Fiscal Cliff Averted: Details of the Deal

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An agreement was reached late Monday between the White House and Senate Minority Leader Mitch McConnell (R-Ky.) aimed at averting wide tax increases and budget cuts scheduled to take effect in the new year, and passed late early Tuesday morning by the Senate.

Late Tuesday night, the House, too, passed the bill on a bipartisan vote that divided the Republican leadership. The measure will raise taxes by about $600 billion over 10 years compared with tax policies that expired at midnight Monday. It also delays for two months across-the-board cuts to the budgets of the Pentagon and numerous domestic agencies.

The bill now goes to President Barack Obama for his signature.

Here are some key points of the deal:

• Income tax rates: Extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts will be taxed at a rate of 39.6 percent, up from the current 35 percent. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.

• Estate tax: Estates will be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent.

• Capital gains, dividends: Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families will increase from 15 percent to 20 percent.

• Alternative minimum tax: Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle- and upper-middle income taxpayers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes.

• Other tax changes: Extends for five years Obama-sought expansions of the child tax credit, earned income tax credit, and an up to $2,500 tax credit for college tuition. Also extends for one year accelerated "bonus" depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity.

• Unemployment benefits: Extends jobless benefits for the long-term unemployed for one year.

• Cuts in Medicare reimbursements to doctors: Blocks a 27 percent cut in Medicare payments to doctors for one year. The cut is the product of an obsolete 1997 budget formula.

• Social Security payroll tax cut: Allows a 2 percentage point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 percent.

• Across-the-board cuts: Delays for two months $109 billion worth of across-the-board spending cuts set to start striking the Pentagon and domestic agencies this week. Cost of $24 billion is divided between spending cuts and new revenues from rules changes on converting traditional individual retirement accounts into Roth IRAs.

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elescofilm

As as wise Czech once said, and I paraphrase, "What worries me is not whom Americans elect but the Americans who elected him"

January 02 2013 at 1:42 PM Report abuse rate up rate down Reply
stock market

I heard on a money talk channel that there will be a tax break for Hollywood movie producers. Anyone else hear that? We are still in a Fiscal Cliff.....

January 02 2013 at 10:44 AM Report abuse +1 rate up rate down Reply
1 reply to stock market's comment
janeswizzle

Micheal Moore ?

January 02 2013 at 10:45 AM Report abuse rate up rate down Reply
tdunkailo

THIS COUNTRY GOT WHAT THEY VOTED FOR.YOU ALL MADE A BIG MISSTAKE FOR OUR CHILDREN /GRANDKIDS FURTURE .NEXT TIME VOTE WITH YOUR HEARTH NOT THE PARTY

January 02 2013 at 10:43 AM Report abuse -1 rate up rate down Reply
mac2jr

Happy New Year.... Congress is Re-Born today....

January 02 2013 at 9:51 AM Report abuse -2 rate up rate down Reply
2 replies to mac2jr's comment
janeswizzle

Sure, if you believe that I have some great waterfront property to sell you.

January 02 2013 at 10:42 AM Report abuse rate up rate down Reply
michael.mouser

I'm actually thinking of placing 100% my earnings into my 401K(TSP). That way I can take it out when we finaly realize many(not all) of our entitlement program are enableing apathy.

January 02 2013 at 1:31 PM Report abuse rate up rate down Reply
marilynbibbee

Funny how they forgot to mention all the corporate goodies in the bill. I think the s*h*i*t will hit the fan later today. We've been robbed again.

January 02 2013 at 7:55 AM Report abuse +4 rate up rate down Reply
1 reply to marilynbibbee's comment
mac2jr

Yep, CBS news this morning reported nearly a Half-Billion in 'Republican Pork being added by the House of Representatives, anyone know for sure?

January 02 2013 at 9:22 AM Report abuse rate up rate down Reply
1 reply to mac2jr's comment
janeswizzle

Communist Broadcasting Service

January 02 2013 at 11:24 AM Report abuse -1 rate up rate down
dad6162

If this mess in Wash. isn't a clear reason why we need term limits on congress, I don't know what is.Congress is the problem, not the solution.

January 02 2013 at 6:36 AM Report abuse rate up rate down Reply
2 replies to dad6162's comment
mac2jr

You helped elect them, did you not?

January 02 2013 at 9:43 AM Report abuse rate up rate down Reply
janeswizzle

So which congress people do you think will vote for shortening their terms?

January 02 2013 at 10:47 AM Report abuse rate up rate down Reply
jrb359

No cuts in spending? The problems in this country will continue as long as there is the failed president in the white house and a democrat controled senate.

January 02 2013 at 6:20 AM Report abuse +2 rate up rate down Reply
1 reply to jrb359's comment
mac2jr

Congress controls the purse strings, not the president...

January 02 2013 at 9:44 AM Report abuse -2 rate up rate down Reply
2 replies to mac2jr's comment
janeswizzle

Yes look at the debt Nancy Pelosi ran up from 2007-2011.

January 02 2013 at 10:27 AM Report abuse +1 rate up rate down
lawmutt55

Since 1932, the country has survived the Great Depression, defeated fascism in WW II and communism in the Cold War. We have become the world's leading economic power.

