If President Barack Obama acceded to Republican and conservative Democrats demands to permanently extend the Bush tax cuts that are set to expire at the end of this year, the decision would cost the federal government $2.8 trillion in revenue over the next 10 years, or $767 million a day. More than half of this loss would come from keeping the current tax rates at 10%, 25%, 28%, 33%, and 35%.

 

Ending some of the Bush tax cuts would only affect the very rich. For example, Bush reduced the two highest tax rates from 36% and 39.6% to 33% and 35%. Returning the rates to their previous levels would only raise taxes for the richest 1% of the U.S. population, while reinstating the personal exemption phaseout (PEP) for wealthier taxpayers and the limitation on itemized deductions (Pease) would only affect the richest 5%.

-David Wallechinsky

 

 

The Bush Tax Cuts and the Economy (by Thomas L. Hungerford, Congressional Research Service) (pdf)