To go directly to the report:
http://tndp.org/blog/wp-content/uploads/2012/12/Middle-Class-Reports-Tennessee-FINAL.pdf
This report, the President's Plan to Extend the Middle-Class Tax Cuts Impact on Tennessee, from the National Economic Council, lays out what the President is proposing and gives scenarios for Tennessee families.
On another note, as much as I hate the dramatically termed "fiscal
cliff," my accuracy button also is pushed when I hear it said that President
Obama's proposal cuts taxes for 98 per cent, period. Even the President refers
to it as the "middle-class tax cuts," since the majority of working Americans
would be the most affected. For example, per the attached report, a working
family of four in Tennessee making a median income of $63,700 would pay $2,200
more in taxes from a combination of the 10% bracket being eliminated and loss of
the expanded child credit and marriage penalty relief.
While it is the case that those who have the least money are most likely to
spend it out of necessity, thus most stimulating our consumer-driven economy,
the truth is that the President's proposal is an "everybody" tax cut down to the
first dollar of income---even for the wealthiest Americans---which makes it
apply to 100% of taxpayers, not 98%. This is not to mention other changes which
lie outside the income bracket portion and which variously could affect all
income levels.
This is not a political observation on my part, just an accuracy observation that seems to have gotten misplaced.
I am not a CPA, but because the Clinton-era brackets and Bush-era brackets differ from the lowest bracket up, that is why the "middle-class tax cuts" reduce taxes for everyone. If all of the Bush-era income tax brackets expire, for example, from $1 to $17,000-plus for married filing jointly the current 10% bracket is eliminated and the lowest bracket reverts to 15% ($890 more tax paid on $17,800). Most other brackets would increase by 3%, for instance, 25, 28, 33 revert respectively to 28, 31 and 36, while the current 35% top bracket would revert to 39.6%.
Therefore, "everyone" saves from the first dollar up under the President's plan, which keeps all of the Bush-era changes intact except for only the top two brackets---currently 33 and 35 change respectively to 36 and 39.6%. So, in the top bracket, every additional $100,000 of net income amounts to $4,600 in tax consequences. (Personally, I would love to have that "problem" or "uncertainty"). How much such a taxpayer would save from keeping the lower brackets as is would be better figured by an accountant than me.
Here are links to other resources, for anyone who feels the need to "geek
out," which also may be called simply better understanding the issues which can
easily get twisted in the wind of surface reporting.
Bloomberg analyzes tax policy consequences currently being discussed:
Tax bracket calculators:
http://www.moneychimp.com/features/tax_brackets.htm
IRS 2011 tax tables:
http://www.irs.gov/pub/irs-pdf/i1040tt.pdf
From the Tennessee Democratic Party:
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