Most of the tax cuts enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) will expire at the end of 2010 unless Congress acts to extend them. If the cuts do expire as scheduled, income taxes will rise sharply for most Americans.
The Tax Policy Center (TPC) has estimated the effects of extending all of the income tax cuts and continuing the relaxation of the alternative minimum tax (the "AMT patch"). Overall, extending the cuts would reduce the average effective tax rate for all taxpayers in 2011 by 2.5 percentage points compared with letting all the cuts expire).
* Excludes effects of any change in estate tax.
TPC has also estimated the distributional effects of incrementally extending provisions of the 2001 and 2003 tax acts and of the reverse—allowing the provisions to expire incrementally . We based the order in which we analyzed specific provisions on our estimation of the likelihood that Congress would extend them or allow them to expire.
Incremental Extension of the 2001-2003 Tax Cuts—2012
Incremental Expiration of the 2001-2003 Tax Cuts—2012
** Result is Current Policy Baseline: Extend 2001-2003 Tax Cuts, Patch AMT, and 2009 Estate Tax
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*** Result is Current Law Baseline: Allow 2001-2003 Tax Cuts to Expire as Scheduled