Senate Approves Fiscal Cliff Deal 89-8

In the early hours of the new year, the U.S. Senate voted and approved the fiscal cliff deal 89 to 8. This is a much wider margin than most could have even predicted, which really puts the pressure on the House of Representatives to pass the bill. The problem is, it’s the House of Representatives, led by Speaker John Boehner who has no control over the ultra-conservative (radical actually) tea party Republicans.

Here are some key details from the bill that passed the Senate:

  • The “Bush tax cuts” are permanently extended to all individuals with incomes below $400,000 and families below $450,000. Above that amount, the top tax rate increases from 35% to 39.6%.
  • The capital gains tax rate increases from 15% to 20% on income above $400/450 thousand.
  • A permanent fix for the Alternative Minimum Tax (AMT) so that it doesn’t hit middle class families. The AMT is something congress has “patched” each year for decades, so this is fairly big news, pending further details.
  • Extension of unemployment benefits.
  • Tax credit for renewable energy companies extended for one year.
  • The “sequester” which was the automatic spending cuts set to take effect starting today will be delayed for two months. This means we get to do this all over again in two months.
  • The payroll tax cut will not be extended which means it returns to its former 6.2% rate as of today.

Again, this only passed the Senate. Given the track record of the House during this 112th congress, I wouldn’t hold your breath. Anything is possible.

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