Go Bernie

Somewhere into the seventh hour of his actual, old-fashioned, stand-up-and-talk-and-don't-yield-the-floor filibuster of the lousy Obama - GOP tax deal, Bernie Sanders made a passionate plea to supporters to let their Senators and Representative know that this is a bad deal. He is urging everybody to call Congress to tell them that we don't need more tax cuts for the wealthy. So are we! Do what Bernie says. Call now. Call often.

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Estate Tax: Linchpin of the Tax Compromise Debate

Weak Estate Tax Could Derail Tax Deal

By Ashlea Ebeling
Posted on Forbes.com, December 10, 2010

Members of the fair tax movement are outraged at the generous estate tax provisions in the Obama/GOP tax deal and are calling on Congress to strengthen it so it hits more estates. Rather than reinstating the estate tax at 2009 levels (a 45% top rate and $3.5 million per person exemption) as was expected, the deal sets the top rate at 35% and raises the exemption to $5 million. So a couple could leave $10 million to heirs without worrying about the federal estate tax.

“It’s obscene and unnecessary, and it benefits no one but a handful of heirs of rich parents,” stated Mike Lapham, director for United for A Fair Economy’s Responsible Wealth project, in a release today calling for stronger tax provisions in the deal, and applauding House Democrats for their commitment to strengthening the plan. “The estate tax is reason enough to reject the deal,” Lapham said.

Responsible Wealth has been fighting for a fair estate tax for 10 years, ever since the Bush tax cuts started gradually weakening the tax, ending with repeal for 2010. (If Congress does nothing, the estate tax is set to return on Jan. 1 with a $1 million per person exemption and rates of up to 60%.) High-profile signers of Responsible Wealth’s “call to preserve the estate tax” include Forbes 400 members David E. Shaw, Julian Robertson, Jr., George Soros, John Sperling, and Ted Turner. All six children of David Rockefeller, the oldest Forbes 400 member, have signed too.

Last month Responsible Wealth gathered millionaire and multi-millionaire signers of the call who are small business owners and entrepreneurs to speak out on why they support a strong estate tax. [...]

Read the full post on Forbes.com.

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Five Reasons Why the Obama-GOP Deal Sucks

Earlier this week, President Obama struck a deal with elitist Congressional Republicans, a deal that he claims is "doing what's right for the American people, for jobs and for economic growth."

The reality is that the deal does more for Paris Hilton than it does the 100,000 people who work at Hilton hotels.

The Obama-GOP plan sucks because it doesn’t do anything to close the wealth divide that has been growing steadily for decades. Closing this gap by allowing the Bush tax cuts to expire and restoring the estate tax was a top priority for progressives during the 2008 election. We expected bold, decisive action. Needless to say, we're a little pissed off.

Compromise usually means that both sides give up a little something to reach an agreement that we can all live with. The problem is, all the Republicans wanted out of a deal with Obama was to preserve tax cuts for the wealthy. And they got it.

Of course, not everything in the deal sucks. Extension of the Bush tax cuts for the middle class is good, as well as the tax credits. And there’s little question that reprieve was essential for the millions of out-of-work Americans. But to settle for a deal that provides a huge tax break for millionaires and billionaires is wildly irresponsible and undeniably unfair. Not to mention sucky.

The deal sucks. And – in plain English – here’s why:

1. It holds unemployed Americans hostage.

It sounds like a nightmare: either watch unemployment benefits for out of work Americans expire or let Wall Street fat cats walk away -- scot-free -- from paying their fair share of taxes. This plan sucks because it wrongly turns this compromise into a black/white, either/or decision. It draws a line in the sand, attempting to divide the left at a time when we should be pulling together.

Besides, I thought we weren’t supposed to negotiate with hostage-takers?

2. It increases economic inequality.

It’s a frightening reality: the top one percent of Americans own as much wealth as those in the bottom 90 percent (to be clear, by “top” and “bottom” we’re only talking net worth). If you think it’s completely unacceptable that billionaire Warren Buffet’s secretary pays more in taxes a higher tax rate than the man himself (as he famously pointed out), know that this plan will do nothing to change that. And that sucks.

