The Washington Post has denounced the inclusion of bonus depreciation in the just-passed tax extenders bill for 2014. The correct term is “partial expensing.” There is nothing “bonus” about it. The...
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- New Tax Calculator Shows Taxpayers their Tax Bill under M...
New Tax Calculator Shows Taxpayers their Tax Bill under Many Scenarios
Today the Tax Foundation releases its latest interactive tool, an update and overhaul of its successful MyTaxBurden tax calculator. I've rewritten the calculator from the ground up and added a variety of new options and features.
The original MyTaxBurden calculator was released in July 2010, and calculated tax bills for tax year 2011 under three scenarios - full expiration of the Bush and Obama stimulus bill tax cuts, full extension of those cuts, and partial expiration for high income earners in the form proposed by President Obama. Later we added a similar proposal to reflect the proposals of Congressional Democrats, and finally the compromise plan that became law in December.
However, one limitation of the calculator was that it wasn't possible to customize policy scenarios in any real way. Suppose, for example, I wanted to compare the effects of failing to patch the AMT under full extension or full expiration of other tax cuts? What if I wanted to look at how my tax burden changes from year to year, and compare my 2010 bill to my 2011 bill? What if I want to look at the President's proposal, with and without the Buffett rule? What if I wanted to look at all of these scenarios but also see what would happen if health care reform is overturned by the Supreme Court?
The new calculator lets the user make these decisions. Each scenario in the calculator represents a particular combination of pieces of legislation, any of which can be turned on and off individually, on top of current law:
To show a quick example of this, let's take a look at President Obama's 2011 tax return under four scenarios:
- actual 2011 tax law,
- full expiration of Bush-era and stimulus tax cuts in 2013 (the default "Tax Cuts Expire" scenario),
- same as (3) except that the AMT is also not patched ("Taxmageddon"), and
- the President's own budget, plus the enactment of the "Buffett Rule" (the default "Obama proposals scenario.)
(2) and (3) are the same in this case, since the expiration of the Bush tax cuts pushes the President out of AMT. Ironically, the President owes the most under his own proposal, because his budget includes a provision to cap the benefits of itemized deductions to at most 28% of their value.
Since the calculator has been rewritten from scratch, I've made it much easier to define new scenarios and legislation as they're proposed. We don't expect the fight over the expiration of these tax cuts to be resolved any time soon, and I'll be continually keeping the calculator up to date with the latest legislative proposals.
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The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.