Obama budget would take $112 billion from the rich
New study says the president's proposed budget would shift $112 billion away from the nation's top earners in 2012.
President Barack Obama's proposed budget would shift $112 billion away from the nation's top earners in 2012, according to the Tax Foundation, a nonprofit organization that monitors federal and state fiscal policies.
The group analyzed the impact of the 10-year budget proposal on various income groups. The study, released last week, said higher-income families would lose the most because of the expiration of Bush administration tax cuts and the proposed 28% cap on certain deductions. Low-income and middle-class families stand to benefit from the redistribution.
"We asked two simple questions," says Tax Foundation Senior Economist Gerald Prante, co-author of the report. "'How much in federal taxes does a given income group pay under a given set of tax policies?' and 'How much in federal taxes would that income group pay under a benefit principle system of taxation, in which a family's tax share is equal to its share of government spending benefits?'''
The difference between those two assessments formed the basis of the income redistribution prediction. The group excluded budget items related to the jobs initiative, health care reform and climate change from its analysis, citing the lack of specifics available.
Families in the bottom 10% income bracket benefit the most from the proposed budget and stand to receive an additional $8.7 billion in federal spending benefits. On average, compared to the current budget, a family in this range would receive an additional $494 from income redistribution, a total of $17,962 in federal spending benefits.
Those earning up to $107,000 would also benefit, according to the foundation's calculations. Families in the 60th to 70th market income percentile would receive an additional $8 billion in tax benefits, an average income redistribution of $475.
Those higher up the income scale would see increased taxes as benefits shift. Compared to the current policy, the proposed budget would move an additional $101,314 away from the highest earning 1% of US residents, a total income hit of $509,257 per family. The top 5% income bracket would forgo an additional $20,304 a year (a total of $141,648) and the top 10% would lose out on nearly $9,000 a year through additional income redistribution.
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