By now this Fiscal Cliff business is somewhat old news BUT since I was on vacation I never took the time to investigate exactly what conclusion was reached. I caught a few snippets here and there but really I simply wasn’t paying attention. It is like having parents who bicker and squabble incessantly all d*mn day long so you become adept at tuning them out – even when you know ONE parent is making more sense than THE OTHER parent it’s still like “you people need to get it together!”
So I did some reading and really this was for my benefit but I figured a few of you may find it helpful so I’m sharing – cause I’m a nice person like that – you’re welcome.
Actual introduction language from the bill:
“In the Senate of the United States, January 1 (legislative day, December 30, 2012), 2013. Resolved, That the bill from the House of Representatives (H.R. 8) entitled ‘‘An Act to extend certain tax relief provisions enacted in 2001 and 2003, and to provide for expedited consideration of a bill providing for comprehensive tax reform, and for other purposes.’’, do pass with the following”
Awwww, that’s kinda cool! #NerdAlert
Clearly I’m not including the ENTIRE bill here (that would be insanity) what follows are paraphrased highlights of the issues people actually cared about HOWEVER if you are interested in being a glutton for punishment and reading the bill – click here and have at it.
INCOME, CAPITAL GAINS AND DIVIDEND TAX RATES
1. Income taxes will increase from 35% to 39.6% (the rate they were during Clinton’s administration) on families making $450,000 a year and on individuals making $400,000 a year.
Families and individuals making less than those stated amounts will maintain the Bush era income tax rates they’ve had for the last several years.
Plus, “the capital gains and dividend tax rates for these high-income households ($400k and $450k respectively) will increase to 20% from 15%. For everyone else, investment tax rates will remain at 15% or below.” (CNN)
Also, regarding households that make $250k (individuals) and $300k (families), Vice President Biden and Senate Minority Leader McConnell reached a compromise that reinstates a limitation on how much may be taken in itemized deductions and personal exemptions.
Quick reminder – the payroll tax “funds such programs as Social Security, healthcare, unemployment compensation [and] worker’s compensation…”
3. Extended benefits for the long-term unemployed will continue for another year.
Once a person exhausts the amount they can receive via their respective state unemployment compensation program (it may vary by state but I believe it is usually 6 months) because of the federal extension that same person is able to collect an additional 47 weeks of unemployment compensation.
AND THERE’S MORE…
4. Retains several expired tax breaks for individuals: The compromise bill will extend for one or two years a few “temporary” tax breaks for individuals that regularly are extended. These include an option to deduct state and local sales taxes in place of state and local income taxes; and a deduction for elementary and secondary school teachers for certain expenses. (CNN)
5. Prevent a cut in Medicare doctors’ pay: The Biden-McConnell compromise will prevent a scheduled 27% cut in reimbursement for Medicare services for one year. The so-called “doc fix” will boost the deficit by $31 billion. (CNN)
6. Extension of tax credits for certain industries that were set to expire:
- $430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States. Producers can expense up to $15 million of costs for their projects.
- $331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50 percent of the cost to maintain tracks that they own or lease.
- $222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.
- $70 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”
- $59 million for algae growers through tax credits to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.
- $4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes.
How about that? Very interesting. Anyway as I stated above this list is not exhaustive and if you are really that curious you should feel free to read the actual bill (yawn). Enjoy! 🙂
So where are we now? Well of course it ain’t over:
“The deal delays the sequester, a series of automatic cuts in federal spending, for two months. In the meantime, the Senate plan calls for $12 billion in new revenue and another $12 billion in spending cuts. The spending cuts are to be split between defense and non-defense spending.