The Republicans have controlled Congress more than 60% of the time for the most recent 20 years when most of the damage was done.

January 02 2013 at 10:57 AM Report abuse +1 rate up rate down
John

One of the most important thing to remember in our Democracy is that "Liberty requires Responsibility" on every American who live in this country. It does'nt matter how difficult the Task, the true spirit of being free to make choices for or against complicated issues without resorting to violence is to give praise to the wisdom of those who represents us in our Local, State and National Government.Todays decision from the National level of Government was a wise decision on the part of both Parties, Democrat and Republicans alike. It truly would have been embarrasing if these representatives would have allowed this difficult task to have been left for the year 2013 to be resolved.Be reminded, we are indeed one of the leading Nations of the World and we do not want to ever lose our position of being a leader. We have an excellent President to lead us and even he is not beyond compromise in reference to caring out the will of the American People. I strongly urge everyone of us to support the President in his striving on our behalf and keep the pressure on your representatives in Washington, (Democrats and Republicans). Congress still have work to do.

January 02 2013 at 2:49 AM Report abuse -3 rate up rate down Reply
1 reply to John's comment
mac2jr

The President has been pushing for 'new Stimulus' that will provide a 50 to 100 year future for the USA and its people, but the House of Representatives have steadfast tried to take us down the path of those that trusted austerity to get them out of the trouble cause by the banking communities, each of which has failed; most of Europe is a disaster using this approach, but the countries that decided to 'invest' in their people are doing fine. There is a website - PhiliContractorsMall that has documented the benefits of following the President's recommendations; it outlines the millions of jobs that 'can be' if we wise up and start 'rebuilding' America, instead of trying to destroy it by cutting education, cutting UE insurance payments, cutting alternative energy and transportation investments, etc.

January 02 2013 at 9:51 AM Report abuse -1 rate up rate down Reply
1 reply to mac2jr's comment
Dave

With the plan out POTUS has, socialism is the only thing that will survive 100 years. Confiscating income from the people who earn it and redistributing it to his cronies and union friends is not the path we need to be on.

If I have to suffer thru increased taxation, then everyone should also shoulder some of the burden. Fairness is equality. When the 50% who do not pay any federal income tax begin to shoulder some of the burden, then those of us who pay the majority of it may begin to sympathize.

January 02 2013 at 10:56 AM Report abuse rate up rate down
michael.mouser

Unemployment is a privalage and I do believe it is necessary (BUT IT SHOULD NEVER BE CONSIDERED AN ENTITLEMENT). Therefore, why doesn't the gov't (local, state, or federal) provide a program to put the persons using unemployment to work for a minimum of 20 hours a week. That would still provide PLENTY of time to interview, update the resumee, and search for a job. AND this will help the states complete work that may NOT be otherwise completed (blue-collar or white-collar jobs). That way the tax payer recieve something from the tax $ spent for the individuals NOT working but recieving $. It would also provide more of an incentive for the individuals to get a job--that they may be too PROUD to do otherwise. EG. I have a problem providing an executive a proportion of what he would have been paid (should he still have his job) for a whole year just because he can't get the job that provide him/her the large amount of $ he was USED to.

January 02 2013 at 1:08 AM Report abuse +2 rate up rate down Reply
1 reply to michael.mouser's comment
mac2jr

UE is an 'Insurance' paid for by the employer out of the employee's labor, therefore it is NOT a Privilege, it is an earned benefit of providing profits for the employer and the company investors.

Yes, there should be a better method of 'helping' someone find a new job, perhaps we should make it law that the employer has to use all of his or her or their resources in 'helping' the person that is being dismissed for the 'benefit' of the employer..

January 02 2013 at 9:28 AM Report abuse rate up rate down Reply
michael.mouser

Why do they preach that we need to contain this frivolous spending and the reduce the debt rate when they turn around and continue the federal unemployment compensation insurance to a year. That costs US an ADDITIONAL $30B dollars when this so-so called tax measure will generate $600B (5%). It is the states' responsibility and not the federal government to provide unemployment. They say that this will save 300,000 jobs, but you aren't saving jobs when taxpayers are paying your salery while your NOT working. A year is entirely toooo long. I'm sorry, but an individual may HAVE to decrease their standards sometimes and swallow their pride if they go even 4 months without finding the job that they are used to.

January 02 2013 at 12:55 AM Report abuse rate up rate down Reply
1 reply to michael.mouser's comment
mac2jr

Wrong, it is the Employer's responsibility to provide the UE insurance, it is the State's responsibility to monitor and properly distribute the money. Each employer is rated and charged on the history of the employer and the numbers of employees dismissed; thus if an employer dismisses one employee a year he or she pays minimum into the fund, if an employer dismisses one-thousand employees a year he or she pays a maximum into the fund. What happened is that due to the Corporate exodus in the period of 2000 to 2008 the employer with one or two dismissed employees per year now did or had to dismiss dozens to thousands, and did not have enough money in the fund to cover this. Thus the solution is to CHARGE these employers for the MASSIVE PROBLEM they CAUSED..

January 02 2013 at 9:36 AM Report abuse rate up rate down Reply