Tax Proposals in the 2010 Budget

The Tax Policy Center offers the table below as a guide to the tax provisions of President Obama’s 2010 Budget. Subsequent pages provide detailed descriptions and brief commentaries on each provision. Linked tables show the distributional effects of the overall proposal and of major elements of the plan. Further details on the analysis appear below the table.

Download complete analysis in PDF format                   View distribution tables

Individual Tax Provisions Provisions Affecting Lower- and Middle-Income Households   Provisions Affecting High-Income Households Provide Making Work Pay Credit -535 Reinstate 36 and 39.6 percent rates for high-income taxpayers1 320 Expand Earned Income Tax Credit -21 Reinstate personal exemption phaseout and limitation on itemized deductions for high-income taxpayers 1 178 Expand refundability of Child Tax Credit -71 Impose 20 percent rate on capital gains and dividends for high-income taxpayers 1 118 Expand saver’s credit and automatic enrollment in IRAs and 401(k)s -61 Limit value of itemized deductions to 28% 267 Provide American Opportunity Tax Credit -49   Eliminate Advanced Earned Income Tax Credit 1   Business Tax Provisions Eliminate capital gains taxes on small businesses -6   Tax carried interest as ordinary income 23 Make research and experimentation credit permanent -74 Codify “economic substance” doctrine 5 Expand net operating loss carryback -19 Reform U.S. international tax system 210 Reinstate Superfund Taxes 17 Repeal LIFO 61 Business provisions not evaluated2 -41   Individual and Business Continue remaining expiring provisions through CY 2010 -17   Reduce the tax gap and make reforms 11   Make reforms to close tax loopholes 48   Total, all tax provisions 363 Climate revenues 624 Tax revenue adjustments to baseline3 Index 2009 parameters of the AMT to inflation -576 Continue the 2001 and 2003 tax cuts -2,484 Make 2009 estate tax permanent -172

1. Couples with income over $250,000 and single people with income over $200,000.
2. Require information reporting for rental payments ($3 billion), eliminate oil and gas company references ($31 billion), modify FAA financing (-$77 billion) and modify alternative fuel mixture credit ($1 billion).
3.The Administration baseline continues the 2001 and 2003 tax cuts (with the estate tax fixed at 2009 law) and indexes the 2009 AMT parameters for inflation. 

Descriptions of tax provisions and revenue estimates come from Department of the Treasury, General Explanations of the Administration's Fiscal Year 2010 Revenue Proposals, May 2009.

Revenue effects shown in the table cover 11 years—2009-2019—even though the budget would begin in 2010 and most of the tax changes would take effect in 2011. Some tax proposals would affect revenue in 2009 because of behavioral changes.

The Tax Policy Center has posted a variety of tables showing the distributional effects of the entire set of tax proposals, all individual tax proposals, and selected specific proposals. Click here for a linked guide to those tables.

The administration assumes a baseline that permanently extends the 2001-2003 tax cuts, makes the estate tax permanent with 2009 parameters, and indexes the exemption for the alternative minimum tax (AMT) from its 2009 level. Most of our distribution tables compare the effects of tax proposals separately both against the administration’s baseline and against a current law baseline that assumes that the 2001-2003 tax cuts expire in 2011 as scheduled and that the AMT exemption reverts to its permanent value after 2009.

For each tax proposal, a separate web page describes current law, the proposed change, and its distributional effects. We do not consider the long-term effects on the economy.

Because some of the tax proposals are not indexed for inflation, their real effects of many tax proposals would change over time. The value of most unindexed proposals would decline in real terms, either because their values are fixed in nominal dollar amounts or because nominal phaseout thresholds would affect more taxpayers. Click here to read a more complete discussion of the impact of indexing.

TPC will update this analysis as the budget moves through Congress.