Fiscal cliff negotiations between the Speaker of the House and the President have suddenly turned chilly and acrimonious. As both sides failed to reach an acceptable compromise yesterday, the House of Representatives will vote on a “Plan B” to partially avert the fiscal cliff. Plan B will increase marginal income taxes rates for those with incomes in excess of $1 million. It also increases capital gains and dividend income tax rates but only for this high income group. Plan B also leaves the estate tax where it is today and adjusts the Alternative Minimum Tax calculation to avoid an expansion in the types of tax payers that need to pay it. In effect, Plan B raises taxes on the highest income earners and avoids tax increases on those making less than $1 million per year. The President has indicated that he opposes Plan B and would veto it.
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