Tentative Plan Set to Extend Expiring Tax Cuts

by

The following article comes from Dow Jones:

The White House and congressional Republicans have come together on a tentative plan to extend all expiring tax cuts and to slash the tax on estates for the next two years.

President Barack Obama shared the outlines of the proposal, negotiated between the White House and Senate Republicans–at a White House meeting with Democratic congressional leaders Monday.

Democrats in the House and Senate have not endorsed the plan, House Democratic aides stressed. It will be presented to Democrats in both chambers during meetings Tuesday.

In exchange for concessions on tax cuts, Republicans agreed to a 13-month extension of expired jobless benefits.

Also, the plan would include a new tax cut for workers in the form of a year-long, 2 percent reduction in the payroll tax. That aims to spur the economy by providing a jolt to consumption, and it replaces Obama’s $400 tax credit for workers, which is also expiring at the end of this year.


On the estate tax, Obama is backing a plan long touted by Sen. Jon Kyl (R., Ariz.) and conservative Democrats like Sen. Blanche Lincoln (D., Ark.). It is much more generous towards heirs of wealthy estates than he proposed during the 2008 campaign, and that a majority of the House and Senate voted for as recently as Saturday.

 

Estate taxes would be set at 35 percent, exempting all estate wealth under $5 million. The estate tax under current rules would have reverted to levels similar to those in place before 2001 — a 55 percent tax rate with a $1 million exemption.

Obama has long advocated letting tax rates expire for single people earning $200,000 or more, and married couples earning $250,000 or more.

In a Monday press conference, he said that is still his preference. But faced with opposition from Republicans, he said he was forced to go along with the upper-income cuts in order to ensure the middle-class cuts stay in place.

“The American people didn’t send us here to fight symbolic battles, or win symbolic victories,” Obama said.

 

 

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x