The fiscal cliff deal on taxes

According to this report, a deal has been reached that will avoid sending the nation over the fiscal cliff. Or at least negotiators have reached broad agreement on taxes. The main points:

— Current tax rates would be permanently extended for singles making $400,000 or below, and permanently extended for couples making $450,000 or below

— For singles, capital gains and dividends of $400,000 or below would be permanently taxed at 15 percent; capital gains and dividends above $400,000 would be permanently taxed at 20 percent

— For couples, capital gains and dividends of $450,000 or below would be permanently taxed at 15 percent; capital gains and dividends above $450,000 would be taxed at 20 percent

— The Alternative Minimum Tax would be permanently patched

— Estates over $5 million would be taxed at 40 percent, and that tax rate would be permanently extended

What will the worthies do about spending? My bet is they punt, as neither party is at all serious about real cuts in federal spending (and yes Virginia, that means defense outlays, too)

One thing is certain: this part of the deal sticks a thumb in Grover Norquist’s eye.

And whether any of it can pass both Houses of Congress before the witching hour is anyone’s guess.

  • I really don’t like the news about this deal so far. If we concede in the tax issue without getting cuts included in the package, we lose all leverage to demand cuts later. And I don’t believe for a minute the House will pass a package that doesn’t include cuts.

    • Brian. we agree!

    • +1

    • Well, there went that idea, the House passed a package that doesn’t include cuts.

      Let me know when you’re ready to concede that my highly cynical view on these matters is more realistic than you first thought.

      • I have to fight my cynicism all the time. I still push for these guys to do the right thing. I think the vote last night was a bad deal, and we’ll see the impact down the road. At least in that regard, we can agree.

        As for the deal, the bill did originate in the House. The Senate took a tax bill that was passed by the House, HR 8, stripped the language (an amendment in the nature of a substitute) and replaced it with their own. That’s a common occurrence and it passes Constitutional muster.

        • Interesting. For every clear statement in the Constitution, it seems these guys have a trick to render it meaningless.

  • Except for the tweek from $250,000 to $400,000, Obama ot it all. All tax increases, no spending cuts.

  • According to the Congressional Budget Office, the bill increases tax revenue by $620 billion while reducing spending by only $15 billion. That’s right a 41:1 ratio of tax increases to spending cuts.

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