posted Oct 3, 2012, 7:47 AM by Patty Langlois
Fate of Bush Tax Cuts Uncertain As Expiration Approaches
April 11, 2012
In 2001 and 2003, Congress passed, and the President signed into law, significant tax reductions for nearly all taxpayers. These cuts included marginal rate reductions, the introduction of a new 10% tax bracket, an expansion of the child tax credit, and a variety of other provisions. Both bills were passed using a Senate procedure known as “reconciliation” – a tactic that lowers the threshold for cloture to a simple majority of Senators (as opposed to a 60-vote supermajority.) This procedure, under the Congressional Budget Act, is not allowed for any bill which affects budget deficits beyond a ten-year window, so these tax cuts included a “sunset” provision which caused them to automatically expire at the end of 2010, in order to bypass that requirement.
Throughout 2010, the President, and factions in Congress proposed various policy options to address the imminent expiration, ranging from letting them fully expire, to extending them partially for taxpayers under a certain income threshold, and full extending them. Finally, in December, a compromise was reached that extended them for an additional two years until the end of 2012.
Below, see a selected list of the tax increases that could occur on January 1, 2013. These are only the most well known provisions of the Bush tax cuts that, if allowed to expire, would come to the immediate attention of the nation’s taxpayers.
The plan outlined in the Obama administration’s budget is to allow only one of those 12 provisions to revert exactly to what it was in early 2001:
Four of those major provisions will change, but they won’t go back to exactly what they were in 2001:
The other major Bush tax cut provisions for individuals listed above will be preserved as enacted during the Bush years.
There are many other provisions that will expire, including EITC eligibility levels, education IRA provisions, and others, not to mention Obama’s biggest tax cut, the making-work-pay credit, which was a one-year tax cut in 2009 that was renewed for 2010. See the complete roster.