Raising the income limit for extending President Bush’s income tax cuts from $250,000 to $1 million, as House Minority Leader Nancy Pelosi has proposed, would cost several hundred billion dollars, our new report explains — and about half of the benefits would go to millionaires. The proposal, as we write in our report:
would lose nearly half of the revenue that President Obama’s proposal to extend the tax cuts only for households making up to $250,000 would raise, according to new estimates from Congress’ Joint Committee on Taxation (JCT). The higher threshold would raise 44 percent — or $366 billion — less in revenue over the coming decade than the lower threshold. Citizens for Tax Justice has released estimates showing a virtually identical percentage revenue loss.
This means that policymakers ultimately would need to find $366 billion more in deficit savings to offset the cost. That would make key programs ranging from Medicare to Medicaid and other low-income programs to education, basic research, food safety, defense, and homeland security significantly more vulnerable to deep cuts. . . .
Nor, despite common misconceptions, would the $1 million threshold end the Bush tax cuts for people making over $1 million. In fact, millionaires would benefit substantially from the Pelosi proposal; they would receive roughly half of the tax cuts from raising the threshold from $250,000 to $1 million, according to Citizens for Tax Justice, because they would continue to get the full benefit of the Bush tax cuts on all of their income between $250,000 and $1 million.
Click here for the full report.