Senate Reached A Deal On The Fiscal Cliff, What Will The House Decide?
After much anticipation, hair pulling, and waiting, this morning, January 1st, the first day of the higher taxes and spending cuts, the senate finally reached a decision to extend tax cuts to all but the nations most wealthy. The bill passed by an astounding 89-8 votes, and still must run through the house to be approved. There is some concern that the house may not be able to reach a consensus by Thursday, when the new congress is being sworn in. If a decision has not been reached by then, it will nullify the bill that was passed by the senate, and congress will be back to the drawing board.
What Does The Fiscal Cliff Deal Include?
Under the Senate package:
According to the bill pushed through the senate early this morning, many of the fiscal cliff issues had been addressed including:
-Taxes. Taxes will stay the same for most Ameircans but will increase to the Clinton era levels of 39.6% for those making more than $400k annually as individuals and $450k as couples.
– Itemized deductions will have a cap for those making $250,000 and for married couples making $300,000.
– Taxes on inherited estates will go up to 40% from 35%.
– Unemployment insurance would be extended for a year for 2 million people.
– The alternative minimum tax will be permanently adjusted for inflation.
– Child care, tuition and research and development tax credits would be renewed
–Reimbursements for doctors of Medicare patients will continue, but it will not come out of funds for Obamacare.
– A spike in milk prices will be avoided. Milk prices would have gone as high as $7 per gallon because an agricultural bill had expired.
The Fiscal Cliff Deal Did Not Address:
The fiscal cliff bill passed by the senate did not address issues surrounding the debt ceiling and debt crisis facing this country. They also did not address the payroll tax that will affect all Americans causing a smaller paycheck.
Will The Fiscal Cliff Bill Pass In The House?
In spite of the overwhelming majority for the bill in the senate, there is some hesitation on whether or not it will so easily be approved in the house. Some republicans are frustrated because the bill still imposes taxes on small business owners, which ultimately hurts the economy. Democrats are also frustrated because it only taxes the 0.6% most wealthy in the nation as opposed to the Nations wealthiest 2%. Senate Minority Leader Republican Mitch McCannell commented: “We don’t think taxes should be going up on anyone but we all knew that if we did nothing they would be going up on everyone today,” he said. “We weren’t going to let that happen.” *Credits to CNN for quote.
A lot will be decided in the next couple days that will determine how badly the new tax laws will impact your personal finances. If you are concerned on how badly your tax exposure will erode your assets speak to a Redhawk advisor today to determine the best possible action to plan ahead for 2013 tax laws.