Middle- and low-income Oklahomans would pay somewhat more in taxes under the Congressional Republicans’ approach to extending the Bush tax cuts than they would under President Obama’s approach, while high-income Oklahomans 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). National figures show the same pattern.
Under President Obama’s proposal, all Americans would keep part of the Bush tax cuts, and only 1.4 percent of Oklahomans would lose any portion of those cuts. The bottom 60 percent of Oklahomans would receive an average tax cut of $640 in 2013 while the richest one percent would get an average tax cut of $17,140. President Obama has also proposed expanding the Earned Income Tax Credit and Child Tax Credit for low- to moderate-income working families.
Under the Congressional Republicans’ approach, 100 percent of the Bush tax cuts would be made permanent, and tax credits for working families would not be expanded. In this plan, the bottom 60 percent of Oklahomans would receive an average tax cut of $480 while the richest 1 percent would receive an average cut of $62,720.
The study also finds that under Obama’s approach, 2.9 percent of the tax cuts would go to the poorest 20 percent of Oklahomans, 12.2 percent would go to the middle 20 percent and 11.3 percent would go to the richest 1 percent; under the Republican plan, 0.5 percent of the cuts would go to the poorest 20 percent of Oklahomans, 8.9 percent would go to the middle 20 percent and 33.3 percent would go to the richest 1 percent. The Bush tax cuts extension outlined by the President would cost one trillion dollars less over 10 years than would making all the Bush tax cuts permanent.
“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, 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 report also addresses the economic effects of tax cuts versus direct government spending and cites Moody 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.