Tax Foundation Releases Two Reports Focusing on High-Income Taxpayers

September 22, 2010

The Tax Foundation has released two reports focusing on the expiration of the Bush-era tax cuts and high-income taxpayers: one examining top marginal effective tax rates by state, and another profiling demographic characteristics among top earners.

If the plan supported by most Congressional Democrats’ becomes law, the top marginal effective tax rate would rise to above 45 percent in many states and above 50 percent in New York City. If a rival proposal prevails, one supported by Republicans and some Democrats, the range of top marginal tax rates would be approximately 5 percentage points lower in each state.

Note that a top marginal effective tax rate of 50 percent does NOT mean that 50 percent of one’s entire income is taken in taxes. It simply means that any additional income that the person earns would be taxed at a 50 percent rate.

For more information, see Tax Foundation Fiscal Fact, No. 246, “Top Marginal Effective Tax Rates by State under Rival Tax Plans from Congressional Democrats and Republicans.”

The Tax Foundation also released “A Profile of the High-Income Taxpayers in the Middle of the Tax Cut Debate,” No. 247 in the Fiscal Fact series. The report compares taxpayers under Obama’s “middle-class” threshold ($200,000 for single tax filers, $250,000 for married tax filers and $225,000 for head of household filers) to those above his threshold: Are they married? Do they have college degrees? Do they have children? Where do they live? How old are they? Where do they work? In short: Are the rich different?

The study finds that those tax units above the $200,000 and $250,000 thresholds set by President Obama tend to be more likely to be married, highly educated and live in metropolitan areas than those beneath the threshold.

To see how the fate of the Bush-era tax would affect individual taxpayers, visit the Tax Foundation’s interactive calculator at, which allows users to compare their 2011 federal income tax liability under various policy scenarios: (1) All the Bush-era tax cuts expire; (2) All the tax cuts are extended (Republican plan); (3) Congressional Democrats’ proposal is adopted, which is similar to the Obama plan but does not extend major stimulus measures or include additional limits on itemized deductions; and (4) President Obama’s budget is adopted.

For more information on the Bush-era tax cuts, visit the Tax Foundation’s Bush-Era Tax Cuts FAQ.

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