NEW YORK TIMES Editorial: …The deal, hammered out by the Obama administration and Senate Republican leaders, raises income taxes to Clinton-era levels on families making more than $450,000 a year and individuals making $400,000. That’s a far cry from the $250,000 threshold that Mr. Obama said defined the upper range of the middle class in the campaign.
But White House officials said they had to compromise on that number to win renewal of important provisions that would otherwise have expired: unemployment insurance for three million people, tax credits for low-income working families, and a reduction in the impact of the alternative minimum tax on many middle-class families. Republicans cynically used those vital measures as bargaining chips. (What was not a point of contention was allowing the payroll tax to go back up by 2 percentage points.)
The higher income threshold isn’t the only price the White House wound up paying. The estate tax on the nation’s biggest inheritances is going up slightly but not nearly enough (estates of more than $5 million would be taxed at 40 percent, up from the current 35 percent) in a big and unnecessary giveaway to the very richest families. Significantly, the estate tax rate would be made permanent, while the credits for low-income families would expire in five years. Capital gains and dividend tax rates go up to 20 percent from the current 15 percent, but again, only for families making more than $450,000 a year… (more)
