Center on Budget and Policy Priorities

Tax — Federal

Allowing High-Income Tax Cuts to Expire Would Be Sound Policy

"In his State of the Union address, President Obama called for allowing the Bush-era tax cuts for high-income Americans to expire on schedule at the end of the year. Critics already are attacking this proposal as an unwarranted tax increase that would harm the weak economy and kill large numbers of jobs, especially among small businesses.

"These criticisms fly in the face of a wealth of fiscal and economic evidence."

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Topics

Basics

The income tax on individuals and the payroll tax, which is deducted from workers' wages and used to help finance Social Security and Medicare, together funded 75 percent of federal spending in 2007. Business or corporate taxes contributed another 14 percent. Other federal taxes include the estate tax on the heirs of large estates.

Policy Basics:
- The Child Tax Credit
- The 2001 and 2003 Tax Cuts
- Where Do Our Federal Tax Dollars Go?
- The Estate Tax
- The Earned Income Tax Credit
- Deficits, Debt, and Interest

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The Center analyzes major tax proposals, examining their likely effects on the economy and on the government’s ability to address critical national needs, especially over the long term. We place particular emphasis on the effects of tax proposals on households at different income levels. In addition, we analyze trends in the level of federal revenues, income distribution, and tax burdens.