Few Spared. Congress passes bill to avert widespread tax increases due with 'fiscal cliff'
Plan calls fro $600 million over 10 years in lieu of tax increases all at once
The highlights of a bill Congress passed on New Year's intended to divert widespread tax increases and budget cuts that were to begin this week have been released. The measure raises taxes by about $600 billion over 10 years in lieu with tax policies that were due to expire at midnight on Monday. The bill also adds a two month delay for across-the-board budget cuts to the Pentagon and numerous domestic agencies.
John Boehner and Eric Cantor with the news. Good news for those still struggling to find work - the plan extends jobless benefits for the long-term unemployed for one year.
Income tax rates. The plan extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Those who make above those amounts will be taxed at a rate of 39.6 percent, up from the current 35 percent. This plan extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.
Estate tax. Estates will be taxed at a top rate of 40 percent. The first $5 million in value will be exempt for individual estates and $10 million for family estates. Such estates were subject to a top rate of 35 percent last year.
Capital gains, dividends. Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15 percent to 20 percent.
Alternative minimum tax. This part of the bill permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle and upper-middle income taxpayers from being struck with higher tax bills by as much as $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes.
Other tax changes. This plank of the plan extends for five years the Obama-sought expansions of the child tax credit, the earned income tax credit and an up-to-$2,500 tax credit for college tuition. This also extends for one year accelerated "bonus" depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity.
Unemployment benefits. Good news for those still struggling to find work - the plan extends jobless benefits for the long-term unemployed for one year.
Cuts in Medicare reimbursements to doctors. The plan will halt a 27 percent cut in Medicare payments to doctors for one year. The cut is the product of an outdated 1997 budget formula.
Social Security payroll tax cut. This will let a 2-percentage-point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 percent.
Finally, Across-the-board cuts. The plan will put off for two months $109 billion worth of across-the-board spending cuts set to start striking the Pentagon and domestic agencies this week.
The House of Representatives late Tuesday night voted 257 to 167 to approve a "fiscal cliff" deal that had been negotiated by Senate Minority Leader Mitch McConnell (R.-Ky.) and Vice President Joe Biden and approved by the Senate in the wee hours of Tuesday morning.
© 2012, Distributed by NEWS CONSORTIUM.
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Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.
Keywords: Fiscal cliff, plan, unemployment benefits, across-the-board budget cuts
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