Actual finance blog

If Republican primary voters are inclined to reward candidates who have big, bold, game-changing plans for the tax code, Mitt Romney might be in trouble.

Compared to the ideas pushed by other White House hopefuls this cycle — particularly Newt Gingrich — Romney’s plan is just not that aggressive.

Of course, Romney’s plan is still firmly rooted in mainstream Republican thought, and that means big tax cuts and a corresponding reduction in federal revenue.

If the Bush tax cuts remain in place — something Romney favors — the federal government would bring in $180 billion less in 2015 under Romney’s plan, according to an analysis conducted by the Tax Policy Center, a group of tax experts who have already examined the plans of Gingrich and Rick Perry.

The rich would see the most benefit, with individuals in the top 1% receiving a tax cut of more than $80,000, while the average person would get a little more than $1,000 break.

"In many ways, Romney’s tax plank is a fairly mainstream Republican offering," Howard Gleckman of TPC said in a blog post. The plan, he said, contains "no major tax reform."

Romney would leave marginal tax rates on income at their current levels, while eliminating taxes on interest, dividends and capital gains for taxpayers who make less than $200,000.

The Romney plan also calls for the elimination of the estate tax, and a reduction in the tax rate paid by corporations from 35% to 25%.

Other candidates have gone further.

"It’s timid, at least by standards of Republican primary plans," said Daniel Mitchell, a senior fellow at the Cato Institute. "From the perspective of the average primary voter, he is probably just trimming around the edges."

Romney has not proposed a flat tax like Gingrich or Perry, and the front-runner has also shied away from the retail sales tax that was the centerpiece of Herman Cain’s now famous 9-9-9 plan personal loan for poor credit.

The Tax Foundation, a think tank that generally advocates for lower tax rates, has said that Romney’s plan for the individual code "really takes no step toward fundamental reform."

In fact, Romney is the lone Republican candidate who has not proposed modifying current tax brackets or substantially reducing income tax rates. Instead, he has articulated only a vague promise to pursue a future plan with "lower, flatter rates on a broader base."

Even President Obama’s fiscal commission, which won plaudits from both sides of the aisle, planned to lower individual rates across the board while eliminating special deductions and loopholes. Under that plan, the top rate paid by individuals would have dropped from 35% to 23%.

On corporate taxes, Romney favors higher rates than his competitors. Romney’s 25% proposed rate carries a less aggressive reduction than that of Gingrich (12.5%), Perry (20%), Rick Santorum (17.5%) or Ron Paul (15%).

America’s Choice 2012

Andrea Saul, a spokeswoman for the campaign, said Romney’s economic policies are a "blueprint for governing that includes dramatic spending cuts to reduce the deficit and pro-growth tax policies."

Grover Norquist, head of the anti-tax advocacy group Americans for Tax Reform, said late last year that Romney’s plan was "fine" but noted that he was falling behind his rivals.

"I think Romney put his plan in very early, Norquist said on Meet the Press, and he "needs to update it to catch up with where the debate’s going,"

But after capturing the Iowa caucuses, Romney might not need to change or explain his tax policies in more detail.

"If you’re the front-runner, then there are a lot of incentives to just run out the clock," Mitchell said. 

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The job market is looking a little brighter at the start of the new year.

Weekly unemployment benefit applications have fallen to levels last seen more than three years ago. Holiday sales were solid. Service companies grew a little faster in December. And many small businesses say they plan to add jobs over the next three months.

The mix of private and government data released Thursday sketched a picture of an economy that is slowly strengthening, stoking optimism one day ahead of the government’s important read on December job growth.

“Businesses have increased hiring to meet the underlying pick-up in (consumer) demand,” said Neil Dutta, an economist at Bank of America Merrill Lynch.

The mostly positive reports had little impact on financial markets. Traders seemed more focused on the debt crisis in Europe, which could slow U.S. growth later this year. The Dow Jones industrial average dropped 37 points in midday trading. Broader indexes were mixed.

