Heritage — The Tax Cuts Didn’t Cause the Budget Deficit

With the 2001 and 2003 tax cuts scheduled to expire at the end of this year, President Obama and Congress face the prospect of overseeing a historic tax increase.

If nothing is done, the $1,000 child tax credit will fall to $500, and the marriage penalty will be re-imposed. Low-income families will see their income tax rate jump five percentage points, while everyone else will see increases of three to 4.6 percentage points. Capital gains and dividends tax rates – currently 15 percent for most investors – will leap to 20 percent and 39.6 percent, respectively. The death tax, which is finally gone, will be re-imposed at a 55 percent rate.

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