How Did You Fare in the Final Fiscal Cliff Deal?

Are you expecting to see more or less in your paycheck this year? Do you think Congress blew it? Should there have been more spending cuts?

I don't know about you, but I'm not one of those folks worrying about the "tax increase for the rich" that was conceived in the fiscal cliff deal lawmakers finally approved on Day 2 of the new year.

I'm not making $400,000 a year. Combined, my wife and I are nowhere near $450,000 a year. So, no worries.

But for all the talk about "protecting the middle class," I'm apparently about to see a change in my take-home pay, thanks to the Jan. 2 deal that averted large across-the-board spending cuts and automatic reversal of some tax cuts.

"Technically, income tax rates that were set to go up were actually left alone, except for individuals and couples earning more than $400,000 and $450,000 respectively," according to this Yahoo! Finance article about three landmines in the fiscal cliff deal. One of those landmines: "Especially of note is a 2 percent bump in the payroll tax that will hit every taxpayer — not just the high-income households."

Another article, from Business Insider published on Yahoo! Finance, notes that the 2 percent (actually, it's 2 percentage points) come because Congress and the White House cut the payroll tax from 6.2 percent for all workers to 4.2 percent for all workers effective 2011.

But the fiscal cliff deal didn't renew that, so everyone's taxes are going up. Find out how you'll fare by reading the chart on the Business Insider article.

"According to the Tax Policy Center, the American Taxpayer Relief Act will mean that the average federal effective tax rate will be 21.7 percent and the average increase is $1,257," the article says.

I consider myself middle class. And this doesn't sound like "protection" to me. But both Missouri senators used that word when talking about their vote for the package.

"I'm glad this vote protects middle class families & #smallbiz owners from tax hikes," said Republican Sen. Roy Blunt. And from Democratic Sen. Claire McCaskill: “This deal isn’t perfect, but it achieves what’s most important here by protecting middle class families."

Are you feeling protected? What could have been done better? Should there have been more spending cuts in this package? Do you expect to pay more or less to the federal government under this deal?

The Missourian January 07, 2013 at 08:21 PM
So if you also understand it was a tax holiday, what is the argument? It was a tax holiday. What is shady about using that to create a stimulus? I can't help it if there were a bunch of ignorant TP'ers standing in the way of additional stimulus. The whole idea of a stimulus is that you increase gov spending without increasing revenue to offset inactivity in the private sector during a downturn. The ability of the feds to print money is the key reason the right's microeconomic view of federal spending is irrelevant to any productive tax/spending discussion. At any rate, the fact that my taxes are returning to the level they were at a couple years ago is pretty inconsequential as far as I'm concerned. It was described to me as a temporary action at the time, and that is how I have viewed it since. So there is no issue.
The Missourian January 07, 2013 at 08:31 PM
And if you all really want to solve the Social Security problem, there is a pretty straightforward solution: tax all income, not just the first $113k or so. Keep the retirement age at 65 or lower it if unemployment stays high to encourage older workers to leave and make room for the young, increase benefits somewhat so households above $113k get a better deal, and bam! Problem solved. Some rich folks may call it unfair, but let me put it this way: Today you might be making $300k a year, but tomorrow you may be making $60k a year. As they say in investment prospecti, "past performance is not a guarantee of future returns." Life can change in an instant, your income can change. That one simple act would solve many problems.
Larry Lazar January 07, 2013 at 08:53 PM
I am continually amazed at how "certain" some people are about who to blame for today's fiscal and societal problems. Perhaps our problems are just a little more complicated than we want to think and that the best path out is to stop calling each other names and to work together? Naive thinking perhaps, but maybe we could tone down our certainty just a tad and focus on solving the problems instead of pointing fingers. "If I am fool, it is, at least, a doubting one; and I envy no one the certainty of his self-approved wisdom. " George Byron
David Mulcahy January 07, 2013 at 09:54 PM
Linda you'd be well served to do a bit of research before you comment on the American economy and taxation. The tax holiday was a 2% reduction in the FICA taxes withheld to pay for your social security benefits if and when you reach retirement. Yes, they increased your pay by $20 each paycheck but in reality they also reduced your future social security calculations by the same amount. None of it went to big companies or the infamous Mr. Blount (sic). When you speak of welfare, food stamps, unemployment and disability to speak as if everyone enrolled in those programs is scamming the system. What, dare say, do you say to the 50 year olds who had well paying positions with respected companies prior to the economic collapse under the last republican administration? The labor force that through no fault of their own is unable to secure employment, primarily because of their age, has college age children and other expenses they incurred when that same administration was telling them to "go buy something" as they did after 9/11? You tell them too bad, you don't deserve the benefits because you are an able bodied human? The last thing many of these folks want is to be on food stamps or other government benefits, but frankly it's the only way they can now survive. You're lumping social security with these is totally off base. Without knowing much about you it sounds like your boss and co-workers may be very pleased if you did quit your job based on you ill-founded comments.
The Missourian January 07, 2013 at 10:50 PM
KCF: "From '95 to '08 (14 years) the Dems were in control of both houses of Congress a total of 2 years: '07-'08 - the last two years of Bush's presidency. Since 1995, there have only been 4 years total of Democratic House majorities in 18 years."


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