What’s in the fiscal cliff deal? From The National Journal:
- Higher taxes on individuals earning $400,000 and on families making $450,000 or more. Under that threshold, the Bush-era tax cuts will be permanent for all but the wealthiest households. The $450,000 threshold for families is a significant increase from Democrats’ initial proposal to raise taxes on Americans making $250,000 or more, but it is lower than Republicans’ earlier proposal to raise taxes on households making $1 million or more.
- Higher tax rates on capital gains and dividends for wealthier households. Taxes on capital gains and dividends will be held at their current levels of 15 percent for individuals making less than $400,000 and households with income of less than $450,000. They will rise to 20 percent for individual taxpayers and for households above those thresholds.
- Automatic spending cuts delayed for two months. The “sequester,” which would impose steep, across-the-board cuts to domestic and defense programs, will be delayed for two months.
- One-year extension to unemployment insurance. Emergency unemployment benefits will be extended for a year. The extension was a priority for President Obama and congressional Democrats.
- One-year “doc fix.” The measure will put off scheduled cuts in physician payments under Medicare. In the absence of an agreement, the payments were going to be reduced by 27 percent in January.
- Nine-month farm bill extension. Breakfast lovers, rejoice: A much-feared spike in milk prices, dubbed the “dairy cliff” because it was also set to kick in abruptly on Jan. 1, will be averted through a nine-month extension of certain portions of the farm bill.
- Personal exemptions phased out for individuals making over $250,000. Personal exemptions will be phased out and itemized deductions will be limited for taxpayers making over $250,000 and families earning more than $300,000.
- 40 percent estate tax. The estate tax will rise to 40 percent from its current 35 percent level, with the first $5 million in assets exempted. Democrats had earlier sought a higher increase to 45 percent and a lower exemption of $3.5 million.
- Permanent fix to the Alternative Minimum Tax. The alternative minimum tax was levied to ensure the wealthiest Americans paid a fair share of taxes. It was not indexed for inflation but is usually “patched” annually to prevent an increasingly large swath of middle-class Americans from being caught in its net. As part of the fiscal deal, the AMT will be permanently indexed to inflation.
- Tax breaks for working families. The deal includes five-year extensions of the American Opportunity Tax Credit, which can be claimed for college-related expenses; the Child Tax Credit; and the Earned Income Tax Credit, which is a refundable income-tax credit for low- to moderate income working Americans.
- Business tax breaks. The Senate Finance Committee passed a package in August that tackled a variety of routinely expiring tax provisions known as extenders. These popular tax provisions include breaks for research and development. That package passed as part of the broader cliff deal.
- Congressional pay freeze. President Obama recently authorized a congressional pay raise in a move that angered many congressional Republicans. Under the New Year’s cliff measure, members of Congress won’t see their pay increase.
By the way, this pretty much all proves no one’s really serious about “fixing” the debt … and why would they be? “Fixing” the debt means cutting benefits to real people (i.e., voters) TODAY. It means raising taxes on real people (i.e., voters) TODAY. All in return for a “fix” that may or may not happen a LONG TIME FROM NOW.
Does anyone take massive pain today in order to potentially gain something well in the future, especially when the pain you suffer today may well be fatal (to your political career)? At least, does any sane person do this?
Of course they don’t.
This deal almost certainly guarantees increases in the deficit going forward, not paying it off. The Bush tax cuts were, like so much of the Bush presidency, a disaster for America, and the fetishization of them today is moronic. But that didn’t stop lots of people from calling for making them “permanent” (whatever that means in DC) in this deal, did it?
See you at the next crisis (over the debt ceiling) in two months. Not a damn thing got settled with this deal … nor was there any intent to settle anything. The game continues.