Sept 13 (Reuters) - President Barack Obama is pushing to let Bush-era tax cuts for the wealthiest Americans expire at the end of this year, while maintaining lower taxes for the middle class.
Making all of the lower tax rates permanent for the middle class and extending other popular breaks would cost $2.9 trillion over 10 years, according to the Obama administration. Extending the lower tax rates for the top two income brackets would add $700 billion over a decade.
Here are details of the tax rates under consideration:
EXPIRING INCOME TAX CUTS
Tax cuts enacted under former President George W. Bush in 2001 and 2003 are due to expire at the end of 2010 and income tax rates would revert to pre-2001 levels.
Under current law, tax rates will rise on Jan. 1 for all income groups. For the two top groups, rates will rise to 36 percent from 33 percent and to 39.6 percent from 35 percent. For the next two groups, rates will rise to 28 percent from 25 percent and to 31 percent from 29 percent.
Neither Republicans nor Democrats support letting all of the rates rise.
OTHER RATES DUE TO EXPIRE
Lower tax rates on capital gains and on dividends, also enacted under Bush, are due to expire at the end of 2010 as well.
For taxpayers in the top two income brackets, Obama wants rates on capital gains and dividends to rise to 20 percent.
If Congress fails to act, rates on dividends for taxpayers in the top two income groups will rise from 15 percent to the top ordinary income tax rates, which would be about 40 percent with no action.
Source on tax rates: Obama Administration 2011 budget; web site of the Congressional Budget Office: http://www.cbo.gov/doc.cfm?index=5746&type=0&sequence=1