See what your paycheck will look like before and after the fiscal cliff
paycheckcity.com
paycheckcity.com
The positive aspect of the fiscal cliff is getting no air time. From Wikipedia: "The deficit for 2013 is projected to be reduced by roughly half, with the cumulative deficit over the next ten years to be lowered by as much as $7.1 trillion or about 70%."
- A version with the income on a logarithmic scale to make it extend past $300k in a sensible way. (Not because I need it, I just want to know how the changes affect taxes in the higher ranges).
- A plot of % increase in taxes vs. income. There are some poor sods on the left hand side of the graph who seem to be getting an almost 50% tax increase. Is that really true?
The rest of the hit is the expiration of the 10% bracket from the Bush tax cuts. That saved 5% of the first $8400 of taxable income (from the old, larger 15% bracket).
http://www.heritage.org/federalbudget/top10-percent-income-e...
See: http://ctj.org/ctjreports/2012/04/who_pays_taxes_in_america....
The total tax burden is pretty flat in the top 40%, and actually goes down marginally from top 5% to top 1% (and probably to top 0.1% if that were shown on the chart). The burden on the middle 20% at 25.2% isn't dramatically lower than the burden on the top 1% at 29.0%, but the burden on the bottom 20% is lower at 17.4%.
In all it's pretty fair if you ask me.
Just estimate your AGI, and it'll be about right.
Tax analysis is hard (and yes, that's a bug not a feature) and not well served by charts like this, nor by ridiculous labels like "fiscal cliff".
[1] With the exception that probably explains your comment: a single mid-income individual without dependents living in rental housing is going to pay pretty much what this chart shows. Obviously that covers a lot of the demographic here, but it's terrible advice for everyone else.
But everyone should have some idea what their taxable income is, and what credits they're eligible for. If the former is X and the latter is Y, you can take Chart(X) - Y and it will be fairly accurate for you.
[1]: http://taxfoundation.org/article/most-americans-dont-itemize...
edit: good point on the EITC as well. This also severely affects the bottom of the scale and you don't need to itemize to take advantage of it.
1) Cliff jumped off with a parachute - middle-class cuts preserved 2) Stephan Feck'd - no agreement = full increase
Also does reflect the cap gains tax increase (15% vs, 25%) which, for entrepreneurs seems more relevant?
Finally there is a much bigger impact to government spending and jobs as the budget cuts would cause furloghs or layoffs until the budget is restored (if at all).
Thanks, recalcitrant GOP, for your willingness to take the nation hostage for your idealism!
Isn't that rhetoric a little inflammatory for HN? We're not talking about a huge dollar value on those high income rates, particularly if we're only talking about the 2001 cuts. One could equally say that President Obama is "willing to take the nation hostage" over $50B in a $3.7T budget.
The budget deficit in 2007 was something like $163B with all these tax cuts in effect and two wars in full swing. Tax rates are not the problem. Spending and the still faltering economy are.
It's clear they are seeking this confrontation, damn the consequences to the majority of the populace... just like their debt-ceiling brinkmanship in 2011.
When the housing bubble burst, the deficit ballooned to $1.4T.
Thank you.
The Senate hasn't proposed a budget in almost 4 years. The Senate is controlled by the Democrats. Is that responsible in the least?
Obama refused to cut any of the extra Trillion dollars per year that the stimulus added to the baseline budget, but instead chooses to point to "the rich" as scapegoats for our national woes.
Why this piece of the Constitution is followed, but practically nothing else, is beyond me.
Spending proposals that originate in the House, like the one(s) that included Paul Ryan's plan, are equally DOA as budget resolutions from the Senate when both houses can't agree... but at least the House is making some effort to show leadership.
Overall, they're both not functioning properly (which may be a good thing), but I was responding to the original poster's accusation that one side is to blame for this mess.
Does work in Chrome on XP. Wish it didn't; I regret seeing the results.
If you can afford to ignore the loss of a few hundred bucks every month then more power to you. Me and my family can't.
The Budget Control Act of 2011 was passed under the political environment of a partisan stalemate, in which Democrats and Republicans could not agree on how to reduce the deficit. It was thought that the blunt cuts of budget sequestration and sharp revenue increases would be mutually undesirable to both parties and provide an impetus and deadline to bring the sides together to solve the deficit problem [1].
Note that the debt ceiling is about to be hit again, which adds to the cliff and the US Credit rating will almost assuredly fall again if we go over it [2].
It's very hard for the CBO to accurately calculate expected revenues with a looming recession, so good it is not.
