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November 16, 2010 at 06:08 AM
As the lame-duck session of Congress officially begins, one of the top issues for lawmakers will be taxes–particularly whether to extend the Bush tax cuts, but also dealing with the Alternative Minimum Tax (AMT) as well as repealing a Form 1099 income reporting requirement for small businesses.
In the absence of compromise, all of the Bush tax cuts will expire come January 1. Republicans favor extending the Bush tax cuts while the Obama Administration’s stance is that middle class tax cuts should be extended indefinitely but higher income taxpayers should be given no permanent tax cut extension.
David Kelly, chief market strategist for J.P. Morgan Asset Management, says that the “most obvious compromise” would be a permanent extension of the middle-class tax cuts and a two-year extension of the tax cuts for upper income individuals. This way, he says, “If the Republicans win the White House and a Senate majority in 2012, they will be in a strong position to make the upper–income tax cuts permanent.” But, either way, he continues, “while the political temperature may rise, the probability is that a few months from now, if not a few weeks from now, all or most of the Bush tax cuts will be extended, removing a potential roadblock to continued economic recovery.”
