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Latest News: Legislative Updates

House and Senate pass versions of Bush tax cuts

Tuesday, August 7, 2012   (0 Comments)
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The U.S. House of Representatives passed H.R. 8, the Job Protection and Recession Prevention Act, on August 1 by a vote of 256 Yea to 171 No along party lines to extend the expiring tax cuts for households and businesses at all income levels through 2013. These tax cuts are known as the "Bush Tax Cuts." The vote came following the House rejection along party lines of the Democratic alternative 170 Yea to 257 No that would have limited the cuts to taxable income over $200,000 for individuals and $250,000 for couples.

The action in the House came a week after the U.S. Senate extended the tax cuts only up to the $200,000 and $250,000 ceilings contained in the Democratic alternative in House.

The House passed language contains the important extension of the estate tax deduction of $5 million and a maximum tax rate of 35 percent. Like the other Bush Tax Cuts, the estate tax deduction was set to expire on Dec. 31. The Senate passed bill does not contain the extension of the estate tax deduction.

In addition, both the House and Senate version of the tax bill includes the deduction of state sales taxes in lieu of the state income deduction. This tax deduction benefits marine retailers in states such as Texas and Florida that do not have an income tax. It also benefits them when the sales tax of a major purchase, like a boat, exceeds the state income tax paid.

The goal in Congress is to have a tax bill to the President after the elections during an anticipated Lame Duck session. The House and Senate will now have to get together in a conference to work out the differences between the two bills. Of course, the parliamentarian will have to rule on the validity of the Senate passed bill since the Constitution says all tax bills must originate in the House and the Senate did pass its version first in violation of the Constitution

MRAA supports re-authorization of the Bush Tax cuts, especially the estate tax and the sales tax deduction.

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