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We Survived "Doomsday" - Now What?

Tax

By Ron Kramer

On Doomsday eve, House Speaker John Boehner cancelled his attempt to pass his “Plan B” tax legislation that would extend the Bush-era tax cuts for all taxpayers with incomes up to $1 million annually. Perhaps Boehner was either expecting or hoping that Doomsday would occur making the fiscal cliff irrelevant! Lawmakers then left Washington for the Christmas holidays and it wasn’t clear whether lawmakers would even return until 2013. However, Speaker Boehner announced plans to continue negotiations with President Obama over the fate of the so-called fiscal cliff.

Speaker Boehner said the House did not consider the tax measure because there were not sufficient Republican votes to pass it. Many Republican House members are not happy that Speaker Boehner agreed to raise tax rates on any taxpayers, regardless of income. . Boehner announced it’s now up to Senate Majority Leader Harry Reid and the President to come up with a plan to avert the large cuts in domestic and military spending and the expiration of the Bush tax cuts scheduled to hit on January 1.

Shortly after House Speaker John Boehner abandoned a vote on Plan B, Senate Majority Leader Harry Reid urged Republicans to return to negotiations. Reid called for Boehner, in the meantime, to bring the Middle Class Tax Cut Bill (Sen. 3412), passed by the Senate in July 2012, to the floor of the House for a vote.

Senate 3412 extends the Bush-era tax cuts to those with incomes under $250,000. In addition, Sen. 3412 provides for:

  • A temporary one year extension of the increased alternative minimum tax exemption amount- the AMT Patch
  • A temporary one year extension of the alternative minimum tax relief for nonrefundable personal credits.
  • A temporary extension of the election to expense certain depreciable business assets to $250,000 in 2013
  • A 20-percent capital gains rate, and
  • A extension of the child tax credit and the earned income tax credit

In turn, Senate Minority Leader Mitch McConnell responded to Senator Reid’s suggestion. McConnell suggested the Senate take a vote on a House-approved bill (the Job Protection and Recession Prevention Bill of 2012 (HR 8)) that would extend the Bush tax cuts for all incomes for one year.

Wednesday, the 26th appears to be a travel day for Congress. President Obama has cut his Hawaiian vacation short and is in route back to Washington to try to broker a deal. There’s not many days left to avoid the Cliff, so let’s see what happens beginning today! 

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