Setting the income threshold for ending the George W. Bush-era tax cuts at $1 million instead of $250,000 would raise $366 billion less over 10 years than the $829 billion envisioned under President Barack Obama’s proposal, according to a report released yesterday.
The estimate comes after Representative Nancy Pelosi, the House Democratic leader, suggested the higher threshold and drew criticism from labor unions and other groups aligned with Democrats. Obama, also a Democrat, wants to set the break point for married couples at $250,000.
The report was released by the Center on Budget and Policy Priorities, a Washington group that advocates policies that help lower-income families. The group said the estimate was from the Joint Committee on Taxation, the official scorekeeper for tax legislation in Congress.
The center didn’t release the actual congressional estimate. The joint committee produces estimates for members of Congress and provides them only to members upon request until legislation is being considered.
If Congress doesn’t act by the end of 2012, all of the Bush-era tax cuts will expire and rates will increase for all tax brackets. The tax-cut expiration is part of the so-called fiscal cliff of tax and spending changes scheduled for the end of the year.
Pelosi of California today rejected the idea that her proposal would require deeper spending cuts.
“The tax rate on income is one way to approach upper-income revenue; there are other ways as well,” she said at a news conference. The House Ways and Means Committee and the Joint Committee on Taxation “have presented us with an array of those,” she said.
Obama has proposed limits on itemized deductions and other breaks received by the highest earners.
House Speaker John Boehner today dismissed Pelosi’s proposal as a job killer during a struggling economy. “Raising taxes at this point in our recovery is a big mistake,” the Ohio Republican told reporters.
Under Pelosi’s proposal,“half of those who would get this higher tax would be small-business people,” Boehner said. “At a time when we are trying to help small businesses create jobs, this proposal would kill jobs.”
In its analysis, the center said that under Pelosi’s proposal, millionaires still would benefit because the higher rates would apply only to the income after their first $1 million.
“In dollar terms, millionaires will receive larger tax cuts than middle-income households even if the threshold is set at $250,000,” the center’s report says. “The disparity will grow substantially if the threshold is set at $1 million.”
Pelosi’s proposal is a “way to move the process forward,” her spokesman Nadeam Elshami said in an e-mailed statement yesterday.
“To date the GOP has been choosing millionaires over the middle class,” he said, using an abbreviation for the Republican Party. “It is time to get to work.”