Tax, Unemployment Changes in Fiscal Cliff Deal
As the dust settles on the fiscal cliff deal struck by Congress and the administration earlier this week, there is a lot of catching up to do on what it means for businesses and their employees.
Tax changes, of course, are the main part of the package. But it also contains the extension of federal unemployment benefits.
Here’s a very quick look at the highlights:
Permanently extends tax cuts at Bush-era rate on incomes up to $400,000 for individuals, $450,000 for families.
Unemployment benefits: Extends jobless benefits for one year, benefiting those unemployed for longer than 26 weeks.*
Payroll tax: Allows a 2 percentage point cut to lapse
Estates: Will be taxed at a top rate of 40%, with the first $5 million in value exempted for individual estates.
Sequester: Delays for two months $109 billion in spending cuts (which directly impacts Connecticut’s defense industry).
The 2009 expansion of tax breaks for low-income Americans would be extended for five years.
Medicare payments to doctors: Blocks a 27% cut in payments for one year.
Alternative minimum tax: Permanently patched to avoid raising taxes on the middle class.
Now for some analysis:
- Here’s one take on how the deal will impact U.S. small businesses.
- How postponement of the sequester is keeping Connecticut’s defense industry in limbo.
- A perspective on how the deal could impact America’s economy.
And, more about the unemployment extensions, from UWC, a business organization specializing in unemployment and workers' comp issues:
- Extension of the Emergency Unemployment Compensation Program (EUC) for a year does not increase the deficit in the FUTA funded accounts because funding for EUC benefits is provided from general revenue.
- Temporary Extension of Extended Benefit Provisions for a year continues the current 100% federal reimbursement for states triggering on regular Extended Benefits.
- And, a statement from the CT Department of Labor
There is much more for federal policymakers to do, including solving what to do about the nation’s $16.394 debt ceiling–which we have already hit; and deciding what to do about the continuing budget resolution–that expires on March 27—to avoid another temporary shutdown of at least some government functions.
Stay tuned for more fiscal and political fireworks from Washington D.C.
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