What The Hell Just Passed? The Senate Fiscal Cliff Deal Explained
Two hours before the ball dropped in Times Square last night, the Senate was hard at work and managed to pass a plan that would avert the fiscal cliff. The deal was strongly agreed upon in an 89-8 vote.
Now the bill is in the hands of the House, which is kind of a messy situation. House Speaker John Boehner and other Republicans have been pretty difficult throughout this process and very well could screw this whole thing up.
If it's passed in the House, it will be the first time in two decades that tax rates will increase for the wealthiest Americans. The bill would also extend the 10% individual income tax bracket forever, which would avoid a lot of debates for the foreseeable future. House Republicans just announced that they will not make a decision on whether or not they should vote at their first meeting today. They'll have two meetings today before they will make the decision on whether or not they want to move the vote to the floor.
So what stuff did the Senate give them to work with?
You're Safe This Time, Middle Class
If the Senate's deal goes through, taxes will stay the same for most Americans. However, if you make over $400,000 or you and your spouse make a combined $450,000, your taxes will increase from the current 35% rate to 39.6%. This is the same rate that it was during the Clinton-era. This is probably the biggest display of 90's nostalgia of all time.
Itemized deductions for those who are making $250,000 and for married couples making $300,000 would be capped.
Fewer Cuts For Now
Marco Rubio, a Republican frontrunner for the way-too-distant 2016 Presidential race, was one of the eight senators who voted against the plan. In a statement, Rubio said, "Thousands of small businesses, not just the wealthy, will now be forced to decide how they'll pay this new tax and, chances are, they'll do it by firing employees, cutting back their hours and benefits, or postponing the new hire they were looking to make. And to make matters worse, it does nothing to bring our dangerous debt under control."
He does have a point in that last part of his statement. The Senate plan does give a two-month delay to part of the $110 billion in spending cuts that would've taken into effect this month.
No More Of Daddy's Money For You
The taxes on inherited estates will go up to 40% from 35%. This applies to estates that are over $5 million. President Obama wanted to set the bar at a 45% rate with a $3.5 million exemption, which means he might hate his rich friends' kids more than you do.
More Milk Please
As the Wall Street Journal explains:
The bill also included a measure preventing a sharp increase in the price of milk that was feared early in the new year, and extending some other agricultural programs through September. The last five-year farm bill expired at the end of last September as lawmakers were unable to reach a deal on the sweeping legislation.
This means the cost of milk will stay low, which is pleasing legislation for babies and cats.
[Image via AP]