[1]: http://en.wikipedia.org/wiki/United_States_fiscal_cliff
[2]: http://articles.chicagotribune.com/2012-11-14/business/sns-r...
The cited article indicates the opposite -- that simply reducing the deficit by doing nothing would encourage the ratings agencies not to cut the US credit rating, while passing "temporary measures" that allow us to keep our high deficit and are very unlikely to be temporary would give us better odds of a downgrade.
"Fitch, meanwhile, said even a deal to avert the cliff might not be enough to save the country's AAA rating."
"Ultimately, if Congress and the president can't reach a deal to stabilize and eventually reduce the debt, now at $16 trillion, Moody's will probably cut the United States' current Aaa rating."
Doing nothing is much closer to this sort of deal than any measure that reduces the amount of tax increases or spending cuts.
The following sentence:
"Temporary measures to stave off the budget shock without a credible strategy for the years beyond could earn the country a downgrade, said David Riley, managing director for sovereign ratings at Fitch."
I don't necessarily support the changes to taxation that this thread is about- just a general observation.
For example, if you make 300k your taxes are going up only 11%. IF you make 80k, your taxes are going up 16.5%. Just doesn't feel right.
But don't worry. As others have pointed out, it's extremely unlikely that all of GWB's tax cuts will be rolled back.
The marginal tax rate cuts were signed by Obama in 2010 and the "cliff" includes things like the Payroll Tax Holiday-- the largest of tax cuts [1]-- which only came about in 2010.
[1] http://www.businessinsider.com/chart-of-the-day-deutsche-ban...
If the United States wants to have a European level of both social services and spending (a legitimate choice, although not one I'd make), the wealthy can't possibly carry the tax burden alone - it needs to be spread around more equitably, over all tax brackets.
If having a national defense and an infrastructure that has enabled a person to build that kind of income, don't you think that person should be paying more than a 1/(population of the United States) share of the taxes?
Wat.
Top 10% — $87,334
I don't understand this argument. The infrastructure benefits everyone. The opportunity to succeed from that infrastructure is available to everyone. The road that leads to the grocery store benefits the grocer and the countless consumers who use it. Who gets the better side of the bargain and how do you determine the magnitude of that inequality?
If anything, public infrastructure tends to help the little guy. Historically, when public services weren't provided, the rich paid for their own needed infrastructure, protective services, etc. Those services were geared exclusively to help the wealthy land owners. If you got protection from the watch patrolling the nearby keep, you were lucky because they weren't really there for you.
If you look at total taxes, instead of just federal income taxes like the Heritage Foundation likes to do (intellectually bankrupt think tank whores that they are), you'll see that the total US tax burden is pretty flat from median up to the top 1%: http://ctj.org/ctjreports/2012/04/who_pays_taxes_in_america....
I don't comprehend your information or intuition on where money is in the economy and how it works. No one with billions is sitting on a big mattress of it. The money is in the economy working in a fairly efficient fashion. That money is capital for business enterprises, personal loans, etc.
That money has "momentum" within the economy and value because of the people who are controlling it who have a vested self interest in using it as wisely as possible to keep their companies running.
When you take away chunks from these people, you aren't siphoning it out of the swimming pools of the rich. You're destroying the momentum of that money and the value it provides to people working in corporations, in factories, on roads, in restaurants, on and on.
Taking away money from the rich to help the economic welfare of society is like taking your best football players off the field and sitting them on the bench for the benefit of your football team.
By that logic, tax brackets should be regressive so that the "best" players pay 0% or, better yet, negative.
I don't comprehend your "intuition" on granparent's post about cash. You imply all of it is being invested, which is absolutely not true.
I think the social security trust fund accounting gimmick is silly, so I consider us as having a 70% debt-to-GDP ($10.9 trillion in real debt). This is the same view the CBO takes. That's set to rise to 100% of GDP by 2022 under current policies, but fall to under 60% of GDP by 2022 if the fiscal cliff is allowed to happen.
http://usatoday30.usatoday.com/news/washington/2011-06-06-us...
The sensible comparison is the cost of these programs relative to GDP. That's the only relevant way to present the data. Social Security is projected to rise in cost from 4.8% of GDP to 6.2% of GDP by 2035. That's the impact of your "$63 trillion unfunded liability" on the budget over that time frame.
Medicare is a bigger problem, but too much of the debate revolves around scare-mongering projecting rising healthcare costs out to infinity. See: http://xkcd.com/605/
You could also add 9/11, two expensive wars (because the US can't stomach losing soldiers the way it used to, and protecting soldiers cost a fortune) and a huge recession that we are still not out of.
The projections assumed that everything would be running the way it was in the late 1990's. It didn't.