Study: Extending Bush tax cuts would be boon for wealthy individuals

An analysis released this week by the Joint Committee on Taxation (JCT) shows millionaires will receive, on average, a $103,834 tax cut next year if Congress extends the breaks enacted by former President George W. Bush.

The sizable refund would affect 315,000 returns out of the 161 million taxpayers who file, according to the JCT.

Results from the committee prompted House Majority Leader Steny Hoyer (D-Md.) on Thursday to renew the vow by Democratic leaders only to extend the breaks benefiting individuals earning less than $200,000 per year and couples making less than $250,000. 

“Democrats would stop the Bush tax increase on the middle class that Republicans scheduled to happen at the end of the year,” he said in prepared remarks. “Instead, we would extend tax relief for the middle class.”

Back in 2001, when the tax cuts became law, Republicans controlled both chambers of Congress and because of arcane rules in the Senate made the cuts temporary. Those provisions are now slated to expire at the end of the year, and congressional leaders are debating which of them should be extended.  

The sluggish economic recovery has some rank-and-file Democrats calling to extend all the Bush tax cuts for at least an additional year. The JCT states it will cost $38.8 billion to extend the upper brackets through 2011, which would have to be offset under pay-as-you-go rules absent a budget point of order in the Senate that would remove the requirement. 

The roughly $200 billion cost to extend tax cuts for the middle class does not have to be offset, according to PAYGO rules.

Sen. Evan Bayh (D-Ind.) last week reiterated his call to extend the Bush tax cuts and noted that one liberal member from his party was concerned that tax increases on those earning less than $1 million — not less than $250,000 — could hamper economic growth. 

“I won’t identify the member, but someone who you would quickly recognize as a very liberal member of the caucus yesterday was speaking up about she happened to believe that raising taxes on anyone making less than $1 million a year, at this moment, was not the right thing to do,” he told MSNBC.

Bayh’s comment comes as sources tell The Hill that lawmakers are debating whether to raise the $200,000/$250,000 thresholds to ensure small businesses don’t get hit with a tax increase next year. 

Extending tax relief for one year on those earning less than $1 million but more than $250,000 would cost roughly $8 billion, according to the JCT.