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Obama says fiscal cliff deal close, not done


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Some Democratic officials said that with his comments, Obama was hoping to ease the concerns of liberals in his own party who feared he had given away too much in the current round of talks over taxes.

Obama campaigned on a call for higher tax rates on income over $200,000 for individuals and $250,000 for couples, far lower than the $400,000 and $450,000 that Biden and McConnell have set.

At a glance

Details of tentative deal averting ‘fiscal cliff’

Highlights of a tentative agreement Monday between the White House and Senate Minority Leader Mitch McConnell, R-Ky., aimed at averting wide tax increases and budget cuts scheduled to take effect in the new year. The measure would raise taxes by about $600 billion over 10 years. Still unresolved is how to avert across-the-board spending cuts set to begin slashing the budgets of the Pentagon and numerous domestic agencies.

Highlights include:

Income tax rates: Extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6 percent, up from the current 35 percent. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.

Estate tax: Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent.

Capital gains, dividends: Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15 percent to 20 percent.

Alternative minimum tax: Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle- and upper-middle income taxpayers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes.

Other tax changes: Extends for five years Obama-sought expansions of the child tax credit, earned income tax credit, and an up to $2,500 tax credit for college tuition. Also extends for one year accelerated “bonus” depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity.

Unemployment benefits: Extends jobless benefits for the long-term unemployed for one year.

Cuts in Medicare reimbursements to doctors: Blocks a 27 percent cut in Medicare payments to doctors for one year. The cut is the product of an obsolete 1997 budget formula.

Social Security payroll tax cut: Allows a 2 percentage point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 percent.

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Similarly, the pending agreement on the estate tax would allow more large estates to escape taxation than many Democrats prefer.

By late afternoon, the two sides remained separated by a stubborn dispute over spending cuts scheduled to take effect on the Pentagon and domestic programs alike.

Officials familiar with the talks said the White House has been seeking agreement to stop the cuts from taking effect, either for a period of months or a year, and wanted to count higher taxes created elsewhere in the legislation to offset the cost.

Republicans have said they are willing to delay the across-the-board cuts, but only if Obama and Democrats agree to targeted savings from government programs to take their place.




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