End the Bush-era Tax Breaks for Wealthy Americans

We, the undersigned, call on Congress and President Obama to allow the Bush-era tax cuts for those of us with taxable incomes over $235,000 to expire on Dec. 31, 2010. The increased revenue, an estimated $43 billion, should go toward making long overdue investments in education, health, transportation, infrastructure, and green energy systems.

Campaign: End The Tax Breaks For Households With Taxable Incomes Over $235,000

Revenue potential: $45 billion a year

tax-tree Our country is facing the worst economic challenge since the Great Depression and an urgent need to make a long overdue investment in bringing jobs and stability back to our communities. This investment should be paid for, in part, by repealing the Bush-era tax cuts our country cannot afford.

Those of us with taxable incomes over $235,000 benefited from the upside of the economy during the last decade and profited for eight years from a 2001 tax cut. Now is the time to give back.

We would see a minimal tax increase—from 35% to 39.6%, a rate still far lower than the one under President Reagan—but the increased revenue would raise an estimated $45 billion per year. This would affect a very small fraction of U.S. taxpayers—about 2.5 percent.

We believe high-income households want President Obama to move our country toward stability, fiscal responsibility and sensible taxation and investment. We call on Congress to immediately reverse the 2001 tax cuts on those of us with taxable incomes over $235,000. We should not wait.

Background

Description: President Obama’s budget includes a proposal to end the 2001 and 2003 Bush tax cuts for households with incomes over $250,000 ($200,000 or more for individuals). (An Adjusted Gross Income of $250,000 or more produces a taxable income of approximately $235,000.)

This repeal would have a substantial impact on federal revenues, as this chart details:

tax-lift These tax changes would affect only a small fraction of U.S. taxpayers. According to an October 2008 Citizens for Tax Justice analysis, only 2.5 percent of taxpayers will fall above the $250,000/$200,000 AGI threshold in 2009.

Increasing taxes on the wealthiest Americans will not harm the economy. Increasing taxes on America’s wealthiest will not reduce consumption. Even with higher tax rates, the wealthy will have the means to maintain their current lifestyles. And raising taxes on wealthy will not result in job losses. Consumer demand, not the tax rate, drives hiring.

Obama’s election demonstrates broad public support, even among the wealthy, for the idea that the wealthiest Americans should pay more. As a presidential candidate, Barack Obama pledged to raise taxes on households with incomes over $250,000 by reversing the 2001 and 2003 Bush tax cuts. A majority of these high-income individuals, 52 percent, still voted for him.

For More Information

Robert Frank, “Why Wait to Repeal Tax Cuts for the Rich?” The New York Times, December 7, 2008.

Citizens for Tax Justice, “Only 2.5 percent of Taxpayers Would Lose Some of the Bush Income Tax Cuts under Obama’s Tax Plan in 2009: State-by-State Figures,” October 23, 2008.