On the defensive for cutting a $700 billion tax deal with Republicans, President Obama argued that the agreement is important because it would benefit middle-class Americans. The Tax Policy Center’s preliminary analysis of the plan finds that he’s right—though the proposal would help just about everyone else as well, including the nation’s highest-earners. How much depends, as always, on what you measure the plan against. If you assume the Bush-era tax cuts were going to be extended anyway (what wonks like to call the current policy baseline), this deal is a sweet tax cut across the board. But if you compare it to the tax law at the end of the Clinton Administration—that is, if you assume the Bush-era revenue law expires in three weeks (the current law baseline)—this proposal is a big tax cut indeed and one that benefits very high earners much more than others. For the next two years, the Obama-GOP proposal would continue all of the 2001 and 2003 tax cuts. It would keep current low rates for ordinary income as well as for capital gains and dividends. It would patch the Alternative Minimum Tax, and keep expanded child credits and earned income credits from the 2009 stimulus. It would restore the estate tax, but with a $5 million exemption ($10 million for couples) and a 35 percent rate. It would also create a new, one-year payroll tax cut for all workers regardless of income. This is far more generous than simply extending the Bush-era tax cuts, which was once the issue on the table. Thus, relative to maintaining current policy, taxes would be cut in 2011 by an average of nearly $1,000 and after-tax incomes would rise by 1.7 percent on average. The lowest earning 20 percent of households would get a tax cut of about $300, and see their after-tax incomes rise by an average of 3.2 percent. Middle-income households would enjoy a boost in after-tax incomes of 2 percent or about $800, while the top 20 percent of earners would get an income boost of 1.3 percent or $2,500. The top 0.1 percent (those making an average of $7.5 million) would see their taxes cut by about $20,000, raising their after-tax income by about 0.4 percent. . If you assume the Bush era tax cuts die by year’s end, the tax cuts are bigger for all, and the pattern is less progressive. The average tax reduction would be about $2,800—a 5.2 percent increase in after-tax income. The lowest earning 20 percent of households would get a tax cut of about $350, raising their incomes by 3.7 percent, while middle-income families would enjoy a tax reduction of about $1,800, a boost in their income of 4.4 percent. But the real benefit comes at the top. The highest earning 0.1 percent would enjoy a tax cut of $360,000—a 7.3 percent increase in their after-tax income. My colleague Elaine Maag notes that if you use yet another baseline, one that assumes continuation of the stimulus provisions as well as the 2001 and 2003 laws, low-income households may do worse under the Obama deal. They’ll lose the benefit of the expiring Making Work Pay credit but get very little from the payroll tax holiday. Keep in mind, btw, that we only looked at the tax changes, and not at the proposal to extend some unemployment benefits. As usual, people will pick a baseline to score political points for or against this deal. But however you measure it, this plan would cut taxes more than if Congress simply extended the Bush-era law, and far more than if lawmakers simply went home tomorrow, mired in gridlock, and let all the tax cuts on the table fade away.