The House and Senate have finally adopted the tax deal President Obama negotiated with GOP leaders.
The measure includes a two-year extension of the Bush-era tax cuts for all income groups, a 13-month extension of unemployment benefits for the long-term unemployed and a one-year cut in Social Security payroll taxes.
Democrats’ well-publicized criticism of the deal faded as the expiration date for the Bush tax — midnight on Dec. 31 — cuts inched closer.
“There is probably no one on this floor that likes this bill. Therefore, the judgment is: It is better than doing nothing,” House Majority Leader Steny Hoyer (D, MD) was quoted as saying in The Wall Street Journal.
Democrats had hoped to limit the availability of income tax cuts to those making $250,000 or less, but that didn’t happen.
As part of the deal, wage earners will get a new payroll tax break, wealthy heirs will get a lower estate tax rate and businesses will get a big tax write-off for new equipment purchases.
Thanks to a new payroll tax holiday, middle-income Americans — those earning between $35,000 and $64,000 will gain about 0.9% or roughly $613 of their pay, according to an analysis by the Tax Policy Center.
Lower earners will be able to continue to benefit from the expanded availability of the Child Tax Credit, Earned Income Tax Credit and the tax credit for college tuition (American Opportunity Tax Credit).
And much to the chagrin of congressional Democrats, high-income earners — those earning between $500,000 and $1,000,000 — will gain roughly $3,859 in income compared to current tax levels.