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How much money you’ll gain or lose under Obama’s tax plan

President Barack Obama gives his State of the Union address. (AP/Charles Dharapak)

The tax policies President Obama sketched in his State of the Union address last week would increase taxes for the wealthiest Americans, while reducing them for the poor, according to a new analysis from the Tax Policy Center.

For people in the middle, the proposal could mean anywhere between a loss of several hundred dollars a year to a gain of a few hundred dollars. Overall, however, the proposal appears to be a wash.

The poorest 20 percent of Americans (those households taking in less than $25,260 a year) would save an average of $174 under Obama's proposal. Meanwhile, the wealthiest 20 percent (those making more than $141,662) would pay $1,818 more, with the biggest hit to the 1 percent and the top .1 percent, as shown in the following chart:

The rest of the country would see increases or decreases, depending on whether or not they are in a position to take advantage of Obama's tax proposals, explained the center's Roberton Williams. For example, college students could benefit significantly from an expanded tax credit for tuition. For those who have no children and are working, the president's proposal would double the Earned Income Tax Credit.

Among the middle class, families would benefit from an expanded tax credit for child care.

Others would see the equivalent of an increase in taxes due to Obama's proposal to tax large banks. The center's analysis predicted that this tax, intended to penalize banks that gain an unfair advantage from being perceived as "too big to fail" by investors, would lead to slightly lower wages for most workers.

And the wealthy would have to pay a higher tax on capital gains under the president's plan.

How these proposals would affect the economy overall is a question beyond the scope of this kind of analysis, Williams explained.

"One of the things about distributional tables is that they do not take account of behavioral change or macroeconomic changes that could occur," he said. If they did, an increase in cigarette taxes would appear to be a tax cut for smokers, who would smoke less and consequently pay less in taxes. That's why economists have to assume that people won't make different decisions because of changes to the tax code -- although they know that in practice, taxpayers are monitoring the tax code closely and making choices accordingly.

As a result, this analysis has limitations, and it isn't likely to resolve any the debates around the Obama's proposal.

Supporters of the president are likely to argue that the analysis is unfair to Obama's proposals, because the advantage that large banks have derives from the assumption in the market that the government will rescue those institutions in the event of another major financial crisis -- a rescue that would come at the expense of taxpayers anyway. On the other hand,Obama's critics will argue that the increase in capital gains tax would hamper the economy overall by discouraging investment, an effect that this analysis does not consider.

Williams said that he and his colleagues would make changes to their analysis when the White House announces the details of the president's tax plan along with the budget next week.