Republicans and Democrats have finally agreed on a new tax deal that covers a host of topics. In this article, we take a look at what the new deal means to you. 

The political parties have been fighting to such an extent it was difficult to imagine them every agreeing on anything. There was, of course, one big exception. Both are more than willing to run up more debt for our nation. In the spirit of the holidays, the Democrats gave the Republicans tax cuts and the Republicans gave the Democrats more benefits. At the end of the day, we’ll add another $700 billion to a deficit that is already completely out of control. Happy Holidays!

The first thing to understand is the social security payroll tax break. The so called tax holiday doesn’t give you a new break. Instead, it keeps your payroll tax contribution at 4.2 percent versus 6.2 on each paycheck. It is not huge, but every bit counts these days. 

President Obama has been trying to give tax help to families. To this end, he’s instituted a $1,000 tax credit for families for each child they have. It is set to expire December 31, but now will extend into 2011. 

The Bush Tax Cuts have effectively zeroed out the estate tax. The tax is set to jump to 55 percent on January 1, 2011. With the new tax deal, the rate is now set to be 35 percent of any estate amounts in excess of five million dollars. 

To understand how disingenuous politicians are, one only has to look at the tax code. Every politician tells you they stand for family values. Despite this, the tax code actually penalizes those who are married by reducing the deductions that can be taken. The Bush Tax Cuts resolved this and the new tax deal will extend the relief through 2012. 

As is often the case in these situations, the tax deal agreed to by Democrats and Republicans is complex and offers a little bit for everyone. Of course, it is really just another stimulus deal intended to rev up the economy, one that is going to cost us $700 billion and more over time. That is not a good thing.