House Passes Sequester Replacement Bill; Vote on “Plan B” Tax Cuts Pulled

(December 20, 2012) The House was poised to take up a two-part process to avert the fiscal cliff by holding separate votes on spending cuts (sequester) and tax cuts (Speaker Boehner’s “Plan B”) on December 20. Part one, the Spending Reduction Bill of 2012 (H.R. 6684) narrowly passed the House in a 215-209 vote. Part two, the Permanent Tax Relief for Families and Small Businesses Bill of 2012 (H.J. Res. 66) was pulled by House Republican leadership due to insufficient votes for passage. The House and Senate are now in recess until after the Christmas holiday.

The Spending Reduction Bill of 2012 would

  • Cancel the across-the-board sequester cuts scheduled to begin January 1, 2013
  • Provide for $300 billion in mandatory spending cuts over 10 years with an additional $19 billion in unspecified spending cuts

The Senate has already indicated that it will not take up H.R. 6684. The President had indicated his intent to veto it, should it, by chance, have passed the Senate.

The not-brought-to-vote Plan B tax measure would:

  • Indefinitely extend the Bush tax rates for income up to $1 million and impose a 39.6% rate on income in excess of $1 million
  • Indefinitely extend the current estate and gift tax rates and exclusion amounts ($5 million, as adjusted for inflation ($5.12 million in 2012) and a 35% rate))
  • Provide an AMT patch

The President had indicated his intent to veto the measure.

AUTHOR

Wolters Kluwer Tax and Accounting

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