By a vote of 51 to 48, the Senate on July 25 narrowly approved a Democratic proposal to extend the 2001 and 2003 tax cuts through 2013 for individuals earning less than $200,000 per year and couples earning up to $250,000 annually. The Democratic plan would also allow taxes on long-term capital gains and dividends to rise and cause the estate tax rate to revert back to its highest level since 2001.
On Aug. 1, the Republican-led House passed competing tax extension legislation that would extend Bush-era tax cuts through the end of next year for all income brackets and maintain current capital gains, dividends, and estate tax rates.
The votes essentially leave Congress deadlocked on this issue.
If Congress fails to resolve this issue, federal income taxes are scheduled to rise for all tax brackets on Jan. 1, and many Americans will be paying higher dividend, capital gains, and estate tax rates next year.
Prior to the House vote on the tax bills, NAHB sent a letter to lawmakers in support of H.R. 8, noting that many home builders are organized as pass-thru entities and that extending the expiring tax cuts for all tax brackets “will block a massive tax increase from hitting our struggling small business owners.”