Senate Proposals to Extend the 2001-2010 Tax Cuts

Democrats and Republicans in the Senate have introduced legislation to extend some of the tax cuts originally passed in 2001 through 2009 and that Congress extended in the compromise legislation at the end of 2010.

TPC has produced distributional analysis of the competing plans against both a current law and a current policy baseline for the 2013 calendar year.

Current law refers to the law currently scheduled for a given year; that is, the law that will prevail if Congress does not act to change it. Thus, under current law, most of the Bush tax cuts passed in 2001 and 2003 and the Obama stimulus provisions originally enacted in 2009 will expire at the end of 2012. Current law also assumes that there will be no fix for the alternative minimum tax (AMT); the most recent fix, or "patch" expired at the end of 2011.

Current policy assumes that the tax law for the current year will apply to all future years, regardless of scheduled changes. TPC’s current policy baseline assumes extension of all temporary provisions in place for 2011 (except for the payroll tax cut). TPC's current policy baseline also assumes an AMT patch. In this analysis, we assume the baseline AMT patch takes the same form as the AMT patch in the Republican version of the tax extension proposal. This avoids spurious tax changes arising simply from a different interpretation of what it means to "patch" the AMT.¹