The fiscal cliff is dead, long live the fiscal cliff! Congress pulled back from the edge of the so-called ‘fiscal cliff’ with legislation passed early in 2013, retroactive back into 2012. The headline features of the “American Taxpayer Relief Act” include higher taxes on those with taxable income above $400,000 for single filers and $450,000 for joint returns. Capital gain and dividend rates also rose to 20% for those fortunate few and the estate tax rate climbed to 40% from the current 35% for taxable estate of 5M or greater.
Other provisions include a permanent solution to AMT (no more annual “fixes” to keep CPA’s awake with worry before year end) and a number of other provisions that made permanent the “Bush-era” tax cuts featured in the EGTRRA and JGTRRA tax acts of 2001 and 2003.
A detailed list of provisions can be found in an online article by the Journal of Accountancy.
While we’re glad that this latest legislation addressed some of the revenue concerns of the fiscal cliff we still have months contention ahead as Congress addresses the spending side of the equation and the debt ceiling limit (technically reached late last year).
While the airwaves are already ringing with dire predictions of stalemate and even a US default (precipitated by exceeding the debt limit) we think this unlikely.
We anticipate more brinkmanship with eventual resolution in March. Stay tuned!