Senate Tax Bill Update

President Obama announced a proposed framework for extending tax programs last Monday. The Senate Leaders and Finance Committee just released the text of the bill last night.  Below please find the current summary and an analysis of tax legislative developments: 
  

• The Senate plans to take up the legislation beginning next Monday with a vote on a required motion to proceed to the bill (the vote is scheduled for 3pm on Monday).  That vote will be a 60-vote threshold to pass, and will be a good proxy for vote on final passage.  Although most Senators have not yet publicly declared their intentions, the bill is expected to receive 60 votes and for the Senate to pass the bill (final passage) sometime mid-week.

• The Senate bill follows the outline of the agreement laid out by President Obama earlier this week:

•  2-year extension of individual income tax rates 

•  Estate tax for 2011 and 2012 with a 35 percent rate and a $5 million personal exemption (with an election to have no estate tax and carryover basis rules apply for decedents of those dying in 2010) 

• Restoration of unified credit against gift tax – indicating that the gift tax exemption is  increasing to $5 MM 

•  Generation Skipping Transfers tax rate of zero for all 2010 GSTs

•  Temporary employee payroll tax cut

• Enhanced bonus depreciation and expensing provisions

• 2-year extension of “tax extenders” (2010 and 2011) 

• Extension of unemployment insurance for one year 

• No tax increases or other revenue offsets

•  As has been widely reported, House Democrats voted yesterday to approve a non-binding resolution rejecting the tax agreement reached by the President and Congressional Republicans.  Although uncertainty remains regarding House action on the package, if the Senate passes the bill as expected, there is a likely chance that the House will ultimately pass it as well before the end of the year.