One Chart That Shows What The Bush Tax Cut Battle Is All About

July 9, 2012 11:07 a.m.

Considering all the Sturm und Drang over President Obama’s plan to allow the Bush tax cuts to expire on income over $250,000 you’d think that Republicans and Democrats had hugely different ideas about where to set tax policy in 2013. But in reality the fight is entirely over how much wealthy Americans should pay in taxes going forward.

That won’t stop Republicans from characterizing Obama’s plan as a broad-based tax increase that will particularly harm small businesses. But as Obama noted when formally reintroducing his plan at the White House Monday, he and Republicans agree that tax cuts for all income under that level should be extended.

So what’s the real difference between the parties on this issue? The liberal group Citizens for Tax Justice broke down the numbers (PDF) in a way that clarifies what (and whom) the fight is really about.

CTJ looks at the numbers from a baseline that assumes all the Bush tax cuts will expire at the end of the year. From that perspective, Obama and the GOP are both proposing large tax cuts — Republicans just want much larger ones for the very wealthy.

But the baseline doesn’t really matter. As you can see, for 99 percent of taxpayers, there’s almost no bottom-line difference between what the GOP is proposing and what Obama’s proposing.

The entire fight is over how much the top one percent of earners should pay in taxes.

The narrowness of that difference won’t quiet the political turmoil. Democratic leaders have coalesced around Obama’s plan. But if they decided to move the line from $250,000 to $1 million, the fight will be no less pitched. Republicans will go to the mattresses to protect those tax cuts no matter where Democrats propose cutting them off.

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