Congress's $70 Billion Tax Cut Pits Rich Against Super-Rich

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http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aS0ZKMnMXe8A

Congress's $70 Billion Tax Cut Pits Rich Against Super-Rich

Dec. 5 (Bloomberg) -- <snip>House and Senate lawmakers are divided over how to structure a tax cut of as much as $70 billion. The House will vote this week to extend for two years the 15 percent tax rate on dividends and most capital gains, which primarily benefits millionaires. The Senate last month adopted a measure that protects 14 million people, most earning between $200,000 and $500,000, from paying higher taxes as a result of the alternative minimum tax. <snip>

Even among Republicans, some say extending tax benefits for the richest appears callous as Congress trims programs such as Medicaid, food stamps and student aid, which benefit the poorest. ``There is concern, and rightfully so, about the perception,'' Representative Robin Hayes of North Carolina said Nov. 18.

Americans with household incomes more than $1 million accrued 22 percent of dividends and 59 percent of capital gains last year, according to the Internal Revenue Service. The Tax Policy Center, operated by the Urban Institute and the Brookings Institution, two Washington research groups, figure 51 percent of the benefits of the House plan would go to the richest 1 percent of Americans. <snip>


The measure faces other challenges, including a Senate provision imposing a $4.3 billion tax increase this year on oil companies by changing an accounting rule for inventories. President George W. Bush, who has never used his veto power, has threatened to block any measure, including the increase. <snip>