Weekly applications for unemployment benefits dropped to a seasonally adjusted 372,000 last week, the Labor Department said Thursday. That’s 11 percent lower than the same time last year.

The four-week average, which smooths fluctuations, fell to 373,250 _ the lowest level since June 2008.

When applications drop below 375,000 _ consistently _ they generally signal that hiring is strong enough to reduce the unemployment rate.

Steven Wood, an economist at Insight Economics, said applications last year averaged 411,000 per week, down from 459,000 per week in 2010.

That’s “a clear indication that the pace of layoffs has slowed,” Wood said.

U.S. service firms, which employ roughly 90 percent of the work force, grew a little faster in December, according to the Institute for Supply Management.

The trade group of purchasing managers said its index of non-manufacturing activity rose to 52.6. That’s slightly above November’s reading of 52 _ the lowest in nearly two years _ but well below last year’s high of 59.7 recorded in February.

Any reading above 50 indicates expansion.

An increase in new orders and stronger imports drove last month’s modest expansion. But a gauge of hiring showed many service firms were hesitant to add workers no fax payday advance.

Retailers, meanwhile, reported solid but not spectacular sales gains last month. And much of the increase stemmed from heavy discounting that will likely cut into profits.

Sales rose 3.5 percent in December for a group of 25 retail chains tracked by the International Council of Shopping Centers. Holiday sales, which cover the last two months of the year, rose 3.3 percent, a decent rise but less than last year’s gain.

Small businesses remain encouraged about their plans to hire over the next three months. The National Federation of Independent Business says the proportion of those firms that expect to add workers is slightly off from the three-year high hit last month.

Economists are predicting that overall hiring increased in December and will strengthen this year.

John Ryding, an economist at RDQ Economics, forecasts that employers added 180,000 jobs last month, a big jump from November’s 120,000 net jobs.

Economists surveyed by the Associated Press project that the economy will generate an average of 175,000 jobs per month this year. That would be a step up from average monthly gains of 130,000 last year and 78,000 in 2010.

In November, the unemployment rate fell to 8.6 percent from 9 percent. Still, about half that decline occurred because many of the unemployed gave up looking for work. When people stop looking for a job, they’re no longer counted as unemployed.

The pickup in hiring reflects some modest improvement in the economy. Growth will likely top 3 percent at an annual rate in the final three months of this year, economists expect. That would be a sharp improvement over the 1.8 percent growth in the July-September quarter.

Even so, many economists forecast that growth could slow to roughly 2 percent this year. Europe is almost certain to fall into recession because of its financial troubles. And without more jobs and higher incomes, consumers may have to cut back on spending. That could drag on growth in 2012.

___

AP Economics Writer Martin Crutsinger contributed to this report.

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British police and journalists agree that their cozy ties allowed illegal phone hacking to go on too long, an independent investigator said Wednesday.

Elizabeth Filkin, a former Parliamentary standards chief, said a culture of confidential briefings, poor guidance from senior staff too ready to accept reporters’ hospitality and a bias toward some tabloids must be overhauled by London police.

Police officers should be wary of journalists who offer alcoholic drinks, make flirty advances or tempt potential sources into “late-night carousing,” Filkin warned.

“Alcohol is fraught issue … drinking loosens tongues, so common sense is needed,” her guidelines state, warning that “some journalists do not practice abstinence.”

Witnesses from both sides had told her inquiry the issue lay behind the failure of early police investigations to uncover the true extent of media malpractice.

An initial police investigation led to the jailing of a reporter from the now-defunct News of The World tabloid and a private investigator in 2007, but failed to unearth the widespread interception of cell phone voice mail messages of celebrities, sporting stars, legislators and even crime victims.

Since then, London police have identified 5,795 potential phone hacking victims and launched three new inquiries into alleged criminality by the press.

Filkin’s inquiry said relationships between the police, particularly senior officers, and the press had “compromised the capacity of both the police and the media to scrutinize the activities of the other.”

However Filkin, who was appointed by London’s Metropolitan Police to review their relationship with the press, said it would be down to a new police inquiry, not her, to say how badly that had hampered inquiries into phone hacking.

