Monday, December 31, 2012

Update on "Fiscal Cliff" Negotiations

by Bill McBride on 12/31/2012 09:14:00 AM

According to this report, income taxes would only increase on earnings over $450,000, and the estate tax would be at the GOP requested level. Still no deal.

From the WaPo: Biden, McConnell continue ‘cliff’ talks as clock winds down

Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) continued urgent talks Monday over a deal to avoid the “fiscal cliff” after Democrats offered several significant concessions on taxes, including a proposal to raise rates only on earnings over $450,000 a year.

With a New Year’s Eve deadline hours away, Democrats abandoned their earlier demand to raise tax rates on household income over $250,000 a year.
Democrats also relented on the politically sensitive issue of the estate tax, according to a detailed account of the Democratic offer obtained by The Washington Post. They promised instead to hold a vote in the Senate that would guarantee that taxes on inherited estates remain at their current low levels, a key GOP demand.
McConnell was holding out to set the income threshold for tax increases even higher, at $550,000, according to people close to the talks in both parties.
Payroll taxes are going up under all proposals.