Dec. 7, 2010 --President Barack Obama defended his compromise tax package in a televised press conference today as a “good deal for the American people.”
Announced Monday, the proposed package includes a two-year extension of the current income tax rates — the so-called Bush tax cuts — for all taxpayers including the wealthy. Obama had previously sought extended tax cuts only for couples making up to $250,000 a year and individuals earning up to $200,000 a year, but Republicans opposed that.
It also includes a temporary estate tax exemption of $5 million per person and a maximum tax rate on estates of 35 percent. Although temporary, both actions would be a boon to insurance professionals who have been trying to help clients with tax planning without any clarity on the future tax structure. Although the higher rate might dissuade some high-net-worth clients from aggressive estate planning and lessen the need for life insurance to cover estate taxes.
The package includes a one-year reduction of the 6.2 percent Social Security payroll tax to 4.2 percent on all wage earners, and provisions extending unemployment benefits.
Obama pointed out that it includes provisions that Republicans had previously opposed, such as child tax credits, college-tuition tax credits and earned-income tax credits.
He positioned the compromise as a way to protect low- and mid-income Americans and the unemployed from being hurt while the next Congress discusses what provisions to make permanent.
Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at [email protected].
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