Wonkbook: Everything you need to know about the fiscal cliff deal
The Washington Post
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This is a special edition of Wonkbook for the New Year’s Eve “fiscal cliff” deal.
Suzy Khimm’s summary of the fiscal cliff deal:
— Tax rates will permanently rise to Clinton-era levels for families with income above $450,000 and individuals above $400,000. All income below the threshold will permanently be taxed at Bush-era rates.
— The tax on capital gains and dividends will be permanently set at 20 percent for those with income above the $450,000/$400,000 threshold. It will remain at 15 percent for everyone else. (Clinton-era rates were 20 percent for capital gains and taxed dividends as ordinary income, with a top rate of 39.6 percent.)
— The estate tax will be set at 40 percent for those at the $450,000/$400,000 threshold, with a $5 million exemption. That threshold will be indexed to inflation, as a concession to Republicans and some Democrats in rural areas like Sen. Max Baucus (D-Mt.).
— The sequester will be delayed for two months. Half of the delay will be offset by discretionary cuts, split between defense and non-defense. The other half will be offset by revenue raised by the voluntary transfer of traditional IRAs to Roth IRAs, which would tax retirement savings when they’re moved over.
— The pay freeze on members of Congress, which Obama had lifted this week, will be re-imposed.
— The 2009 expansion of tax breaks for low-income Americans: the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit will be extended for five years.
— The Alternative Minimum Tax will be permanently patched to avoid raising taxes on the middle-class.
— The deal will not address the debt-ceiling, and the payroll tax holiday will be allowed to expire.
— Two limits on tax exemptions and deductions for higher-income Americans will be reimposed:
Personal Exemption Phaseout (PEP) will be set at $250,000 and the itemized deduction limitation (Pease) kicks in at $300,000.
—The full package of temporary business tax breaks — benefiting everything from R&D and wind energy to race-car track owners — will be extended for another year.
— Scheduled cuts to doctors under Medicare would be avoided for a year through spending cuts that haven’t been specified.
— Federal unemployment insurance will be extended for another year, benefiting those unemployed for longer than 26 weeks. This $30 billion provision won’t be offset.
— A nine-month farm bill fix will be attached to the deal, Sen. Debbie Stabenow told reporters, averting the newly dubbed milk cliff.
Wonkbook’s Number of the Day: 89.
That’s the number of senators that voted in favor of the fiscal cliff deal. Only 9 voted against. Opposing the legislation were Democratic Senators Tom Carper (D-DE), Tom Harkin (D-IA), and Michael Bennet (D-CO) along with Republican Senators Mike Lee (R-UT), Richard Shelby (D-AL), Rand Paul (R-KY), Chuck Grassley (R-IA), and Marco Rubio (R-FL). The House is expected to vote on the bill in the next few days.
Wonkblog’s Graphs of the Day:
Tuesday’s tax increase is the biggest in decades, and Who would foot the higher 2013 tax bill, in one chart.
Top story: Everything you need to know about the fiscal cliff deal
This is a special edition of Wonkbook for the New Year’s Eve “fiscal cliff” deal.
No Biden, no deal. (ERIC THAYER/REUTERS)
— Tax rates will permanently rise to Clinton-era levels for families with income above $450,000 and individuals above $400,000. All income below the threshold will permanently be taxed at Bush-era rates.
— The tax on capital gains and dividends will be permanently set at 20 percent for those with income above the $450,000/$400,000 threshold. It will remain at 15 percent for everyone else. (Clinton-era rates were 20 percent for capital gains and taxed dividends as ordinary income, with a top rate of 39.6 percent.)
— The estate tax will be set at 40 percent for those at the $450,000/$400,000 threshold, with a $5 million exemption. That threshold will be indexed to inflation, as a concession to Republicans and some Democrats in rural areas like Sen. Max Baucus (D-Mt.).
— The sequester will be delayed for two months. Half of the delay will be offset by discretionary cuts, split between defense and non-defense. The other half will be offset by revenue raised by the voluntary transfer of traditional IRAs to Roth IRAs, which would tax retirement savings when they’re moved over.
— The pay freeze on members of Congress, which Obama had lifted this week, will be re-imposed.
— The 2009 expansion of tax breaks for low-income Americans: the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit will be extended for five years.
— The Alternative Minimum Tax will be permanently patched to avoid raising taxes on the middle-class.
— The deal will not address the debt-ceiling, and the payroll tax holiday will be allowed to expire.
— Two limits on tax exemptions and deductions for higher-income Americans will be reimposed:
Personal Exemption Phaseout (PEP) will be set at $250,000 and the itemized deduction limitation (Pease) kicks in at $300,000.
—The full package of temporary business tax breaks — benefiting everything from R&D and wind energy to race-car track owners — will be extended for another year.
— Scheduled cuts to doctors under Medicare would be avoided for a year through spending cuts that haven’t been specified.
— Federal unemployment insurance will be extended for another year, benefiting those unemployed for longer than 26 weeks. This $30 billion provision won’t be offset.
— A nine-month farm bill fix will be attached to the deal, Sen. Debbie Stabenow told reporters, averting the newly dubbed milk cliff.
Wonkbook’s Number of the Day: 89.
That’s the number of senators that voted in favor of the fiscal cliff deal. Only 9 voted against. Opposing the legislation were Democratic Senators Tom Carper (D-DE), Tom Harkin (D-IA), and Michael Bennet (D-CO) along with Republican Senators Mike Lee (R-UT), Richard Shelby (D-AL), Rand Paul (R-KY), Chuck Grassley (R-IA), and Marco Rubio (R-FL). The House is expected to vote on the bill in the next few days.
Wonkblog’s Graphs of the Day:
Tuesday’s tax increase is the biggest in decades, and Who would foot the higher 2013 tax bill, in one chart.
Top story: Everything you need to know about the fiscal cliff deal
Labels: Crisis Politics, Economy, United States
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