Fiscal Cliff Deal Raises Taxes on Almost 80% of Households

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average dollar tax change

Yay. Those super rich pricks that never pay anything in taxes just got their taxes raised! Now it’s fair in America, as Obama wants it, right? The rich pay more, the middle class sees no tax hike, and we start chipping away at the debt starting now, right?


This new ‘deal’ that Obama is praising as a victory carries a tax increase in there that actually hurts the middle-class worse than those that fall in the $200k-500k range.

Middle-class workers will take a bigger hit to their income proportionately than those earning between $200,000 and $500,000 under the new fiscal cliff deal, according to the nonpartisan Tax Policy Center.

Earners in the latter group will pay an average 1.3 percent more – or an additional $2,711 – in taxes this year, while workers making between $30,000 and $200,000 will see their paychecks shrink by as much as 1.7 percent – or up to $1,784 – the D.C.-based think tank reported.

Overall, nearly 80 percent of households will pay more money to the federal government as a result of the fiscal cliff deal.

This is largely because of the payroll tax, which will jump from 4.2 percent up to 6.2 percent – its level from 2010. As William G. Gale, the co-director of the Tax Policy Center, points out, “For most households, the payroll tax takes a far bigger bite than the income tax does, and the payroll tax cut therefore – as [the Congressional Budget Office] and others have shown – was a more effective stimulus than income tax cuts were, because the payroll tax cuts hit lower in the income distribution and hence were more likely to be spent.”

Notice how President Obama’s carefully worded statement says ‘income taxes’ and not just ‘taxes’: “Under this law, more than 98 percent of Americans and 97 percent of small businesses will not see their income taxes go up.”

I see what he’s doing there.

Now, to be clear, the taxes are not rising as much as they would have if no deal had been reached, so at least the deal accomplished something. But from an average-American standpoint, it’s hard to look at what Obama and the Democrats are saying and not shake your head. Obama has been preaching for what seems like an eternity that he would not raise taxes on the middle class, but that’s exactly what just happened.

It’s just so damn frustrating to take these people in Washington seriously. You now have a fiscal cliff deal that adds $330 billion to the deficit, raises taxes on almost 80% of American families, and they want us to think this is the best they can do?


You know how people have been freaking out about how bad it would be if the sequestration occurred, cutting an outrageous $110 billion from spending that would largely affect military funding? This fiscal cliff deal results in a “fiscal constriction” of $115 billion. That means $115 billion dollars – more than the sequestration cuts were supposed to be – will be taken out of the economy and shipped straight to Washington. Yes, that Washington that funds robo-squirrels and studies the effects of cocaine on Japanese quail.

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