Bottom 60 Percent of Earners Would See Higher Tax Bills, While Richest One Percent Would Get Tax Break of $71,960 a Year
Middle-income and low-income New Jerseyans would pay more in taxes under the Congressional Republicans’ plan to extend the Bush tax cuts than they would under President Obama’s plan, while high-income New Jerseyans would pay far less under the Republican approach, according to a new analysis from the Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice (CTJ).
“The evidence is overwhelming that the Obama proposal is a much better deal for practically all New Jerseyans,” said Gordon MacInnes, president of New Jersey Policy Perspective. “This would be an excellent time for Governor Christie to use his growing influence with the right wing of the Republican Party to say ‘Whoa guys! Help us out here in Jersey. Show some bipartisanship and work it out with the President. I’ve pledged not to trample on the most vulnerable in our society. You should do the same thing.’”
Under President Obama’s proposal, in 2013, the poorest 20 percent of New Jerseyans would receive an average tax cut of $290 while the richest one percent would get an average tax cut of $19,020. Under the Congressional Republicans’ proposal, the poorest 20 percent of New Jerseyans would receive an average tax cut of $140 while the richest one percent would receive an average cut of $90,980.
The GOP plan would give 30.5 percent of the tax cuts to the richest one percent of New Jerseyans, leaving just 69.5 percent for the other 99 percent. The Obama plan would give 91.7 percent of the cuts to the 99 percent, and just 8.3 percent to the state’s richest one percent.
The extension outlined by the President would cost $1 trillion less over 10 years than would making all the Bush tax cuts permanent, and only 3.2 percent of New Jerseyans would lose any portion of the cuts.
“Both President Obama and Congressional Republicans have proposed to extend far too many of these unaffordable tax cuts,” said Robert S. McIntyre, director of Citizens for Tax Justice. “But if we have to choose between the Congressional Republicans’ and President Obama’s approach, however, the President’s proposal is fairer and more responsible.”
The term “Bush tax cuts” refers to income tax cuts and estate tax cuts enacted in 2001 and 2003 and extended several times since then. In 2009, President Obama expanded some parts of these tax cuts that benefit low income and working families. In December of 2010, the President and Congress agreed to extend all of these tax cuts through the end of 2012.
The Republicans in Congress have indicated that they would extend all of the tax cuts first enacted in 2001 and 2003, but not the 2009 expansions for lower income families. President Obama wants to extend the 2001 and 2003 tax cuts only for the first $250,000 a married couple makes annually, or the first $200,000 a single person makes. Obama also wants to extend the 2009 expansions.
The New Jersey findings are part of a national report, which shows that in 2013:
• Under the President’s approach, the poorest 20 percent of Americans would receive an average tax cut of $270 while the richest one percent would get an average tax cut of $20,130. Under the Congressional Republicans’ approach, the poorest 20 percent of Americans would receive an average tax cut of $120 while the richest one percent would receive an average cut of $70,790.
• Of the tax cuts going to Americans under Obama’s approach, three percent would go to the poorest 20 percent of Americans, 9.9 percent would go to the middle 20 percent and 11.4 percent would go to the richest 1 percent.
• Of the tax cuts going to Americans under the Congressional Republicans’ approach, one percent would go to the poorest 20 percent of Americans, 7.4 percent would go to the middle 20 percent of Americans and 31.8 percent would go to the richest one percent of Americans.
The report also addresses the economic effects of tax cuts versus direct government spending and cites Moody’s Analytics research concluding that government spending is more stimulative by a factor of five, or more, than tax cuts.
The full report is available at www.ctj.org/bushtaxcuts2012.php and shows the specific distribution of the benefits, and amounts of tax cuts, from the two different approaches in each of the fifty states and the District of Columbia, as well as nationally.
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