Most of the real work of the U.S. Congress (and perhaps the most contentious) will occur after the elections when Congress returns to finish the “business of the people” during a short Lame Duck session. Almost everything of consequence, most notably a set of automatic, economy-related spending cuts and tax increases that have been called a “fiscal cliff,” will be debated during the post-election Lame Duck.
Topping the list of issues important to marine retailers is the expiration of a full menu of President George W. Bush-era tax cuts on December 31. The resulting tax increases, should an extension of the Bush Tax Cuts fail to pass, when combined with more than $100 billion in automatic across-the-board spending cuts (called sequestration) set to take effect at the same time, have become known as the fiscal cliff. Economists warn that unless Congress acts, the one-two austerity punch could sent the fragile economy back into recession.
The automatic cuts are punishment for the inability of last year’s deficit reduction “super committee” to strike a bargain to cut the 10-year deficits by at least $1.2 trillion as promised by last summer’s debt and budget pact. The Bush tax cuts were originally set to expire at the end of 2010, but were renewed two years ago.
There is no certainty that Congress will handle the issue in the Lame Duck, especially if Republicans retake the White House and gain seats in the House and Senate. Presidential candidate Mitt Romney has asked Congress to delay its work in this regard until he’s in office.
Two important issues to marine retailers are tied to the Bush tax cuts. The first is re-authorization of the sales tax deduction in lieu of deduction state income taxes. This deduction is especially good for major purchases, such as a boat, in states where there is no state income tax, like Florida and Texas. The other issue is continuation of the 35-percent tax rate on inherited assets valued more than $5.5 million, known as the estate tax. MRAA has long supported both the state sales tax deduction and elimination of the estate tax and will work hard to retain both tax provisions.
