The U.S. Senate was expected to vote early on Tuesday on a deal to avert $600 billion in automatic tax increases and spending cuts in the "fiscal cliff" that could hobble the economy if allowed to take effect this week.
If this alternative to the fiscal cliff passes the Senate, the House of Representatives could also vote on the measure later on Tuesday.
Here are details of the deal, according to congressional sources
- Postpones for two months the start of $1.2 trillion in automatic spending cuts over 10 years, known as the "sequester." For those two months, $24 billion in savings would be substituted. Half of those savings would be split between defense and non-defense programs. The other half includes new revenues.
- Raises $600 billion in revenue over 10 years through a series of tax increases on wealthier Americans.
- Permanently extends tax cuts made in 2001 by Republican President George W. Bush for income below $400,000 per individual, or $450,000 per family. Income above that level would be taxed at 39.6 percent, up from the current top rate of 35 percent.
- Above that income threshold, capital gains and dividend tax rates would return to 20 percent, from 15 percent.
- Caps personal exemptions and itemized deductions for income above $250,000, or $300,000 per household.
- Raises estate tax rate to 40 percent for estates of more than $10 million per couple, up from the current level of 35 percent.
- Includes a permanent fix for the alternative minimum tax.
- Extends unemployment insurance benefits for one year for 2 million people.
- Extends child tax credit, earned income tax credit, and tuition tax credit for five years.
- Extends research and experimentation tax credit, and the wind production tax credit through the end of 2013. Extends 50 percent bonus depreciation for one year.
- Avoids a cut in payments to doctors treating patients on Medicare - the so-called "doc fix."
- Temporarily extends farm programs.
- Cancels a cost-of-living raise for members of Congress.
Copyright @ Thomson Reuters 2012