Tax Deal Alleviates Senate’s Hurdle

Last Monday, the hotly debated tax deal negotiated by President Barack Obama and the Republican leaders cleared a key Senate procedural hurdle. It can be expected that the final Senate approval will come as early as today. The package to extend the Bush Tax Cuts for two more years, as well as the unemployment benefits for additional 13 months, and cutting the payroll tax by two percent for a year already received a nod from the Senate. That being said, Obama is urging the House to pass it quickly despite the fact that both sides of the political spectrum are unhappy.

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Investors Care Most About Bush Tax Cuts

The additional 39,000 jobs last November are fewer than what the economists are hoping for. The employment rate also rose to 9.8%, a proof that the current US economy is still weak. However, stock investors are more focused on Washington policies such as the Bush Tax Cuts.

Investors are hoping that the current tax rates for all Americans will be extended. According to the French Wolf & Farr co-founder, Dorsey Farr, the stocks will be pushed materially higher if the Congress extends all the tax rates. The current structure of the Bush Tax Cuts will expire by the end of the year. And when no extension is approved by that time, everyone’s income and investment levy will spike back up.

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