Nasdaq.com reports that some Democratic senators are balking at the proposal of Senators Kyl and Lincoln to reinstate the $3.5 million exemption and 45 percent rate but then increase the exemption to $5 million and reduce the top rate to 35 percent. The report indicates the Senate Democrats had a rather “animated” discussion in caucus recently. Some of the more liberal members questioning why we should be cutting taxes on the wealthy while less affluent people are in economic distress. Apparently Senator Sanders, one of the most liberal Senators, indicated he favors allowing the $1 million exemption and top 55 percent rate to come into effect in 2011 as present law now provides.
President Obama had pledged in his campaign and his proposed budgets since have indicated he favors reinstating the 2009 law provisions of a $3.5 million exemption and 45 percent top rate.
The present impasse indicates we may very well see no agreement and the old law of the $1.o million exemption and 55 percent top rate may very well come back into effect because of the inability of the two parties to agree on much of anything.