What Do You Really Know About The Fiscal Cliff?Posted: 8 January 2013
All the negotiations are finished and no one is really happy with the deal made by our asshat politicians……but what do you really know about the deal that ended the hoopla? Not the talking points that your favorite politician or media outlet has told you……what is the end deal?
Time to learn………
There is good, bad and ugly in the deal……Michael Synder has summed it up very well…….
-One of the best things about the fiscal cliff deal is that income tax rates did not rise on the poor and the middle class. This is great news for millions of families that are struggling to make ends meet each month. A significant rise in income tax rates would have been crippling.
-The Alternative Minimum Tax will now be permanently adjusted for inflation. This is something that I had screamed about in previous articles. If an AMT fix had not been passed, approximately 28 million households would have been hammered with the Alternative Minimum Tax on their 2012 earnings.
-Millions of unemployed workers will continue to receive extended federal unemployment benefits. We probably cannot really afford to keep doing this, but at least now there won’t be millions of unemployed workers that suddenly have their only source of income shut off. The next trick will be to find jobs for all of those workers. Unfortunately, millions of our jobs continue to be shipped to the other side of the world.
-Payroll taxes are going up for every American worker. The fiscal cliff deal allows the 2 percent payroll tax cut to expire, and so now the average U.S. household bringing in about $50,000 a year will pay approximately $1,000 more per year in payroll taxes. As a result, it is being projected that U.S. consumers will have $115 billionless in disposable income to spend in 2013. Happy New Year American workers!
-The fiscal cliff deal did nothing about the new Obamacare taxes that went into effect on January 1st. Many of these taxes will hurt the middle class. To see an example of a receipt where a consumer was charged the new “medical excise tax” in Obamacare, just check out this article.
-The carried-interest deduction loophole remains intact, so incredibly wealthy hedge fund managers will continue to get away with paying very little in taxes. If the rest of us are being taxed into oblivion, then they should share in the pain with the rest of us. Of course I personally believe that the income tax should be abolished entirely, but none of our politicians seem interested in that idea at all.
-Income tax rates will increase for high earners. This will hurt a lot of small businesses. Many small businesses that earn more than $400,000 a year will now be faced with making some really tough choices. Some may have to lay off workers. The top rate will now be 39.6 percent, but when other federal and state taxes are factored in, many small businesses will now be paying a top marginal rate of well over 50 percent. That is absolutely obscene.
-A compromise was reached on the estate tax. The exemption was scheduled to fall to just $1 million and the rate was scheduled to go up to 55 percent, and fortunately Congress decided to do something about that. As I have written about previously, that would have been a disaster for many small businesses and family farms. As a result of the fiscal cliff deal, the estate tax will only rise from 35 percent to 40 percent. The exemption for individuals will be about 5 million dollars and for couples it will be about 10 million dollars, and those figures will now be indexed for inflation. A tax increase is never a good thing, but if Congress had done nothing things would have been far worse.
-The fiscal cliff deal contains a lot of pork. In particular, it contains provisions that extend specific tax breaks related to Puerto Rican rum, electric motorcycles, biodiesel and renewable diesel fuel, the film and television business, and motorsports entertainment complexes.
According to the Congressional Budget Office, as a result of this deal the U.S. national debt will be about $4 trillion higher a decade from now than it would have been if Congress had done nothing.
The deficit for fiscal year 2013 alone will be about $330 billion higher than it would have been if Congress had done nothing.
So this deal has made our debt problems even worse.
Right now, the U.S. has a debt to GDP ratio of about 103 percent. We are already well into the “danger zone”, yet most Americans still don’t seem very concerned about all of this debt.
The fiscal cliff deal contained hardly any spending cuts at all. In fact, there was a 41 to 1 ratio of tax increases to spending cuts in the deal. The Democrats definitely won this round. But of course they had most of the leverage. If Congress had done nothing, the middle class would have been absolutely devastated by all of the tax increases, and the Republicans were desperate to prevent that.
Now there is your deal……..and now we will be bombarded with the crap on the debt fight to come…….
Let’s make one thing clear at this point……..the debt debate is about money already spent….not money to be spent…..let them play you like a cheap drum…Hell, they have been playing you for years and you just smile and let them get away with it…….