Following two failed votes in the U.S. Senate Saturday to extend the Bush-era tax cuts only for the middle-class or those making less than $1 million a year, the White House and GOP Congressional leadership Monday agreed to a tentative “framework” agreement to extend current tax rates for all taxpayers for another two years.
The deal also includes extensions of other current tax measures, as well as a 13-month extension of unemployment benefits and a one-year reduction in employee payroll taxes for Social Security.
The agreement also proposes 100 percent expensing for businesses in 2011, retroactive to September 8, 2010, and 50 percent in 2012.
Although the deal was announced yesterday, it remains a work in progress. Other pending tax provisions may be included in the final bill that will increase its overall cost. While a two-year extension of the research and development tax credit and other already-expired tax incentives are included in the proposal, other items up for discussion include an extension of the Build America Bonds program and removing water infrastructure investment from the state volume caps for the Private Activity Bond program. Removal of water and wastewater projects from the congressionally-mandated cap on their volume would free up private money to act as an additional alternative financing mechanism for water infrastructure construction.
Although not described in the White House’s fact sheet on the agreement, the White House did agree to set the estate tax rate at 35 percent and exemption levels at $5 million for singles and $10 million for couples through 2013. However, further details regarding the estate tax—such as taxation of 2010 estates—are yet to be finalized.
Additional details regarding the agreement and the development of legislative language are expected to be released in the upcoming days with votes in the House and the Senate possibly occurring at the end of this week at the earliest.
Despite White House support, Congressional Democrats have yet to signal whether they will support the package.
For more information, contact Karen Lapsevic at 202-547-4733 or lapsevick@agc.org.