President Announces Tentative Tax-Cut Agreement, (Dec. 7, 2010) President Obama on December 6 announced the framework for a bipartisan agreement that includes a two-year extension of the 2001 and 2003 tax cuts and a one-year, 2-percent reduction in payroll taxes for employees in lieu of the Making Work Pay Tax Credit. The tentative deal also provides an alternative minimum tax (AMT) patch retroactively for 2010 and extends it through 2011, estate tax relief for two years and a 100-percent write-off for business investments in 2011. "Without a willingness to give on both sides, there is no reason to believe this stalemate won’t continue well into next year," Obama said. The president, in making the announcement, stressed he would not agree to any extension of high-income tax cuts without an agreement to extend unemployment benefits in the hardest-hit states and "additional tax cuts for working families and small businesses." The president noted that the estate tax compromise is "more generous" than he preferred since it would raise the personal exemption to $5 million and lower the tax rate from 45 percent to 35 percent on estates exceeding the higher threshold. The proposal also would extend for two years several expiring tax provisions, including the Child Tax Credit, the American Opportunity Tax Credit and the Earned Income Tax Credit, according to senior administration officials. The agreement does not include repeal of the expanded Form 1099 paperwork requirements, a senior administration official confirmed at a press briefing. Because the tax-cut compromise would expire in two years, a senior official said the administration expects any further extension to be "a centerpiece" of the 2012 presidential debate. In the interim, Obama said he is "not willing to let working families across this county become collateral damage for political warfare here in Washington and…to let our economy slip backwards just as we are pulling ourselves out of this devastating recession." Senate Minority Leader Mitch McConnell, R-Ky., expressed guarded optimism over the terms of the agreement announced by the White House. "Members of the Senate and House will review this bipartisan agreement, but I am cautiously optimistic that Democrats in Congress will show the same openness to preventing tax hikes the administration has already shown," he said in a prepared statement. The office of Senate Majority Leader Harry Reid, D-Nev., however, withheld comment until members of the Democratic caucus review the agreement. A spokesman for Reid released a statement saying only that Reid will discuss the provisions with Democrats on December 7. "Now that the president has outlined his proposal, Senator Reid plans on discussing it with his caucus tomorrow," stated the spokesperson.
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