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A story in this week’s New York Times uses CTJ numbers to demonstrate what CTJ has said many times: President Obama’s proposal is not the confiscatory tax plan opponents would have you believe.
We have pointed out that taxpayers earning just over $250,000 really don’t have to worry because the President’s plan would barely affect them. “A married couple whose income is exactly $250,000 would see no change in their income taxes under Obama’s plan,” we explained.
As the New York Times puts it, “A close look at the president’s plan shows that a large majority of families making up to $300,000 — as well as hundreds of thousands of families with even larger incomes — would not pay taxes at a higher marginal rate…. [T]hey are the beneficiaries of choices the administration has made to ensure that families earning less than $250,000 do not pay higher rates.”
According to the Times, in crafting the plan, Obama’s team assumed high-income families take $20,000 in deductions, even though most families in this income range take a much larger amount, further driving down their taxable income. The Obama team also indexes the $250,000 and $200,000 thresholds for inflation from 2009, when the proposal was first formally put forward. This means families in 2013 could have considerably more than $250,000 in income without losing any part of the Bush income tax cuts under Obama’s approach.
“They wanted to be able to say that ‘Absolutely nobody making less than $250,000 could possibly pay higher taxes under our plan,’” said Robert S. McIntyre, the director of Citizens for Tax Justice, a liberal advocacy group. “So they had to assume the most ridiculous assumptions, that even if you’re a childless couple with no itemized deductions making $250,001, your taxes still won’t go up. They figured that if this couple existed and their taxes went up, somebody would find them and jump on ’em.”
You can view the graphics here.
In the end, the Times reports that if the President’s plan to allow the Bush tax cuts to expire on the top two percent is implemented, only about 32 percent of families with income from $250,000 to $300,000 would lose part of their income tax cuts. About 77 percent of families with income of $300,000 to $350,000 would lose tax cuts, and almost 99 percent of families with incomes above one million would lose some of theirs.
A related story in the Boston Globe uses other new CTJ numbers to show that, by contrast, one of the Republican plans to cap deductions without raising rates would have the inverse effect; it would “exact a bigger toll on upper- to high-income earners in the professional classes,” as opposed to the Mitt Romneys and Warren Buffetts.