The Return of the Death Tax: As The Heritage Foundation has consistently demonstrated, the death tax will punish job creators, kill some small businesses, and wreak havoc on the economy. There is currently no death tax, but it would spring back to life in 2011 to tax estates over $5 million at a rate of 35%. A two-year extension of current tax rates needs to ensure that the death tax remains dead.
Temporary Tax Rates and Additional Uncertainty: As the saying goes, the only certainties in life are death and taxes, but families and businesses need long-term certainty on what their taxes will be in order to plan accordingly, invest, and take risks that ultimately create jobs. By allowing for only a two-year extension of current tax rates, the President’s agreement provides no long-term certainty that is essential for economic recovery.
"Permanent" Unemployment Benefits: The Heritage Foundation, drawing from the full spectrum of economic research, has shown that extended unemployment benefits decrease individuals’ incentives to get new jobs. The President wants to further extend these "temporary” unemployment benefits for another 13 months. If these temporary benefits never expire, they will become yet another permanent entitlement.
UPDATE: Interestingly, Alison Fraser of the Heritage Foundation (Heritage Action's 501(c)(3) parent organization) calls the plan a "wondrous gift," and endorses its adoption:
If the details bear out, this is a compromise worth embracing. It now falls to Senate Majority Leader Harry Reid and Speaker Nancy Pelosi to decide whether they follow their President’s lead or go their own way, leaving taxpayers a tax hike chunk of coal for the new year.
Enough already of the job killing tax agenda. It’s time to do the right thing for the taxpayers and for the economy. In President’s words: it’s time to speed up the recovery and get people back to work.