Mission Accomplished! House Passes Fiscal Cliff Deal
During a New Year’s Day session, the United States House of Representatives passed a bill to avoid the fiscal cliff.
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The bill, which passed by a vote of 257-167, was a major compromise that didn’t leave many people happy and had only 85 Republican votes. Here are some of the details of the bill:
- Tax rates will permanently rise to Clinton-era levels for families with income above $450,000 and individuals above $400,000. All income below the threshold will permanently be taxed at Bush-era rates.
- The tax on capital gains and dividends will be permanently set at 20 percent for those with income above the $450,000/$400,000 threshold. It will remain at 15 percent for everyone else.
- The estate tax will be set at 40 percent for those at the $450,000/$400,000 threshold, with a $5 million exemption indexed to inflation.
- The phase out of personal exemptions will be reinstated with a starting income threshold for those making $250,000.
- The sequester will be delayed for two months, paid for half by discretionary cuts and the other half will be offset by revenue raised by the voluntary transfer of traditional IRAs to Roth IRAs.
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Americans will be happy to hear a deal was struck, but with plenty left on the table, including an impending increase in payroll taxes, and debt ceiling negotiations in the near future, the fiscal cliff is just one problem that has now been solved.
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