President Obama offered a framework for the tax-related aspects of spurring the economy moving forward. The foundation of the proposal, which conflicts with a bill that has already passed the Democrat-controlled House of Representatives, is the full extension of the Bush-era tax cuts, even for the wealthiest taxpayers.
The proposal also calls for an extension to unemployment benefits for another thirteen months and a consolation to Republicans who wanted more favorable tax treatment for estates.
None of this proposal is automatic. Congress must still form bills based on this proposal, pass the bills through a vote, and send a compromise bill to the president to sign. All along the way, there will be more compromises. The new laws affect taxes for 2011 income, so there is enough time for more partisan debate to shape a bipartisan law before taxpayers will owe their final tax bill for the year in April 2012 (or October with an extension).
For those who need to plan for 2011 taxes ahead of time, particularly small business owners, it would be better to know the results as soon as possible.
Is Obama conceding to Republican pressure too early or is this plan the right move to boost the economy?
Updated January 17, 2011 and originally published December 6, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.