The wealthy in this country are doing fine. Why aren’t they being asked to make sacrifices like the rest of us?

3. It values whack economic principles.

The number one economic justification for tax breaks for the rich is that they will somehow trickle down these savings into jobs to provide economic stimulus. Yet, history tells us that this simply isn’t true. If tax breaks for the rich resulted in job creation, we wouldn’t be in the mess we’re in a decade after the Bush tax cuts. History tells us that tax breaks for the rich sit idle in their bank accounts.

Consider a very sophisticated and economically nuanced piece of economic insight: people need money to buy stuff. If we want to stimulate the economy, we need to be looking at how we can put regular people back to work. That seems to be the most surefire plan for economic stimulus out there.

4. It’s more of the same.

Extending Bush tax cuts for the wealthy and weakening the estate tax is bad policy, bad economics, and bad for our country. During challenging times, we should be investing in our people, our education, and our national infrastructure. Instead, we are prioritizing the bank accounts of millionaires and billionaires.

This tax deal does nothing to move us forward and simply provides more of the same, setting us up for a painful bout of economic déjà vu in a year or so.

5. It disrespects the will of the people.

Obama may chide us for being progressive “purists”, but I prefer to think of those who are skeptical of this plan as progressive patriots. It is our job to hold our elected officials accountable. Polling shows that the majority of Americans believe that tax breaks for the super-wealthy should be allowed to expire. After all, low- and middle-income Americans have tightened their belts, why aren’t we asking the same of millionaires and billionaires?

This deal sucks. It sucks real bad. It’s time we rise up, make lots of noise, and hold our elected officials accountable. We must call on our elected officials and tell them that the deal sucks, and we expect more. Whose back do they have, anyway?

 

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Americans For a Fair Estate Tax Coalition Letter to Congress - December 2010

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December 8, 2010

Dear Senators and Representatives:

The undersigned organizations urge you to establish a robust estate tax during the current lame duck session of Congress.  Within the next few weeks, the House will likely consider an extension of the Bush tax cuts; any package must include the permanent extension of a strong estate tax.

Americans for a Fair Estate Tax (AFET), a coalition of dozens of national and state organizations, has long advocated for a robust estate tax that can provide our nation with the desperately needed revenue to invest in priorities such as education, health and nutrition, and infrastructure.

We are told repeatedly, however, that increased investments in the American people are not affordable because the federal budget deficit is too great.  Yet, Congress has sharply decreased an important revenue source that can help fund these priorities and reduce the budget deficit.

The Bush tax cuts enacted in 2001 set in place the gradual reduction and then temporary one-year elimination of the federal estate tax for 2010.  Unfortunately, we have already seen the revenue loss resulting from the one-year repeal.  In March, an oil and gas businessman in Texas became the first billionaire in United States history to pass along his entire estate – worth some $9 billion – without paying any federal estate tax.

President Obama recently endorsed a Bush tax cut extension compromise with Republicans that includes a weak estate tax.  With a $5 million exemption for individuals and a $10 million exemption for couples, and a tax rate of 35 percent, this proposal would severely undermine this fair and important revenue source.

The president originally proposed permanently extending the 2009 estate tax in his budget proposal this year.  With a $3.5 million exemption for individuals and a $7 million exemption for couples, and a tax rate of 45 percent, this proposal would be more than generous to the wealthiest among us and would not harm small businesses or family farms.

Restoring the estate tax to 2009 levels or stronger would affect only the wealthiest one quarter of one percent of estates and would bring in roughly $250 billion in revenue over 10 years.  The Brookings/Urban Institute Tax Policy Center estimates that in 2009, only 100 small businesses and small farm estates nationwide owed any estate tax, and those paid an average tax of only 14 percent.

Any proposal that grants a higher exemption level or a lower tax rate than existed in 2009 will virtually eliminate the estate tax and cost our nation much more revenue down the road.  Moreover, no proposal should provide a prepayment option or include an unlimited farm exemption, both of which would provide an unacceptable loophole and deprive the Treasury of much-needed federal revenue.

