EDITOR'S NOTE: This deal is such a moving target that as we posted this item we got word that the House will not vote on a compromise before the year ends, next stop fiscal cliff.
The latest reports from Capitol Hill include coverage of plenty of wrangling in the Senate to come up with a plan before the deadline nears. The Hill is reporting that the Estate Tax would creep up to 40% but the negotiations would keep the $5 million exclusion - a compromise level that has broad support among farm and commodity groups.
The deal being worked out in the Senate would also hold on to Bush era tax cuts and the payroll tax break for people making less than $400,000 per year - according to reports. This is still in the negotiation stage, but the news on the Estate Tax would be more positive than the rollback to a $1 million exclusion and a 55% tax rate.
There are other provisions of the compromise measure, but the deal is still far from sealed. There will be some time after 1/1/13.
In a CBS News report, Sen. Minority Leader Mitch McConnell is being quoted saying that the Senate has "reached an agreement on all of the tax issues." How that plays out by day's end remains to be seen, but this will be positive for markets when trading reopens on Wednesday, provided the deal doesn't fall through.
Speculation includes a slight bump in capital gains to 20% (from 15% now); and a permanent fix for the Alternative Minimum Tax. Whether those provisions remain in the final deal remains to be seen.
Farm bill extension
While talk of a deal on the farm bill came through the weekend, final details are yet to be worked out. There is a push now to extend the current measure for a year. However, no deal has moved beyond the talks between committee members. And with the fiscal cliff negotiations taking priority, the farm bill talks may wait until early in January.
While the permanent farm bill takes effect on 1/1/13, there will be time for Congress to iron out extension details. Talks range from a full year to a one-month dairy extension. It's all tied up with saving the consumer from higher milk prices.
While some experts have denied this will happen, the fear of $8 milk seems to be a motivator.