In a move that surprised absolutely no one, House Republicans formally introduced legislation today to counter bill S.3412 — introduced by Senate Democrats to extend the Bush tax cuts only for those earning less than $250,000 — with their own plan for the soon-to-expire cuts.
In H.R. 8, Republicans would extend the Bush tax cuts — and the 10/15/25/28/33/35% rates that came with them — for all taxpayers for one year, through December 31, 2013. In addition, the bill contains the following proposals:
- The overall limitation on itemized deductions and phase-out of personal exemptions, both slated to return in 2013, would be deferred one year, this time until January 1, 2014.
- The child tax credit would remain at $1,000 for 2013 (it was set to drop to $500) and will be permitted to offset AMT in 2013.
- All marriage penalty relief provisions (a standard deduction double the individual deduction, doubling of the 15% rate bracket) would be extended through 2013.
- The maximum rate on qualified dividends and long-term capital gain — slated to return to ordinary rates and 20%, respectively — will remain at 15% for 2013. The bill would seem to attempt to remove the proposed 3.8% Obamacare surtax from the dividend and LTCG rates, though the text does not make this abundantly clear.
- The current 35%/$5,120,000 estate tax rate/exemption would be extended through 2013.
- The Section 179 deduction will remain at $100,000 for 2013.
- A one year AMT patch with an increased exemption of $78,750 for MFJ and $50,600 for single taxpayers for 2012, and $79,850 and $51,150 for 2013.
If you’re curious about a price tag for this one-year reprieve, the Joint Committee of Taxation puts it at $228 billion for 2013 alone, with $64 billion of the cost attributable to the extended Bush-era tax rates.
H.R. 8 is nearly identical in effect to a Senate bill sponsored by Orrin Hatch, though that bill would make an overhaul of the Code mandatory in 2013. The overhaul would be required to achieve the following results:
- Reduce rates,
- Eliminate preferences and deductions,
- Permanently repeal the AMT,
- Bring the top corporate rate down to 25%,
- Be revenue neutral,
- Retain a progressive tax code,
- Reunite the cast of tv’s “The Facts of Life,” including long-time hold-out Tootie, and
- Move to a territorial international tax regime,
Now that you’ve read and digested this, feel free to print it out and promptly light it on fire, since there’s absolutely zero chance the Democratic controlled Senate will support either bill.