Bush Tax Cuts Extended As Part of Unemployment Insurance Extension and Payroll Tax Deal


In addition to keeping the current tax rates for all Americans, President Obama announced a compromise plan with the Republican leadership that would extend aid for the long-term unemployed for another 13 months. Other taxes that will be implemented or remain unchanged as part of the compromise include:

  • The payroll tax, which funds Social Security and Medicare, would also be cut by 2% points during 2011 to help spur hiring
  • Estate tax would be set at a top rate of 35%, which applies after a $5 million tax-free allowance per individual
  • Full deduction for equipment purchases that currently must be deducted over time (accelerate depreciation proposed in small business jobs bill). The proposal would accelerate $200 billion in tax savings for companies in the first year and benefit 1.5 million companies and several million individuals who run businesses, according to White House estimates
  • Dividend and capital gains rates would remain capped at 15%, rather than at higher or marginal income tax rates

Mr. Obama justified his compromise with Republicans and shift from his original stance by saying the Bush tax cuts stalemate in Congress threatened to punish middle-class Americans, while unemployed workers risked seeing their benefits cease. “I’m not willing to let working families across this country become collateral damage for political warfare here in Washington….The American people didn’t send us here to wage symbolic battles or win symbolic victories. They would much rather have the comfort of knowing that when they open their first pay check in January of 2011, it won’t be smaller than it was before, all because Washington decided they preferred to have a fight and failed to act.”

The above plan still needs to pass Congress and I will provide updates as more information comes to hand and encourage you to subscribe free via RSS or Email to get the updates.

Sources: Bloomberg

Leave a Reply

10 Comments on "Bush Tax Cuts Extended As Part of Unemployment Insurance Extension and Payroll Tax Deal"

[…] American tax payers will be asking through 2012 as the Presidential election heats up. With the Obama-Bush tax cut extensions on income, capital-gains and estate taxes set to expire on Dec. 31 2012, there will […]

[…] will fail like the ones he enacted in 2009 (Recovery act) and 2010 (bush tax cuts and unemployment extension). It is likely that whatever job creation package the Obama administration proposes will contain […]

[…] The White House agreed to forgo an automatic tax increase (part of the bush-era tax cuts) as one of the consequences to kick in if no debt-reduction law is enacted by […]

[…] debt” deal being reached is essentially around including tax hikes and/or repeal of current tax breaks as part of the equation to justify raising the debt ceiling. While spending cuts, which mainly […]

2011 Debt Reduction Plans – Obama vs Republicans and What Gets Cut

[…] Tax Cuts: Administration officials confirmed that the president will renew his call to end the Bush-era tax cuts for families making over $250,000 a year, a proposal that Republicans fiercely opposed. “The […]

[…] The IRS has released its 2011 Tax Rates and Income thresholds following approval of the Bush-Era Tax Cuts. The latest 2011 IRS federal tax table is shown below with the following key tax […]

[…] [Update] President Obama has signed into law a bill that covers an extension of all the bush-era tax cuts, in addition to providing additional tax breaks for all families and small business. With this […]

[…] andys2i With President Obama reaching a deal with Republicans to extend all the bush-era tax cuts and other tax benefits, he has essentially created a new 2011 Economic […]


Just to be clear, the “extension of the unemployment benefits” is an extension of the qualifying dates for the various tiers of benefits, and not additional weeks of benefits. There is no additional help for the so-called “99ers”.


Behind the decision is a political fact: Unlike in the midterms Obama’s name will appear on the next ballot. Tax cuts and unemployment = votes. Pity about the ballooning deficit


Previous post:

Next post: