McConnell: Tax Deal Struck With Biden

By Chris Frates
Updated: December 31, 2012 | 5:35 p.m.
December 31, 2012 | 3:27 p.m.

AP Photo/Susan Walsh

Senate Minority Leader Mitch McConnell of Ky. walks toward the Senate floor on Capitol Hill in Washington, Monday, Dec. 31, 2012. 

Echoing President Obama’s statement that a fiscal-cliff deal is near, Senate Republican Leader Mitch McConnell took to the Senate floor on Monday afternoon to announce that he and Vice President Joe Biden have struck a deal to prevent tax hikes on the middle class.

“I can report that we’ve reached an agreement on all of the tax, the tax, issues. We are very, very close as the president just said,” McConnell said.

The Republican leader’s statements ratchet up pressure on Democrats, who are split over how to handle across-the-board spending cuts, called sequestration, which start Jan. 2. McConnell is arguing that lawmakers should vote on tax relief now and leave the spending cuts for later.

McConnell and Biden have agreed to raise income-tax rates on families making more than $450,000 and make the Bush-era tax cuts permanent for everyone under that limit. And the estate tax would be exempted on the first $5 million with assets over that amount being taxed at 40 percent.

“A deal to prevent tax hikes on millions of Americans is finished,” a GOP aide said.

But Democrats disputed that, saying no deal is final until there is agreement on sequestration.

“There is no deal yet,” Sen. Dick Durbin of Illinois, the Senate’s No. 2 Democrat, told National Journal.

A Republican aide said that McConnell and Biden had a sequestration deal last night that would have allowed votes on two separate bills. But the White House backtracked when it became clear there was disagreement among Democrats on how to handle the votes.

On the floor, McConnell said his last conversation of the night with Biden was at 12:45 a.m. Monday. At 6:30 on Monday morning, the two kicked off another day filled with phone calls.

"This has been, clearly, a good-faith negotiation," McConnell said.

Here are the details of the tax agreement between McConnell and Biden, according to a Republican aide:

1. • Permanent extension of current policy on income-tax rates for those earning below $400,000 (single), $450,000 (couples).
2. • Permanent 15 percent rate on capital gains and dividends for those below $400,000 (single), $450,000 (couples).
3. • A 20 percent rate on capital gains and dividends for those above $400,000 (single), $450,000 (couples).
4. • Permanent extension of the personal exemption phaseout and Pease provision for those below $250,000 (single), $300,000 (couples).
5. • Permanent estate-tax exemption at $5 million, but a 40 percent rate.
6. • Permanent alternative minimum tax patch.
7. • Finance Committee tax extender package.
8. • Five-year extension of American Opportunity Tax Credit, Child Tax Credit, and Earned Income Tax Credit.
9. • One-year extension of 50 percent bonus depreciation.