Dec 31 2012

Missed Deadline: Tax Cuts to Expire at Midnight

The Senate has failed to come to an agreement to avoid the mythical “fiscal cliff” and the House has adjourned for the day thus missing the deadline for the expiration of the Bush tax cuts and the spending cuts that were agreed to last year. The MSM pundits are of course saying that this is not the be all or end all for an agreement. According to CNN sources told them that they saw little difference in settling the issue Monday versus Tuesday. Apparently it’s a Republican source:

If lawmakers approve a bill on Tuesday — after tax rates have technically gone up — they can argue they’ve voted for a tax cut to bring rates back down, GOP sources said.

So far, according to a report in McClatchy this is what they have argeed to:

Negotiators were working toward a scaled-back package that includes a series of critical tax changes that would extend permanently the Bush tax cuts on most Americans but end them and thus raise taxes for individuals who make $400,000 and families who make $450,000.

Individuals earning more than $250,000 and couples earning more than $300,000 would still be taxed higher because some of the value of their exemptions and itemized deductions would be phased out.

The tentative package would also:

– Extend unemployment benefits for 2 million Americans.

– Prevent about 30 million Americans from having to pay the alternative minimum tax.

– Keep Medicare payments to doctors at the current rate.

– Extend tax credits for children and college tuition.

– Provide tax breaks to clean-energy companies.

– Raise the estate tax, but significantly less than Democrats had wanted. The value of estates over $5 million would be taxed at 40 percent, up from 35 percent.

Left unaddressed, at the moment, are the $1.2 trillion in sequestration-related cuts that will also be triggered on Jan. 1.

The new congress will be sworn in January 3. If Obama and the Democrats are smart they will start tomorrow with a clean slate, as of tomorrow, telling the Republicans to suck it up.

It wouls appear that Congress has gotten an early start on dropping the ball.