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Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
""Great Seal of the United States
Long title An act to amend the Internal Revenue Code of 1986 to extend the funding and expenditure authority of the Airport and Airway Trust Fund, to amend title 49, United States Code, to extend authorizations for the airport improvement program, and for other purposes.
Enacted by the "111th United States Congress
Effective (Various dates for different provisions)
Citations
Public law Public Law 111-312
"Statutes at Large 124 Stat. 3296
Codification
Acts amended "Economic Growth and Tax Relief Reconciliation Act of 2001
"Jobs and Growth Tax Relief Reconciliation Act of 2003
"American Recovery and Reinvestment Act of 2009
"Energy Policy Act of 2005
"Energy Policy Act of 1992
"Public Utility Regulatory Policies Act of 1978
"Public Utility Holding Company Act of 1935
Titles amended "16 U.S.C.: Conservation
"42 U.S.C.: Public Health and Social Welfare
U.S.C. sections amended "16 U.S.C. ch. 46 § 2601 et seq.
"42 U.S.C. ch. 134 § 13201 et seq.
"42 U.S.C. ch. 149 § 15801 et seq.
Legislative history
  • Introduced in the House as H.R. 4853 by Rep. "James Oberstar on March 16, 2010 (in unrelated form); subsequently introduced December 1, 2010 (in this form)[1]
  • Passed the Senate on December 15, 2010 (81-19)
  • Passed the House on December 16, 2010 (277-148)
  • Signed into law by President Barack Obama on December 17, 2010

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Pub.L. 111–312, H.R. 4853, 124 "Stat. 3296, enacted December 17, 2010), also known as the 2010 Tax Relief Act, was passed by the "United States Congress on December 16, 2010, and signed into law by "President "Barack Obama on December 17, 2010.[2]

The Act centers on a temporary, two-year reprieve from the "sunset provisions of the "Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the "Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), together known as the ""Bush tax cuts." Income taxes would have returned to "Clinton administration-era rates in 2011 had Congress not passed this law. The Act also extends some provisions from the "American Recovery and Reinvestment Act of 2009 (ARRA or 'the Stimulus'). The act also includes several other tax- and economy-related measures intended to have a new stimulatory effect, mostly notably an extension of unemployment benefits and a one-year reduction in the "FICA payroll tax, as part of a compromise agreement between Obama and Congressional Republicans. The overall monetary impact of the measure has been placed at $858 billion.[3]

The law was also known, during its earlier formulation in the House of Representatives, as the Middle Class Tax Relief Act of 2010. The package has been referred to as the "Obama-GOP tax deal" as well the "Obama tax cuts".[4][5][6]

Contents

Provisions[edit]

Key aspects of the law include:

Legislative history[edit]

The years leading up to 2010 were filled with speculation and political debate about whether the "Bush tax cuts should be extended, and if so, how. Rolling back the cuts for the wealthiest taxpayers had been one of the core promises of "Obama's 2008 presidential campaign.[13]

The issue came to a head during the "lame duck session of the "111th Congress. At the ""Slurpee Summit" of November 30, 2010, President Obama appointed Treasury Secretary "Tim Geithner and "Office of Management and Budget chief "Jack Lew to help Republicans and Democrats hammer out an agreement on extending the Bush tax cuts.[14] President Obama wanted to extend the tax cuts for taxpayers making less than $250,000 a year. Congressional Republicans agreed but also wanted to extend the tax cuts for those making over that amount.[15] Indeed, all 42 Republican senators joined in saying that, until the tax dispute was resolved, they would "filibuster to prevent consideration of any other legislation, except for bills to fund the U.S. government.[16][17][18][19]

The Middle Class Tax Relief Act of 2010 originated in the Democratic caucus within the House in early December 2010, and proposed to extend the Bush tax cuts for "middle incomes", meaning those earning under $250,000 for joint filers (and for singles, those earning under $200,000). It would restore the previous, higher rates for those "high income" people above that mark. A second proposal raised the dividing line to $1 million. Both proposals were able to pass in the House, but on December 4, 2010, both fell short in the Senate, getting only 53 votes and not the 60 needed for "cloture.[20]

On December 6, 2010, President Obama announced that a compromise tax package proposal had been reached with the Republican congressional leadership. This centered around a temporary, two-year extension of the Bush tax cuts and included additional provisions designed to promote economic growth.[21] This proposal was identical to what became law.

