The American Taxpayer Relief Act of 2012 (Pub.L. 112-240, HR 8, 126 Stat. 2313, enacted January 2, 2013) was adopted by the United States Congress on 1 January 2013, and signed into legislation by President Barack Obama the next day.
This law centered on a partial resolution of the fiscal cliff of the United States by discussing the ending of certain provisions of the Economic Growth and the 2001 Relief Tax Reconciliation Act and the 2003 Reconciliation Tax Benefit Reconciliation Act and Act (known collectively as "Bush tax withholding "), which has been temporarily extended by Tax Relief, Reauthorization of Unemployment Insurance and the Employment Creation Act of 2010. This law also addresses the activation of the budget absorption provisions of the 2011 Budget Control Act.
The size of the compromise, the Act provides permanently to the lower level of many of Bush's tax cuts, while retaining a higher tax rate on the income level that became effective on January 1 as a result of the end of Bush's tax cuts. The law also imposes limits on deductions and tax credits for those with higher incomes. This does not address the level of federal spending for the most part, rather than leaving it for further negotiations and legislation. The American Taxpayer Relief Act was passed by the vast majority in the Senate, with both Democrats and Republicans backing it, while the Republican majority in the House opposed it.
Video American Taxpayer Relief Act of 2012
Terms
Tax conditions
- For individuals with a taxable income of $ 400,000 per year or less ($ 450,000 for married couples on joint tax returns, both thresholds for indexing for inflation after 2013), income tax rates, capital gains , and dividends remain at their 2012 levels, instead of returning to a higher level than the end of Bush's tax cuts.
- For individuals with taxable income above the $ 400,000/$ 450,000 limit:
- The upper marginal tax rate on income of 39.6%, provided for under the end of the 2001 Bush tax rebate, is maintained. This is an increase from the 2003-2012 level of 35%.
- The marginal tax rate on the long-term capital gain of 20%, provided for the end of the 2003 Bush tax withholding, is maintained. This is an increase from the 2003-2012 level of 15%.
- The upper marginal tax rate on dividends, which will rise to a regular income level of 39.6% due to the end of Bush's tax cuts in 2003, is set to a 20% capital-gain level. This is an increase from the 2003-2012 level of 15%.
- Termination of tax and credit deductions for earnings of over $ 250,000 for individuals and $ 300,000 for couples restored. These limits on cuts already existed before the Bush tax cuts, and have disappeared in 2010.
- Property taxes are set at 40% of values ​​above $ 5,000,000, indexed for inflation, an increase from the 2012 rate of 35% of values ​​above $ 5,120,000.
- Changes are made to the Alternative Minimum Tax to permanently index it to inflation and thus to avoid the annual "patches" that were previously required to prevent it from affecting middle-class families.
- The two-year cut to payroll tax is not renewed. This figure has been reduced from 6.2% to 4.2% for 2011 and 2012.
- Some tax credits for poor families are extended for five years, including for tuition and extension of income tax credit earned.
- A number of corporate tax breaks are extended, including "active" financing for large companies ($ 9 billion), New Market Tax Credit Program ($ 1,365 billion per year), rum taxes supporting Puerto Rico and Virgin Islands rum industry ($ 547 million in 2009), tax benefits for NASCAR racetrack owners (about $ 43 million), tax credits for two and three-wheeled electric vehicles and employing individuals who are members of Native American tribes.
Overall, the bill includes $ 600 billion over ten years in new tax revenues, about one-fifth of the revenues will be raised no legislation is passed. For the fiscal year 2013, some taxpayers have increased their first year to first year income tax rate since 1993, although the tariff increase did not occur as a result of the 2012 law, but as a result of the end of the Bush tax. cut. New tariffs for revenue, capital gains, estates, and alternative minimum taxes will be made permanent.
Terms of spending
- The budget absorption made by the Budget Control Act of 2011 was delayed for two months, allowing for further negotiations on deficit reduction. The $ 24 billion fee will be offset by a loosening rule for the 401 (k) account to be converted into the Roth 401 (k) plan, which requires taxes paid on assets, as well as terms for unspecified deductions of $ 4 billion for the remaining FY2013 and another $ 8 billion in FY 2014.
- The sequestration limit for 2014 is downgraded to compensate for a two-month delay in 2013.
- For 2013 alone, certain "security" funding such as domestic security and international affairs are cut to reduce cutbacks to defense.
- The federal unemployment benefits are extended for one year without budget balances elsewhere, costing $ 30 billion.
- Medicare "document repair", suspending a reduced payment of physicians to adjust to Medicare Sustainable Growth Rate, extended for one year.
- The salary payments for members of Congress are extended, but the general pay freeze for government employees is not.
- Some parts of the agricultural bill that expired in September were extended for nine months, but without change supported by dairy farmers and legislators.
