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.

[okie01]

2 years is barely worth voting for.

However, from the Republicans' standpoint, two years is perfect.

A GOP-controlled House insures that another extension (or permanence) will be brought up in Sept-Oct 2012.

At which point, the Senate Democrats and the President will be confronted with voting for a tax hike immediately prior to an election.

A two-year extension at this time is the best way to get a long-term extension (or permanence) next time around.

[WOSG]

A partial defense:
To be precise small business does NOT pay for the Federal monies going to UI benefit extention. Businesses paying into the unemployment compensation fund at the state level are paying for state benefits only, this is separately funded.

This extention of UI is payed via Federal deficit-financed payments. Pelosi assures us of the financial soundness of this welfare-type program, that UI benefits get recycled into the economy... who pays? Our kids will have to pay down the road for this deficit spending.

It is however more defensible than the billions wasted on so many other programs and projects.

[ziravan]

The Administration wasn’t going to let taxes go up on the middle class. Period. And, they were desperate to move on to their real lame duck agenda.

The GOP held all the cards and folded.

This is not a good deal by any definition.

Milton Friedman posited that people act on permanent income changes, so temporary changes don’t effect long term outcomes. Until the tax rates are made permanent, jobs will be held hostage.

Estate taxes should stay zero. A huge tax increase on family businesses is NOT a conservative victory, any way you look at it.

Both of these caves damage the economy.

This isn’t scorched earth purist talk. The GOP held the cards for a better deal that could have kept the rest of the lame duck iced out. Better a deal next year than this deal now.

Argue what a great deal this is tonight, but then don’t complain about repeal of DADT and dream act, etc., that this deal paves.

[okie01]

Shall we just review the scorecard come January?

[Drago]

"Where are you getting your information?

It is 99 weeks max, and that is only in high unemployment states.....all others max out at 79 weeks."

Several articles I read earlier were saying "a 13 month extension for long-term unemployed" (Like this one)

Now I am seeing other articles that say no extension for people in "Tier 5"...so I am not sure what is in "the deal" now...I have no direct experience with the "Tier system"...maybe someone can help out?

Another article that mentions "Tier 5": http://www.aolnews.com/surge-desk/article/unemployment-extension-clears-filibuster-whats-next-for-99ers/19561601

[MamaDearest]

What would YOU have done?

What will you do when the newly added unemployment benefits run out? Just how long can the unemployed expect the government to support them?

[goodnesswins]

YEP....Obomba would have been better off with 3 years...the economy might have been OKAY....but, it looks like that’s not what he wants...kinda like we know.

[Drago]

Ignore my “Tier 5” AOL News link in the above post...it is outdated. I still haven’t found details on the “deal” struck for an unemployment extension yet...just generic statements like “Extend long term jobless benefits for 13 months”.
http://blogs.ajc.com/jamie-dupree-washington-insider/2010/12/07/obama-tax-deal/?cxntfid=blogs_jamie_dupree_washington_insider

[Persevero]

“And then libs hate it, so how bad can it be?”

Exactly, visit Daily Kos or DU or similar. They are going insane over there, absolutely bonkers. They are furious.

Ergo, this is largely a good thing.

[Persevero]

“Free money for 155 weeks for those who don’t feel like working and finance it by stealing money from working people when they die?

Damn! That sums it up perfectly! “

Those who seem to know are saying no one goes beyond 99 weeks; but some who are 26 may go to 99 weeks.

My point being, no one is getting 155 weeks. 99 appears to be the max, still.

[Persevero]

“don’t complain about repeal of DADT and dream act, etc., that this deal paves.”

I understand they recess for the year on Dec. 17?

If that is so, do they have time to pass their agenda?

[Drago]

You could be right...I just cannot find anything to specifically confirm or deny. I guess we will have to wait until it actually gets to Congress...probably won’t be much time between the publishing and the vote though.

http://thomas.loc.gov/

[tallyhoe]

Here in Washington now it unemployment checks are $400.00 a week... Why work?

[Talf]

wtf?

2010. estate tax is zero
2011, estate tax is 35% above 5 mil
????

if true a lot if people are going to be murdered

[SF_Redux]

General Zero is just adding more troops to his payroll

[Red in Blue PA]

There is no Tier 5.

99 weeks is the max, and that is in high unemployment states only.

79 weeks is the max in many states.

The 13 month extension only allows the 27ers to continue collecting....nobody can go past 99.

[Red in Blue PA]

So punish the successful and let the unemployed just keep riding in the cart I’m pulling.

You are paying for those under 26 weeks only.....The Feds pay for the extended benefits.

[Drago]

You may be correct but ABC is reporting this:

“13-month extension of unemployment benefits beyond the current limit of 99 weeks. The extension is expected to help about 9 million Americans.”

http://abcnews.go.com/Business/tax-deal-means-consumers/story?id=12323621

[jocon307]

“They are furious.”

And that is very good, not so much the Kos Kids, but the pols like McCaskill who wants Pat Buchanan to lend her his pitchfork now.

They’ve shown themselves to want more of worker’s money above all else. They can’t even feign to be happy on getting the rates extended for “lower” paid workers.

And my goodness how they hate middle class traditional families. $250K for a family, but $200K for an individual? Why not at least $400K for a family then? This would have been a big break for highly paid urban-type singles and a real back breaker for many middle class families across the country.

I’m surprised nobody said that before (that I saw) but I’ll point it out now, even though the point is largely moot at this time.

What about the AMT “patch”, is that is then somewhere, or does that still need to be addressed?

And, in our glee (or glum satisfaction) let’s not forget to keep the heat on over the DREAM act.

[GatorGirl]

While you have a very good solution to the traditional SS recipient, retirees aren’t the major problem, SSI and SSD are the problem.

There’s plenty of waste, fraud and abuse. For example, if you have a misbehaving “ADHD” kid you’ll get $500-600 per month. Children with true, severe disabilities don’t cost the parents anything with Medicaid, school based services, etc...but they’re still getting a fat check each month.

SSI should be abolished completely, it’s welfare, plain and simple. SSD is like a premature retirement but the dirty little secret is...no matter how “disabled” you are, if you’re persistent and see the process through three times, you’re pretty much guaranteed an award.

Granted, it’s not much (the amount you get is based on the amount you’ve earned so the harder/longer workers get more) but the prospect of a government check for the rest of your life while you sit around doing nothing is attractive to a whole bunch of people, unfortunately. Particularly when you combine it with your Section 8 housing, SSI for several kids, the EITC if someone works a little bit, food stamps, subsidized day care that helps you get the rugrats out of your hair even though you don’t go to work, free breakfasts and lunches at school...you get the picture.

Also did you know if you voluntarily retire and begin drawing SS while you have minor child(ren) your child(ren) will receive a check without reducing your benefit? What is that all about? Just extra money being paid out!!