We support re-establishing a permanent robust estate tax because it serves these crucial purposes:

  • The estate tax raises revenue that our nation needs to invest in the American people.  Continued repeal will deepen the budget deficit by roughly $800 billion between 2012 and 2021.
  • Polls show a clear majority of voters want there to be an estate tax, believing that an exemption of between $2 million and $3.5 million is fair.  Voters continually place the estate tax at the bottom of the list of taxes the government should cut.
  • Because the government does not tax assets bequeathed to a charity, the estate tax encourages charitable contributions.  This is especially important in light of the current economic downturn in which charities are struggling to continue providing vital community services.
  • The estate tax functions as a backstop for the income tax, taxing capital gains that previously have not been taxed.  Over half the value of inherited estates is capital gains income that has never been taxed.  Most large estates include assets such as real estate, stocks or bonds.  Any increase in the value of these assets is capital gain income that would only be subject to the income tax if the assets were sold during the owner’s lifetime.

A robust estate tax must fairly tax wealth that might otherwise escape taxation entirely, preserve a system that ensures that the very wealthy pay their fair share, and maintain a structure that encourages charitable giving.

Sincerely,

 

9to5, National Association of Working Women

AFL-CIO

American Association of University Women (AAUW)

American Federation of State, County and Municipal Employees (AFSCME)

American Federation of Teachers

American Heart Association

Americans for Democratic Action

Americans for Responsible Taxes

Arizona Advocacy Network

Bread for the World

Campaign for America's Future

Citizen Action / Illinois

Citizen Action of New York

Citizen Action of Wisconsin

Citizens for Tax Justice

Coalition on Human Needs

Colorado Progressive Coalition

Communications Workers of America

Community Action Partnership

Community Organizations in Action

Connecticut Citizen Action Group

Economic Opportunity Institute

Every Child Matters Education Fund

Florida Consumer Action Network

Friends Committee on National Legislation

Friends of the Earth

Georgia Rural Urban Summit

Growth & Justice

Independent Sector

Institute for Policy Studies' Program on
Inequality and the Common Good

Iowa Citizen Action Network

Jobs with Justice

Main Street Alliance

Maine People's Alliance

Michigan Citizen Action

Missouri Progressive Vote Coalition

National Committee for Responsive Philanthropy

National Community Tax Coalition

Missouri Progressive Vote Coalition

National Committee for Responsive Philanthropy

National Community Tax Coalition

National Education Association

National Women's Law Center

NDPeople.org

NETWORK: A National Catholic Social Justice Lobby

New Hampshire Citizens Alliance

New Jersey Citizen Action

Ocean State Action

OMB Watch

Oregon Action

PennAction

Progress Ohio

Progressive Maryland

Progressive States Network

Responsible Wealth

RESULTS

Service Employees International Union (SEIU)

Sugar Law Center for Economic and Social Justice

Tax Fairness Oregon

Tax Justice Network USA

Tennessee Citizen Action

U.S. PIRG

United Action for Idaho

United Church of Christ, Justice and Witness Ministries

United for a Fair Economy

USAction

Virginia Organizing

Voices for Progress

Washington CAN!

Wealth for the Common Good

West Virginia Citizen Action Group

Wider Opportunities for Women

YWCA USA

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This Is What's Wrong with the Tax Cut Deal

President Obama is still pushing his tax cut deal with the GOP. The Senate has already taken up debate. They even added some "sweeteners" to coax votes out of some reluctant Democrats. What they don't realize is that things like "the continuation of a federal tax break for mass transit users, an ethanol tax credit and a grant program for renewable energy developers" are not what is needed to make this a sweet deal. The problem with this deal is demonstrated clearly in this chart (via Ezra Klein.

Obama - GOP tax deal gives even bigger tax break to the wealthy than the original GOP proposal

The deal that Administration officials negotiated gives an bigger tax break to millionaires and the richest taxpayers than even the original Republican proposal. That is why we are opposed to the deal and why Democrats in the House are right to not bring it to a vote as is. It isn't because it lacks dubious sweeteners like more ethanol subsidies. It will be a bad deal until the giveaway to the rich – who least need a tax break – is scaled back.

