Fast Facts on Expiring Tax Cuts

Unless Congress acts before the end of 2010, federal taxes will increase substantially. Numerous proposals have been introduced to extend portions of the tax cuts.

FACT: Based on a simulation of the Moody’s Analytics macroeconomic model, an across-the-board tax increase would precipitate a double-dip recession during the first half of 2011.

  • Employment would decline throughout 2011, bottoming out 8.6 million jobs below 2007 levels.
  • Unemployment would remain above 10% through late 2012.
  • GDP would drop to 0.90% growth in 2011.
  • The economy would not return to full employment until 2015.

FACT: The proposal to increase income taxes for those earning over $250,000 technically applies to 2% of taxpayers. But the facts are far more compelling. The top two income brackets:

  • Already contribute 50% of all tax dollars
  • Spend 25% of U.S. personal outlays
  • Generate 50% of small business income

FACT: Further, those with income under $250,000 will be impacted by the increase in dividend and capital gains taxes:

  • 24% of tax filers with income less than $250,000 would be hit by increased dividend taxes and 10% by increased capital gains taxes
  • Half of seniors earning under $250,000 would have to pay higher taxes from dividends, capital gains, or both.

FACT: Over the next ten years, Heritage Foundation projects a loss of $1.1 trillion to GDP if current tax rates are not extended.

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