- Posted December 1, 2012 by
This iReport is part of an assignment:
Surprise! Congress Has Passed 2 Tax Cut Extension Bills
Most of us have probably heard President Barack Obama pushing the US House of Representatives to approve a bill that the US Senate passed earlier this year to extend the Bush/Obama tax cuts. But did you know that the House also passed a bill earlier this year to extend the Bush/Obama tax cuts?
One would think that the normal course when there are competing bills on the same issue that a conference committee would be formed to hammer out the differences in the 2 bills and present a comprise bill to both chambers for a vote. Not so this time around. In fact no one is talking about the House bill, only the Sentate bill.
The Senate bill was passed in July. The House bill was passed in August.
But what are the differences?
A look at the specifics of each bill:
Senate: Extends the Bush tax cuts for middle-and low-income families, while letting the top two income tax rates increase from 33 percent to 36 percent and from 35 percent to 39.6 percent. The 33 percent rate would be applied to income above $200,000 for individuals and $250,000 for married couples filing jointly. The top tax rate is applied to incomes above about $390,000.
House: Extends all the Bush tax rates through 2013, for wealthy, middle-income and low-income families.
Senate: Raises the top tax rate on capital gains and qualified dividends from 15 percent to 20 percent.
House: Keeps the top tax rate on capital gains and qualified dividends at 15 percent.
Neither bill addressed the payroll tax cut, which reduced the Social Security payroll tax paid by workers from 6.2 percent to 4.2 percent in 2011 and 2012. If the tax cut expires, a typical worker making $50,000 in wages would get a $1,000 tax increase next year.
Senate: Does not address the estate tax, allowing the top rate to increase from 35 percent to 55 percent. Currently, the first $5.1 million of an estate is exempt from the federal estate tax; the exemption rises to $10.2 million for married couples. If the tax cut expires, the exemption would be reduced to $1 million for individuals and $2 million for couples.
House: Extends the top rate of 35 percent through 2013, with the larger exemption.
Child Tax Credit
Both bills extend the $1,000-per-child tax credit through 2013. If Congress does not act, the tax credit is scheduled to revert to $500 per child next year.
Senate: Extends a 2009 provision that makes the child tax credit available to more families that don't make enough money to owe federal income taxes.
Earned Income Tax Credit:
Both bills extend a more generous credit first enacted under Bush. The EITC provides tax credits to low-income families based on their income and number of children. The credits are available as payments to many families that don't make enough money to owe federal income taxes.
Senate: Extends a 2009 provision that makes the credit more generous for families with three or more children.
Education tax breaks
Both bills extend more generous tax deductions for interest on student loans and exemptions for employer-provided educational assistance.
Senate: Extends a tax credit of up to $2,500 a year for college costs, first enacted in 2009.
Alternative Minimum Tax
Both bills spare millions of middle-income families from paying the alternative minimum tax for 2012. The tax was first enacted in 1969 to make sure higher-income taxpayers could not use tax breaks to avoid paying any federal income tax. The income limits, however, were not adjusted for inflation, so Congress routinely fixes the law to spare middle-income families.
Congress has yet to patch the law for 2012. So if lawmakers don't act, about 28 million middle-income families will face unexpected tax increases averaging more $3,000 when they file their 2012 tax returns next spring.
Two competing bills just setting there. Since there is a framework in place to address at least part of the fiscal cliff, why doesn't Congress form a conference committee and hash this out?
From the Cornfield, it only makes sense to me to form the committee to pound out a compromise.