Fiscal Cliff Deal Update 12/31

At the 11th hour, as expected, here comes the mini-deal. All speculation so far, but here’s what it’s looking like:

· Threshold for income tax rate increase would be $400k for individuals or $450k for families. Top rate on these taxpayers would increase from 35% to 39.6% though the marginal rates below that level will remain the same as they are now.

· Long-Term Capital Gains rates AND dividend rates go to 20% from 15% (but not 39.6%) for those above the $400k/450k income level. 15% would be maintained for those below.

· Extension of unemployment benefits for ??? time

· AMT Patch for 2012

· Deferral of sequestration-related spending cuts for a limited amount of time

· 40% top tax rate on estates over $5M (per individual??), up slightly from current 35%

Details still to be worked out. Votes in both the Senate and House required to pass. Not a given by any means. This would also do nothing for the debt ceiling (which needs to be raised sometime around late Feb / early Mar) and does VERY little to close the $1 Trillion per year deficit at the heart of the matter.

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