Senate-Passed Deal Means Higher Tax on 77% of Households
The budget deal passed by the U.S. Senate today would raise taxes on 77.1 percent of U.S. households, mostly because of the expiration of a payroll tax cut, according to preliminary estimates from the nonpartisan Tax Policy Center in Washington.
More than 80 percent of households with incomes between $50,000 and $200,000 would pay higher taxes. Among the households facing higher taxes, the average increase would be $1,635, the policy center said. A 2 percent payroll tax cut, enacted during the economic slowdown, is being allowed to expire as of yesterday….
Today: $1 IN CUTS FOR EVERY $41 IN TAXES. In 1982: President Reagan was promised $3 in spending cuts for every $1 in tax hikes
According to the Congressional Budget Office, the last-minute fiscal cliff deal reached by congressional leaders and President Barack Obama cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts.
When Presidents Ronald Reagan and George H.W. Bush increased taxes in return for spending cuts—cuts that never ultimately came—they did so at ratios of 1:3 and 1:2.
“In 1982, President Reagan was promised $3 in spending cuts for every $1 in tax hikes,” Americans for Tax Reform says of those two incidents. “The tax hikes went through, but the spending cuts did not materialize. President Reagan later said that signing onto this deal was the biggest mistake of his presidency.
CBO: Fiscal Cliff Deal Ads Nearly $4 Trillion To The Deficit Over The Next 10 Years Relative To If Congress Had Done Nothing.
Just out from the CBO: A “score” of the Fiscal Cliff deal that the Senate voted on last night.
You can find the score on the 2nd page of this embedded document. The bill adds nearly $4 trillion to the deficit over the next 10 years. Of course, this is against the baseline (which assumed the expiry of all tax cuts) so naturally undoing those tax increases was going to add a lot to the deficit.
For the full text of the American Taxpayer Relief Act of 2012, see here.
The “fiscal cliff” deal that was designed to save money actually includes $330.3 billion in new spending over the next decade, according to the official estimate the Congressional Budget Office released Tuesday afternoon.
CBO said the bill contains about $25.1 billion in new cuts, but those are swamped by the new spending on extended unemployment benefits for the long-term jobless and other new refundable tax credits that President Obama fought for.
Of those cuts, only $2 billion are scheduled to take effect in 2013.
Small and medium LLC’s and S-Corps will get hit
Fiscal Cliff Tax Deal: What Does It Mean for Small Business?
ORDINARY INCOME: While the tax deal increases the rates at a higher level than first proposed by the President ($200k single/250k married) – it does increase the rates from 35% to 39.6% at $400k single and $450k married (talk about a marriage penalty). From 2012 tax policy this is a tax increase of $396 billion over 10 years. Don’t forget, there is also the 0.9 percent tax increase on ordinary income over 200k/250k already set to begin in 2013 thanks to the health bill. Given that small and medium businesses are overwhelmingly organized as pass-thrus (LLC’s; S Corps; partnerships) – it is the ordinary income rate that hits these business owners – not the corporate rate (which was untouched in this deal).
From the Senate bill passed today:
“Unemployment insurance would be extended for a year for 2 million people.”
Otherwise, UI benefits expire today.
Once that UI is gone, we’re going to see a HUGE plunge in the consumer spending and possible civil unrest and market crash.
Obama Deal Adds $3.97 Trillion to Deficit Over 10 Years; Only 5 Republicans Voted Against; White-Flag Surrender
For all the pissing and moaning over the fiscal cliff, there was never much of a “cliff” in the first place. Worse yet, every delay made matters increasing irresponsible in terms of addressing the deficit.
The final result, as passed by the Senate, watered down budget cuts from $600 billion to a mere $12 billion.
Moreover, the extension of the tax cuts will add almost $4 trillion to the deficit over 10 years according to CBO analysis of the American Taxpayer Relief Act.
Nonetheless, that was not enough for liberal democrats who thought they did not get enough out of the deal.
The “Fiscal cliff” moves to House, where a slim hope remains that Republicans will punt this bill a mile high.
In a rare late-night show of unity, the Senate voted 89 to 8 to raise some taxes on the wealthy while keeping income taxes low on more moderate earners.
Republicans, unhappy that the bill contained over $600 billion in tax increases but only around $12 billion in spending cuts, said they may change it more to their liking and send it back to the Senate. Party leaders planned to take the temperature of rank-and-file lawmakers over the afternoon before deciding on a course of action.