On the eve of the much maligned"Fiscal Cliff", Senate Republicans and Senate Democrats agreed on a deal which included various revenue increase measures and spending cut measures. Here are some of the details:
—Income tax rates: Extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6 percent, up from the current 35 percent. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.
—Estate tax: Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent.
—Capital gains, dividends: Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15 percent to 20 percent.
—Alternative minimum tax: Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle- and upper-middle income taxpayers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes.
—Other tax changes: Extends for five years Obama-sought expansions of the child tax credit, the earned income tax credit, and an up-to-$2,500 tax credit for college tuition. Also extends for one year accelerated "bonus" depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity.
—Unemployment benefits: Extends jobless benefits for the long-term unemployed for one year.
—Cuts in Medicare reimbursements to doctors: Blocks a 27 percent cut in Medicare payments to doctors for one year. The cut is the product of an obsolete 1997 budget formula.
—Social Security payroll tax cut: Allows a 2-percentage-point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 percent.
—Across-the-board cuts: Delays for two months $109 billion worth of across-the-board spending cuts set to start striking the Pentagon and domestic agencies this week. Cost of $24 billion is divided between spending cuts and new revenues from rule changes on converting traditional individual retirement accounts into Roth IRAs http://abcnews.go.com/Politics/wireStory/details-tentative-deal-averting-fiscal-cliff-18103152
In a rare moment of bipartisanship in response to a big issue, the Senate voted to pass the bill on a vote of 89-8. That type of unanimous backing is so very rare in the Senate. Throw in the politicization of the fiscal cliff issue, and it is rather astounding that such a lopsided vote emerged. No tax measure has been passed with such large scale agreement in over 20 years in the Senate.
So, what will the House do? Specifically, what will all of those self proclaimed "Conservatives" in the House do? How will the "Tea Party Nation" politicians vote? Will they oppose a bill that 90% of the United States Senate agreed on?
This will be truly be a test of strength fo Tea Party Republicans in the House (and Republicans in general). Undoubtedly, some of them will be getting pressure from their constituency to say no to the deal. Yet, the Senate has come together, and the country was already blaming Republicans for the fiscal cliff mess anyway. Will House Republicans put their own careers before the betterment of the country? Rarely do we get to see such a direct test of this measure. How much bloviating will be done? What kind of alternative may House Republicans counter with in order to save face after all of their caterwauling?
As an example of just how bad the genuine intent of some House members have grown, there was talk yesterday that agreeing to the bill on Tuesday would technically mean that House Republicans hadn't voted to raise taxes, because the tax increases would have technically already kicked in. So, House Republicans would then be voting for tax cuts for 98% of America, while leaving taxes the same for 2%. That's what Gover Norquist's completely arbitrary, entirely baseless "pledge" has done to the rational thinking of some House members - delaying a vote on the bill by 10 hours will give some of them a technical out.
With that kind of reasoning, why should any of us be worried.....? *facepalm*