Other specific provisions have been spelled out to help those at the bottom of the income ladder, including a doubling of the standard deduction that would shield the first $24,000 of a married couple’s income from taxes.
But there are plenty of specific provisions in the initial proposal that would clearly help those at the top of the income ladder. The list includes:
Cutting the top tax rate from 39.6 percent to 35 percent: Unless Congress restores a fourth rate at the top, this change would save a couple with $1 million in taxable income $24,000 a year, according to the CBPP.
A special 25 percent rate for “pass-through” income: This rate would apply to private businesses including partnerships, S corporations, and sole proprietorships, whose owners “pass through” business profits as personal income and currently pay personal income tax rates. The CPBB estimates that 79 percent of this tax cut would flow to filers with incomes above $1 million.
Repealing the estate tax: Most taxpayers don’t own enough savings and investments for their heirs to incur taxes on the inheritance. Under current law, the tax doesn’t apply to couples who pass along less than $11 million. Only the wealthiest 0.2 percent of estates pay this tax at all, according to the CPBB.
Eliminating the alternative minimum tax: This tax was created to make sure that high-income households couldn’t avoid their fair share of taxes by taking large deductions and other tax breaks. Because it wasn’t indexed to inflation, it now hits millions of middle-class households. But the wealthiest taxpayers would see the biggest windfall if the AMT is repealed.