“I don’t know whether it inhibited that inquiry,” Filkin said paydayloans. “What I heard from a large number of people, both journalists and people who work at the Met, was that they feared it had.”

“That was the greatest concern for me from what I heard,” she said, presenting her proposed new guidelines to officers on how to handle the press.

Since the extent of tabloid phone hacking was exposed last summer, more than a dozen News of the World journalists, including former editor Andy Coulson, have been arrested.

The scandal also forced the resignations of London’s top police officer, the Metropolitan Police commissioner Paul Stephenson, and assistant commissioner John Yates.

Stephenson quit in July over his links to Neil Wallis, a former News of the World executive turned PR consultant. Yates resigned amid criticism of his handling of initial investigation.

“There will be no more secret conversations, there will be no more improper contacts,” said Stephenson’s successor as London’s top police officer, Bernard Hogan-Howe.

Hogan-Howe pledged to take up Filkin’s recommendations in full, including a proposal that officers should in the future record every contact they have with reporters for potential inspection.

Filkin did not discuss in detail allegations that Britain’s press paid London police for information, but said claims from senior officers that only a few people were involved conflicted with accounts she had received from journalists.

Eight people, including a serving police officer and a reporter working for The Sun tabloid, have been arrested as part of an inquiry into the alleged bribes, though no one has been charged.

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Commodities may rebound from their first retreat in three years as developing economies shore up global growth, driving demand higher at a time when raw-material producers are already struggling to keep up.

Precious metals will advance 27 percent or more, industrial metals at least 17 percent and grains 5 percent, according to the median estimates in a Bloomberg survey of 143 analysts, traders and investors. Nine of the 15 commodities covered by a similar survey a year earlier reached their predicted highs in 2011, with another five no more than 4 percent away.

The Standard & Poor

Prime Minister Mario Monti is prescribing more

South Korean President Lee Myung Bak said a new era in inter-Korean relations was possible if the North begins behaving sincerely, after the nuclear-armed nation accused Lee of

Italy’s borrowing costs fell for a second day Thursday but the country’s new premier said his government has more to do before it convinces financial markets it can manage the heavy debts that have made it the focus of the eurozone crisis.

Mario Monti said he was encouraged by bond auctions at which interest costs demanded by bond investors eased. He said his government of technocrats, in office for just a month and a half following the resignation of Silvio Berlusconi, was preparing a package of measures to get the Italian economy moving again, including efforts to boost competition and liberalize the labor market.

“We absolutely don’t consider the market turbulence to be over,” he said at a news conference after the Italian treasury tapped investors for around euro7 billion ($9.2 billion).

The most keenly awaited result from Thursday’s batch of auctions was the euro2.5 billion ($3.3 billion) sale of ten-year bonds at an average yield of 6.98 percent.

That’s lower than the record 7.56 percent it had to pay at an equivalent auction last month, when investor concerns over the ability of the country to service its massive debts became particularly acute.

However, the country’s borrowing rate on the key 10-year bond remains uncomfortably close to the 7 percent level widely considered to be unsustainable in the long run. Greece, Ireland and Portugal all had to request financial bailouts after their 10-year bond yields pushed above 7 percent. In the secondary markets, Italy’s yield continues to hover around the 7 percent mark.

The 17 countries that use the euro are struggling with a crisis over heavy levels of government debt in several countries. Fears of default on those debts mean that bond investors demand ever higher interest. If a country can no longer borrow affordably to pay off bonds that are maturing, it winds up needing a bailout or defaulting.

Markets had grown fearful over the past few months over Italy’s massive debt burden of euro1.9 trillion ($2.5 trillion). Next year alone, the eurozone’s third largest economy has some euro330 billion ($431 bill.

That means Italy has far to go before it convinces markets it will avoid a disastrous default that could cause another banking crisis and sink the European and global economies.

Italy also sold euro2.54 billion ($3.3 billion) of 3 year bonds at an average interest rate of 5.62 percent, far lower than the 7.89 percent rate it had to pay last month. It also raised euro803 million ($1.05 billion) in the 7-year auction at a rate of 7.42 percent and euro1.18 billion ($1.54 billion) in nine-year bonds at a yield of 6.7 percent.

