Georgia County Government - January/February 2013 - (Page 31)

Federal Updates The Fiscal Cliff: What’s in the Final Deal and When’s the Next One Coming? By Holland & Knight O n Jan. 2, 2013, President Obama signed into law a short-term fiscal cliff compromise bill. However, the drama of the fiscal cliff negotiations has already given way to the upcoming “March Cliff,” when the 113th Congress will have to address the U.S. borrowing limit, the end of the two-month extension to delay sequestration and funding to avoid a government • • • shutdown. Amidst the continuing economic uncertainty affecting the operations of many local governments, it is critical to understand what was in the recent fiscal cliff deal, • as well as what was not addressed and delayed for more debate in the coming months. What is in the Deal? The January fiscal cliff deal received a vote of 89-8 in the Senate and 257-167 in the House. House Republicans generally opposed the deal because of tax increases and the lack of substantial spending cuts, but House GOP leaders decided against trying to amend it. The measure, titled the American Taxpayer Relief Act of 2012 (H.R. 8), postpones for two months automatic cuts to government spending (sequestration) that were set to occur in January 2013. The deal permanently extends Bush-era tax levels for income up to $400,000 for individuals and $450,000 for couples — but allows tax rates to rise from 35 percent to 39.6 percent on income over that level. It increases tax rates for capital gains and dividends on such income from 15 percent to 20 percent and increases the estate tax from 35 percent to 40 percent, with the first $5 million in assets exempted. It also includes a permanent fix for the alternative minimum tax so it is indexed for inflation. HR 8 extends for another year longterm unemployment benefits, prevents a 27 percent cut in Medicare reimbursement rates for the 2013 calendar year and extends through FY 2013 most federal farm programs and policies — including dairy policies that, if not extended, would have meant an increase in milk prices. In addition, certain agriculture disaster assistance programs that expired on Sept. 30, 2011, are authorized through FY 2013. The deal also extends (primarily for a two-year period) more than 50 tax-credits and deductions known as “tax extenders” that benefit individuals, businesses and various sectors of the energy industry. The most notable include: • the credit for business researchand-development • the credit for college tuition • the deduction for state and local sales taxes in lieu of state income taxes • the bonus depreciation rules for property placed in service before the end of 2013 (and through 2014 for certain transportation property, as well as certain longer-lived items); this provision • • allows businesses to deduct from their taxes 50 percent of the value of that property in addition to amounts that they could otherwise claim under depreciation rules the new markets tax credit the credit for alternative fuel use by transit systems the credit for alternative fuel vehicle refueling property certain credits for renewable energy, such as extension of the renewable electricity production credit, including for wind facilities, the exclusion of paper that is commonly recycled from the definition of municipal solid waste for purposes of the renewable energy production credit, and the election to claim the energy credit in lieu of the electricity production credit increasing the transit commuter tax benefit to equal the tax-free benefit employers provide for parking, raising the transit benefit from $125 to $240 per month the credit for employing those who work and live on or near an Indian reservation, as well as accelerated depreciation rules for certain business property placed in service on an Indian reservation What is Not in the Deal? Congress and the White House were notably unable to garner bipartisan FISCAL CLIFF continued on page 32 Political fireworks may be interesting for Washington D.C.’s “beltway” players, but they also will create a toxic economic and political environment. SPRING 2013 31

Table of Contents for the Digital Edition of Georgia County Government - January/February 2013

President's Message
Director's Desk
Chatham County: Cultivating Opportunities to Grow Investments
2013 ACCG Annual Conference Preview
Eight Annual Georgia County Excellence Awards
County Government : Emergency Management Agencies: Prepared Today for Tomorrow's Disaster
Federal Update: The Fiscal Cliff: What's in the Final Deal and When's the Next One Coming?
Counties & the Law: Avoiding First Amendment Liability in the Employee Discipline
System for Taxing Motor Vehicles to Change March 1
News & Notes
Index of Advertisers

Georgia County Government - January/February 2013