Senate Majority Leader Reid Introduces Tax Cut, Unemployment Extension Bill

The Senate compromise bill includes the following provisions:

• Extends Alternative Minimum Tax (AMT) relief for two years. Currently, a taxpayer receives an exemption of $33,750 (individuals) and $45,000 (married filing jointly) under the AMT. Current law also does not allow nonrefundable personal credits against the AMT. The Senate proposal increases the exemption amounts for 2010 to $47,450 (individuals) and $72,450 (married filing jointly) and for 2011 to $48,450 (individuals) and $74,450 (married filing jointly). The Senate proposal also allows the nonrefundable personal credits against the AMT. The proposal is effective for taxable years beginning after December 31, 2009.
• As for the estate tax, the Senate bill sets the exemption at $5 million per person and $10 million per couple and a top tax rate of 35% for the estate, gift, and generation skipping transfer taxes for two years, through 2012.
• Extends by two years the current tax rate for middle class families.
• Includes a $120 billion payroll tax reduction for workers.
• Extends unemployment insurance benefits for 13 months.
• Extends the American Opportunity Tax Credit (college tuition), the Child Tax Credit and the Earned Income Tax Credit.
• Allows businesses to deduct 100% of certain investments in the first year.
• Extends for two years the state and local sales tax deduction.
• Extends the capital gains and dividends rates through 2012.

A blog posting on WhiteHouse.gov cited comments President Obama made on Dec. 9 regarding the “bipartisan framework” that he forged with the GOP on taxes. He said the deal “will not only protect working Americans from seeing a major tax increase on January 1st; it will provide businesses incentives to invest, grow and hire.”

Every economist that Obama’s talked with or “I’ve read over the last couple of days,” he continued, “acknowledges that this agreement would boost economic growth in the coming years and has the potential to create millions of jobs. The average American family will start 2011 knowing that there will be more money to pay the bills each month, more money to pay for tuition, more money to raise their children. But if this framework fails, the reverse is true.”