The American Taxpayer Relief Act of 2012
By: Robert L. Moshman, Esq.
Resolution for 2013: Never invite Congress to a New Year’s Eve party again. They fight all night, they won’t go home, and what a mess they leave behind!
The Senators spent so long caucusing on December 31, 2012, that at the stroke of midnight, the nation went over the so-called “fiscal cliff.” Then the House of Representatives began debating, and by the time the party ended 20 hours later, the fiscal cliff freefall was revealed to be a dramatic bungee jump that enabled Congress to rebound from the bottom of the fiscal cliff back to reality with the new American Taxpayer Relief Act of 2012 (ATRA).
As a result, we now have old rules made permanent, some new rules, some unresolved problems, and a stiff tax hike on personal trusts all mixed together in what might referred to as a classic hangover. Let’s sort the whole thing out.
We Landed Where?
After all the hullabaloo leading up to the fiscal cliff negotiations and with the expectations that ATRA has averted disaster and set things right, one might have expected to find the Capitol Building to have landed on a wicked witch.
Not only is that not the case, but there is no agreement on ATRA’s impact.
The Wall Street Journal reported that ATRA’s income tax rate increases were the largest in the last two decades. The New York Times observed that the law made the Bush tax cuts permanent.
Truthfully, the new rules for 2013 look almost exactly like the rules from 2012. However, we did not wake up in our own bed like Dorothy in The Wizard of Oz. There are crucial differences between ATRA and prior law. There are also unresolved economic dangers that will require investors to monitor a jittery stock market...