In announcing the agreement, the president said, "I'm not willing to let working families across this country become collateral damage for political warfare here in Washington. And I'm not willing to let our economy slip backwards just as we're pulling ourselves out of this devastating recession. ... So, sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do. ... As for now, I believe this bipartisan plan is the right thing to do. It’s the right thing to do for jobs. It’s the right thing to do for the middle class. It is the right thing to do for business. And it’s the right thing to do for our economy. It offers us an opportunity that we need to seize."[22]

At a press conference the next day, Obama strongly defended the compromise agreement, after numerous congressional Democrats had strongly objected to aspects of it.[21] Obama labelled Republicans as "hostage takers" for forcing the situation, but also lashed out at liberal Democratic opponents of the deal as "sanctimonious" purists and compared it to their unhappiness over the lack of a "public option in the "health care reform legislation the previous year.[13][21] His stance led to immediate speculation among pundits that he was engaging in "political triangulation, akin to what President "Bill Clinton had done following the 1994 "Republican Revolution.[13][23] The White House denied any such thing was happening.[23]

""
Sanders spoke for over eight hours in his December 2010 filibuster

Administration officials such as Vice President "Joe Biden worked to convince the wary Democratic members of Congress to accept the plan, notwithstanding a continuation of lower rates for the highest-income taxpayers.[24] On December 10, Democratic-caucusing independent Senator "Bernie Sanders made a filibuster-like stand against the compromise tax proposal, speaking for over eight hours and mocking the need for the wealthy to own multiple homes.[25][26] Overall, the compromise proved widely popular in public opinion polls, with two-thirds support or more among self-described liberals, moderates, and conservatives, and it allowed Obama to portray himself as a consensus-builder not beholden to the liberal wing of his party.[13][27]

The bill was opposed by some of the most conservative members of the Republican Party as well as by talk radio hosts such as "Rush Limbaugh and some groups in the "Tea Party movement.[27][28] It was also opposed by several leading potential candidates for the "Republican nomination in the 2012 presidential election, including "Sarah Palin and "Mitt Romney,[27] typically on the grounds that it did not make the Bush tax cuts permanent and that it would overall increase "the national deficit.[29]

The cut of the "FICA payroll tax in the agreement was for one year only at a two percent reduction.[3] This "tax holiday was intended as an "economic stimulus by Obama and the Democrats,[3] with the value of boosting the disposable income of American families.[3] It would not worsen the "Social Security's financial strength, as the shortfall would be made up from general revenues. Some Republicans thus criticized the idea for increasing the national deficit. Some Democrats were also wary of the notion, either because they thought the return to the normal rate one year hence would be characterized as a politically unpalatable "tax hike", or because they featured that reductions in the payroll tax would undermine the basic model that Social Security was based on.[30][31]

""
""
President Obama signs the law into effect, on December 17, 2010, as members of Congress and others look on.

On December 15, the Senate passed the compromise package with an 81–19 vote, with large majorities of both Democrats and Republicans supporting it.[32] Near midnight of December 16, the House passed it 277–148, with it getting only a modest majority among Democrats and a large majority among Republicans (of the 148 votes against the bill in the House, 112 were cast by Democrats and only 36 by Republicans).[6][33] Before that, an amendment put forward by Democratic Representative "Earl Pomeroy and the progressives among the Democratic caucus to raise the estate tax – the ultimate sticking point of the deal for them and the cause of a minor revolt among those against it – had failed on a 194–233 vote.[6][27][34] "The Washington Post called the approved deal "the most significant tax bill in nearly a decade".[33]

