Pelosi’s ‘Middle Class’ Tax Cut Extension Would Largely Benefit Millionaires, Cost Billions In Revenue
"Pelosi’s ‘Middle Class’ Tax Cut Extension Would Largely Benefit Millionaires, Cost Billions In Revenue"
House Minority Leader Nancy Pelosi (D-CA) issued a statement Wednesday calling for a permanent extension of the Bush tax cuts for the middle class, demanding House Speaker John Boehner (R-OH) schedule a vote on the plan as soon as possible. But her proposal differs from others offered by Democrats, including President Obama, that call for an extension of the rates for incomes below $250,000. Instead, Pelosi wants a permanent extension of the Bush tax cuts for incomes up to $1 million, the statement said.
“Democrats believe that tax cuts for those earning over a million dollars a year should expire and that we should use the resulting revenues to pay down the deficit,” Pelosi said. Her plan, however, would cost the government billions in revenue compared to Obama’s plan, and though she has billed it as a tax cut for the middle class, half of its benefits would go to millionaires, according to analysis from Citizens for Tax Justice:
CTJ’s preliminary estimates show that Obama’s proposal to extend the Bush tax cuts for the first $250,000 or $200,000 of income a taxpayer makes would save between $60 billion and $70 billion in 2013 compared to the GOP proposal to extend all the tax cuts, depending on economic conditions. Leader Pelosi’s proposal to extend the Bush tax cuts for the first $1 million of income would save 43 percent less revenue than Obama’s proposal.
The additional tax cut that would result from Pelosi’s plan compared to Obama’s plan (the additional tax cut resulting from extending the Bush tax provisions for taxpayers’ first $1 million of income instead of “just” their first $250,000 or $200,000 of income) would not be targeted towards the “middle class.” In fact, 50 percent of this additional tax cut would go to taxpayers with adjusted gross income (AGI) in excess of $1 million.
Millionaires would continue to benefit under Pelosi’s plan because the tax cut applies to the first $1 million of their incomes, meaning their tax cut would still be substantially larger than it would be for actual middle class workers. And as a result, a large portion of the Bush tax cuts for the rich, which blew up the national debt and failed to deliver on promises of job creation and economic growth, would exist in perpetuity.