Upper-income tax cuts and tax deal
"The president’s budget requests have consistently adhered to one campaign pledge: Allow the Bush-era tax cuts for the wealthiest 2% of Americans to expire. Like last year’s budget, this budget proposes to permanently extend middle-class tax relief for individuals earning less than $200,000 and joint-filers earning less than $250,000. This proposal implicitly means allowing the top 33% and 35% marginal tax rates to revert to 36% and 39.6%, respectively, for individuals earning above $200,000 and joint-filers making more than $250,000. The budget also assumes that the personal exemption phase-out and the limitation on itemized deductions are reinstated for these top earners. Finally, the preferential rate on capital gains and dividends would increase from 15% to 20% for upper-income tax filers (prior to the Bush-era tax cuts, qualified dividends had been taxed as ordinary income under progressive tax rates). Last December’s tax deal had extended these upper-income tax cuts through the end of 2012 as the price for securing middle-class tax relief and continuing emergency unemployment insurance.
December’s tax deal also included a two-year estate tax cut (benefiting only the wealthiest 0.25% of Americans) instead of reinstating the estate tax at 2009 levels, as the president’s 2011 budget had proposed. This year’s budget proposes extending the estate and gift tax rates at 2009 parameters (after the December tax deal expires), adding an estimated $271 billion to deficits over a decade, relative to current law. In contrast, extending the upper-income tax cuts and the estate tax levels in the tax deal would add $953 billion to deficits over the next decade, relative to the president’s proposals, offsetting almost all of the deficit reduction measures in the president’s budget request."
President Obama