The Tax “Deal”
Unless aliens abducted you to their planet this week, you are probably aware of the "deal" struck between the President and Congressional Republicans and Democrats to extend the 2001/2003 tax cuts for 2 years for everyone. However, it is not just an agreement to extend current tax rates. The plan pegs the death tax (currently at zero) at 35% for estates over $5 million. It also includes a one year reduction in the employee’s share of the social security tax by 2%; a 13 month renewal of unemployment benefits, which maintains the 99 week total cap; a 2 year extension of most of the tax provisions from the 2009 stimulus bill, including the earned income tax credit which gives people a "tax rebate" when they have not paid any taxes; and various other provisions, like a 100% write-off for business equipment for one year.
As I write this, the bill to reflect this agreement has just come out. But, of course, no one has read it yet. So, all analysis of this bill must necessarily be an estimate. It appears, though, that the "cost" of this bill will be close to $1 trillion over the next 2 years. Some of this is the "cost" of letting… Read More