Senate Finance Committee Chairman Max Baucus, D-Mont., has introduced a package of tax cuts for middle-class families after the House passed tax cut legislation Thursday extending the Bush-era tax rates.
Baucus is on a six-man bipartisan working group of congressional leaders and Obama administration officials who have been negotiating an agreement on the Bush tax cuts for upper-income earners since a meeting in the White House on Tuesday. Like the bill passed by the House, the bill that Baucus introduced Thursday would permanently cut taxes for middle-class families making up to $250,000 and individuals making up to $200,000 a year (see House Democrats Pass Middle-Class Tax Cut Package). Republicans have dismissed the House bill as a political maneuver, with House Minority Leader John Boehner, R-Ohio, calling it “chicken crap.”
The Senate legislation would extend a number of business tax cuts for employers, and unlike the House bill, institute a permanent estate tax policy at the 2009 rates and exemption levels. The Senate bill also contains a large number of tax extender items left over from previous bills. It would also repeal the controversial 1099 information reporting requirements that the Senate failed to repeal earlier this week when both Democrats and Republicans attempted to attach it to the food safety bill in two different amendments.
Like the House bill, the Senate bill would patch the AMT to reduce the number of Americans required to pay the Alternative Minimum Tax for the next two years. Also like the House bill, the Senate bill, the Middle Class Tax Cut Act of 2010, would also create identical, permanent tax rates for income from capital gains and dividends.
“Our bill permanently cuts tax rates for middle-class families to help them meet the challenges of these tough economic times,” said Baucus in a statement. “When families and businesses know what to expect from our tax system, they can plan, they can spend and they can expand. Our legislation cuts taxes and provides certainty to families, individuals and investors, giving them confidence to help our economy grow. Middle-class families are critical to the continued recovery of our economy and this bill provides the tax relief and job-creation incentives they need to thrive.”
The Middle Class Tax Cut Act of 2010 would permanently cut tax rates to 10, 15, 25, 28 and 33 percent for individuals making up to $200,000 and families making up to $250,000. Without the Bush tax cut extensions, the middle class would pay taxes at rates of 15, 28, 31 and 36 percent next year.
The bill would also make the Child Tax Credit permanent as well as the 2009 estate tax rate of 45 percent, with an exemption for estates under $3.5 million, indexed for inflation. The estate tax policy also recognizes the unique estate planning challenges of family ranchers and farmers across the country. The legislation would make permanent the current 15 percent rate for capital gains for individuals making up to $200,000 and families making up to $250,000. The bill also would continue to treat dividends as capital gains rather than ordinary income.
The bill would extend the Making Work Pay tax credit, which gives all working Americans a $400 tax cut in their paycheck through 2011. It would also cut taxes for families paying college tuition, state and local sales taxes and property taxes. It would cut taxes for employers to spur sustainable energy advancements, business research and development, and investment, freeing up cash to expand and hire new workers. And the legislation would reauthorize federal unemployment insurance through 2011.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access