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Obama plan vs. Boehner plan vs. 'Plan B'

The top tax rate, estate taxes and capital-gains rates are points of contention. Plans also disagree on spending cuts and the debt limit.

By MSN Money Partner Dec 20, 2012 12:48AM

This post is by The Associated Press.

 

Image: Dollar bills floating over U.S. Capitol © CorbisThere are several competing plans to avoid the "fiscal cliff," a one-two combination of tax increases and automatic spending cuts.

 

The GOP-controlled House is scheduled to vote on Thursday on House Speaker John Boehner's scaled-back "Plan B" tax proposal exempting people earning less than $1 million a year from tax increases. Boehner and President Barack Obama have also exchanged offers in their ongoing talks.

 

Here are some of the highlights of the three competing plans.

 

Taxes

 

Obama's plan would increase taxes by $1.3 trillion over a decade, including raising the top rate on income exceeding $400,000 from 35% to 39.6%. He also would increase the tax rate on capital gains and dividend income exceeding $250,000 from 15% to 20% and increase the estate-tax rate from 35% to 45%, while exempting estates of $3.5 million per person. He would limit the deductions claimed by wealthier people. Tax brackets would be indexed for inflation less rapidly.

Boehner's latest offer totals $1 trillion over 10 years, including raising the top rate on income exceeding $1 million to 39.6% and increasing rates on dividends and capital gains. Boehner also proposes a tax overhaul next year that would lower rates and eliminate numerous deductions, credits and other tax breaks.

 

Plan B would increase taxes by about $310 billion by raising the top tax rate to 39.6% on million-dollar-plus incomes. It also would increase the tax rate on capital gains and dividend income exceeding $1 million from 15% to 20% and maintain the estate tax rate at 35%, while exempting estates of $5.1 million per person. It would permanently update the alternative minimum tax for inflation.

 

Spending

 

Obama proposes to cut spending by $1.2 trillion over a decade, though that includes $290 billion in interest savings not counted under GOP math. He proposes cutting $400 billion from health care programs and $200 billion in cuts and fees from other so-called mandatory spending. He proposes $200 billion in cuts from agency budgets set by Congress each year, half from the Pentagon and half from nondefense budgets. He claims $130 billion from a lower inflation adjustment that reduces Social Security and federal retirement benefits.

 

Boehner's original offer promised $1.4 trillion in spending cuts over a decade, including $600 billion from health care programs, $300 billion from nonhealth mandatory programs, $200 billion from the lower inflation adjustment and $300 billion from agency budgets. Last week, he winnowed the savings to as low as $1 trillion, with about half to come from health care programs.

 

Plan B includes no spending cuts.

 

Debt limit

 

Obama would raise the government's borrowing cap enough to last for two years.

 

Boehner's offer would raise the debt limit enough to last one year.

 

Plan B would not increase the debt limit.

 

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

 

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1Comment
Dec 21, 2012 8:28PM
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Privileged? I started working and moved out on my own at 16, (technically worked since age nine) over the years, I paid an average of approx. 27% in taxes, SS, state, etc.... and only made around $30,000. I see you didn't list the approx amount you made when you stated the "30%" you paid. I am sure your income was considerably higher!  I say all that for this reason, they DO need a fairer system, and not all, but many people in the upper income tiers...... Don't pay close to that! I am not saying everyone, but a large amount, don’t pay their fair share.  The change they are trying to get passed would basically only affect the ones that currently, don’t pay their fair share.  I am republican and believe this would be a good thing.  However, I vote for each person based on their beliefs, integrity etc...... Not just a party vote.

Regarding the comment you made

{"People who don't pay taxes and just take government benefits are the privileged class"}  Unfortunately, I was involved in a boating accident, 19 years ago. I tried continuing to work for 3 years, waited 7 years before even applying for SS Disability, because I felt (feel) guilty not paying my own way! I know that is what the programs are for, but it still doesn't allay the guilt. Especially due to all the fraud and false claim recipients. It makes legitimate claimants, feel even worse when they hear all the comments such as yours..... And things like "If you live off the government, then I pay your bills!  I would much rather PREFER to work, and feel like a contributing member of society, and have a purpose in life!

 

Let me tell you about my: "Privileged status" of paying no taxes and "taking" from the government" Over a 15 year span I paid in excess of $300,000 out of pocket  for medical expenses, even though I have Medicare, Medigap policy (2nd coverage) and a part D Drug benefit plan! I have gone through every penny I have. Even though I thought I would be set when I retired, I have now lost my home (waiting to be kicked to the street). Usually I stretch 1 regular meal to last about 3 days; I can’t afford all my medications... I have quit taking several that I should be taking, and (especially when I am in the donut hole on meds) I stretch out my basics that I must take...... I don't qualify for any "other" asst programs to help (even food assistance) other than my disability, they say I 'make too much money', even though my medical expenses exceed what I receive in SS! They don't take that into consideration, only how much you receive!  I was relieved when they added the option for a Drug policy to Medicare. I thought, 'This will be great, they set a maximum for ‘out of pocket expense’.  It’ll be the deductable and the $4800ish for prescriptions in the donut hole!  Then you will get lower copays on medicines.  What MOST people are NOT aware of is that there are a lot of medications that Medicare doesn't cover, or limits the amount it will allow for a medication, and you have to PAY A CASH price out of pocket. AND that DOES NOT even count toward your total out of pocket expense!!!!   I pay normally over $12,000 yearly out of pocket for medical!!!!!!!   I have now spent the last of my savings, Roth, retirement etc…  And even though I am disabled (prefer limited), and spend most of my time in bed, I will soon be on the street! 

Something virtually unimaginable for someone who believes in keeping their word, hard work, honesty, giving………..   Will now be homeless.  According to you ’I AM PRIVALEDGED’!  I would change it all in a minute if I could.  And though I wouldn’t wish my pain and medical issues on anyone,     I would love to trade with you, and let you be the privileged one!!!!!!!! 

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