Posted by Autumn Ronda
The proposal boils down to a two-year extension of the Bush tax cuts. President Obama made it clear in the statement he made after Monday night’s compromise, that he doesn't favor extending tax cuts for the upper tax brackets, but that he compromised in order to keep the tax breaks for the middle class. Although the agreement on these tax issues still needs to be introduced as legislation, voted on by Congress and signed by the President (meaning that the agreement could vary from its reported form), President Obama stated that legislators "have arrived at a framework for a bipartisan agreement," and it is expected that the proposed legislation will look something like the following…
- The estate tax will be reinstated with a 35 percent rate on estates worth more than $5 million for individuals and $10 million for couples;
- The current tax rates from 10% to 35% will remain intact for the next two years, rather than reverting back to 15% to 39.6%;
- The section 179 deduction will be expanded to allow businesses to completely write off their investments next year;
- The top rate of 15 percent on capital gains and dividends would remain in place for 2011 and 2012;
- There will be a reduction in the employee-portion of Social Security taxes to 4.2% from 6.2%.
- The child tax credit will continue to be $1000, rather than reverting back to $500;
- The earned income credit will continue to provide tax credits for a three dependents, rather than reverting back to a maximum of two dependents;
- The American opportunity credit for college expenses will be extended;
- Unemployment insurance benefits will be extended for 13 months.
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