The US Senate is slated to take up competing tax relief bills, S. 3412, the Middle Class Tax Cut Act, which is supported by the Democrats, and S. 3413, the Tax Hike Prevention Act, supported by the Republicans.
Tax relief S. 3412 would reflect President Obama’s plan to extend through 2013 the 2001 (EGTRRA) and 2003 (JGTRRA) tax cuts for taxpayers other than those with “higher income” (generally, those making over $250,000 for marrieds filing jointly, and over $200,000 for single taxpayers). Among other changes, the legislation would:
• Extend through 2013 some 2010 Tax Relief Act changes (e.g., expanded American Opportunity Tax Credit, child tax credit).
• Allow up to $250,000 to be expensed under Code Sec. 179, for tax years beginning in 2013.
• Provide another one-year (i.e., through 2012) alternative minimum tax (AMT) “patch” (increasing AMT exemption amounts, and generally allowing nonrefundable personal credits to be used to offset AMT).
Tax relief S. 3412 carried some estate and gift tax modifications but Senate Democrats apparently want to consider this issue separately, so there are no estate tax changes in the latest version of S. 3412.
Tax relief S. 3413, the Republicans’ bill, is similar to the Democrats’ bill except that it would extend through 2013 the 2001 (EGTRRA) and 2003 (JGTRRA) tax cuts for all taxpayers. It also carries a mandate for the Senate Finance Committee to come up with a tax reform plan one year after S. 3413 becomes law.
According to Senate Republicans, a Joint Committee on Taxation analysis of both bills indicates that the Republican bill would cost only $29 billion more than the Democratic bill.
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