Obama's tax cut "deal" will raise taxes for lower income workers who make less than $10 an hour. [View All]

Obama's deal will raise taxes for some low-income workers
By Chris Adams | McClatchy Newspapers
December 8, 2010

WASHINGTON — The tax deal struck this week between the White House and congressional leaders has a little bit for most taxpayers in the country. But some of the nation's poorest workers will actually end up worse off.

The president's proposal, struck in a deal with congressional Republicans, would lower the Social Security taxes on all workers in the nation by 2 percentage points.

At the same time, the proposal eliminates the "Making Work Pay" tax credit that was originally part of President Barack Obama's 2009 stimulus package and reduced Americans' taxes by up to $400 for an individual or $800 for a couple.

When comparing the Social Security reduction versus the current tax credit, middle- and upper-income Americans will fare far better under the new proposal. But some lower-income workers won't.

The break-even point is $20,000 for an individual and $40,000 for a couple. All other things being equal, make less than those figures in a year, and your taxes will go up come Jan. 1, 2011. Make more and they'll go down.

Read the full article at:

http://www.mcclatchydc.com/2010/12/08/104986/under-obamas-deal-taxes-will-rise.html