President Obama’s Outline of Possible Yet Not Quite Done Deal on Tax Cuts – Including a $120 Billion Payroll Tax Reduction
December 6, 2010
The following is part of an outline of a deal on tax cuts that the White House and congressional leaders are discussing:
extending lower Bush tax rates for EVERYONE for 2 more yrs;
extending 99 weeks’ worth of unemployment insurance benefits for an additional 13 months for approximately nine million Americans – without being offset by spending cuts;
one year payroll tax reduction for employees -- from 12.4% to 10.4% ($120 billion worth). This is instead of the “Making Work Pay” tax credit in the stimulus bill – an administration officials says this will “will have more than twice the economic impact next year as a one-year extension of Making Work Pay.” It also will be more noticed than that tax credit, which many Americans didn’t realize they had received;
allowing businesses to deduct 100% of certain investments in the first year (President Obama pitched this in September).
Says an administration official: “this is the largest temporary investment incentive in American history and should be a powerful driver of growth”;
extending the American Opportunity Tax Credit (college tuition), Child Tax Credit and Earned Income Tax Credit plus their refundability.
Says the administration official: “this represents about $40 billion in tax cuts for the hardest-hit families and students that would have been virtually impossible to achieve outside the context of this deal”;
two years of estate tax at 35%, with a $5 million floor (first proposed by Sens. Blanche Lincoln, D-Ark., and Jon Kyl, R-Ariz.)
This deal has not been agreed upon yet – and in fact President Obama’s meeting with Democratic congressional leaders has gone longer than expected, indicating some possible pushback. The president, Vice President Biden, and Treasury Secretary Tim Geithner have been working this proposal all weekend with congressional leaders.