The Senate early this morning passed H.R. 8 by a vote of 89-8 to avert the fiscal cliff. The bill now moves to the House. Highlights of the bill include:
- Raise the marginal tax rate to 39.6% on income over $450,000 (joint) and $400,000 (single).
- Raise the tax rate on dividends and long term capital gains to 20% on taxpayers with income over $450,000 (joint) and $400,000 (single). The top rate would remain 15% for taxpayers with lower incomes.
- Estate and gift tax: $5 million exemption (inflation-adjusted) and 40% rate.
- Permanent and retroactive patch for the AMT.
- Return of the exemption and itemized deduction phase-outs on taxpayers with income over $300,000 (joint) and $250,000 (single).
- One-year extension of 50% bonus depreciation.
- Extension of various tax extenders.
Revenue estimates from the Congressional Budget Office and Joint Committee on Taxation score the bill as adding $3.9 trillion to the deficit over ten years compared to existing (January 1, 2013) law. The White House has released this fact sheet and statement from President Obama.
Press and blogosphere coverage:
- Bloomberg, Senate-Passed Deal Means Higher Tax on 77% of Households
- Len Burman (Syracuse), Senate Bill Averts Fiscal Cliff–For Now–While Ignoring our Short- and Long-Term Fiscal Problems
- Breitbart, Fiscal Cliff Deal: $1 in Spending Cuts for Every $41 in Tax Increases
- Greg Mankiw (Harvard), President Rejects His Bipartisan Bowles-Simpson Commission
- Greg Mankiw (Harvard), The Neverending Quest for a More Redistributionist Tax System
- New York Times, The McConnell-Biden Plan
- New York Times, Senate Passes Legislation to Allow Taxes on Affluent to Rise
- Dan Shaviro (NYU), The Fiscal Cliff Deal
- Tax Policy Blog, Details of the Fiscal Cliff Tax Deal
- Tax Update Blog, New Year’s Day Special: Senate Passes Fiscal Cliff Bill in Wee Hours
- Tax Vox Blog, Congress Kicks the Fiscal Can off the Front Stoop
- Joe Thorndike (Tax Analysts), Is Obama the Worst Legislative Negotiator of the Last Century?
- Wall Street Journal, Details of Tax Law Changes Spelled Out
- Wall Street Journal, Fiscal-Cliff Focus Moves to House
- Washington Post, Everything You Need to Know About the Fiscal Cliff Deal