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No Deal – Pelosi and the House Hold Strong

On Thursday, House Democrats pulled together and delivered a resounding 'NO DEAL' in response to the Obama-GOP tax cut compromise, which disproportionately serves the wealthiest Americans.

House Speaker Nancy Pelosi explained in a press release:

Nancy Pelosi “In the Caucus today, House Democrats supported a resolution to reject the Senate Republican tax provisions as currently written. We will continue discussions with the President and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote."

The worst part of the so-called compromise is the estate tax provision. The estate tax is levied on less than one percent of America's wealthiest estates. It reduces extreme dynastic transfers of wealth and the accompanying concentration of power, which undermines our democracy.

Under the deal in question, the estate tax would be reduced to its weakest form since 1931. Any deal with such a gutted version of the estate tax is unacceptable. UFE has spent over a decade fighting to preserve and strengthen the estate tax as a means to reduce the persistent and growing disease of inequality that ails our nation. We applaud Speaker Pelosi and the House Democrats for standing up against this giveaway to the wealthy.

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Tax Cuts Compromise - Who is Obama Protecting?

No to tax breaks for the wealthyIn defense of the egregiously unacceptable deal President Obama is trying to strike with the elitist Congressional Republicans (and a few short-sighted Democrats), he claims he is "doing what's right for the American people, for jobs and for economic growth."

Mr. President, you are way off.

There are some desirable pieces to the deal – extension of the Bush tax cuts for the middle class, the child, earned income and small business tax credits, reprieve for millions of out-of-work Americans with 13-month extension of unemployment benefits, and even in a shorter-term, stimulative sense, the one-year reduction of the payroll tax by 2% (more below).

But, this compromise is still by and large an extension of the status quo, the postponement of pain, and a wasted opportunity, at best.

They're doing it all in exchange for more tax breaks for the economically well-to-do, who don't need the breaks. The deal includes 2-year extension of the top-tier income tax breaks and the historically low capital gains and dividend tax rates passed by Little Bush, as well as a slashing of the estate tax to an 80-year low. That's a hell of a giveaway to a mere 2 percent of taxpayers – folks whose wealth and success depend not only on the buying power of working America, but also on the structures and services funded by taxes.

Back to that 2% cut to the payroll tax – because this tax is only levied on the first $106,800 of one's salary (an extremely regressive cap), an individual making $106,800 per year in wages pays the same amount in payroll taxes as one making millions per year in wages. Design problems with the payroll tax aside, at least middle- and low-income folks would have more cash in hand to spark demand in the short-term. But, that's made so by weakening the future positions of two important safety nets for American seniors: social security and medicare.

This compromise – or sellout of the American majority, rather – continues to pay undue credence to ineffective trickle-down economic strategies. We've pretty well established over the past several decades that continually higher tax breaks for the rich don't create more jobs. (There's more money to be made with those tax breaks in the Wall Street casino, in property ownership or in offshore tax havens.)

Also, as Robert Reich put it, this deal "makes a mockery of deficit reduction." (Do we need a reminder of what Republicans purport to be their top priority?) And, this focus on immediate relief is distracting us from what's waiting at the end of this debate's dark tunnel: billions of dollars in lost revenue.

With that comes those public sector wage freezes, job cuts all the way from the federal to the state and local levels, and reduced funding for public services at a time when they're most needed. Those cuts will hit middle- and working-class taxpayers the hardest, the very people President Obama claims he is trying to protect.

Unless we want to witness the further erosion of our middle class, and yet growing division between America's rich and poor, we must take action to stop the Obama-Republican tax compromise.

Need more?

Read AFL-CIO President Richard Trumka's statement in sharp opposition to this lopsided deal.

Watch this spot-on speech by Sen. Bernie Sanders (I-VT), and see if that does the trick:

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Obama-GOP Estate Tax Deal is Unacceptable

Forbes logo

On December 6, 2010, President Obama announced that he reached a deal with Republicans to extend the federal estate tax and other tax cuts.         

