The name of the legislation which allowed us to be saved from the Fiscal Cliff is the American Taxpayer Relief Act of 2012. It is very hard not to be cynical about legislation with a name like that, especially when it increases taxes. Bickering among politicians from both parties continues, while solutions to the obvious problems of our great country have not yet been given serious consideration.
Below is a highlight of changes caused by this legislation. This information has been adapted from a summary prepared by the staff of the National Academy of Elder Law Attorneys (NAELA), which is an organization we support with our membership and participation. For most senior citizens and nearly all of our clients with very few exceptions, the Fiscal Cliff legislation creates no change for their tax rates or service levels.
Income tax rate changes. The bill does not change tax rates for individuals earning less than $400,000 and couples earning less than $450,000. Tax rates increase to 39.6% (from 35%) for individuals with income above $400,000 and for couples above $450,000, as well as an increase in the tax rate from 15% to 20% on capital gains and dividends.
Estate and gift tax. The estate and gift tax rates will remain the same for those whose affairs involve less than $5 million.
Payroll tax. The payroll tax revert to the pre-2011 level of 6.2%.
Medicare. A threatened 27% reimbursement reduction to physicians will not occur.
Funding of programs for senior citizens. The Act provided relatively small amounts of increased funding for various programs.
Sequestration. The bill delayed threatened automatic spending cuts by two months until at least March 1, 2013.
CLASS Act repeal. The Community Living Assistance Services and Supports (CLASS) Act, which was part of the Affordable Health Care Act, was officially repealed. The CLASS Act had been opposed by the insurance industry and financial experts as being actuarially unsound, which was a conclusion that the Congressional Budget Office also reached, causing President Obama to abandon it in October 2011.
Commission on Long-Term Care. A commission was authorized, with 3 members to be appointed by the President, Senate Majority Leader, Senate Minority Leader, Speaker of the House, and House Minority Leader. This commission has no authority and it is, therefore, hard to see it as anything other than a political stage for various interest groups to state their agenda about long term care.