Fiscal cliff update: House vote on “Plan B” expected
December 20, 2012
Article courtesy of NSBA, by Jody Milanese
On Tuesday, House Speaker John Boehner (R-Ohio) announced that the House will vote on Thursday on a tax-only measure to avert the fiscal cliff and keep rates low for most Americans.
The tax-only measure is being called “Plan B” and will raise taxes on Americans earning more than $1 million annually. It is intended to be looked at as an alternative to a broader plan that the speaker has been negotiating with the White House. Talks between President Barack Obama and the speaker have not yet yielded a broad deal, but the two sides are moving closer to a compromise agreement and talks are ongoing.
As a precautionary measure, Boehner will have the House consider this limited version of action to avert the cliff while continuing to negotiate with Obama. Differences remain over spending cuts, entitlement reforms, new spending measures and the president’s request for an increase to the debt limit.
The Plan B will extend current tax rates on all income below $1 million and allow tax rates on annual income above $1 million to rise from 35 percent to 39.6 percent. Without action by Congress, all of the Bush-era tax rates will expire at the end of the year.
On Monday, Obama offered to raise tax rates on annual income above $400,000. This was a shift from his position that income tax rates should rise on annual income above $250,000. Additional concessions made by the president include changing the way cost-of-living increases are calculated for benefits in entitlement programs. The White House offer also would lock in a framework for entitlement and tax reform in the next year.
After the expected passage of Boehner’s Plan-B legislation, the House intends to send this bill, along with a House-passed bill extending the current Bush-era tax rates for everyone, to the Senate for action, where it will likely stall. The White House has already indicated that the bill would be vetoed by President Obama if it were to pass Congress.