Well, Congress has officially adjourned until November 29, which means that they have further stalled, for at least one week, a vote on the 2001 and 2003 tax cuts. Just a reminder that all tax relief enacted in the Jobs and Growth Tax Relief Reconciliation Act will expire at the end of the year if Congress fails to act. The 10 percent bracket will disappear, the three middle tax brackets will rise by three percentage points, the top marginal income tax rate will rise from 35 percent to 39.6 percent, the capital gains and dividend taxes will rise from top rates of 15 percent each to 20 percent and 39.6 percent, and the death tax (non-existent for 2010) will jump back to a 55 percent rate and $1 million exemption.
We were disheartened at the end of September when Senate Majority leader Harry Reid announced that there would be no tax cut vote prior to the mid-term elections. Given that the middle fifth of American households face an average hike of $1,540, we thought that it was inexcusable for Congress to opt for petty partisan politics over the taxpayers they serve. Nonetheless, Reid moved forward with his decision and here we are now, on the brink of expiration, with no clear “compromise” in sight.
Throughout October, I was hearing that the most likely compromise was a short-term extension of all tax cuts, but now that doesn’t look to be the case. Senate Democrats met yesterday and, according to The Hill, Reid will “force a vote on extending tax cuts for families earning below $250,000 and individuals below $200,000 that would allow tax rates on the wealthy to expire.” But, even at that, we don’t know if the extension for middle-class earners would be temporary or permanent. Apparently, Reid has said he will allow Senate Minority leader Mitch McConnell to hold a vote on a permanent extension of all cuts, but we can only speculate the manner in which it will be offered. The same article reports that House Majority leader Steny Hoyer will also push a vote on extending tax cuts for middle-class families alone. To make matters more complicated, there is talk of additional Democrat alternatives being presented, including a motion to set the threshold at $1 million instead of $250,000. Republicans appear to be united in support for a full, permanent extension.
One thing is for sure. We’re in for heated debate come November 29.
Permitting the Bush tax cuts to expire would generate an anti-stimulus that severely hurts families, businesses, and any prospects for economic recovery. We hope that Congress will move to extend all current tax rates on income and investments. There is simply no other option if we are to shrink unemployment and bounce back from the prevailing fiscal crisis.
https://www.ntu.org/news-and-issues/taxes/extend-tax-cuts.html
https://www.ntu.org/news-and-issues/taxes/extend-tax-relief.html