The second session of the 112 Congress came to a close with the passing of H.R. 8 (the American Taxpayer Relief Act of 2012, or ATRA) on January 1, 2013. ATRA became law on the following day when President Obama signed the bill. This bill prevented the country from going off the so-called Fiscal Cliff.
The Fiscal Cliff was a series of expiring tax cuts and a series of new spending cuts that would have taken effect on January 1; the tax increases and spending cuts equaled (roughly) four percent of our GDP, and according to the Congressional Budget Office, could have thrown the country into a recession. Some of the debate over whether or not it was a “cliff” came from the different dates which different measures were set to expire, leading to the term “fiscal slope.”
What’s in the deal:
- Bush Tax cuts for individuals making over $400,000 or couples making over $450,000.
- Individuals making over $400,000 will see an increase in their top marginal tax rate (35%-39.6%).
- The estate tax was set at 40% for those at the $450,000 (for couples) and $400,000 (for individuals) thresholds.
- The payroll tax cut was not extended, and the payroll tax rate has gone from 4.2%-6.2%.
- A one year extension of unemployment insurance.
Overall this deal only produced a plan for $600 billion in new revenues over a 10-year time span.