Daily Tax Update - December 20, 2012: "Plan B" Republican Withdrawn From House Floor

“PLAN B” REPUBLICAN BILL WITHDRAWN FROM HOUSE FLOOR:  Tonight, House Speaker John Boehner pulled his bill, which permanently extends the 2001 and 2003 tax cuts for incomes of less than $1 million, from consideration on the House floor after failing to secure enough Republican votes to pass the measure. A statement by Boehner said, "The House did not take up the tax measure today because it did not have sufficient support from our members to pass. Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff. The House has already passed legislation to stop all of the January 1 tax rate increases and replace the sequester with responsible spending cuts that will begin to address our nation's crippling debt. The Senate must now act."

  • Earlier tonight, the House narrowly passed the Spending Reduction Act, H.R. 6684, by a vote of 215-209.  The House adjourned until after Christmas.
  • Senate Majority Leader Harry Reid said earlier today that the Senate would not take up the House bill and said that Republicans were "wasting time."  Reid said, "We are not taking up any of the things that they’re working on over there now.  It’s very, very, very unfortunate the Republicans have wasted an entire week on a number of pointless political stunts."  Reid added, "The bill has no future, if they don’t know it now, tell them what I said."  Reid said Boehner should schedule a House vote on the Senate-passed bill to extend the Bush-era tax rates for families with income below $250,000.  Reid said, "The Senate bill is the only one that will be signed into law.  We could protect middle-class families tomorrow. . . . The Speaker refuses to bring our bill to the floor because it would pass."
  • Earlier today, Boehner reacted to Reid’s remarks and said, "I am not convinced at all that when the bill passes the House today that it will die in the Senate. At some point the Senate has to act."

The provisions in "Plan B" include:

    • Permanent inflation indexing of AMT exemption level;
    • Permanently set estate tax rate at 35% and exemption level at $5 million, indexed to inflation;
    • Income in excess of $1 million taxed at 39.6% marginal income tax rate;
    • Raise top tax rate on dividends and long-term capital gains to 20% on income in excess of $1 million
    • Permanent extension of higher small business expensing limits under Sec. 179

Permanent Extensions of:

    • $1,000 child tax credit
    • Marriage penalty relief
    • 10%, 25%, 28%, 33%, and 35% brackets
  •  The text of “Plan B” can be accessed here.

BAUCUS NAMES NEW DEMOCRATIC STAFF DIRECTOR:  Today, Senate Finance Committee Chairman Max Baucus named Amber Cottle as the new Democratic Staff Director.  Baucus said, "Amber has vast experience in both economic and international policy.  She is well respected in the business, labor, policy and academic communities and is known for her leadership and dedication.  She is also an expert negotiator, skills which will prove vital in my efforts to reform the nation’s tax system.  Amber is a problem solver who works across party lines to get results.  She is exactly the type of person I want leading my team for years to come."  Cottle replaces long-time staff director Russ Sullivan, who will return to the private sector.

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:  As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

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