Thursday’s results come a day after Italy raised euro10.7 billion ($14 billion) in a pair of auctions, again at sharply lower rates than those it was forced to pay just a month ago.

The sharp decline in Italy’s borrowing costs over the past couple of days suggests that commercial banks from the 17 countries that use the euro may have diverted some money they tapped from emergency loans from the European Central Bank last week to buy the bonds of heavily indebted governments.

It may also suggest rising investor confidence in Italy’s recent efforts to reduce its long-term debt through tax increases, pension changes and spending cuts.

Monti’s technocratic government got parliamentary approval last week for more spending cuts and tax increases intended to save the country from financial disaster. One of the most controversial aspects of the austerity package is reform of Italy’s bloated pension system.

Economists say the long term problem is the country’s weak growth, since stronger growth both increases tax revenues and shrinks the size of debt relative to the economy. European Central Bank head Mario Draghi has said Italy must undertake deeper economic reforms to improve its economic performance.

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President Barack Obama will nominate Harvard economist Jeremy Stein and Jerome Powell, an investment banker and former Treasury official, to the two empty seats on the Federal Reserve’s policy-setting board of governors.

The White House’s pick of candidates, who have Democratic and Republican credentials respectively, may help speed their nomination through Congress amid a sluggish economic recovery that has failed to put a major dent in the unemployment rate, now at 8.6 percent.

While neither has laid out detailed views on monetary policy, Stein wrote a paper earlier this year suggesting he would back the Fed’s unconventional efforts to keep down long-term borrowing costs, which have been controversial in Washington. The Fed for over three years has adopted an array of radical measures to keep interest rates low and spur recovery.

Stein, who previously worked for the Obama administration as an adviser to the Treasury secretary and a National Economic Council staff member, specializes in stock price behavior, corporate investment and financing decisions, risk management and capital allocation inside firms. He declined to comment on his nomination.

The choice of Powell, who served at the Treasury during President George H. W. Bush’s term in the late 1980s and early 1990s, could be aimed at mollifying Senate Republicans. They blocked Peter Diamond, a Massachusetts Institute of Technology economist, saying the Nobel prize winner was not qualified for the job and was too sympathetic to government intervention in the economy.

Powell is a lawyer by training and worked at Dillon, Read and Bankers Trust Co. after leaving the senior Bush administration and before joining Carlyle Group. His knowledge of financial markets could help him fill the gap left by Kevin Warsh, a former Morgan Stanley executive who acted as Chairman Ben Bernanke’s point-man for crisis negotiations cash advance america.

FULL BOARD

However, Powell’s financial industry background may also be a source of criticism from analysts who already see the U.S. central bank as being too cozy with Wall Street.

Powell is currently a visiting scholar at the Bipartisan Policy Center in Washington, focused on federal and state fiscal issues. He was not immediately available to comment. Both Stein and Powell had already been flagged in various press reports as likely nominees.

In response to a deep recession and financial crisis, the Fed slashed interest rates to near zero and sharply expanded its balance sheet to $2.8 trillion to keep the economy afloat. Some analysts worry the Fed’s asset purchases could make it harder for the central bank to tighten monetary policy when it decides the time is right.

If Powell and Stein are confirmed, it would be the first time since April 2006 that all seven seats on the Fed’s board are filled. The term currently filled by Elizabeth Duke, the last remaining George W. Bush appointee on the board, is to expire at the end of January, though governors can choose to stay in office until a successor is confirmed.

Senate Banking Committee Chairman Tim Johnson, a Democrat, welcomed the most recent nominations.

“With the fragile state of the U.S. economy and a looming European debt crisis, Chairman Johnson believes it is imperative that our financial regulators operate at full strength,” his office said in a statement. “Chairman Johnson is committed to moving these nominations though the Banking Committee in a timely manner and is looking to schedule a hearing soon.”

