Bush Tax Cuts: Poison Pill

[Hannah Bell]

The most unusual aspect of the 2001 package was that the cuts were temporary, with some reductions phasing in as late as 2006, and all of them expiring by the end of 2010. Not only did the bill stipulate that some of the cuts would be good for only a year or two, it also left the task of ending or extending tax relief to whomever followed Bush in the White House...All together, the Bush tax cuts cost just north of $2 trillion.

Income Taxes

-- Some taxpayers in the 10 percent bracket would go to the 15 percent bracket;
-- The 25 percent bracket would go to 28 percent;
-- The 28 percent bracket would become 31 percent;
-- The 33 percent bracket would go to 36 percent; and
-- People in the highest bracket -- 35 percent -- would see their rate go up to 39.6 percent.

http://www.politicsdaily.com/2010/07/29/battle-looming-over-bush-tax-cuts-what-it-means-to-you/.



Summary:

Estate Tax:

This year = 0. In 2011 it would go to 55%/$1 mill exempted without the bush cuts.


Capital Gains and Dividends:

Currently = 5-15%, with some earners paying no dividend taxes at all. Cap gains will go to 20%, dividend taxes back to marginal income tax rates.


AMT:

Current cut-off is $46K for individuals, $70K for families. Would drop to $33K/$45K.

AMT also applies to corporations.


Child Tax Credit:

Currently $1000, would drop to $500.

[MannyGoldstein]

1. I believe they were temporary since they had to be

because they were passed using reconciliation.

[Hannah Bell]

2. i believe they were temporary because dems wouldn't sign on to *permanent* cuts because

of political ramifications.