Press Release

Middle Class Tax Cuts made Permanent

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Washington, December 3, 2010 | Lesley Lopez ((202) 225-1640) | comments

Today, Congressman Henry Cuellar (TX-28), announced that the House successfully passed the Middle Class Tax Relief Act of 2010, which permanently extended income tax cuts for all income up to $250,000 a year. The bill now goes on to a vote in the Senate.

A typical middle-class American family will save approximately $1,000 per year and the wealthiest 3% of Americans would actually receive an average tax cut of over $6,000 next year.

and the wealthiest 3% of Americans would actually receive an average tax cut of over $6,000 next year.

"American families simply cannot bear the additional burden of higher taxes in these tough economic times," said Congressman Cuellar. "Though I also support at least a temporary extension of tax cuts for Americans who earn more than $250,000, we had to act now to make sure that the middle class is protected. If Congress did not act, taxpayers at every income level would have been burdened with a hefty tax increase. A tax increase in a fragile economy would stunt the nation’s incremental growth by discouraging business investment and job creation, reducing consumer confidence and increasing market uncertainty."

For all families making less than $250,000 a year, the bill permanently extends the 2001/2003 tax cuts, including current tax rates, marriage penalty relief, capital gains and dividends rates, and $1,000 child tax credit (for earnings above $3,000)

Almost all small businesses-- 97%-- will benefit from the tax cuts—and of the 3% not guaranteed them, a significant portion are not what we consider "small businesses," since some hedge fund managers, investors, and super-wealthy individuals file as S Corporations or partnerships.

What’s in the Bill:

Two-year extension of alternative minimum tax ("AMT") relief. In order to ensure that middle-class taxpayers are able to enjoy the benefits of extending these tax cuts, the bill would extend AMT relief for nonrefundable personal credits and increasing the AMT exemption amount. This will protect more than 25 million families from the AMT. 

Permanent extension of marginal individual income tax rate reductions for middle-class taxpayers.  The Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") created a new 10-percent regular income tax bracket for a portion of taxable income that was previously taxed at 15 percent and reduced the other regular income tax rates of 28%, 31% 36% and 39.6% to 25%, 28%, 33%, and 35%, respectively.  The bill would permanently extend the 10%, 25% and 28% rate brackets. 

  The Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") created a new 10-percent regular income tax bracket for a portion of taxable income that was previously taxed at 15 percent and reduced the other regular income tax rates of 28%, 31% 36% and 39.6% to 25%, 28%, 33%, and 35%, respectively.  The bill would permanently extend the 10%, 25% and 28% rate brackets. 

Permanent reduced capital gains and dividend tax relief for middle-class taxpayers.  The bill would make permanent the reduced rates on capital gain and dividend income for taxpayers with adjusted gross income. 

  The bill would make permanent the reduced rates on capital gain and dividend income for taxpayers with adjusted gross income. 

Permanent extension of EGTRRA and ARRA improvements to child tax credit.  EGTRRA doubled the value of the child tax credit from $500 to $1,000, allowed the child tax credit to be claimed against the alternative minimum tax, and enhanced the refundable child tax credit

  EGTRRA doubled the value of the child tax credit from $500 to $1,000, allowed the child tax credit to be claimed against the alternative minimum tax, and enhanced the refundable child tax credit

Permanent extension of PEP and Pease relief for middle-class taxpayers.  Prior to 2010, certain taxpayers were subject to limitations on the amount that they could claim with respect to itemized deductions (the "Pease" limitation) and personal exemptions (the "PEP" limitation). The bill would permanently set the threshold at which these limitations apply so that taxpayers with adjusted gross income under $200,000 ($250,000 for a married couple filing jointly), adjusted for inflation, would not be subject to these limitations. 

  Prior to 2010, certain taxpayers were subject to limitations on the amount that they could claim with respect to itemized deductions (the "Pease" limitation) and personal exemptions (the "PEP" limitation). The bill would permanently set the threshold at which these limitations apply so that taxpayers with adjusted gross income under $200,000 ($250,000 for a married couple filing jointly), adjusted for inflation, would not be subject to these limitations. 

Permanent marriage penalty relief for middle-class taxpayers.  A "marriage penalty" exists when the combined tax liability of a married filing a joint return is greater than the sum of the tax liabilities of each individual computed as if they were not married. Among other things, EGTRRA increased the basic standard deduction for a married couple filing a joint return to twice the basic standard deduction for an unmarried individual filing a single return. The bill would permanently extend this tax relief. 