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+%3Cp%3EDeserted+by+many+of+his+fellow+Republicans%2C+U.S.+House+Speaker+John+Boehner+surrendered+to+attacks+from+President+Barack+Obama+and+congressional+Democrats+and+agreed+to+a+two-month+extension+of+a+payroll+tax+cut+that+he+derided+hours+earlier.+%3C%2Fp%3E+%3Cp%3EThe+decision+kicks+the+fight+over+extending+the+tax+cut+for+160+million+U.S.+workers+into+early+next+year+without+resolving+deep+divides+over+how+to+cover+the+cost+through+2012.+%3C%2Fp%3E+%3Cp%3EDemocrats+are+focused+on+imposing+a+new+tax+on+income+exceeding+%241+million+while+Republicans+want+to+cut+the+federal+work+force+and+freeze+pay+for+government+workers.+Republicans+also+want+to+attach+policies+to+a+payroll+tax+cut+extension+–+opposed+by+Democrats+–+such+as+a+rewrite+of+the+unemployment+system+or+weaker+rules+for+industrial+emissions.+%3C%2Fp%3E+%3Cp%3EThe+deal+that+Boehner+and+Senate+Majority+Leader+Harry+Reid%2C+a+Nevada+Democrat%2C+agreed+to+yesterday+includes+language+that+calls+on+Obama+to+accelerate+approval+of+the+Keystone+XL+Canadian+oil+pipeline.+Both+chambers+plan+to+pass+the+tax+cut+deal+today+by+unanimous+consent%2C+which+means+most+lawmakers+won%92t+have+to+return+to+Washington+over+the+holiday+recess.+%3C%2Fp%3E+%3Cp%3EBoehner+could+be+in+a+weaker+position+entering+the+2012+negotiations+after+presiding+over+the+tumult+of+recent+days%2C+in+which+Senate+Republicans+opposed+Boehner%92s+stance+and+some+House+Republicans+had+begun+to+defect+as+well.+The+talks+next+year+will+unfold+in+the+months+ahead+of+a+presidential+election%2C+making+Boehner%92s+task+more+difficult.+%3C%2Fp%3E+No+Time+for+Celebration++%3Cp%3E%93I+don%92t+think+it%92s+a+time+for+celebration%2C%94+the+Ohio+Republican+told+reporters+yesterday.+%93Our+economy+is+struggling.+We%92ve+got+a+lot+of+work+ahead+of+us+in+the+coming+year.%94+%3C%2Fp%3E+%3Cp%3EAfter+days+of+relentless+attacks+from+Democrats+and+negative+headlines+in+the+press%2C+some+Republicans+were+pleased+to+see+Boehner+cut+his+losses.+%3C%2Fp%3E+%3Cp%3E%93The+great+danger+would+have+been+if+we+continued%2C%94+said+Representative+Tom+Cole+of+Oklahoma.+%93We+made+our+points.+We%92ve+gotten+some+modifications.%94+%3C%2Fp%3E+%3Cp%3EThe+pressure+for+Boehner+to+cut+a+deal+was+building+for+days.+Republican+Senators+Olympia+Snowe+of+Maine%2C+Scott+Brown+of+Massachusetts%2C+John+McCain+of+Arizona+and+Bob+Corker+of+Tennessee%2C+criticized+Boehner%92s+move+to+reject+the+bipartisan+two-month+extension+after+it+passed+the+Senate+on+Dec.+17%2C+just+two+weeks+before+the+tax+cut+was+set+to+expire.+%3C%2Fp%3E+Isolation+in+Opposition++%3Cp%3EBoehner+became+more+isolated+in+his+opposition+to+the+Senate-passed+bipartisan+bill+after+the+top+Republican+in+the+Senate%2C+Mitch+McConnell+of+Kentucky%2C+issued+a+statement+before+lunchtime+yesterday+urging+the+House+to+pass+the+short-term+measure.+%3C%2Fp%3E+%3Cp%3EMcConnell+said+the+House+should+pass+a+bill+that+averts+%93any+disruption+in+the+payroll+tax+holiday+or+other+expiring+provisions+and+allows+Congress+to+work+on+a+solution+for+the+longer+extensions.%94+%3C%2Fp%3E+%3Cp%3EThat+statement+%93sealed+the+deal%94+in+ending+the+standoff%2C+said+Brian+Gardner%2C+the+senior+vice+president+for+Washington+research+at+KBW+Inc.+%3C%2Fp%3E+%3Cp%3EBoehner+held+a+conference+call+with+Republicans+yesterday.+On+a+similar+conference+call+following+the+Dec.+17+Senate+passage+of+the+two-month+extension%2C+rank-and-file+Republicans+pressed+Boehner+to+oppose+the+measure.+They+did+so+on+Dec.+20+as+the+House+rejected+the+Senate+bill+229-193.+%3C%2Fp%3E+Different+Tone++%3Cp%3EHouse+Republicans+who+participated+in+yesterday%92s+call+said+the+tone+was+much+different+than+after+the+Senate+vote.