July 13 (Bloomberg) -- Competing plans from President Barack Obama and House Republicans for extending the Bush-era tax cuts differ by $68 billion in what they would cost the Treasury in lost revenue.
The BGOV Barometer shows Obama’s call for Congress to pass a one-year extension of the cuts for families making less than $250,000 annually would cost the U.S. $358 billion in forgone tax revenue for a year. That compares with $426 billion from a Republican plan to extend cuts for all earners, according to an analysis by the nonpartisan Joint Committee on Taxation requested by Senate Finance Committee Republicans.
If the tax cuts were to be made permanent, the plans differ by $966 billion in lost tax revenue over a decade, with the Republican proposal costing the Treasury $4.5 trillion in forgone revenue versus $3.6 trillion for Obama’s plan.
Extending tax breaks for the wealthiest Americans makes no sense because it “would cost us about $1 trillion,” Obama said in a speech July 10 in Cedar Rapids, Iowa.
A third approach -- extending tax cuts for everyone making less than $1 million -- would make the dent in U.S. Treasury revenue $25 billion larger than Obama’s plan, according to the joint tax committee’s data.
U.S. Senator Charles Schumer, a New York Democrat, is among lawmakers representing higher earners who have argued for such an intermediate approach. Across a decade, such a plan would end up costing the U.S. $366 billion more in lost revenue than Obama’s proposal.
Mitt Romney, the presumptive Republican presidential nominee, portrays Obama’s proposal as a tax increase, rather than maintaining the status quo for some. Romney said at a town hall-style event in Grand Junction, Colorado, on July 10 that taxes shouldn’t be raised on job-creators.
If Congress doesn’t act, all tax cuts initially enacted in 2001 and 2003, during President George W. Bush’s first term, and extended by Obama and Congress in 2010 would expire at year-end. The top tax rate for ordinary income would climb to 39.6 percent from 35 percent; the highest capital gains rate would rise to 23.8 percent from 15 percent, and dividends would be taxed as ordinary income.
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