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Worldcrunch

U.S. Senate Rings In New Year With Fiscal Deal

 AP (USA)

Worldcrunch

WASHINGTON – The U.S. Senate has approved a bill aimed at avoiding tax increases and spending cuts.

Senators voted 89-9 to approve the proposal. Three democrats and five Republicans dissented. 

In a statement released by the White House early Tuesday morning, President Obama said, “While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay.” 

The House is expected to vote on the bill Tuesday or Wednesday.

According to the AP, highlights include:

—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.

Read more here.

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