Under the deal, the estate tax exemption would be up to $5 million for individuals and $10 million for couples. The tax rate would be 35%. The exemption and rate would be in effect for two years.        

This announcement only intensifies the estate tax debate.       

(1) Commenting on the President’s announcement, Lee Farris  (Senior Organizer on Estate Tax Policy, United for a Fair Economy) said, “This deal gives away too much and gets too little in return. This deal is unacceptable.”       

Lee explains why UFE finds the deal unacceptable:        

The proposed tax deal that further weakens the estate tax is outrageous.  The deal would make the estate tax even weaker than it was under President Bush, and the weakest it has been since the tax started in 1916.  The estate tax is our country’s most progressive tax, and our only tax on wealth.  Wealth inequality is already at the highest levels since 1928. A weaker estate tax will result in the richest 1% owning even more of our county’s wealth, and will shift the responsibility for paying taxes from the wealthy to the middle class.       

United for a Fair Economy’s members strongly support the estate tax, including business owners, farmers, and thousands of wealthy people who expect to pay the estate tax.  They all agree that the estate tax is the right way to have those who have benefited the most from our country’s government to give back so that our country prospers.        

Lee concludes by assuring that UFE  “is going to continue to fight hard for an estate tax at 2009 levels or stronger.”     

Read more on Hani Sarji's "Estate of Confusion" blog on Forbes.com

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Reuters: Obama tax deal a big gift for America's rich

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Obama tax deal a big gift for America's rich

By Joseph Giannone
Column appeared on Reuters.com, December 7, 2010

More than 40,000 ultra-rich Americans may have another reason to celebrate the holiday season if President Barack Obama's latest estate tax proposals are passed by Congress.

Obama struck an agreement on Monday with congressional leaders on a range of tax issues, including cutting the estate tax to 35 percent and raising the individual exemption to $5 million. The estate tax, which expired this year, is due to return in 2011 at 55 percent with a $1 million exemption.

If the compromise proposal is passed, roughly 40,700 families will avoid an estimated $23.2 billion of estate taxes next year, according to the Urban-Brookings Institute Tax Policy Center. Around 3,500 families would pay an estimated $11.2 billion in estate taxes.

"They're making the estate tax weaker than it has been for more than seven decades. This is a real mistake," said Lee Farris, who follows estate taxes for United for a Fair Economy, a group advocating progressive tax policy. "Obama also puts himself in a bad position to negotiate the tax in two years."

(emphasis added)

Obama agreed to extend all Bush-era tax cuts for two years, yielding to Republicans, who won big in mid-term elections. The preliminary agreement would renew tax cuts for the middle class, as well as the wealthiest Americans.

"You knew Congress was not going to let the Bush tax cuts expire. There are too many millionaires there," Ray Madoff, a Boston College law professor and expert on trusts and estates. "This helps an absolutely tiny, tiny portion of the wealthiest people who are passing billions to their heirs tax-free."

Tax experts now estimate that less than one in 400 families will pay the estate tax, the fewest since the Depression.

The estate tax was not the only gift for the wealthy in Obama's plan.

Read the rest on Reuters.com

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Tell President Obama & Congress: NO DEAL on Estate Tax!

Call Congress Today

It’s outrageous!  President Obama has announced a tax deal with Republicans that further weakens the estate tax. In the deal, Democrats would accept the Lincoln/Kyl estate tax bill, with a $5 million exemption per spouse and 35% tax rate, for two years.

The deal would make the estate tax even weaker than it was under President Bush, and the weakest it has been in seven decades.

The deal includes some important tax credits for lower income people and an extension of unemployment benefits. But overall, this deal is no compromise. It gives away too much and gets too little in return. This deal is unacceptable.

Express your OUTRAGE: Call the President and Congress now!

CALL THE WHITEHOUSE switchboard at 202-456-1414, and the comment line at 202-456-1111.

CALL YOUR TWO SENATORS AND YOUR REPRESENTATIVE at the toll-free Congressional switchboard at 800-830-5738.
 
