The U.S. Congress passed a $ 858,000,000,000 bill extending for two years all the Bush-era tax cuts, sending the measure to President Barack Obama for his signature.
Obama will sign measure into law later today, White House spokesman Robert Gibbs said in an e-mail. Gibbs does not mention a specific time for the bill signing.
Before the House voted 277-148 for final passage on the tax-cut agreement, members defeated an amendment made by some Democrats to their dissatisfaction with the bill to express and especially with a Republican-backed estate-tax proposal.
Enough Democrats voted with House Republicans to the deal negotiated with Congress that Obama Republicans who gained scores of seats in elections last month to accept. Republicans said the bill would certainty about tax rates and would create jobs.
The bill would not “serious economic damage and possibly to send us back into a double-dip recession,” said Representative Eric Cantor, a Virginia Republican who became majority whip in January.
The vote concluded a debate on the expiring tax cuts that the 2008 and 2010 U.S. election campaign dominated. As the renewed tax cuts will expire at the end of 2012, they are certainly a focus of the next presidential campaign.
Majorities of both parties supported the bill. Votes were 139 Democrats and 138 Republicans, while 112 Democrats and 36 Republicans voted against. Eight lawmakers did not vote.
‘Income Inequality’
“Wonderful,” said Representative David Obey, a Wisconsin Democrat who is retiring after 40 years, when he left the house floor for the last time in his career. “Just what we need: more exacerbate income inequality in this country.”
Treasury Secretary Timothy Geithner said in a statement that the tax plan was “good for growth, good for jobs.”
U.S. stock index futures were little changed this morning, with the Standard & Poor’s 500 Index to its highest level since September 2008, an increase of 46.2 percent since Obama took office, and an increase of 1.6 percent since the tax deal was beaten on Dec. 7.
Many Democrats had insisted that the U.S. could not afford the 2001 and 2003 tax cuts for the family income of more than $ 250,000 a year. Republicans demanded the extension of tax cuts, expiring on December 31 for all income groups.
For businesses
The tax-cut plan extends to 2012 all the Bush-era tax cuts on income, capital gains and dividends. It remains unemployment insurance benefits extended to 2011, cuts in payroll tax by 2 percentage points in 2011 and allows companies to write off 100 percent of capital investment between September 9, 2010, and December 31, 2011. Obama has agreed the plan with Republicans on December 6.
The legislation also extends dozens of expired and will end tax breaks, including a research and development tax credit and a tuition tax credit that was created last year in the economic stimulus law.
Republicans said the measure would be companies and individuals the certainty that rates would not rise in January to give.
“This house – the House people – has a simple choice today: Increase taxes for families and small businesses or prevent a massive, job-killing tax increase to go into effect only a 16 days from now,” said Representative Dave Camp of Michigan, who chairs the tax-writing Ways and Means Committee next month.
House Democrats threatened last week to reject the Senate tax plan to bring to the floor untouched. They focused much of their anger on the estate-tax provision, saying that the benefit of the richest Americans at the expense of a higher budget deficit.
“It is a huge giveaway to the super-rich in these difficult economic times,” said Representative Jim McDermott, a Washington Democrat. “This is only the mind. It is indefensible, unconscionable.”
Immo-Tax Rate
Under the plan negotiated with Obama, the estate tax next year, a top rate of 35 percent should be applied after an exemption of $ 5 million per person. House Speaker Nancy Pelosi of California, the minority leader in January and was not part of the final negotiations on the measure, said she was plagued by the cost of the agreement, particularly for estate tax benefits.
“I salute President Obama gets in the bill what’s inside,” she said. “Sorry for the price to be paid by our children and grandchildren to the Chinese government to pay for the increase in the deficit that Republicans insisted on. ”
Many House Democrats favor a top estate tax rate of 45 percent with a $ 3.5 million per person tax-free allowance. The House is such a rate in December 2009 and the proposal died in the Senate.
GDP Forecasts
The tax-cut deal with a larger than expected gains in U.S. retail sales, prompted economists to raise their forecasts for GDP and consumer spending, which accounts for about 70 percent of the world’s largest economy.
Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, increased its 2011 growth forecast half percentage point to 3.1 percent. Tom Porcelli, senior economist at RBC Capital Markets Corp. in New York, raised with a percentage point, also up 3.1 percent.
Deutsche Bank Securities economists, led by Joseph LaVorgna, said the inflation-adjusted tax agreement would increase growth by 0.7 percentage point, to 4 percent annualized in the fourth quarter of next year.
‘Done Deal’
“This is a done deal for a while,” said House Agriculture Chairman Collin Peterson of the committee, a Minnesota Democrat. He called the speculation about the estate-tax proposal “just a lot of teeth.”
Democrats control the House 255-179 with one vacancy. Republicans will take over the majority in January.
“The choice is to pay the ransom or go watch it next month,” said representative Brad Sherman, a California Democrat.
The Senate tax-cut plan, 81-19, on Dec. 15 with broad support from Democrats and Republicans.
Senate Republicans said no significant changes by the House would be rejected in the Senate and would risk scuttling the entire agreement.
source:bloomberg
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