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  Republicans Set Aside Middle-Income Tax Cuts to Focus on Rich
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ContributorDFWDem 
Last EditedDFWDem  May 08, 2006 10:10am
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News DateMonday, May 8, 2006 04:00:00 PM UTC0:0
DescriptionBy Ryan J. Donmoyer

May 8 (Bloomberg) -- Republican lawmakers, facing the prospect that their power to cut taxes may soon be curbed, plan to extend breaks that mostly benefit the wealthy and Wall Street at the expense of reductions for middle-income households.

Six months before elections that may return a Democratic majority in at least one house of Congress, Senate Majority Leader Bill Frist of Tennessee and House Speaker Dennis Hastert of Illinois are focusing on extending the 15 percent rate on investments and repealing the estate tax. They won't push extensions of lower rates for all taxpayers and expanded breaks for married couples and families with children, which expire after 2010.

Internal Revenue Service data show taxpayers who earned at least $1 million reaped 43 percent of all savings from reduced rates on dividends and capital gains. The estate tax will affect only 12,600 families with more than $2 million in assets this year, a number that will decline to 7,200 by 2009, according to a study by the Tax Policy Center.

In contrast, households earning less than $75,000 received about 70 percent of the benefits from increasing the child credit and 64.4 percent of the benefit from creating the 10 percent bracket on the first $14,000 of taxable income, the Tax Policy Center says. In addition, it says 55.2 percent of the benefit from ending the so-called marriage penalty was received by families earning less than $100,000.
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