+%3C%2Fp%3E+%3Cp%3E%93It+wasn%92t+truly+a+conference+call%2C%94+Representative+Jack+Kingston%2C+a+Georgia+Republican%2C+said.+%93It+wasn%92t+a+solicitation+of+opinion.%94+%3C%2Fp%3E+%3Cp%3EThough+most+House+Republicans+still+want+a+yearlong+deal%2C+Kingston+said+that+it+was+time+for+the+party+to+move+forward.+%3C%2Fp%3E+%3Cp%3E%93This+takes+the+whole+thing+off+the+front+page+and+that%92s+a+good+thing%2C%94+he+said.+%3C%2Fp%3E+%3Cp%3ESome+House+Republicans+said+yesterday+they+don%92t+think+Boehner%92s+agreement+to+pass+the+two-month+extension+puts+him+in+immediate+danger+of+losing+the+support+of+the+Republican+majority+he+leads.+%3C%2Fp%3E+%3Cp%3ERepresentative+Sean+Duffy%2C+a+freshman+Republican+from+Wisconsin%2C+said+Boehner+was+trying+to+reflect+the+views+of+his+colleagues.+Duffy+said+he+is+pleased+that+a+tax+increase+will+be+avoided+in+January+and+doesn%92t+think+the+saga+would+hurt+Republicans+in+the+2012+election.+%3C%2Fp%3E+%3Cp%3E%93I+think+the+American+public+will+look+at+the+economy+and+job+growth+and+the+lack+thereof%2C%94+Duffy+said.+%93I+don%92t+think+this+is+an+indicator+of+what+will+happen+next+year.+%3C%2Fp%3E+Provisions+Extended++%3Cp%3EWithout+congressional+action%2C+the+payroll+tax+for+employees+would+rise+in+January+to+6.2+percent+from+the+current+4.2+percent.+The+tax+funds+Social+Security.+The+deal+also+averts+an+end+to+emergency+unemployment+benefits+set+to+expire+on+Dec.+31+and+assures+doctors+their+Medicare+reimbursement+rates+won%92t+be+reduced+starting+in+January.+%3C%2Fp%3E+%3Cp%3EMichael+Feroli%2C+%3Ca+topic_url%3D%22http%3A%2F%2Ftopics.bloomberg.com%2Fjpmorgan-chase-%26amp%3B-co%2F%22+href%3D%22http%3A%2F%2Fwww.bloomberg.com%2Fapps%2Fquote%3Fticker%3DJPM%3AUS%22+density%3D%22sparse%22+title%3D%22Get+Quote%22+ticker%3D%22JPM%3AUS%22+class%3D%22web_ticker%22%3EJPMorgan+Chase+%26amp%3B+Co.+%28JPM%29%92s+New+York-based+chief+U.S.+economist%2C+said+economic+growth+would+be+reduced+by+0.5+percentage+points+in+the+first+quarter+and+1.5+percentage+points+in+the+second+quarter+of+2012+if+the+payroll+tax+cut+and+expanded+unemployment+benefits+weren%92t+continued.+If+they+are+extended+for+the+year%2C+he+expects+growth+of+2.5+percent+in+the+first+half+of+the+year%2C+he+said+in+a+Dec.+16+note+to+clients.+%3C%2Fp%3E+%3Cp%3EHouse+Ways+and+Means+Committee+Chairman+Dave+Camp%2C+a+Michigan+Republican%2C+will+introduce+the+legislation+in+the+House+today+that+will+implement+the+agreement.+%3C%2Fp%3E+Unanimous+Consent++%3Cp%3EThe+measure+will+be+brought+up+in+the+House+under+unanimous+consent+to+avoid+requiring+lawmakers+to+return+and+could+be+cleared+in+the+Senate+later+in+the+day+using+the+same+process.+%3C%2Fp%3E+%3Cp%3EThe+legislation+includes+one+difference+from+the+version+passed+by+the+Senate.+A+yearlong+payroll+tax+cut+extension+would+apply+to+the+first+%24110%2C100+in+wages.+To+prevent+someone+from+shifting+all+their+income+into+the+first+two+months+of+the+year%2C+the+Senate+bill+limited+the+tax+break+to+the+first+%2418%2C350+a+worker+earns.+%3C%2Fp%3E+%3Cp%3ERepublicans+changed+the+bill+to+apply+the+tax+cut+to+the+full+%24110%2C100+in+wages%2C+according+to+information+provided+by+Camp%92s+office.+That+makes+it+easier+for+payroll+processors+to+continue+the+tax+cut+if+it+is+extended+beyond+February.+%3C%2Fp%3E+%3Cp%3EWorkers+who+earn+more+than+%2418%2C350+during+the+first+two+months+of+the+year+will+pay+an+additional+2+percentage+point+tax+when+they+file+their+returns+in+2013.+%3C%2Fp%3E+%3Cp%3EThe+bill+is+HR+3630.+%3C%2Fp%3E++%3Cp%3E%3Ca+href%3D%27http%3A%2F%2Fwww.bloomberg.com%2Fnews%2F2011-12-22%2Fhouse-s-boehner-senate-s-reid-said-to-agree-on-u-s-payroll-tax-cut-plan.html%27+rel%3D%27nofollow%27%3ESource%3C%2Fa%3E%3C%2Fp%3E+