Obama signed the bill into law on December 17, 2010.[3] Much of the Democratic Congressional leadership was absent from the signing ceremony, indicating their ongoing unhappiness with the law.[13] Washington Post writer Dan Balz asserted that Obama's ability to win passage for the law indicated a "resilience of the occupant of the Oval Office" and a possible course he would take during the next Congress.[13]

Legislative voting breakdown[edit]

Final Senate vote:

Vote by party Yea Nay
Democrats 43 13
Republicans 37 5
Independents 1 1
Total 81 19

Final House vote:

Vote by party Yea Nay
Democrats 139 112
Republicans 138 36
Total 277 148

Implementation[edit]

The passage of the law so close to the new year caused a scramble for many parties involved.

Employers had to modify payroll systems to the new lower deduction for the FICA payroll tax. The "Internal Revenue Service (IRS) allowed employers until January 31, 2011, to do so.[35] While companies that specialize in payroll processing could adapt to the change quickly, smaller companies that do their own payrolls could take longer.[35] It was possible that employees would have to wait for up to three paychecks to see the reduction take place.[36]

The IRS had to reprogram its processing systems for some of the provisions in the law, and said that those who file their tax returns early would need to wait until at least the middle of February if they itemize deductions or take certain other deductions.[37] Any refunds coming to taxpayers would be similarly delayed.[38] Vendors of tax preparation software also had to modify their applications and get the updates to customers; "Intuit, the vendor of "Turbo Tax said they were ready and would hold affected returns until the IRS was ready to process them.[38]

See also[edit]

References[edit]

