The tax bill has passed through Congress and will be signed by the President after a huge bipartisan effort. Image from Wikimedia Commons.

The tax bill that has been the subject of a fair amount of partisan bickering has been passed by Congress. The bill extends cuts in taxes instituted during the Bush administration, thus they’re commonly referred to as the Bush tax cuts. The bill was passed by a coalition of Republicans and Democrats.

House of Representatives passes tax bill

Despite objections from members of both parties over the final, compromised version of the bill, the tax bill extending the Bush era tax cuts has passed the House of Representatives, according to the Washington Post. After the Senate tax bill passed, the bill had to clear the House before legislators left on a break. President Obama has said that the bill contains flaw, but that not signing it would do more harm than good. Criticisms were made about the bill from both sides of the aisle, but the bill passed after some bipartisan collaboration. The House voted 277 to 148 in favor of the bill, with 36 Republicans and 112 Democrats voting against.

What the bill does

Current income tax rates remain unchanged, according to CNN. The ceiling for exemptions from the Alternative Minimum Tax is raised to $47,450 for individuals and $72,450 for couples filing jointly. For 2011, it increases to $48,450 and $73,450. Payroll tax going to Social Security for workers earning $106,000 a year or less is being cut from 6.2 percent in 2010 to 4.2 percent in 2011. The child credit is being raised to $1,000 from $500 for 2011 as well. The controversial estate tax measure exempts any estate less than $5 million for individuals, $10 million for couples, left to heirs, but estates worth more than that will be taxed at 35 percent.

Benefits extended along with deficit

The bill also includes a federal unemployment benefits extension for unemployed workers in states with high rates of unemployment. Benefits usually last for 26 weeks, but they are extended to 99 weeks in states with high unemployment rates. Other tax credits are being kept as well, such as the Opportunity credit for college students. The bill has rubbed some people the wrong way, as the cuts in government revenue will add to the near $14 trillion federal deficit.

Sources

Washington Post

CNN

The Senate tax bill was hailed by Majority Leader Harry Reid as a great bipartisan achievement. Image from Wikimedia Commons.

The Senate passed the tax bill by a very wide margin after compromises by both sides of the aisle. The bill will extend the Bush tax cuts and make some other key changes. The bill still must pass the House of Representatives to become law.

Senate tax bill pass with flying colors

A lot of eyes have been on Washington, D.C., to see whether the Senate would pass the tax bill to extend the Bush era tax cuts. It’s the most significant piece of legislation before the “lame duck Congress” is set to begin next year. The Senate voted in favor of the $858 billion bill by a margin of 81 to 19, according to the New York Times. Senate Majority Leader Harry Reid (D-NV) hailed the tax cut bill passing as an act of great cooperation between the two parties to accomplish a significant task on behalf of the American people. However, the difficulty lies in the bill passing the House of Representatives, which the bill has to in order to become law.

The tax cut bill

The tax bill will extend the tax cuts from the Bush administration. The increase in taxes for the richest 2 percent of earners is canceled. The estate tax is conditionally reinstated for 2011. Estates left to heirs totaling more than $5 million, or $10 million for couples, will be taxed at 35 percent. The bill adds a federal unemployment benefits extension from 26 weeks to 99 weeks for states that have an unemployment rate of 8.5 percent and above. The bill also cuts payroll taxes for Social Security for workers earning $106,000 a year or less.

Bill goes to the House

In order for the bill to become law, it has to be passed by the House of Representatives. Currently, the House has a Democrat majority, as the Republican majority of the upcoming lame duck session has not yet been seated. Congressional democrats are not all thrilled with the compromises made in the bill. However, should the House not pass it, income taxes will rise for all Americans in 2011.

Sources

New York Times

New statistics on the U.S. unemployment rate were released today, and things haven’t been worse for 26 years. The October unemployment rate was 10.2 percent, more than double normal levels. It’s also the highest unemployment rate the country has seen since 1983, when it hit 10.5 percent.

I have read a lot of things lately that say “economic indicators” say we are in recovery from the recession. I am also familiar with the fact that unemployment rates are “lagging indicators,” and in fact might be the last thing to improve during economic recovery. However, several other current conditions indicate to me that people might have to stay in debt survival mode for a while longer.

Good news before bad

The president signed a bill today that extends unemployment benefits for people whose unemployment insurance is set to expire before the end of the year. People who fit the bill will get an additional 14 weeks of unemployment benefits, and those who live in states with unemployment rates higher than 8.5 percent can get an additional 20 weeks, almost five months, of benefits.

The fact that 8.5 percent is considered a high unemployment rate, and the national unemployment rate is nearly 2 percent higher than that, shows how bad things really are right now. The unemployment rate isn’t the only thing that got worse last month.

More economic indicators

Bloomberg.com reports that payrolls fell 190,000 in October. Factory payrolls fell 61,000, compared to 45,000 the month before. Furthermore, the underemployment rate has hit a staggering 17.5 percent. Underemployment includes people who are working part time but would prefer to work full time.

That number also includes people who want work but have given up looking. Remember, the unemployment rate only includes people who are actively looking for jobs and collecting unemployment insurance. It doesn’t include those whose benefits have already run out. So those who are not collecting unemployment but still jobless and seeking work are included in the underemployment rate.

In short, 27.7 percent of Americans are unemployed or underemployed.

Still trying to help

The bill that extended unemployment benefits also extended the homebuyer tax credit. First time homebuyers can still receive $8,000 if they sign a sales agreement before April 30, 2012.

People who have owned their current house for five years or more can qualify for a $6,500 credit. The tax credit only applies to purchases of primary residences that cost less than $800,000. Also, only individuals with incomes less than $125,000 or couples with incomes less than $225,000 can qualify.

Who says things are getting better?

The consensus that the economy is recovering from the recession comes from the fact that the economy grew in the third quarter, which ended at the end of October. That means the gross domestic product grew over the three month period preceding that.

Economists are referring to the period we’re going through now as a “jobless recovery,” but some experts, including CNN columnist Colin Barr, say a jobless recovery is no recovery at all. Barr writes:

But so far there is no sign of an employment turnaround — and without one, and soon, all the other gains could prove fleeting. … But so far there is no sign of an employment turnaround — and without one, and soon, all the other gains could prove fleeting.