Canadian Gold and iron producer Eldorado Gold Corp. said Sunday it will buy European Goldfields Ltd. in a deal worth about $2.4 billion, increasing its ability to produce gold.

The Vancouver, British Columbia, company said its offer values each European Goldfields share at 13.08 Canadian dollars ($12.59), based on Eldorado’s closing stock price on the Toronto Stock Exchange Friday.

That comes to 2.5 billion Canadian dollars. It’s a 10 percent premium to European Goldfields’ closing price on the Toronto Stock Exchange Friday.

Eldorado said the deal will create a company with a market capitalization of about 11 billion Canadian dollars ($10.59 billion) and help diversify production. It expects to increase annual production to reach more than 1.5 million ounces of gold by 2015. In October, the company said it expected to produce 650,000 ounces of gold this year.

Eldorado operates in China, Turkey, Brazil and Greece. It has six active mines and other projects in development.

European Goldfields, which is based in Whitehorse, Yukon, operates a mine in Greece and is developing projects in both Greece and Romania pay day loans. It said it has gold reserves of 10 million ounces within the European Union. It is also a partner of Aktor SA, the largest construction company in Greece.

“Integration of European Goldfields’ business with our own will provide Eldorado with the dominant gold mining business in the Aegean Region,” said Eldorado CEO Paul Wright in a statement Sunday. He added that European Goldfields’ partnership with Aktor will help the combined company safely develop operations in Greece.

Under the deal proposed Sunday, European Goldfields stockholders will receive 0.85 Eldorado share and a fraction of a Canadian cent for each European Goldfields share.

The acquisition requires approval from a majority of Eldorado shareholders and two-thirds of European Goldfields shareholders. Shareholders from both companies will meet in February to vote on the deal.

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