage Interest Deduction with a Revenue‐Neutral 17.6 Percent Refundable Credit
Limit Mortgages Eligible for Credit to $500,000 on Primary Residences Only
Baseline: Current Law
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2011 1
Detail Table ‐ Tax Units with Children
Percent of Tax Units 4
Cash Income Percentile 2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
With Tax Cut
With Tax Increase
26.4
41.9
57.5
56.6
8.1
39.0
0.0
*
0.9
13.3
73.5
15.8
11.4
6.6
2.5
2.0
2.2
72.3
76.1
77.3
57.7
29.9
Percent Change in After‐Tax Income5
Average Federal Tax Change
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate 6
Change (% Points)
Under the Proposal
Dollars
Percent
0.9
1.0
0.9
0.3
‐0.8
‐0.1
‐136
‐307
‐419
‐263
1,645
57
6.1
119.7
‐6.7
‐1.7
2.5
0.4
‐0.2
‐0.4
‐0.6
‐0.4
1.6
0.0
‐3.0
‐0.8
7.5
19.2
77.0
100.0
‐1.1
‐1.0
‐0.8
‐0.3
0.6
0.1
‐19.3
‐1.9
10.9
16.2
24.5
17.9
‐0.7
‐1.0
‐1.2
‐0.3
‐0.1
881
1,572
3,394
3,487
2,666
2.8
3.6
3.7
0.7
0.1
0.5
0.4
0.7
0.1
0.0
18.9
12.0
20.4
25.8
12.2
0.6
0.8
0.9
0.2
0.0
20.8
22.2
25.4
29.0
31.2
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, 2011 Tax Units4
Cash Income Percentile 2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Number (thousands)
Pre‐Tax Income
Percent of Total
Average (dollars)
9,624
10,630
9,718
9,731
8,493
48,380
19.9
22.0
20.1
20.1
17.6
100.0
12,221
30,191
53,686
91,659
279,232
87,155
4,479
1,994
1,626
394
37
9.3
4.1
3.4
0.8
0.1
153,349
204,015
372,645
1,704,575
8,017,842
Federal Tax Burden
After‐Tax Income 5
Average Federal Tax Rate 6
Average (dollars)
Percent of Total
Average (dollars)
Percent of Total
2.8
7.6
12.4
21.2
56.2
100.0
‐2,225
‐257
6,249
15,141
66,836
15,551
‐2.9
‐0.4
8.1
19.6
75.5
100.0
14,446
30,447
47,436
76,518
212,396
71,604
4.0
9.3
13.3
21.5
52.1
100.0
‐18.2
‐0.9
11.6
16.5
23.9
17.8
16.3
9.7
14.4
15.9
7.0
30,973
43,711
91,251
490,537
2,498,743
18.4
11.6
19.7
25.7
12.2
122,375
160,304
281,393
1,214,038
5,519,099
15.8
9.2
13.2
13.8
5.9
20.2
21.4
24.5
28.8
31.2
Percent of Total
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0411‐2).
* Less than 0.05
Note: Tax units with children are those claiming an exemption for children at home or away from home.
(1) Calendar year. Baseline is current law. Proposal: replaces the mortgage interest deduction with a revenue‐neutral 17.6 percent refundable credit; and limits mortgages eligible for the credit to $500,000 on primary residences only. We approximate the $500,000 limit on mortgages with a limit on mortgage interest eligible for the credit of $25,000. Estimates assume that individuals pay down their mortgage in response to a smaller tax benefit for mortgage interest.
(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 2011 dollars): 20% $11,688; 40% $22,351; 60% $38,055; 80% $65,353; 90% $95,935; 95% $134,201; 99% $335,779; 99.9% $1,350,445.