  A "marriage penalty" exists when the combined tax liability of a married filing a joint return is greater than the sum of the tax liabilities of each individual computed as if they were not married. Among other things, EGTRRA increased the basic standard deduction for a married couple filing a joint return to twice the basic standard deduction for an unmarried individual filing a single return. The bill would permanently extend this tax relief. 

Permanent earned income tax credit simplification and increase.  The bill would make permanent certain EGTRRA modifications and ARRA modifications to the earned income tax credit. 

  The bill would make permanent certain EGTRRA modifications and ARRA modifications to the earned income tax credit. 

Permanent extension of education tax incentives.  The bill would make permanent certain modifications to the suite of education tax incentives included in the EGTRRA

  The bill would make permanent certain modifications to the suite of education tax incentives included in the EGTRRA

Permanent extension of tax benefits for families and children.  The bill would make permanent certain tax benefits for families and children enacted in the EGTRRA, including: the maximum $13,170 adoption tax credit , the employee tax credit for employee child care, and the increased dependent care tax credit. 

  The bill would make permanent certain tax benefits for families and children enacted in the EGTRRA, including: the maximum $13,170 adoption tax credit , the employee tax credit for employee child care, and the increased dependent care tax credit. 

Permanent extension of enhanced small business expensing.  The bill would make permanent the increased small business expensing amounts set to expire at the end of 2010 that were enacted prior to the ARRA and prior to the "Small Business Jobs Act of 2010". 

  The bill would make permanent the increased small business expensing amounts set to expire at the end of 2010 that were enacted prior to the ARRA and prior to the "Small Business Jobs Act of 2010". 

 

Congressman Cuellar on fiscal responsibility:

  The Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") created a new 10-percent regular income tax bracket for a portion of taxable income that was previously taxed at 15 percent and reduced the other regular income tax rates of 28%, 31% 36% and 39.6% to 25%, 28%, 33%, and 35%, respectively.  The bill would permanently extend the 10%, 25% and 28% rate brackets.    The bill would make permanent the reduced rates on capital gain and dividend income for taxpayers with adjusted gross income.   EGTRRA doubled the value of the child tax credit from $500 to $1,000, allowed the child tax credit to be claimed against the alternative minimum tax, and enhanced the refundable child tax credit  Prior to 2010, certain taxpayers were subject to limitations on the amount that they could claim with respect to itemized deductions (the "Pease" limitation) and personal exemptions (the "PEP" limitation). The bill would permanently set the threshold at which these limitations apply so that taxpayers with adjusted gross income under $200,000 ($250,000 for a married couple filing jointly), adjusted for inflation, would not be subject to these limitations.   A "marriage penalty" exists when the combined tax liability of a married filing a joint return is greater than the sum of the tax liabilities of each individual computed as if they were not married. Among other things, EGTRRA increased the basic standard deduction for a married couple filing a joint return to twice the basic standard deduction for an unmarried individual filing a single return. The bill would permanently extend this tax relief.   The bill would make permanent certain EGTRRA modifications and ARRA modifications to the earned income tax credit.   The bill would make permanent certain modifications to the suite of education tax incentives included in the EGTRRA  The bill would make permanent certain tax benefits for families and children enacted in the EGTRRA, including: the maximum $13,170 adoption tax credit , the employee tax credit for employee child care, and the increased dependent care tax credit.    The bill would make permanent the increased small business expensing amounts set to expire at the end of 2010 that were enacted prior to the ARRA and prior to the "Small Business Jobs Act of 2010". 

Reducing the deficit and ending wasteful spending has been a longstanding priority for Congressman Cuellar. As a member of the fiscally-conservative Blue Dog Coalition, Congressman Cuellar authored the bill to reduce government waste, Government Performance and Results Modernization Act of 2010. This bipartisan legislation would increase transparency and accountability by requiring federal agencies to establish performance goals that can be measured and reported to Congress and taxpayers. On June 16, 2010 the U.S. House of Representatives unanimously passed the bill and it is expected to see action on the Senate floor shortly.

In February 2009, Congressman Cuellar helped pass the largest single measure to provide 95% of all hard-working Americans with a tax cut, the American Recovery and Reinvestment Act, which provided over $100 billion worth of payroll tax cuts for hard working Americans, including over $4.2 billion for working Texans.

 

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Congressman Henry Cuellar is a member of the U.S. House Homeland Security, Agriculture, and Oversight & Government Reform Committees in the 111th Congress. Accessibility to constituents, education, health care, economic development, and national security are his priorities. Congressman Cuellar is also a Senior Whip and member of the Blue Dog Coalition

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