Terms of the deal
Here’s what I understand the deal to be:
- Extended for two years, through December 31, 2012:
- All 2010 individual income tax rates;
- 2010 capital gains and dividend rates (15%/5%);
- Expanded Earned Income Credit is extended for two years
- Expanded child credit is extended for two years
- “American Opportunity” (education) tax credit
- Alternative Minimum Taxes as in the McConnell bill, such that no additional taxpayers face AMT
- Estate and gift taxes return, with a $5 million per person exemption and a 35% rate. After 2012 they would revert to pre-Bush levels ($1 M / 45%)
- Full expensing of business investment for all non-property investment for all businesses made between September 8, 2010 and December 31, 2011. 50% expensing for investment made in 2012.
- Extended unemployment insurance benefits are available through December 31, 2011.
- Two percent payroll tax credit for 2011 (employee side, replaces the refundable Making Work Pay credit)
- The smorgasbord of “extender” provisions will run for two years, which is retroactive for 2010 and prospectively for 2011. Details on this are still TBD and are undoubtedly occupying nearly every tax lobbyist in town. (ick)
Given a Democratic President, this is the best possible deal that could be reasonably expected. For the next two years, through the remainder of President Obama’s first/only term, tax rates won’t go up on anyone except dead people. (OK, actually their heirs.) That is a total and complete policy win.
(photo credit: FaceMePLS)