Recently, both the Republican-controlled House and the Democrat-controlled Senate voted on tax legislation. Although practically everyone agrees that nothing will actually be passed by both Congressional houses until after the November 2012 election, the differing legislation gives some small indication of what the tax proposals are. Specifically:
- Everyone agrees that the so-called Bush tax cuts should be extended for most taxpayers. The primary difference between the Republican and Democrat proposals involve whether this same extension of the Bush rates should be given to taxpayers with income exceeding $200,000 for singles and $250,000 for joint filers.
- Both proposals are for only a one-year extension, thus continuing the problem of not providing taxpayers with long-term security about the future. Both parties apparantly are willing to conceded that the economic future is too uncertain to propose a long-term solution.
- Republicans did not include alteration of the Medicare tax contained in the PPACA (aka ObamaCare). Perhaps this signals that the Medicare tax change is not as high a priority for Republicans.
- Democrats were unable to craft a proposal that even their own members could support for the estate and gift tax (which opponents label the “death tax”). This signals the possibility that continuation of larger exemptions will be approved.
This article provides additional detail regarding the current and soon-to-be future rates, and what should be done about this.