Wed July 11, 2012
The Value Of Taxing The Wealthy: $56 Billion
Originally published on Thu July 12, 2012 2:06 pm
The debate is back over what to do with the Bush tax cuts, which are scheduled to expire at the end of the year.
The Obama administration wants to extend them only for families earning less than $250,000 a year. Republicans generally favor extending them for everyone. What hangs in the balance are tax breaks for wealthier Americans.
So just how much are those worth? About $56.3 billion in fiscal 2013 alone, the Tax Policy Center estimates, using Treasury data, or about $850 billion over 10 years (thanks to the back-loaded nature of some of the tax breaks). That's how much more the federal government could collect if the administration's proposal goes through, as opposed to extending the cuts for everyone.
Here's how that figure compares to the taxes the federal government actually collected in 2011:
Of course, $56.3 billion is real money, but context is everything. It's only about a quarter of what we spent on unemployment benefits last year, and about 1 percent of all the money the government spent in 2011.
The Tax Policy Center estimate is necessarily rough, thanks to scant detail in current proposals. Of the $56.3 billion total, almost half would come from reinstating the 36-percent and 39.6-percent individual income-tax brackets: $23.1 billion. Nearly as much ($21.5 billion) would come from reinstating a higher tax rate on dividends. Taxing long-term capital gains at 20 percent adds another $5.8 billion, and reinstating a limit on itemized deductions for upper-income Americans adds $4.4 billion. Phasing out the personal exemption with income adds $1.5 billion.
We also noticed that the amount at stake in 2013 is a little higher than the $54 billion in revenue that Kraft Foods reported in 2011. By comparison, Apple's revenue topped $108 billion for the year, not quite double the tax breaks at issue.
This isn't the only way to think about the Bush tax cuts, of course. On Morning Edition on Tuesday, Tamara Keith looked at how the debate affects the middle-class, and the post includes a chart breaking down tax benefits by income.
If you've seen any other good charts out there, let us know in the comments.
Note: We've modified the graphic to clarify the description of the additional tax revenue.