MINNEAPOLIS (WCCO) – It appears tax increases across the board in the U.S. will not happen after a bill was passed overnight by the U.S. Senate to avoid going over the fiscal cliff.
It’s now up to the House to vote on the bill. House members will reconvene at 11 a.m. Tuesday to vote on the bill. Had the U.S. gone over the fiscal cliff, everyone’s taxes would be going up, which means you’d be getting less money out of your paycheck. That was just one of several issues that arose with that possibility.
For single people who earn less than $400,000, your income tax rate will not go up under this bill. For couples, the cut off is $450,000 a year.
If your earnings are above those amounts, the current 35 percent rate will jump to 39.6 percent. The ‘Estate Tax’ Top Rate will go up from 35 percent to 40 percent, with the first $5 million exempt.
The bill would also extend the child tax credit, the earned income tax credit, and an up to $2,500 tax credit for college tuition. Senate Minority Leader Mitch McConnell said Republicans agreed to the measure rather than let the middle class suffer.
“We don’t think taxes should be going up on anyone but we all knew that if we did nothing, they would be going up on everyone today,” McConnell said. “We weren’t going to let that happen.”
“I personally just don’t like it because I think we’re kicking the can down the road and we aren’t really addressing the real crisis, which really to tell you the truth wasn’t the fiscal cliff, it’s a debt crisis,” said Republican Paul Rand of Kentucky.
The controversial spending cuts that were a sticking point of negotiations are postponed for at least two months. The U.S, reached its legal borrowing limit of $16.4 trillion.
The Treasury Department is taking measures to buy time until the end of February. So overall there is a tentative agreement and it’s now up to the House. Speaker John Boehner has not yet endorsed the plan.
Sen. Amy Klobuchar voted for the compromise and released a statement shortly after it passed the Senate.
“I voted for this compromise because the last thing we should be doing this New Year’s is sticking middle class families with a tax hike. I fought for and wanted a larger, more comprehensive plan that balanced revenues and spending cuts. I will continue to push for a broader plan to reduce our debt and give businesses and families the certainty they need,” Klobuchar said.
Sen. Al Franken also voted in favor of the legislation and released a statement after it passed.
“I voted for this bill because it contains a number of very important provisions, including tax cuts for working and middle-income Minnesotans, an extension of unemployment insurance for so many Americans who are looking for work, and the production tax credits that mean so much to our state’s renewable energy producers. And it was crucial to me that Medicare, Medicaid, and Social Security beneficiaries were protected,” Franken said.