Insights

In another empty political gesture, On Wednesday, August 1, the U.S. House of Representatives passed legislation on a 256 to 171 vote that would extend the 2001 and 2003 Bush tax cuts on income, capital gains and dividends through 2013. What is notable in this vote is that twenty Democrats joined the Republican controlled House in passing the measure. However, the measure is likely destined to end up on the trash heap of history.

The tax measure was passed minutes after the Democrat-controlled Senate measure extending most of the Bush tax cuts was voted down in the House. A nearly identical scene played out last week in the Senate as the Democrat endorsed tax plan was passed along party lines minutes after the House plan was voted down by the same margin. Normally, the issue would now go before a conference committee, comprised of select House and Senate Members, to forge a compromise bill. In this case, however, both parties plan to wait until after the Presidential elections to take any real action on the issue.

So, not only is Congress putting on a boring, predictable show for the American public, now they’re showing re-runs. However, as most members of Congress will attest, the show will become much more exciting after the November elections, as we approach the dreaded “fiscal cliff” of scheduled tax increases and mandated spending cuts. Stay tuned.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter

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