Maps American Taxpayer Relief Act of 2012
Legislative history
Part of the bill came after days of talks between Senate leaders and the Obama administration, with final approval linked to talks between Vice President Joe Biden and Senate Minority Leader Mitch McConnell. Some Democrats criticized the bill for not raising taxes on the rich more, while Republicans criticized him for raising tax rates while not giving explicit spending cuts. The final action on the bill came during a Congress session on New Year's Eve and New Year's Eve.
At about 2 am EST on January 1, 2013, the Senate passed the bill, at a margin of 89-8. 49 Democrats (and Independent Democrats) and 40 Republicans voted in favor while 3 Democrats and 5 Republicans voted against.
The prospect was proposed that the House would pass an amended bill, including a $ 300 billion spending cut. But it was determined to be unlikely that the Senate would vote on the amended law before the end of the 112th Congress by noon on January 3, 2013 (all laws under consideration end at the end of each Congress), and failure to pass the bill and thus extending the time on the cliff is seen as politically unfavorable by the Republican leadership, and therefore the House moves towards a vote on the same day.
Parliament passed the bill without amendment with a margin of 257-167 about 11 p. m. EST on 1 January 2013. 85 Republicans and 172 Democrats supported 151 Republicans and 16 Democrats in the opposition.
House Speaker John Boehner voted for the bill, a break from the usual speaker habits did not vote at all. The action by the House in bringing the bill itself is also a pause from the normal "Hastert rule", in which the majority of Republican caucuses do not support it.
Section House brings to the cap what the so-called Associated Press "Congress" tortures, approval of the extraordinary New Year's Day of compromise that avoids the prolonged collapse of the fiscal cliff. "A few minutes later, the president flew back to Hawaii to rejoin his family for their holiday vacations, and Obama signed an official copy of the bill with autopen from there on January 2, 2013.
CBO ratings
The Congressional Budget Office (CBO) analyzes the effects of laws on deficits and the economy. Describing the effects of the American Taxpayer Relief Act (ATRA) depends on which baseline is used as a comparison.
- Compared to 2012, the deficit in 2013 will be slightly lower due to additional tax revenues from higher payroll tax rates on all income taxpayers and higher income tax rates on richer taxpayers. Economic growth in 2013 will be slower due to the decrease in the short-term deficit.
- Compared to the CBO "Baseline Scenario" (which assumes a significant deficit reduction due to the end of Bush's tax cuts at all income levels, the end of the payroll tax deduction and the implementation of spending cuts), ATRA increases the deficit well above the 2013-2022 Period. Economic growth will be faster in the short term because of the higher deficit but slower in the long run due to higher debt levels.
- Compared to the CBO's "Alternative Scenario" (which assumes a limited deficit reduction due to the extension of Bush's tax cuts at all levels and no substantial cuts in spending), ATRA raises the deficit moderately over the 2013-2022 period. Economic growth will be slower in the short term because of a lower but faster deficit in the long run due to lower debt levels.
Projection of ten years 2013-2022
The CBO reports its forecast on the effects of the ATRA budget on January 1, 2013. This effect is measured relative to the "March 2012 Baseline" CBO scenario, which assumes a significant deficit reduction due to the end of Bush's tax cuts and the implementation of cut-out spending under the Budget Control Act of the year 2011.
- The terms of income will add a total of $ 3.638 billion for the deficit for the 2013-2022 period, averaging $ 364 billion per year. The Baseline assumes that the income tax deduction will end at all income levels, so simply raising the income tax rate for higher income taxpayers causes the deficit to rise substantially relative to the baseline.
- Terms of expenditure will add $ 332 billion for the deficit period 2013-2022, an average of $ 33 billion per year. The Baseline assumes a series of significant spending cuts under the Budget Control Act of 2011 will apply, so delaying or avoiding it will increase the deficit relative to the baseline. The CBO analysis assumes most of the reduction in spending in the Budget Control Act ($ 1.2 trillion over a decade) or equivalent will still occur.
- The total deficit for the 2013-2022 period will increase by $ 3.971 billion relative to the baseline.
The baseline scenario of CBO in March 2012 assumes the total deficit for the 2013-2022 period is $ 2,887 billion. Publicly held debt (part of the national debt) by the end of 2022 is $ 15.115 billion, resulting in a debt-to-gov't ratio of 61.3% to the GDP of the public. The ratio is projected to be 73.2% in 2012. Applying the amount in ATRA to the baseline (a rough estimate awaiting further CBO assessment), ATRA causes :
- Total estimated deficit for the 2013-2022 period of $ 3.971 billion, from $ 2.887 billion to $ 6.858 billion;
- Debt held by the public in 2022 by $ 3.971 billion, from $ 15.115 billion to $ 19.086 billion; and
- The ratio of debt held by the public to GDP in 2022 amounted to 16.1 percentage points, from 61.3% to 77.4%, assuming no change in GDP by 2022.
