Sen. Mike Johanns (R-Neb.) today voted to ensure taxes for every American will not increase beginning January 1. The Tax Relief Act also would implement a payroll tax cut, extend ethanol and biodiesel tax credits, and continue unemployment benefits through December 2011. Today's vote was to invoke cloture, or end debate, on the bill, which required 60 votes. A final vote, expected tomorrow, would require only a simple majority vote.
"I believe this proposal is necessary to prevent the largest tax hike in American history," Johanns said. "The American people are asking Congress to ensure their taxes don't go up in a struggling economy. It is my hope that the Senate builds on this compromise into 2011 to continue charting a positive economic course for our country."
Preserves Current Tax Rates
• Extends for two years all tax rates that were first enacted in 2001 and 2003.
• Preserves the marriage penalty relief and the $1,000 per child tax credit.
• Sets a two-year maximum estate tax rate of 35 percent and increases the exemption to $10 million for couples ($5 million for individuals).
• Extends enhanced unemployment insurance for another 13 months, through December 2011.
Extends Tax Deductions and Credits
• Extends through 2011 the research and development tax credit, deductions for state and local sales taxes and the ethanol and biodiesel tax credits.
• Extends a limited number of refundable tax credits initiated in 2009, including the American Opportunity Tax Credit for tuition, Earned-Income Tax Credit and the Refundable Child Tax Credit.
Two-Year Alternative Minimum Tax
• Adjusts for inflation the Alternative Minimum Tax (AMT) exemption amount for 2010 and 2011.
Payroll Tax Reduction
• Establishes a one year payroll tax reduction that will reduce the employee share of the payroll tax by 2 percentage points, down to 4.2 percent.
• Increases small business expensing amount.
• Allows businesses to immediately deduct 100 percent of property placed in service between September 9, 2010 and December 31, 2011; and to take advantage of 50 percent bonus depreciation in 2012.