President Obama and the GOP reached a tentative deal on taxes last night. This agreement will still need to pass through Congress and is being touted as a framework; however, it has some welcome news. Below are the main points :
- Extension of the Bush tax cuts for 2 years;
- Re-establishment of the estate tax rate of 35% for estates over $5m (Note: Consensus is that this will likely be increased to 45% as the proposal works through Congress);
- Reduction of the FICA tax due by employees from 6.2% to 4.2%. This effectively acts as an economic stimulus since working Americans will receive a larger net income on their paychecks;
- Extension of unemployment benefits for the long-term unemployed.