<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
<HTML><HEAD>
<META content=text/html;charset=iso-8859-1 http-equiv=Content-Type>
<META name=GENERATOR content="MSHTML 8.00.7600.16671"></HEAD>
<BODY style="PADDING-LEFT: 10px; PADDING-RIGHT: 10px; PADDING-TOP: 15px"
id=MailContainerBody leftMargin=0 topMargin=0 CanvasTabStop="true"
name="Compose message area">
<DIV>
<DIV class=timestamp><FONT face=Calibri></FONT> </DIV>
<DIV class=timestamp><FONT face=Calibri>Notice the silence of the Republican/Tea
Party crowd </FONT><FONT face=Calibri>on how this cash
handout will increase the US deficit? Meanwhile, Obama's "bipartisan"
Bowles-Simpson</FONT></DIV>
<DIV class=timestamp><FONT face=Calibri>"deficit reduction" Commission is
mapping out a long-term slashing of the social service net.
<BR></DIV></FONT><FONT face=Calibri></FONT>
<DIV class=timestamp><FONT face=Calibri>Meanwhile, back in California, lame
duck Governor Schwarzenegger is calling for a "special legislative session" to
push for another $10 billion</FONT></DIV>
<DIV class=timestamp><FONT face=Calibri>dollar cut to social services before his
term ends. </FONT></DIV>
<DIV class=timestamp><FONT face=Calibri></FONT> </DIV>
<DIV class=timestamp><FONT face=Calibri>Ever get the feeling that we have only
one political party in this country? The Rich Peoples' Party?</FONT><FONT
face=Calibri></DIV></FONT>
<DIV class=timestamp><FONT face=Calibri></FONT> </DIV>
<DIV class=timestamp><FONT face=Calibri></FONT> </DIV>
<DIV class=timestamp><FONT face=Calibri><A
title="http://www.nytimes.com/2010/12/08/us/politics/08impact.html?partner=rss&emc=rss&pagewanted=print
CTRL + Click to follow link"
href="http://www.nytimes.com/2010/12/08/us/politics/08impact.html?partner=rss&emc=rss&pagewanted=print">http://www.nytimes.com/2010/12/08/us/politics/08impact.html?partner=rss&emc=rss&pagewanted=print</A></FONT></DIV>
<DIV class=timestamp>December 7, 2010</DIV>
<DIV class=kicker></DIV>
<H1><NYT_HEADLINE type=" " version="1.0">Tax Package Will Aid Nearly All,
Especially Highest Earners</NYT_HEADLINE></H1><NYT_BYLINE>
<H6 class=byline>By <A class=meta-per
title="More Articles by David Kocieniewski"
href="http://topics.nytimes.com/top/reference/timestopics/people/k/david_kocieniewski/index.html?inline=nyt-per"><FONT
color=#000066>DAVID KOCIENIEWSKI</FONT></A></H6></NYT_BYLINE><NYT_TEXT>
<DIV id=articleBody><NYT_CORRECTION_TOP></NYT_CORRECTION_TOP>
<P>The deal to extend the <A class=meta-classifier
title="More articles about Bush Tax Cuts."
href="http://topics.nytimes.com/top/reference/timestopics/subjects/t/taxation/bush_tax_cuts/index.html?inline=nyt-classifier"><FONT
title="http://topics.nytimes.com/top/reference/timestopics/subjects/t/taxation/bush_tax_cuts/index.html?inline=nyt-classifier
CTRL + Click to follow link"
color=#000066>Bush-era tax cuts</FONT></A> for two years includes a bevy of
additional credits and deductions that will reduce the burden on nearly all
households. </P>
<P>But the tax benefits will flow most heavily to the highest earners, just as
the original cuts did when they were passed in 2001 and 2003. At least a quarter
of the tax savings will go to the wealthiest 1 percent of the population. </P>
<P>The tentative deal includes a two-year patch for the <A class=meta-classifier
title="More articles about the alternative minimum tax."
href="http://topics.nytimes.com/top/reference/timestopics/subjects/a/alternative_minimum_tax/index.html?inline=nyt-classifier"><FONT
color=#000066>alternative minimum tax</FONT></A>, a reduction in the payroll tax
and a plan to reinstate the <A class=meta-classifier
title="More articles about estate planning."
