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December 13, 2010 at 08:47 AM
The U.S. Senate is scheduled to hold a cloture vote beginning around 3:00 PM on Monday on the Obama-GOP compromise tax and unemployment insurance bill. The Democratic majority will very likely close debate on the bill with that Dec. 13 vote, and then approve the bill itself, likely on Dec. 14.
The bill, which would extend the Bush-era tax cuts for two more years and unemployment benefits (see details below), would still need to gain House approval before becoming law; passage there is expected to be more difficult, despite the Democratic majority in that chamber as well.
The compromise bill—The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010—was introduced into the Senate on Dec. 9 by Majority Leader Harry Reid, D-Nev., and includes the following main 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.
- Sets 35% Estate Tax.
The exemption would be set 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-income families.
- Includes a temporary $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 for middle- and lower-income taxpayers.
- 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.
On Friday, former President Bill Clinton and President Obama gave a joint press conference at the White House to tout the tax cut package. The Sunday talk shows were full of conversation about the package.
