Latest on the Tax Deal: Payroll Tax Cut, Estate Tax Back

NRO ^ | December 6, 2010 | Daniel Foster

[ejdrapes]

Latest on the Tax Deal: Payroll Tax Cut, Estate Tax Back

December 6, 2010 4:45 P.M.

By Daniel Foster    

What we’re hearing: A two-year extension of all current income, dividend, and capital gains tax rates, plus a one-year (or 13 month) extension of unemployment insurance.

Chuck Todd reports that the tax deal could include a payroll tax holiday. But Marc Ambinder reports that it will instead include a two percent two percentage point reduction in payroll tax that would replace President Obama’s favored Making Work Pay tax credit, and a reinstatement of the estate tax over a certain yet-to-be-decided threshold.

Multiple reports are indicating a deal is close to being struck.

UPDATE: We’re now hearing that the estate tax will be set at 35 percent for two years, with the first $5 million exempted. [Daily Caller's Jon Ward first to report.]

UPDATE II: Jake Tapper has more details on what’s in the proposed deal, including:

–allowing businesses to deduct 100% of certain investments in the first year (President Obama pitched this in September).

–extending the American Opportunity Tax Credit (college tuition), Child Tax Credit and Earned Income Tax Credit plus their refundability. 

One other wrinkle Tapper is reporting, potentially huge: the unemployment benefits extension will not be offset, at least not as part of this deal. This makes it likelier that Republicans in both houses will challenge it from the right, and that any voting majority will have to be cobbled together from both caucuses.

President Obama is supposed to address the deal at 6:10 PM.

[Uncle Miltie]

Two years was 0bama’s opening position. We should have argued for “Forever,” and settled on 6-8 years.

Who flipped already?

[tallyhoe]

13 month extension of unemployment? What are they nuts? extend through the Christmas to Feb 1, 2011!!! That is it. The longer this goes on the more the unemployment will be.. Why work when you can sit at home twiddle your thumbs and get $450.00 a week? i hope the Republicans don’t buy into this!!!

[Reagan Man]

One of the major goals of the election victory on Nov2nd was to force Obama to hold the line on taxes and extend the Bush era tax cuts. That goal has been accomplished. Albeit, only for two years.

Bottom line, Obama has lost!

[Mr Ramsbotham]

yeah for two years big deal. How does a two year extension help busines?. What happens in 2 years?

Maybe instead of three quarters of the pie we should have held out for none of it at all. You know, there are some things more important than posturing.

[Fury]

Good points, dirtboy.

[EGPWS]

Bottom line, Obama has lost!

While Rome burns.

[Reagan Man]

If you want a revolution, go dig up Thomas Jefferson.

Otherwise, this is a victory for conservatives and a huge loss for Zero and his leftist minions.

[Chesterbelloc]

In 2010 the estate tax rate is 0%.

[dfwgator]

Otherwise, this is a victory for conservative

If this is victory, I'd hate to see defeat.

[EGPWS]

... this is a victory for conservatives the GOP and a huge loss for Zero and his leftist minions.

[The Wizard]

I am amazed that so many here do not realize the victory this is.....we will get to run in 2011 on making the taxes permanent....we will be able to run on killing the death tax.....kids...get a grip....

[plain talk]

You must have read about a different deal and a different political climate in DC. The dems still control the Senate and the WH come Jan. On this deal - the Republicans won, Obama caved. Tax cuts extended for all Americans for 2 years. Of course the dems got unemployment benefits included. so what? We can only hope two years from now they can extend it again.

[louscat]

This is a huge defeat for Obama and great news for conservatives and the average American family.

What is wrong with some of you? All Bush tax cuts extended for 2 years (when we may own the White House and Senate and House).

Capital gains and dividend cuts stay as well. The negative: a larger deficit, falling dollar and higher inflation in our future. Buy gold and silver while you still can.

You know it's good when the Left are going nuts tonight

[ejdrapes]

I hope you're right. But the signs aren't good. I agree with Hugh Hewitt (someone who could not be considered on the far right of the Republican party) - the GOP doesn't know how to fight. Sickening.

[ejdrapes]

We had Obama at 2 years. There was no way in hell he could block that. We should have held out for longer than 2 years. We won in November.

[yefragetuwrabrumuy]

The Bush tax cuts should absolutely *not* be restored, because they offer an amazing opportunity that should *not* be missed.

To downgrade and repair the Social Security System, while harming as few people as possible! Here’s the idea, and please tell people about it!

Not too long ago, “means testing” was proposed to help the SSS remain solvent. The idea was that people who already have money shouldn’t get SS benefits. It was a HUGELY UNPOPULAR idea. Politically impossible.

So instead, make people who are getting SS benefits a deal. If they need their SS money to live, fine, they can have their SS money. But if they have other income, give them a *choice* to instead of taking their SS money, to *not* take it.

Instead, they can get a *tax deduction* that would work out to them getting even *more* money, through saving their income money.

That is, the Bush tax cuts become the Social Security tax cuts.

And just because they are not taking the money owed them by SS, it makes the SS system *solvent*, overnight! And that’s phase one.

Phase two is to get people still paying into the SSS a similar deal, so they can *choose* to put money into an IRA, *instead* of SS, *and* cash in *another* year’s worth of the money they already paid into SS as a tax deduction, as long as that money also goes to their IRA.

This means that their IRA would gain two years of payments for every year they continued to earn income. A wonderful deal for them.

Again, the Bush tax cuts become Social Security tax cuts.

Lastly, only let people who are minimum wage (zone) workers enter the SS system in the first place. In the future, it will become a retirement system just for them, because they have no other retirement.

So this means that America not only gets all the benefits of the Bush tax cuts, but used in such as way as to stop the one of the two biggest drains on the federal budget.

Everybody wins. The well to do and the poor, the economy because of the tax cuts, and even the federal government doesn’t take any more of a hit than it is taking right now.

If we just restore the Bush tax cuts, we still have the huge problem of Social Security to deal with. Why not kill two birds with one stone?

[okie01]

I am amazed that so many here do not realize the victory this is.....we will get to run in 2011 on making the taxes permanent....we will be able to run on killing the death tax.....kids...get a grip....

One would think Chicken Little has assumed leadership of the FReepers...

[Cobra64]

The payroll tax holiday appears to replace Obama’s “making work pay” tax cut which was in the Stimulus. Is there a reason this is not a good deal.

No it's not a "good deal." Payroll taxes are what funds your social security account. Fewer dollars of your and your employer's contributions are going into YOUR account. In essence you get to get what should have been going into your Social Security "retirement" account.

Look up "Federal Insurance Contribution Act", "FICA," and "Social Security."

People need to understand what the numbers mean on their pay stubs.

[EGPWS]

We went from a sitting POTUS calling November 4 a “shellacking” to compromising what has created the “shellacking” in the first place.

[Reagan Man]

You can give credit to Republicans if you like.

In my book, conservatives drove the agenda that gave the GOP victory on Nov2nd. Conservatives demanded the Bush tax cuts be extended.

Obama caved and both the American taxpayer and small businesses will not have their federal income taxes raised come Jan. 1ST 2011. Period. Those are the facts.