Under the Senate package:
– Taxes would stay the same for most Americans. But they will increase for individuals making more than $400,000 and couples making more than $450,000. For them, it will go from the current 35% to the Clinton-era rate of 39.6%.
– Itemized deductions would be capped for those making $250,000 and for married couples making $300,000.
– Taxes on inherited estates will go up to 40% from 35%.
– Unemployment insurance would be extended for a year for 2 million people.
– The alternative minimum tax — a perennial issue — would be permanently adjusted for inflation.
– Child care, tuition and research and development tax credits would be renewed.
– The “Doc Fix” — reimbursements for doctors who take Medicare patients — will continue, but it won’t be paid for out of the Obama administration’s signature health care law.
– A spike in milk prices will be avoided. Agriculture Secretary Tom Vilsack said milk prices would have doubled to $7 a gallon because a separate agriculture bill had expired.
Now it’s up to the House.
Sources told CNN over the weekend that Boehner’s latest proposal dropped Republican opposition to two key demands by Obama — higher tax rates on the wealthiest Americans and an automatic extension of the federal debt limit.
Definitely a retreat on statements by the Republicans about not increasing rates.
Democratic Senator Kent Conrad told Reuters that extending the payroll tax cut would have “the biggest bang for the buck on economic growth.”
“We need to do something on stimulus as part of the overall fiscal cliff. We have to do something because the economy’s not growing fast enough,” said Charles Schumer, one of the Democratic leaders in the Senate.
Max Baucus, chairman of the Senate Finance Committee, told reporters that the payroll tax cut extension needs to be “on the table,” in any discussions over resolving the fiscal cliff.
Republican Senator Rob Portman agreed that the tax cut had to be part of fiscal talks, and Democratic Representative Chris Van Hollen has long said the tax break would help the economy.
The Obama administration has been adamant about not extending the tax break for the third year in a row.
This potential willingness to, or maybe posturing about, extending the tax cut is a departure from previous bipartisan statements to the contrary.