Channeling Ezra Klein at The Washington Post, Bill McBride at Calculated Risk summarizes the pending budget dea in “Fiscal Cliff” Deal.
Here are a few details from that post:
1. Details on the deal: 39.6% tax rate for individual income over 400k/family income over $450k. AMT patched permanently.
2. Dividends and cap gains taxes at 20% of the $400k/$450k levels. PEP at $250k. Pease at $300k.
3. UI and business cuts extended through 2013. Stimulus cuts for 5 years. Medicare cuts stopped with offsets. Payroll cut expires.
4. Sequester unclear. Prez wants to offset with taxes and spending cuts. R’s only want to offset with spending cuts.
5. Estate tax set at $10m exemption but 40% rate.
6. Deal raises about $600b — and maybe a bit more — in taxes over 10 years. As always details can change, but that’s where it is now.
The big question here is with the sequester — the mandated spending cuts across the board that are expected to have a particularly harsh impact on defense spending.
I wouldn’t be surprised if there is no vote until sometime tomorrow, January 1st. At that point, no one will be voting for an income tax increase. The automatic income tax increases kick in at midnight tonight, so a bill passed tomorrow would contain no tax hikes, only cuts.
The payroll tax cut also expires at midnight tonight, but there has been no serious talk from either side about extending that again.