  1. ^ Technically, H.R. 4853 was first introduced in March 2010 as the Federal Aviation Administration Extension Act of 2010. It was re-purposed on December 1, 2010, to be the vehicle to address the expiring tax rates issue. See full history in Thomas.
  2. ^ a b c d e f "Tax Cuts, Unemployment Insurance and Jobs". "The White House. Retrieved December 17, 2010. 
  3. ^ a b c d e "Obama signs tax deal into law". "CNN. December 17, 2010. Retrieved December 17, 2010. 
  4. ^ Bosh, Steve. "Bush tax cuts are now the Obama tax cuts", "KUSI-TV, December 17, 2010 9:27 PM.
  5. ^ Read, Max. "How Will Americans Spend the Obama Tax Cuts?", "Gawker, December 17, 2010.
  6. ^ a b c Beutler, Brian (December 16, 2010). "House Passes Tax Cut Plan, Obama To Sign |". "Talking Points Memo. Retrieved December 17, 2010. 
  7. ^ a b c d e f g h i j k "Tax Cut Extension Bill Wends Its Way to White House". "Accounting Today. December 17, 2010. Retrieved December 17, 2010. 
  8. ^ a b "Fact Sheet on the Framework Agreement on Middle Class Tax Cuts and Unemployment Insurance |". "The White House. December 7, 2010. Retrieved December 10, 2010. 
  9. ^ a b c d e Dupree, Jamie (December 9, 2010). "Tax Cuts Compromise Package Summary". "The Atlanta Journal-Constitution. Retrieved December 10, 2010. 
  10. ^ Zimmerman, Cindy (December 16, 2010). "House Passes Tax Bill With Biofuel Incentives". Domesticfuel.com. Retrieved December 17, 2010. 
  11. ^ Scherer, Michael (December 9, 2010). "Playing The Tax Compromise Number Game". "Time. Retrieved December 10, 2010. 
  12. ^ Schaick, Jeff V. (December 17, 2010). "45G Short Line Tax Credit Extended through 2011". American Short Line and Regional Railroad Association. Retrieved December 26, 2010. 
  13. ^ a b c d e f "Balz, Dan (December 18, 2010). "For President Obama, signing tax-cut bill makes for a good day after a bad election". "The Washington Post. Retrieved December 21, 2010. 
  14. ^ Thrush, Glenn; Lee, M.J.; Brown, Carrie Budoff (2010-11-30). "Barack Obama fields tax-talk team". "The Politico. 
  15. ^ Thoma, Mark (December 1, 2010). "Senate GOP Pledges to Block All Bills Until Tax Cuts are Extended for All". Wall Street Pit. Retrieved 2010-12-20. 
  16. ^ Espo, David (2010-12-01). "Senate GOP letter calls for blocking most bills". The San Francisco Chronicle. "Associated Press. 
  17. ^ Simons, Meredith (2010-12-01). "GOP Senators Pledge to Block All Democratic Legislation". "Slate. 
  18. ^ "Reuters (December 9, 2010). "Senate Republicans block 9/11 health bill". "KENW-TV. Retrieved 2010-12-19. 
  19. ^ Stirewalt, Chris (December 1, 2010). "Today's Power Play: Republicans and Democrats Play Chicken With Lame Duck". "Fox News Channel. Retrieved 2010-12-20. 
  20. ^ Dayen, Favid (December 2, 2010). "Senate GOP Blocks Consideration of Tax Plan Extending Rates on First $250K and First $1M". "Firedoglake. Retrieved December 14, 2010. 
  21. ^ a b c Herszenhorn, David M.; Stolberg, Sheryl Gay (December 7, 2010). "Democrats Skeptical of Obama on New Tax Plan". "The New York Times. Retrieved December 8, 2010. 
  22. ^ Jesse Lee (2010-12-07). "President Obama on Tax Cuts and Unemployment Extension: "The Right Thing to Do" | The White House". "The White House. Retrieved 2010-12-17. 
  23. ^ a b "Smith, Ben (December 8, 2010). "Is this triangulation?". "The Politico. Retrieved December 21, 2010. 
  24. ^ Hulse, Carl; Calmes, Jackie (December 7, 2010). "Biden and G.O.P. Leader Helped Hammer Out Bipartisan Tax Accord". "The New York Times. Retrieved December 8, 2010. 
  25. ^ Nick Wing, "Bernie Sanders Filibuster: Senator Stalls Tax Cut Deal", December 10, 2010, "The Huffington Post.
  26. ^ Memoli, Michael. “Sen. Bernie Sanders ends filibuster”, "Los Angeles Times, December 10, 2010.
  27. ^ a b c d Sherman, Jake (December 13, 2010). "Tax cut plan clears House, goes to Barack Obama". "Politico. Retrieved December 17, 2010. 
  28. ^ "Nation & World | Grumbling on extremes not likely to halt tax deal &#124". "The Seattle Times. December 14, 2010. Retrieved December 17, 2010. 
  29. ^ the CNN Wire Staff (December 18, 2010). "Obama to sign tax deal Friday afternoon". "CNN. Retrieved December 17, 2010. 
  30. ^ Hand, Jim (December 17, 2010). "House OKs tax cuts". "The Sun Chronicle. 
  31. ^ Lochhead, Carolyn (December 17, 2010). "House passes Obama's huge tax-cut bill". "San Francisco Chronicle. 
  32. ^ Herszenhorn, David M. (December 15, 2010). "Politics | Senate OKs tax bill; House to vote Thursday |". "The Seattle Times. Retrieved December 17, 2010. 
  33. ^ a b "Congress votes to extend Bush-era tax cuts until '12". "The Washington Post. December 17, 2010. Retrieved December 17, 2010. 
  34. ^ Sonmez, Felicia (December 16, 2010). "44 - House resumes debate on tax-cut bill after liberal uprising". "The Washington Post. Retrieved December 17, 2010. 
  35. ^ a b Vaughan, Martin (December 17, 2010). "IRS Issues 2011 Tax Tables". "The Wall Street Journal. 
  36. ^ Saunders, Laura (December 16, 2010). "Pay Won't Reflect Tax-Code Changes For Several Weeks". "The Wall Street Journal. 
  37. ^ Ehling, Jeff (December 29, 2010). "Tax law changes could mean delayed refunds". Houston: "KTRK-TV. 
  38. ^ a b Myers, Zach (January 2, 2011). "Many early tax-return filers won't see check until February or March". Indianapolis: "WXIN-TV. 

External links[edit]

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