Tax Provisions Expiring in 2012
- Submitted by: macowar
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- Category: Politics: Economics
- Date Submitted: 01/28/2013 07:57 PM
- Pages: 6
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Tax Provisions Expiring in 2012
Introduction
The pending expiration of a number of tax provisions has generated a great deal of attention as reflected by editorials and opinion pieces in national newspapers, and Congressional hearings. The tax provisions that are scheduled to expire at the end of 2012 include:
• What is commonly referred to as the Bush tax cuts, which reduced income taxes by reducing tax rates, reducing certain penalties and limitations on personal exemptions and itemized deductions and reduced estate tax liabilities.
• The alternative minimum tax (AMT) patch, which prevents an estimated 26 million additional taxpayers from owing the AMT.
• The payroll tax cut, which reduced an employee’s share of Social Security taxes by two percentage points.
• A variety of previously extended temporary tax provisions commonly referred to as “tax extenders,” which affect individuals, businesses, charitable giving, energy, community development, and disaster relief.
On one extreme, allowing these tax provisions to expire as scheduled will somewhat improve the fiscal condition, but could stifle an economic recovery. At the other extreme, permanently extending all of these tax provisions could worsen the longer-term fiscal outlook and possibly signal a lack of progress in dealing with the long-term fiscal situation.
The Obama Administration has proposed allowing the Bush tax cuts to expire for upper income taxpayers and permanently extending the tax provisions for middle class taxpayers. Compared to permanently extending all of the tax provisions, this proposal would increase tax revenues, but still leaves federal debt on an unsustainable path. As Congress and the Obama Administration decide whether to extend these provisions, they must consider the estimated revenue loss associated with their extension, the impact to the business sector and the impact to the overall economic outlook as these tax cuts are implemented along with mandatory spending cuts....
Introduction
The pending expiration of a number of tax provisions has generated a great deal of attention as reflected by editorials and opinion pieces in national newspapers, and Congressional hearings. The tax provisions that are scheduled to expire at the end of 2012 include:
• What is commonly referred to as the Bush tax cuts, which reduced income taxes by reducing tax rates, reducing certain penalties and limitations on personal exemptions and itemized deductions and reduced estate tax liabilities.
• The alternative minimum tax (AMT) patch, which prevents an estimated 26 million additional taxpayers from owing the AMT.
• The payroll tax cut, which reduced an employee’s share of Social Security taxes by two percentage points.
• A variety of previously extended temporary tax provisions commonly referred to as “tax extenders,” which affect individuals, businesses, charitable giving, energy, community development, and disaster relief.
On one extreme, allowing these tax provisions to expire as scheduled will somewhat improve the fiscal condition, but could stifle an economic recovery. At the other extreme, permanently extending all of these tax provisions could worsen the longer-term fiscal outlook and possibly signal a lack of progress in dealing with the long-term fiscal situation.
The Obama Administration has proposed allowing the Bush tax cuts to expire for upper income taxpayers and permanently extending the tax provisions for middle class taxpayers. Compared to permanently extending all of the tax provisions, this proposal would increase tax revenues, but still leaves federal debt on an unsustainable path. As Congress and the Obama Administration decide whether to extend these provisions, they must consider the estimated revenue loss associated with their extension, the impact to the business sector and the impact to the overall economic outlook as these tax cuts are implemented along with mandatory spending cuts....