NCPA - National Center for Policy Analysis

Kerry's Tax Proposals

May 7, 2004

Based on preliminary information from his presidential campaign, Sen. John Kerry has pledged to repeal the Bush tax cuts for households with incomes over $200,000, but not the middle-class tax cuts, which he intends to make permanent. His plan would likely raise the two top marginal tax rates from 33 and 35 percent, to 36 and 39.6 percent.

Kerry also proposes a new refundable tax credit for higher education expenses, changes to the estate tax, and creating three new tax credits aimed at expanding health insurance coverage. On balance, Leonard Burman of the Urban Institute says Kerry's proposals would reduce federal revenues by $440 billion over the next ten years:

  • In 2005, the average tax cut would be about $128, with the largest tax cut going to the middle and upper-middle income households.
  • The top 20 percent (quintile) of income earners are slated to pay an average $111 net tax increase in 2005 -- those with more than $1 million in income will pay an average $94,811 in new taxes.

In comparison with the platform of President Bush, Kerry's tax proposals would result in a $808 billion tax increase. The average tax unit would pay $225 more under the Kerry plan in 2005, with taxpayers in the top quintile paying an average of $1,249 in taxes.

Source: Leonard E. Burman, "Senator Kerry's Tax Proposals," Tax Policy Center, April 9, 2004.

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