Latest on the Tax Deal: Payroll Tax Cut, Estate Tax Back

NRO ^ | December 6, 2010 | Daniel Foster

[ejdrapes]

Latest on the Tax Deal: Payroll Tax Cut, Estate Tax Back

December 6, 2010 4:45 P.M.

By Daniel Foster    

What we’re hearing: A two-year extension of all current income, dividend, and capital gains tax rates, plus a one-year (or 13 month) extension of unemployment insurance.

Chuck Todd reports that the tax deal could include a payroll tax holiday. But Marc Ambinder reports that it will instead include a two percent two percentage point reduction in payroll tax that would replace President Obama’s favored Making Work Pay tax credit, and a reinstatement of the estate tax over a certain yet-to-be-decided threshold.

Multiple reports are indicating a deal is close to being struck.

UPDATE: We’re now hearing that the estate tax will be set at 35 percent for two years, with the first $5 million exempted. [Daily Caller's Jon Ward first to report.]

UPDATE II: Jake Tapper has more details on what’s in the proposed deal, including:

–allowing businesses to deduct 100% of certain investments in the first year (President Obama pitched this in September).

–extending the American Opportunity Tax Credit (college tuition), Child Tax Credit and Earned Income Tax Credit plus their refundability. 

One other wrinkle Tapper is reporting, potentially huge: the unemployment benefits extension will not be offset, at least not as part of this deal. This makes it likelier that Republicans in both houses will challenge it from the right, and that any voting majority will have to be cobbled together from both caucuses.

President Obama is supposed to address the deal at 6:10 PM.

[screaminsunshine]

Quick. Turn on Sgt. Shultz to watch him puke his Cow Pie dinner up.

[Laur]

True,but the political reality is that the GOP does not control the agenda — not even in the House until January —nor preidential approval or veto. So they have to get what they can and hope for a senate majority in two years when items can be altered.

[seekthetruth]

http://www.resistnet.com/forum/topic/show?id=2600775%3ATopic%3A2975626&xgs=1&xg_source=msg_share_topic

[Jedidah]

None till the end of December, then 55% on anything over $1 million.

[ejdrapes]

yeah for two years big deal. How does a two year extension help busines?. What happens in 2 years? Obama will get credit for caving and the GOP will get credit for nothing.

[dajeeps]

Are there any drafts of the legislation available?

At this point I don’t know which will add more to the debt, no deal which would most likely mean more people on the UI rolls or cutting a deal to extend the deadline for those already on it and didn’t get 99 weeks. Higher taxes just shrinks the tax base by killing jobs. So they might get more from the rich, but unknown numbers of people will no longer be paying taxes because they’ll be laid off.

There might just be a certain level of practicality in cutting a deal to keep the tax rates from going up which, if allowed to occur, could be its own mini-disaster with little or no benefit to the revenue side. We might have won last month, but there is still this reality of having Obummer in the WH and the rats in charge of the lame duck to deal with, and over this topic time is not on our side.

[applpie]

Let me tell you about the American Opportunity Tax Credit (college tuition)—

my son became unemployed this summer and with this we thought maybe now he might qualify for some kind of aid (for once)to go back to school. Right.

Those numbskulls at Northern Virginia Community College had no idea about these $5k grants nor the rules for applying for them. They told him he had to wait a year until his income showed $0 (even though the Federal letter said they could zero out his income). Then after he did a waiver, he got a big fat zip. I have only met one person....who has ever gotten a grant or financial aid that WASNT a LOAN.

[dirtboy]

What happens in two years? A shot at a GOP president and a chance to make the cuts permanant.

Two years is better than them expiring at the end of the year.

[tobyhill]

The GOP allowed Obama to save a little face which is going to come back and bite them. This 13 month extension on unemployment is entirely too long. It is going to create even more of a welfare state.

[ejdrapes]

BTW in Obama's speech he said he's confident in 2 years people will realise that we shouldn't be lowering taxes for the wealthiest Americans. Obama wouldn't agree to this if it wasn't a win for him. And it is.

[EGPWS]

Until the GOP can gain control, there will have to be compromises with the Dems to get items such as the Bush tax cuts extended.

At the rate they are going they will never gain control.

A two year period without tax increases is NOT going to spur an employment frenzy by any means.

It needs to be permanent or permanent employment will not increase.

It's good for temp agencies and that's about it.

[hoyt-clagwell]

What is the latest on the estate tax?? Is it extended for 2 years or is something else pending?

[raybbr]

dajeeps --> add an 'r' and you get...

ejdrapes

[dfwgator]

We got screwed...big time!

[Reagan Man]

The deal is done?!

Obama caves? Capitulation? Surrender?

LOL

[dirtboy]

BTW in Obama's speech he said he's confident in 2 years people will realise that we shouldn't be lowering taxes for the wealthiest Americans. Obama wouldn't agree to this if it wasn't a win for him. And it is.

Two years ago, Obama thought he had a mandate and pundits saw the end of the GOP.

They wuz wrong. Obama can delude himself all he wants, but there will be a further reckoning in 2012 and then the GOP can make the cuts permanent.

[EGPWS]

Obama caves? Capitulation? Surrender?

Apparently they STILL don't get it.

The people sound off and they sputter.

[TexasFreeper2009]

I agree that will actually increase the unemployment rate... but that is a good thing, since a high unemployment rate = Obama loses in 2012.

So if Obama wants to dig his own political grave... I say let him!

[ladyjane]

Then 35% sounds good

It will not sound good to someone who is in the ICU December 31st of this year. It will sound much worse to the heirs.

The heirs will be sweating it out in the waiting room. Some of them, of course, will cut some deals with the health care 'provider' to move things along and make sure the inheritance isn't taxed.

[Revel]

“President Obama’s favored Making Work Pay tax credit,

Ah yeah that was a 400 dollar tax credit on income stated on a W2 only. If your income involved rents and royalties(self employed) then you got no tax break even though you payed the same amount in taxes for your income. Then there are seniors. The government decides who pays and who does not. In the end it all goes on the national debt and even those who got no tax break get the bill for those who did. In the end, We will be paying the ultimate price for the socialist mentality sweeping over this country. Spiritually I do not consider myself liable for any of that debt. I have taken nothing. For now though, I get stuck paying for it.