href="http://topics.nytimes.com/your-money/planning/estate-planning/index.html?inline=nyt-classifier"><FONT
color=#000066>estate tax</FONT></A> with lower rates and higher exemptions than
in 2009 — all of which will offer far more savings for high earners than those
in the low- or middle-income bracket. </P>
<P>The wealthiest Americans will also reap tax savings from the proposal’s plan
to keep the cap on dividend and capital gains taxes at 15 percent, well below
the highest rates on ordinary income. </P>
<P>And negotiators have agreed that the estimated $900 billion cost of the cuts
will simply be added to the deficit — not covered by reductions in spending or
increases in other taxes. That is good news for hedge fund managers and <A
class=meta-classifier title="More articles about private equity."
href="http://topics.nytimes.com/top/reference/timestopics/subjects/p/private_equity/index.html?inline=nyt-classifier"><FONT
color=#000066>private equity</FONT></A> investors, who appear to have withstood
an effort to get them to pay more by eliminating a quirk in the tax code that
allows most of their income to be taxed at just 15 percent. </P>
<P>In fact, the only groups likely to face a tax increase are those near the
bottom of the income scale — individuals who make less than $20,000 and families
with earnings below $40,000. </P>
<P>“It’s going to look like the rich are getting richer again,” said Anne
Mathias, an analyst for MF Global Inc. </P>
<P>In the agreement, which breaks a campaign pledge to eliminate some tax breaks
for the top 2 percent of American earners, <A class=meta-per
title="More articles about Barack Obama."
href="http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per"><FONT
color=#000066>President Obama</FONT></A> won a few concessions from Republicans,
including a 13-month extension in government benefits for the long-term
unemployed. After several extensions, the maximum has been 99 weeks. </P>
<P>The administration also succeeded in extending several of the tax credits in
last year’s <A class=meta-classifier
title="More articles about economic stimulus."
href="http://topics.nytimes.com/top/reference/timestopics/subjects/u/united_states_economy/economic_stimulus/index.html?inline=nyt-classifier"><FONT
color=#000066>stimulus plan</FONT></A> to aid low- and moderate-income
Americans: the earned-income tax credit, the child credit, the child and
dependent-care credit and the tuition deduction. </P>
<P>As a result, families with an income near the median of $55,000 would owe
about $2,700 less in taxes than if the Bush-era cuts had been allowed to expire.
</P>
<P>A two-income couple earning $146,000 would owe about $7,000 less than if the
tax cuts were allowed to expire, and about $3,400 less than they did in 2009.
</P>
<P>The proposal does not include an extension of Mr. Obama’s signature tax cut,
the Making Work Pay credit, which provided a credit of up to $400 for
individuals and $800 for families of low and moderate income. Instead, the plan
creates a one-year reduction in <A class=meta-classifier
title="More articles about Social Security."
href="http://topics.nytimes.com/top/reference/timestopics/subjects/s/social_security_us/index.html?inline=nyt-classifier"><FONT
color=#000066>Social Security</FONT></A> payroll taxes, which are generally
levied on the first $106,800 of income. For an individual earning $110,000, that
provision would reduce payroll taxes by $2,136. </P>
<P>Although the $120 billion payroll tax reduction offers nearly twice the tax
savings of the credit it replaces, it will nonetheless lead to higher tax bills
for individuals with incomes below $20,000 and families that make less than
$40,000. That is because their payroll tax savings are less than the $400 or
$800 they will lose from the Making Work Pay credit. </P>
<P>“It will come to a few dollars a week,” said Roberton Williams, an analyst at
the nonpartisan Tax Policy Center, “but it is an increase.” </P>
<P>To the wealthiest Americans, however, an assortment of breaks is available.
</P>
<P>The plan includes a two-year “patch” for the alternative minimum tax, which
is now paid by about 4 million taxpayers with income in the mid- to high six
figures. Without the patch, more than 20 million additional taxpayers would have
been liable for that tax. </P>
<P>The estate tax — which was allowed to lapse this year and was scheduled to
resume at a rate of 55 percent on most assets above $1 million — will be
reinstated under less onerous terms. Estates over $5 million will be subject to
a 35 percent tax. </P>
<P>The proposal will also maintain the current rates on dividends and capital
gains, averting scheduled increases to ordinary income and 20 percent,
respectively. </P>
<P>The marginal tax rate on high incomes will also remain unchanged. The top
brackets had been scheduled to increase to 36 percent and 39.6 percent, from 33
percent and 35 percent. </P>
<P>Under Mr. Obama’s failed proposal, which would have raised the rates on
income over $250,000 for families and $200,000 for individuals, the taxpayers at
the top 1 percent of the income scale — those with incomes above $564,000 —
would have received an average tax break of $28,000. Under the agreement reached
with Republicans, the top 1 percent will receive breaks of about $70,000.
</P></DIV></DIV></BODY></HTML>