Tax benefits will flow mostly to highest earners; 25% will go to wealthiest 1% of population (NYT)

[somone]

http://www.nytimes.com/2010/12/08/us/politics/08impact.html

Package to Aid Most, Especially Wealthy
By DAVID KOCIENIEWSKI

The deal to extend the Bush-era tax cuts for two years includes a bevy of additional credits and deductions that will reduce the burden on nearly all households. 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.

The tentative deal includes a two-year patch for the alternative minimum tax, a reduction in the payroll tax and a plan to reinstate the estate tax 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. 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.

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 private equity 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.

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. “It’s going to look like the rich are getting richer again,” said Anne Mathias, an analyst for MF Global Inc...

[Rosa Luxemburg]

1. and the very rich know how to evade taxes with their clever accountants!

the rest of us have to pay them

[midnight]

2. K&R for more clarification.... The poorest pay more tax, and

rich get richer?

[enough]

3. Having read the article, I'm not clear on how the lowest income people will be paying more.

Can anyone explain?

[Hannah Bell]

5. it's in the story:

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.

“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.”

[WinkyDink]

6. What about this do you not get:

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.

[Hannah Bell]

4. kick, unfortunately not able to rec