Obama and GOP reach deal on two-year extension of Bush tax cuts for all incomes
President Obama and congressional Republicans have reached a tentative deal to extend the Bush tax cuts for all income levels and are presenting the proposal to congressional Democrats Monday afternoon, The Daily Caller has learned.
The deal will extend the current tax levels for two more years, preventing taxes from going up on any income levels, despite the wishes of many liberal Democrats — including Obama — that individuals making more than $200,000 a year and families with more than $250,000 a year in income see their rates go up.
In exchange, Republicans have agreed to extend unemployment insurance benefits for an additional 13 months.
Obama presented the proposal to Democratic congressional leaders at the White House Monday afternoon, seeking to obtain their approval for the deal.
A House Democratic leadership source cautioned that the full party caucus will need to give their approval to any deal, which House Speaker Nancy Pelosi, California Democrat, will likely present to them at a Tuesday evening meeting.
Other details include a temporary two percent reduction in payroll taxes – reported by the Wall Street Journal to be one year – to replace Obama’s “Making Work Pay” tax credit from the 2009 stimulus bill, and a compromise on the estate tax, which will be set for two years at 35 percent, with a $5 million exemption amount.
The tax rate for capital gains and dividends will be maintained at 15 percent. The Daily Caller was the first to report these details. And ABC News’ Jake Tapper reported that businesses will be allowed to deduct 100 percent of certain investments for one year, an idea that Obama proposed in September.
The estate tax solution comes from Sen. Blanche Lincoln, Arkansas Democrat, and Sen. Jon Kyl, Arizona Republican.
Obama views the unemployment benefit extension, as well as the payroll tax holiday, as measures which will stimulate the economy, which he has said is his top priority even if it means he must accept some things he does not want, such as a full extension of all tax cuts.
“We’ve got to make sure that we’re coming up with a solution, even if it’s not a hundred percent of what I want or what the Republicans want,” Obama said Monday during a speech in Winston-Salem, N.C. “There’s no reason that ordinary Americans should see their taxes go up next year.”
This article originally stated that the estate tax exemption would be permanent.