Tell the President and Congress:
  • This deal is outrageous. Do not accept it!
  • End the top-tier tax breaks.
  • Don't take any deal unless it has an estate tax at the 2009 level or stronger.

This is a bad deal.

We need a tidal wave of calls! Forward the alert, then CALL your friends; blog and share this alert on your social networks.

Thank you for taking action!

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Obama Confronts Dems' Pushback Over Deal on Tax Cuts

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Obama Confronts Democrats' Pushback Over Deal on Tax Cuts

By Ryan J. Donmoyer and Mike Dorning
Column appeared on Bloomberg.com, December 7, 2010

President Barack Obama confronted pushback from fellow Democrats today as he begins the job of selling his agreement with congressional Republicans to temporarily sustain all the Bush-era tax cuts.

After almost a week of negotiations between an administration team led by Treasury Secretary Timothy Geithner and budget director Jack Lew, Obama announced last night he’ll accept a deal that would extend current tax rates for high- income taxpayers for two more years in exchange for extending federal unemployment insurance for the long-term jobless and cutting the payroll tax by $120 billion for one year.

While Republicans such as Senate Minority Leader Mitch McConnell welcomed the compromise, Democrats said they haven’t committed to the plan and party activists mounted campaigns to kill it. Vice President Joe Biden is being dispatched to the Senate Democratic Caucus lunch this afternoon to lobby lawmakers.

“House Democrats have not signed off on this deal,” Maryland Representative Chris Van Hollen, a member of the House Democratic leadership, said today on Bloomberg Television. “I have some serious reservations.”

Obama said he made the compromise to break the stalemate over taxes to ensure rates don’t rise for middle-income Americans when the current ones, enacted in 2001 and 2003, expire on Dec. 31. He said that while he still believes the nation can’t afford to permanently extend the reduced top tax rates, raising taxes for the rest of taxpayers would damage the fragile economic recovery.

‘Collateral Damage’

Without the deal, middle-income families would become “collateral damage for political warfare here in Washington,” Obama said in televised remarks yesterday. He criticized Republicans for insisting on permanent tax cuts for the wealthiest Americans “regardless of the cost of impact on the deficit.”

In addition to preserving the status quo on Bush policies, the proposal creates more than $300 billion in new tax cuts for wage-earners, wealthy families, and corporations.

Stocks rose, copper and gold climbed to all-time highs and Treasuries fell after word of the agreement, offsetting concern that Europe’s debt crisis will spread further.

The Standard & Poor’s 500 Index jumped 0.8 percent to 1,233.10 at 9:57 a.m., reaching its highest levels since September 2008. The Nasdaq Composite Index rose 0.9 percent 2,617.71. The Dollar Index fell 0.3 percent. Copper rose to a 31-month high in New York and gold for delivery in February jumped to as much as a record $1,430.50 an ounce.

White House Meeting

Obama met yesterday afternoon at the White House meeting with Democratic congressional leaders to outline what he called a “framework” for compromise tax legislation.

Van Hollen characterized those discussions as “lively,” though “not overheated.”

Van Hollen said he understood that the president “doesn’t’ want to play Russian roulette” with the economy. Still, he said, “a number of us think there could have been a better result here.”

House Democrats will meet later today to air some of their concerns, he said. One of the sticking points is the provision that would set the top rate of the tax on estates at 35 percent, which applies after a $5 million tax allowance per individual.

“The question is, was that really necessary as part of this package,” Van Hollen said. “I’m not convinced it was.”

In a letter to House Speaker Nancy Pelosi of California circulated yesterday, Representative Peter Welch of Vermont and at least five other Democrats urged her not to agree to the administration’s deal.

Resistance

“We support extending tax cuts in full to 98 percent of American taxpayers, as the president initially proposed,” Welch wrote. “He should not back down. Nor should we.”

Jim Manley, a spokesman for Senate Majority Leader Harry Reid of Nevada, was noncommittal.

“Now that the president has outlined his proposal, Senator Reid plans on discussing it with his caucus tomorrow,” Manley said.

McConnell, of Kentucky, said in a statement that he was “cautiously optimistic” that congressional Democrats “will have the same openness to preventing tax hikes that the administration has already shown.”