For comparison, the CBO "Alternative Scenario", which assumes Bush's tax cuts will be extended and spending cuts in the Budget Control Act is avoided, it is assumed to be $ 10.731 billion in cumulative deficits over the 2013-2022 period. ATRA generated $ 6,858 billion in cumulative deficits, roughly dividing the differences between the two scenarios. In other words, ATRA improves the image of the deficit relative to the Alternative scenario, but worsens it relative to the Baseline scenario.
The CBO is separately indicated in January 2013 that an additional interest cost of $ 600 billion over the period 2013-2022 is not included in the initial assessment discussed above. This raises the deficit estimate of $ 6,858 billion (Basic scenario with ATRA adjustments above) to $ 7,458 billion. These additional interest costs arise because of a higher deficit relative to the Baseline. While ATRA will reduce the short-term economic impact due to cliffs, it will slow long-term growth relative to the lower Baseline deficit scenario.
2012 to 2013 changed
The CBO's "Baseline" scenario of August 2012 assumes revenues will increase from $ 2,435 billion in 2012 to $ 2,913 billion in 2013, an increase of $ 478 billion or 19.63%. It also assumes spending will decrease from $ 3.563 billion in 2012 to $ 3.554 billion in 2013, a decrease of $ 9 billion or -0.25%. The deficit is projected to $ 641 billion in 2013, well below the 2012 deficit of $ 1.128 billion.
The CBO analysis of January 1, 2013 on ATRA includes adjustments to the Baseline scenario for 2013 - $ 280 billion in revenue and $ 50 billion in spending. This lowers the projected revenue of Baseline 2013 from $ 2,913 to $ 2,633 billion, an increase of $ 198 billion or 8.13% compared to 2012 revenues of $ 2,435 billion, while increasing 2013 spending from $ 3.554 billion to $ 3,604 billion, an increase of $ 41 billion 1.15% compared to 2012 spent $ 3.563 billion. After adjusting for these changes, the deficit is projected to $ 971 billion in 2013, instead of the $ 641 billion projected before ATRA, rising $ 330 billion. Both projected deficits are below the 2012 deficit of $ 1.128 billion with $ 157 billion and $ 487 billion, respectively.
Analysis and reaction
The Wall Street Journal reported that the tax bill "represents the largest tax increase in the last two decades", based on year-on-year increase in tax rates from 2012 to 2013. However, Dave Camp, the Republican chairman of The House Committee of Ways and Means, cited the same provision as "the largest tax cut in American history", refers to the fact that the tax rate of bills replacing a much higher rate for 2013 provided in previous laws applies.
In the news analysis section, The New York Times writes that "A few years ago, a tax deal that was pushed through Congress... would be a Republican fiscal fantasy, a sweeping bill that was locked in almost all Bush-era tax cuts , excluding almost all plantations from taxation, and perpetuating the former president's credo that dividends and capital gains should be taxed equally and gently. But times have changed, President George W. Bush disappeared, and before the final bill of the bill... Republican leaders are struggling throughout the day to quell the uprising among caucus members who threaten to blow a hard-fought compromise that they can easily be framed as a victory. "
The Committee for Responsible Federal Budget says that the bill avoids most of the economic losses from fiscal cliffs and sets a useful precedent over payments for seizure and document repairs but fails to include serious rights reforms, impose serious spending cuts, or stabilize debt as part of economy. President of The Peter G. Peterson Foundation said the fiscal clash agreement "is a significant lost opportunity to put the nation on a sustainable fiscal path." The Editorial Board of the Washington Post said the "ratification of the bill was far better than the failure by this Congress to act before he resigned" but complained that "lawmakers seem to be as close as possible to doing the bare minimum."
Economist Paul Krugman wrote that ATRA allows liberals to avoid spending cuts or rights reforms, while conservatives allow for an increase in income tax rates for the first time since 1993. Krugman believes that Obama should bid harder to earn more revenue. He also estimates that 2% of the other GDP in the annual deficit reduction will be needed in the long term to stabilize the debt situation.
References
Further reading
- Cebula, R., Boylan, R., Foley, M., & amp; Isard, D. (2014). New Federal Income Tax Implication Improves Income Tax Income, Income Tax, and Budget Deficit MPRA Paper55308, University of Munich Library, Germany.
External links
- Published text. L. No. 112-240, 126 Stat. 2313 per Superintendent of Documents, US Government Printing Office
- H.R. certified text 8, per Superintendent of Documents, US Government Printing Office
- Substitute text of the Senate on 1 January 2013 (legislative day 30 December 2012) for H.R. 8
- Text of 1 August 2012 ago, H.R. 8 (later renamed)
- Joint Committee on Taxation JCX-1-13-Estimated ATRA Income Securities - January 1, 2013
Source of the article : Wikipedia
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