Senate to Consider Tax-Cut Bill That Would Add $857 Billion to U.S. Debt #p2

Senate leaders released an agreement crafted by the White House and Republicans to sustain Bush-era tax rates through 2012, set the estate tax at the lowest rate in 80 years, extend jobless aid and cut payroll taxes by 2 percentage points.

The legislation would add $857 billion to the federal debt over 10 years, government analysts said.

Senate Majority Leader Harry Reid introduced the legislation late yesterday after three days of lobbying by Democrats to include measures excluded from the framework announced Dec. 6 by President Barack Obama. The measure includes some provisions favored by Democrats such as renewed ethanol and commuter subsidies. Others, such as an extension of the Build America Bonds program, didn't make the cut.

Reid scheduled a procedural vote on the bill for Dec. 13.

The congressional Joint Committee on Taxation, which estimates the revenue effects of tax legislation, said the provisions would cost the government $801.3 billion in forgone revenue over 10 years. Extending unemployment benefits for 13 months, another feature of the package, would cost $56 billion, the Obama administration has said.

The proposal would extend Bush-era tax cuts for all levels of income. A two-year extension of those rates would cost $407.6 billion, according to the Joint Committee on Taxation.

The measure would keep the reduced tax rates enacted in 2001 and 2003 on income, capital gains and dividends from expiring on Dec. 31. That would preserve the current 15 percent rate for most dividends and capital gains as well as the 10, 15, 25, 28, 33, and 35 percent income-tax rates.

Child Credit

The $1,000 child credit would avoid being cut in half, the abolishment of the so-called marriage penalty would be retained, and tax credits subsidizing adoption, higher education and child care would be extended.

The bill includes provisions from last year's economic- stimulus law that Democrats favor, including a Treasury grant in lieu of tax credits for solar, wind and renewable energy conversion. The change helps companies that are unprofitable and couldn't take advantage of the credits.

The bill would extend federal unemployment insurance for the long-term jobless for 13 months, covering all of 2011, and cut workers' share of Social Security taxes to 4.2 percent. It would temporarily index the alternative-minimum tax, rolling back a $136.7 billion tax increase set to affect an estimated 21 million Americans this year and next.

rest at http://www.bloomberg.com/news/2010-12-10/senate-tax-cut-extension-plan-would-add-857-billion-to-debt.html