Thursday, January 3, 2013
As of January 1, 2013, the House of Representatives passed the bill that passed the Senate on New Year's Eve. The deal reached was a compromise from both Democrats and Republicans. President Obama is expected to sign the bill into law today on January 3, 2013.
The bill "makes permanent the Bush administration's tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000." For income that exceeds the new threshold, the tax rate will be 39.6%, which reflect the tax rates from the Clinton administration. Estimates conclude that the new tax rate will generate about $600 billion in new revenue. On the matter of the estate tax, the bill passed by the house and the senate will maintain the $5 million lifetime gift and estate tax exemption (indexed for inflation), but the rate on income that exceeds to the exemption has increased. The new estate tax rate is now 40% instead of 35%. In addition, the new bill will prevent Sword of Damocles that has swayed over this country's neck for the past year. The bill will delay the vast and automatic spending cuts that were set to activate if Congress did not come to an agreement on the fiscal cliff.
I have provided a link to the full text of the bill if you interested here. Readers can also find a complete summary of all of the fiscal cliff changes in the article from Mr. Ezra Klein.
See Matt Smith, House Staves Off Fiscal Cliff, But More Squabbles Lie Ahead, CNN Politics, Jan. 2, 2013; see also Ezra Klein, Wonkbook: Everything You Need To Know About The Fiscal Cliff Deal, The Washington Post, Jan. 1, 2013.