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![handle is hein.taxfoundation/ffcchxz0001 and id is 1 raw text is: FISCAL
FOUNDATIONFC
May26, 2010
No. 227 FC
Taxpayers Face Uncertainty in 2011 As Bush
And Obama Tax Cuts Expire
By Mark Robyn
[Note.- Corrections were made to some information contained in this report, as indicated, on
712012010]
Polls show that many Americans are anxious about their taxes and believe their payments are
rising. At first glance this seems like a public misperception because tax policy at the end of the
Bush administration and the beginning of the Obama administration has been dominated by a
blizzard of tax cuts, most narrowly targeted at a few taxpayers but some broadly benefiting low-
and middle-income people. But paradoxically, the people are right to be worried about high taxes.
With federal deficits growing and the U.S. debt mounting to alarming levels, Congress will soon
need to cut spending or raise taxes to shore up the long-term fiscal outlook.
These serious long-term concerns about the fiscal health of the nation have implications in the
near term. The end of 2010 is an obvious turning point for tax policy as the Bush-era cuts and
Obama's new temporary making-work-pay credit are all expiring at the same time. The handling
of these expiring tax provisions may be an indication of what tax policy will look like in the years
to come.
The personal income tax has always been Congress's vehicle of choice to raise or cut taxes. Here
we calculate what some typical tax returns will look like for tax year 2011 under three scenarios:
* the tax policies that prevailed before President Bush was elected;
all Bush-era tax policies extended to 2011 (with no Obama changes); and
combined Bush and Obama policies, as outlined in the President's FY 2011 Budget.
The Bush-era personal income tax cuts that expire at the end of this year included reductions for
high-, low- and middle-income earners. Some provisions helped just low-income people, some
helped low- and middle-income, some middle- and high-income, and some just high-income
people. Proceeding roughly up the income spectrum, then, they:
* made more married taxpayers eligible for the earned income tax credit (EITC);
Mark Robyn is an economist at the Tax Foundation.](ViewImageLocal?handle=hein.taxfoundation/ffcchxz0001&div=1&collection=&method=preview&ext=.png&size=3)