Washington, Dec. 13 (ANI): The U.S. Senate is poised to hold a key vote on Monday on the tax cut deal between President Obama and Republicans, and it is believes that a major portion of the 858 billion dollar tax package will benefit middle- and upper-middle-income Americans.
According to the New York Times, this section of American society has felt neglected since 2008, and if the new tax breaks are passed, President Obama and other Democrat leaders could earn huge political dividends in 2012.
The single most expensive component of the package - other than the continuation of all of the marginal rates - is a two-year adjustment of the alternative minimum tax, to prevent it from hitting millions more households.
This would insulate couples with income up to 72,450 dollars in 2010 and 74,450 dollars in 2011 at a cost of 137 billion dollars, according to a detailed cost analysis by the Congressional Joint Committee on Taxation.
Middle- and upper-middle-income Americans will also benefit most from the one-year payroll tax cut, which will reduce the Social Security tax on income up to 106,800 dollars to 4.2 percent from 6.2 percent. For couples with two incomes, each above the maximum, the tax savings will be 4,272 dollars. That provision will cost 112 billion dollars.
The extension of jobless benefits, by contrast, will cost just under 57 billion dollars, according to the joint tax committee.
According to Austan Goolsbee, the chairman the White House Council of Economic Advisers, appearing Sunday on "Meet the Press" on NBC, Obama is convinced there is no economic benefit to be derived from continuing to lower tax rates for the highest earners.
The full scope of the new tax breaks will be fully discernible only by poring over the bill and its head-spinning array of provisions, the NYT reveals.
Goolsbee said the White House was betting that after a two-year extension of tax policies of President George W. Bush, it would be far harder for Republicans to defend the tax cuts for the wealthy in 2012, when the economy is expected to be stronger, thereby weakening their argument that allowing tax rates to rise for the rich would hamper the recovery.
While the full political ramifications will not be known for months or longer, it was increasingly clear on Sunday that the tax deal would move forward. (ANI)