Continue the 2001 and 2003 tax cuts.
—Most of the tax reductions enacted in 2001 and 2003 expire on
December 31, 2010. This includes reductions in marginal
tax rates, marriage penalty relief, expansions in
the child tax credit, increases in small business expensing,
preferential rates for capital gains and dividends,
and reduction and repeal of estate and gift taxes. The
Administration’s baseline projection of current policy
continues all of these expiring provisions (as amended by
subsequent legislation),5 except for repeal of estate and
generation-skipping transfer taxes. Estate and gift taxes
are assumed to be extended at parameters in effect for
calendar year 2009 (a top rate of 45 percent and an exemption
amount of $3.5 million).