(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. 23‐Jun‐11
PRELIMINARY RESULTS
http://www.taxpolicycenter.org
Table T11‐0203
Replace the Mortgage Interest Deduction with a Revenue‐Neutral 17.6 Percent Refundable Credit
Limit Mortgages Eligible for Credit to $500,000 on Primary Residences Only
Baseline: Current Law
Distribution of Federal Tax Change by Cash Income Percentile Adjusted for Family Size, 2011 1
Detail Table ‐ Elderly Tax Units
Percent of Tax Units 4
Cash Income Percentile 2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
With Tax Cut
With Tax Increase
10.5
14.9
38.2
43.3
19.6
25.8
0.0
0.0
0.0
0.9
18.4
3.5
30.4
14.4
6.6
4.5
2.2
13.4
22.8
24.1
17.8
9.8
Percent Change in After‐Tax Income5
Average Federal Tax Change
Share of Federal Taxes
Change (% Points)
Under the Proposal
Average Federal Tax Rate 6
Change (% Points)
Under the Proposal
Dollars
Percent
0.1
0.1
0.4
0.4
‐0.1
0.1
‐8
‐19
‐133
‐222
143
‐52
‐14.3
‐12.0
‐10.2
‐3.7
0.3
‐0.6
0.0
‐0.1
‐0.3
‐0.4
0.8
0.0
0.1
0.4
3.1
11.9
84.5
100.0
‐0.1
‐0.1
‐0.4
‐0.4
0.1
‐0.1
0.5
0.8
3.3
9.0
20.3
14.2
0.1
‐0.1
‐0.2
‐0.1
0.0
‐46
165
413
563
561
‐0.3
0.7
0.9
0.2
0.0
0.0
0.2
0.3
0.3
0.1
12.5
13.3
20.6
38.1
20.2
‐0.1
0.1
0.2
0.1
0.0
13.7
16.8
19.7
26.9
31.1
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, 2011 Tax Units4
Cash Income Percentile 2,3
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Top Quintile
All
Number (thousands)
Pre‐Tax Income
Percent of Total
Average (dollars)
5,318
8,941
8,299
6,547
6,397
35,530
15.0
25.2
23.4
18.4
18.0
100.0
8,514
17,755
35,781
64,256
208,223
63,396
2,978
1,695
1,338
387
39
8.4
4.8
3.8
1.1
0.1
97,974
149,233
249,438
1,173,369
5,341,288
Federal Tax Burden
After‐Tax Income 5
Average Federal Tax Rate 6
Average (dollars)
Percent of Total
Average (dollars)
Percent of Total
2.0
7.1
13.2
18.7
59.1
100.0
54
162
1,309
6,027
42,095
9,049
0.1
0.5
3.4
12.3
83.8
100.0
8,461
17,594
34,472
58,230
166,127
54,347
2.3
8.2
14.8
19.7
55.0
100.0
0.6
0.9
3.7
9.4
20.2
14.3
13.0
11.2
14.8
20.1
9.2
13,492
24,937
48,771
314,527
1,659,915
12.5
13.2
20.3
37.8
20.1
84,482
124,296
200,667
858,842
3,681,373
13.0
10.9
13.9
17.2
7.4
13.8
16.7
19.6
26.8
31.1
Percent of Total
Addendum
80‐90
90‐95
95‐99
Top 1 Percent
Top 0.1 Percent
Source: Urban‐Brookings Tax Policy Center Microsimulation Model (version 0411‐2).
* Less than 0.05
Note: Elderly tax units are those with either head or spouse (if filing jointly) age 65 or older.
(1) Calendar year. Baseline is current law. Proposal: replaces the mortgage interest deduction with a revenue‐neutral 17.6 percent refundable credit; and limits mortgages eligible for the credit to $500,000 on primary residences only. We approximate the $500,000 limit on mortgages with a limit on mortgage interest eligible for the credit of $25,000. Estimates assume that individuals pay down their mortgage in response to a smaller tax benefit for mortgage interest.
(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 2011 dollars): 20% $11,688; 40% $22,351; 60% $38,055; 80% $65,353; 90% $95,935; 95% $134,201; 99% $335,779; 99.9% $1,350,445.
(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.