January 2, 2013
House Approves Fiscal Cliff Tax Deal
The House last night approved H.R. 8 by a vote of 257-167 to avert the fiscal cliff. The bill now goes to the White House for President Obama's signature. Highlights of the bill include:
- Raise the marginal tax rate to 39.6% on income over $450,000 (joint) and $400,000 (single).
- Raise the tax rate on dividends and long term capital gains to 20% on taxpayers with income over $450,000 (joint) and $400,000 (single). The top rate would remain 15% for taxpayers with lower incomes.
- Estate and gift tax: $5 million exemption (inflation-adjusted) and 40% rate.
- Permanent and retroactive patch for the AMT.
- Return of the exemption and itemized deduction phase-outs on taxpayers with income over $300,000 (joint) and $250,000 (single).
- One-year extension of 50% bonus depreciation.
- Extension of various tax extenders.
- Legislative Language
- Senate Finance Committee Summary
- White House Fact Sheet
- President Obama Statement.
- Congressional Budget Office Revenue Estimate
- Joint Committee on Taxation Reveue Estimate
- Len Burman (Syracuse), Senate Bill Averts Fiscal Cliff--For Now--While Ignoring our Short- and Long-Term Fiscal Problems
- CCH, Tax Briefing
- Stephen J. Entin (Tax Foundation), Modeling the Economic and Distributional Effects of the Senate Tax Bill
- Howard Gleckman (Tax Policy Center), Congress Kicks the Fiscal Can off the Front Stoop
- Joseph Henchman (Tax Foundation), Details of the Fiscal Cliff Tax Deal
- Ezra Klein (Washington Post), Wonkbook: Everything You Need to Know About the Fiscal Cliff Deal
- Greg Mankiw (Harvard), President Rejects His Bipartisan Bowles-Simpson Commission
- Greg Mankiw (Harvard), The Neverending Quest for a More Redistributionist Tax System
- David Malpass (WSJ op-ed), Nothing Is Certain Except More Debt and Taxes,
- New York Times, Tax Deal’s Passage Ends Latest Standoff
- Dan Shaviro (NYU), The Fiscal Cliff Deal
- Joe Thorndike (Tax Analysts), Is Obama the Worst Legislative Negotiator of the Last Century?
- Wall Street Journal, Congress Passes Cliff Deal
- Wall Street Journal, High Earners Facing First Major Tax Increase in Years
- Wall Street Journal editorial, Obama's Tax Bill Comes Due
- Washington Post, Congress Approves ‘Fiscal Cliff’ Measure
- Washington Post, Tea Party Backers Swallow a Bitter Pill in ‘Cliff’ Bill
- Robert Wood (Forbes), Five Things Everyone Should Know about the Fiscal Cliff Tax Deal
- George Yin (Virginia), 'Fiscal Cliff' Compromise Is a Bad Deal
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And the new trust tax income rates will be?
Posted by: RB | Jan 2, 2013 12:03:31 PM
My clients, the millionaire couple who live quite comfortably on $50,000 annually in dividends, are happy. Their federal tax is still zero. Now if we could just eliminate their state income tax, without forcing a move to Texas.
Posted by: Bob | Jan 2, 2013 12:09:30 PM
Thank goodness Hollywood was able to keep its tax breaks! You wouldn't want all their political contributions to have been wasted.
Posted by: Woody | Jan 2, 2013 12:37:01 PM
According to the Senate Finance summary, the law retroactively "extends for two years, through 2013, the credit under Section 25C of the Code for energy-efficient improvements to existing homes, reinstating the credit as it existed before passage of the American Recovery and Reinvestment Act."
This is the best kind of tax incentive: Reward people who did something even though they did not expect a tax credit for it. Meanwhile, phones are already ringing in the offices of contractors willing to provide backdated receipts.
Posted by: Bob | Jan 2, 2013 12:49:47 PM
A compromise is a deal that pleases no one but that enough people will vote for. So taxes are raised on some of the "wealthy", tax goodies are preserved for some and spending and debt is punted down the road to be fought at another time and same place. This is what happens when you call something a "cliff", allow the media to instill hysteria ("falling off the cliff will be the biggest economic disaster since the .....Great Depression!!!!!")and then wait until the final hour to "reach a deal". God forbid enough people should just act like adults and reach a decent, comprehensive deal.
Posted by: George | Jan 2, 2013 5:19:26 PM
Thank goodness they kept those bennies for the car racing fans of Georgia.
Posted by: Sid | Jan 2, 2013 10:02:41 PM
Does the new 39.6% rate apply to trusts? Does the new applicable exclusion for estates
start at $5,000,000 or $5,250,000 (counting inflation adjustments?
Posted by: Peter | Jan 3, 2013 9:39:12 AM
Sid, I oppose the NASCAR money, too. I'm for fiscal responsibility by all sides, but I'm not going to see it with either Republicans or Democrats.
Posted by: Woody | Jan 4, 2013 1:54:01 PM