I don’t know how many of my readers were paying attention to the goings on in Washington, D.C. over the past couple of days given all the football games to be watched, especially the Sun and Capital One Bowls for Tech and Georgia fans, but our elected representatives did manage to stop us from going over the “fiscal cliff”, at least for now. The good news for most people was that the income tax rates for anyone earning less than $400,000 per year ($450.000 for married couples) will not go up from their 2012 levels and the tax rate on capital gains and dividends for those taxpayers will stay at 15%. In addition, the estate tax exemption will stay at its current level of $5,120,000 per person. The bad news for most everyone was that the legislation passed yesterday will actually result in an increase in the federal deficit over the next 10 years if nothing further is done.
For those insurance agents who sell flood insurance, there was more bad news. Despite warnings from FEMA that, due to the extraordinary losses incurred as a result of Hurricane Sandy, it will run out of money to pay flood insurance claims within the next two weeks, the House of Representatives did not act on a bill passed by the Senate that would have increased the borrowing authority for that program by an additional $10 billion. It will be up to the new Congress to solve that problem. (Click here for a good explanation of what the legislation that has been passed will and will not do.) Stay tuned for further developments on that and other issues of interest to insurance agents that will be addressed in Washington in the next few weeks.