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OBAMA TAX COMPROMISE APPROVED BY CONGRESS

The $858 billion tax deal negotiated by President Obama and Republican leadership was overwhelmingly approved by the Senate on Wednesday, and passed the House Thursday, December 16, 2010, on a 277 to 148 vote. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the Bill):

•    Extends for two years the Bush-era income tax rates, the 15 percent rate on capital gains and dividends,  and many credits affecting families and children
•    Extends jobless benefits for the long-term unemployed until the end of 2011
•    Sets the maximum estate tax rate at 35 percent, with an exclusion of $5 million per person, or $10 million per couple
•    Includes an Alternative Minimum Tax (AMT) patch for 2010 and 2011
•    Cuts Social Security payroll taxes for employees from 6.2 percent to 4.2 percent for one year
•    Provides businesses with 100 percent bonus depreciation for qualified capital expenditures for 2011
•    Extends other credits, such as the R&D and new markets tax credits, and includes a variety of energy provisions

The Bill does not provide any offsets to prevent these provisions from expanding the deficit.  For more in-depth information on this Bill please click here.