At a standstill | Capitol HillDuane L. Musser
Despite pleas for immediate action by NRCA and other business groups, Congress
recessed in September in advance of the Nov. 6 elections without
resolving the impasse over major tax increases scheduled to take
effect in 2013. At press time, Congress has entered into a
lame-duck session that likely will continue through this month. How
Congress and President Obama address urgent tax policy issues
during this lame-duck session could substantially affect the U.S.
economy.
Approaching expiration dates
On Jan. 1, 2013, tax rates on individual incomes, capital gains
and dividends that were enacted in 2001 and 2003 and extended for
two years in December 2010, are scheduled to expire. Under this
scenario, all income tax rates will increase; the 15 percent rate
on dividends will be taxed at regular income rates; and the capital
gains rate will increase from 15 to 20 percent. In addition, the
estate tax is scheduled to increase from 35 percent to its pre-2001
level of 55 percent, with the exemption falling from $5 million to
$1 million. And that's not all.
The employee payroll tax cut first enacted in 2011 and extended
through 2012 also is scheduled to expire. The Alternative Minimum
Tax also will affect more taxpayers in 2013 unless Congress
approves legislation to limit its expansion as it has done numerous
times in recent years. Another area of tax policy that needs urgent
attention is a series of tax credits and deductions, many of which
are used by employers to reduce their tax liability, that either
expired at the end of 2011 or are set to expire...
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