An administration official said the president was happy with the agreement because it would give the economy a boost.

Unemployment Aid

Obama won his biggest prize: a 13-month extension of unemployment insurance, the official said, speaking on condition of anonymity. The White House also counted as a win an agreement from Republicans to renew a refundable child-care tax credit, the earned income tax credit, tuition tax credits and a 2 percentage point reduction in payroll taxes, among other items, the official said.

The compromise amounts to a couple hundred billion in tax cuts that no one thought possible just days ago, the official said, adding that the deal will play better across the country than in Washington, D.C.

The Office of Management and Budget said it doesn’t yet have an estimated cost estimate for the package, spokeswoman Meg Reilly said in an e-mail.

Lawrence Mishel, president of the Economic Policy Institute, a Washington group funded in part by labor unions, said Obama extracted some concessions from Republicans that may help the deal advance in Congress.

Future Fight

“Economically, if you were going to do a deal, I think this is better than expected and will provide some help to the economy, but we need a lot more help,” he said. “I think people generally wanted to have a fight to show who was for the rich people and who was for the rest of us. That fight now will take place in the 2012 election.”

If Congress agrees, the deal would leave in place the 10, 15, 25, 28, 33 and 35 percent marginal tax rates created in 2001. It would also preserve for two years the 15 percent tax rate on most capital gains and dividends, and would temporarily index the alternative minimum tax for inflation.

In addition, the plan outlined by Obama would extend aid for the long-term unemployed for an additional 13 months. To help spur hiring, the payroll tax -- which funds Social Security and Medicare -- would be cut by 2 percentage points during 2011.

The payroll tax cut would apply to all wage-earners, an administration official told reporters on a conference call. That would be an $800 savings for individuals with an income of $40,000. Those who earn salaries of more than $106,800 would save a maximum of $2,136. The proposal would cost the government $120 billion, another administration official said.

Payroll Taxes

The 2 percentage point cut represents a savings of about a third on the 6.2 percent share of the tax workers normally pay. Their employers get no benefit under the proposal.

The unemployment rate rose to a seven-month high of 9.8 percent in November as payroll growth slowed to 39,000 from 172,000, according to the Labor Department.

The compromise plan would set the estate tax at a top rate of 35 percent, which applies after a $5 million tax-free allowance per individual. That rate would be the lowest since 1931 --not counting 2010, when the rate was zero and replaced with a complicated capital gains tax that applies when inherited assets are sold.

Lee Farris, who tracks estate tax policy for the liberal advocacy group United for a Fair Economy in Boston, called Obama’s acceptance of the 35 percent rate “inconceivable.”

“A weaker estate tax, coupled with the extension of the Bush tax cuts for the wealthy, is only going to end in the richest 1 percent owning even more of our country’s wealth,” she said. (emphasis added)

Read the rest of this column on Bloomberg.com.

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UFE Needs Your Votes!

CREDO Donation Voting bannerEach year, CREDO Mobile / Working Assets, a long-distance and mobile phone provider – with a social and environmental conscience – allows members to submit votes to determine which charitable organizations on their ballot will receive a portion of the company's service charges as a donation.

Once again, United for a Fair Economy has made it to the ballot!

All CREDO / Working Assets customers are eligible to vote, BUT if you're not a customer, you can still participate. CREDO's "Action Members" – those who sign up for their mailing list and share action alerts – are also eligible to vote. If you're not already an Action Member, see "New to CREDO? click here" at the bottom of their sign-in page to get involved.

Since 1985, CREDO has contributed more than $65 million to groups working to restore justice, defend our environment and promote sustainability here in the US and abroad.

You may have noticed that a lot of the issues we address in our quest to reduce economic inequality have taken center stage in both Congress and the media: taxes and the federal deficit, the jobs and foreclosure crises. These are significant problems that require significant solutions. And, we need all the financial support we can gather to see that solutions that address the root causes of inequality make it to the policy tables.

Please take a moment to send UFE as many of your 100 votes as you're able today.

Thank you (times a hundred) in advance for your support!

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