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Details of Senate bill averting 'fiscal cliff'

By Associated Press

LAST UPDATED: 11:07 a.m. HST, Jan 01, 2013

Highlights of a bill approved today by the Senate aimed at averting wide tax increases and budget cuts scheduled to take effect in the new year. The measure would raise taxes by about $600 billion over 10 years compared with tax policies that were due to expire at midnight Monday. It would also delay for two months across-the-board cuts to the budgets of the Pentagon and numerous domestic agencies.

The House is expected to vote on the bill today or Wednesday.

Highlights include:

—Income tax rates: Extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6 percent, up from the current 35 percent. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.

—Estate tax: Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent.

—Capital gains, dividends: Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15 percent to 20 percent.

—Alternative minimum tax: Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle- and upper-middle income taxpayers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes.

—Other tax changes: Extends for five years Obama-sought expansions of the child tax credit, the earned income tax credit, and an up-to-$2,500 tax credit for college tuition. Also extends for one year accelerated "bonus" depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity.

—Unemployment benefits: Extends jobless benefits for the long-term unemployed for one year.

—Cuts in Medicare reimbursements to doctors: Blocks a 27 percent cut in Medicare payments to doctors for one year. The cut is the product of an obsolete 1997 budget formula.

—Social Security payroll tax cut: Allows a 2-percentage-point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 percent.

—Across-the-board cuts: Delays for two months $109 billion worth of across-the-board spending cuts set to start striking the Pentagon and domestic agencies this week. Cost of $24 billion is divided between spending cuts and new revenues from rule changes on converting traditional individual retirement accounts into Roth IRAs.

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NanakuliBoss wrote:
Shreechhhhhhhhhhhhhhhhhh...........wow that a close manufactured doomsday scenario.
on December 31,2012 | 06:42PM
Tanabe wrote:
Where are the spending cuts? Fine to raise taxes, but need to curtail spending too!
on January 1,2013 | 09:17AM
jussayin wrote:
Alright, an even bigger government. More revenues for the government and as Tanabe said, where are the spending cuts. I guess our increased taxes go to more government spending. I feel for the younger generation as they'll feel the most pain of the current policies.
on January 1,2013 | 03:55PM
nj24 wrote:
Where is the spending CUTS? This was suppose to be a deficit reduction not tax and spend.
on January 1,2013 | 04:03PM
HD36 wrote:
Don't worry about the cuts because they'll have to raise the debt ceiling again this year in order to borrow more money to pay the interest on the money they borrowed before that, that they used to pay the interest on the money they borrowed before that. Ever wondered what hapens when a Ponzi Scheme collapeses? How about a bond bubble and dollar collapse simultaneously? Massive Social Unrest. Don't let them take your guns.
on January 1,2013 | 07:24PM
Bumby wrote:
Get this all us average citizens. The payroll tax which is your FICA was at 4.2% on what your W2 showed meaning what you earned. Thus all families as an example earning $100,000 will see their net income drop $2,000 dollars a year provided your income of $100,000 for 2013 was the same as 2012. You have a tax hike. $50,000 your net income will be less $1,000.
on January 2,2013 | 12:15AM
Bumby wrote:
Why do we the people of the U.S. allow our government to have our debt increase year after year? Who does the U.S. government pay interest to on this debt? The U.S. government and its people interest payment on this debt is getting bigger and bigger each year. Meaning every American citizen will be paying back interest on this debt for all of their lives. The people need to start looking at economics and ask yourselves if you as an individual or a family was not in debt and paying back interest forever and ever that means you would have more money and be better off financially. Imagine our country being our family and we members of that family are paying back interest in the form of taxes. Imagine if no interest had to be paid and all taxes could be used 100% for its citizens. People start wising up and make our leaders understand that we want this debt gone. We need to start being prudent and wise and cut the fat and have a plan for our country to be debt free.
on January 2,2013 | 12:26AM
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