The Averting the Fiscal Cliff Act
A truly balanced approach to Washington’s so-called “fiscal cliff” would 1) cut spending and 2) help our economy grow by preventing tax increases on income, savings and investment. H.R. 6688, the Averting the Fiscal Cliff Act, accomplishes exactly that. The spending cuts were modeled on the cuts found in H.R. 5652, the Sequester Replacement Reconciliation Act, which passed the House on May 10, 2012. The tax policies are based on H.R. 8, the Job Protection and Recession Prevention Act. H.R. 8 passed the House with bipartisan support of 19 Democrats on August 1, 2012.
Bill Summary; Bill Text
Some Details of the Spending Cuts Include:
Some Tax Details Include:
- $19 Billion Reduction to Budget Control Act: Lowers the Budget Control Act spending cap by $19 billion in FY 2013. The cap would be lowered from $1.047 trillion to $1.028 trillion, the level of the House-passed budget resolution.
- Repeal of Three ObamaCare Provisions: Repeals the Health Benefit Exchanges ($14.5 billion savings over ten years), the Prevention and Public Health Fund ($12 billion savings over ten years), and rescinds unobligated balanced for the CO-OP program ($872 million savings over ten years), which will save $27 billion over ten years.
- Eliminate Dodd-Frank Bailout Fund: Saves $22 billion over ten years.
- Make Federal Pension Benefits Similar to Private-Sector: Saves $80 billion over ten years.
- Medicaid Reform: Includes five Medicaid reform provisions that save $23 billion over ten years
The bill would also patch the Alternative Minimum Tax on individuals (AMT) for 2012 and 2013 and extend increased small business expensing through 2013.
- Certainty and Permanence: The 2001 and 2003 tax cuts—otherwise set to expire at the end of 2012—are extended permanently for all Americans. The sole exception is the death tax, which is extended through 2013 in its current form.
- 10% Tax Bracket: Permanent extension of the 10% income tax bracket (would otherwise rise to 15%).
- Other Tax Brackets: Permanent extension of the lower 25%, 33%, and 35% income tax brackets.
- Child Tax Credit: Permanently extends the $1,000 child tax credit (scheduled to drop to $500 in 2013).
- Marriage Penalty: Permanent extension of marriage penalty relief.
- Savings & Investment: Permanent extension of the 15% top rate on capital gains and dividend income.
- Death Tax: The bill extends the lower 35% rate with a $5 million exemption—otherwise set to expire at end of 2012—through the end of 2013. In 2010, per the 2001 tax law, there was no “death tax.” Under current law, it goes back to 55% with a $1 million exemption in 2013.