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1 William McBride & Ed Gerrish, How the States Would Be Affected by Extension of the Bush Tax Cuts and Other Provisions 1 (2012)

handle is hein.taxfoundation/ffdcfxz0001 and id is 1 raw text is: TAX FUDAT UN ° August 1, 2012 No. 325 How the States Would Be Affected by Extension of the Bush Tax Cuts and Other Provisions By William McBride, PhD & Ed Gerrish With just five months to go until Taxmageddon,' some people are becoming concerned about the impact it will have on the economy.2 This week, the House will vote on a Republican proposal to extend through 2013 the Bush tax cuts of 2001 and 2003 and the Alternative Minimum Tax (AMT) patch, two of the largest components of Taxmageddon.3 The larger of these is actually the AMT patch, which would save middle- and high-income taxpayers about $193 billion, according to the Joint Committee on Taxation JCT).4 Extension of the Bush tax cuts, which are more evenly distributed, would save taxpayers about $179 billion. The bill also extends estate and gift tax provisions for one year, saving taxpayers $31 billion, and small business expensing, worth $581 million. The total tax relief is estimated at $403 billion, or about 2.7 percent of the economy, and almost all of it would be immediately felt in 2013. As such, it would forestall many of the economy-crushing aspects of Taxmageddon, while setting the stage for comprehensive tax reform next year. All 50 states would benefit from this bill, though some more than others. Table 1 shows our estimates of the tax relief for each state, based on the latest IRS data on the distribution of income, tax credits, and deductions within each state.5 The first column is total aggregate tax relief in millions of dollars, the next column is tax relief as a share of state income (AGI), and the last column is tax relief per tax filer. 1 William McBride, Taxmageddon Looms, Potentially Pushing Tax Freedom Day Later than Ever, TAX FOUNDATION FISCAL FACT NO. 297 (Apr. 16, 2012), h tvt:/taxfoundation.org/aruiclekaxmageddon-loms-pote*tiall -pushin1g-tax-freedom-day-la~er-ever. 2 Douglas Holtz-Eakin & Ike Brannon, American Action Forum, New Study Examines Economic Effects of the Fiscal/C/iff(July 17, 2012), http:!/americanactionforum.org/topic/ncw study cxamines-economic-effects-fiscal-cliff. SHouse of Representatives, Committee on Ways and Means, Democrats' Ticking Time Bomb, Part I, June 11, 2012, http:/iwaysandmea ns.housecgov/Ncws/DocumentSingle. aspx? Document1lD=299226. 4 Joint Committee on Taxation, Estimated Revenue Effects ofH.R. 8, The job Protection and Recession Prevention Act of 2012 (July 24, 2012), https:/www.jct.gov/publications.html?finc=download&id=4476&chk=476&no html= 1. 5 Internal Revenue Service, SOI Tax Stats- Historic Table 2, http://www.irs.govtaxstatsIarticle/O,,id=IZ I535,00.litml.

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