The Corner

Latest on the Tax Deal: Payroll Tax Cut, Estate Tax Back

What we’re hearing: A two-year extension of all current income, dividend, and capital gains tax rates, plus a one-year (or 13 month) extension of unemployment insurance.

Chuck Todd reports that the tax deal could include a payroll tax holiday. But Marc Ambinder reports that it will instead include a two percent two percentage point reduction in payroll tax that would replace President Obama’s favored Making Work Pay tax credit, and a reinstatement of the estate tax over a certain yet-to-be-decided threshold.

Multiple reports are indicating a deal is close to being struck.

UPDATE: We’re now hearing that the estate tax will be set at 35 percent for two years, with the first $5 million exempted. [Daily Caller’s Jon Ward first to report.]

UPDATE II: Jake Tapper has more details on what’s in the proposed deal, including:

–allowing businesses to deduct 100% of certain investments in the first year (President Obama pitched this in September).

–extending the American Opportunity Tax Credit (college tuition), Child Tax Credit and Earned Income Tax Credit plus their refundability. 

One other wrinkle Tapper is reporting, potentially huge: the unemployment benefits extension will not be offset, at least not as part of this deal. This makes it likelier that Republicans in both houses will challenge it from the right, and that any voting majority will have to be cobbled together from both caucuses.

President Obama is supposed to address the deal at 6:10 PM.

Daniel FosterDaniel Foster is a former news editor of National Review Online.

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