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On Wednesday, the Senate voted 51-48 to extend some of the Bush tax cuts for another year. This will impact 98% of all US taxpayers–those who make up to $250,000 a year. The Senate voted to not extend cuts for the 2% of Americans whose earnings top that.
The GOP plan, which would have renewed tax cuts for all next year, including the top earners, was rejected.
According to Townhall:
The $250 billion Democratic bill would renew through 2013 a slew of cuts in income tax rates and other levies that were first enacted during the last decade but would expire Jan. 1 without congressional action.
But Democrats drew the line for individuals earning over $200,000 and couples making at least $250,000. Their top rates would revert from 33 percent and 35 percent, respectively, today to 36 percent and 39.6 percent in January.
The Democratic bill would also boost the top tax rate paid by people who inherit estates to 55 percent, exempting the first $1 million in an estate’s value. The GOP measure would maintain today’s 35 percent top rate and would not tax the first $5.12 million of an estate’s value.”
The Joint Committee on Taxation has estimated that the Democrat plan would affect 55,200 estates, compared to only 3,600 who would have faced estate taxes under the Republican plan. A 20% tax rate will be imposed on dividends and capital gains which are two sources of income realized largely by the wealthy. The GOP plan called for a 15% dividends and capital gains tax.
The Democrats believe that the rich should assist in helping to contain federal deficits. At the same time, they ignore the obvious–their plan makes it that much harder for for business to hire workers and so will negatively impact the economy.
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