Congress has given the markets some much needed clarity in regards to the fiscal cliff and taxes. Some of the highlights in the news from the recent congressional action include:
- A permanent extension of the Bush tax cuts for the middle class
- An increase in taxes for couples earning over $450,000 (individuals earning $400,000) from 35% to 39.6%
- An increase in the dividend and capital gains tax rates for couples earning $450,000 ($400,000 for individuals) from 15% to 20%
o (plus a 3.8% surcharge for the Affordable Care Act (aka Obamacare)
- An increase on estate tax from 35% to 40%, with an exemption up to $5,000,000 per couple
- A permanent fix to the Alternative Minimum Tax with an index to inflation
- An extension of the unemployment benefits for another year
- No extension of the temporary 2% payroll tax cut from the Bush era
One of the biggest benefits of the decisions of the last few days is some decisions were made and market uncertainty in some regards has been eliminated. Still left on the agenda for congressional action:
- No resolution to the $110 billion in spending cuts that was to be enacted January 1, 2013 as part of sequestration (postponed for two months)
- No increase to the debt ceiling, which also needs to be addressed in two months
