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Thu Dec 27, 2012, 12:57 PM

Higher Taxes for All: The Dems' Terrible Fallback Plan for the Fiscal Cliff

So, the fiscal cliff. Barring a semi-miraculous breakthrough, it looks like it will be around until at least January. In other words, a deal is not close. That's left both sides scrambling for a backup plan, which could leave all of us scrambling for more cash in the new year. Indeed, as Greg Ip of The Economist points out, the fallback option Democrats are talking about now, a bill the Senate passed last summer, wouldn't undo nearly enough of the austerity set to kick in.

The Senate tax bill is just that -- a tax bill. It would extend the Bush tax cuts for a year for all but the top 2 percent of households, and limit the deductions they can take. It would bring the estate tax back to its 2001 level with a $1 million exemption and 55 percent rate. It would raise taxes on capital gains and dividends from 15 to 20 percent -- which is really 23.8 percent when you include the Obamacare surtax. And that's it. It wouldn't extend the payroll tax cut. It wouldn't extend unemployment insurance. It wouldn't undo the sequester. It wouldn't do the doc fix. It wouldn't start any new infrastructure projects. If you add up all of the things it doesn't do, it comes out to about 1.8 million fewer jobs in 2013 than in a world without the fiscal cliff.

It also adds up to quite a bit less take-home pay for everybody. While the Senate bill ostensibly only raises taxes on the top 2 percent, the expiring payroll tax cut means that the middle-class would get hit hard too. The charts below from the Tax Policy Center show just how hard the plan would hit each group of earners. If the expiring payroll tax doesn't get you, the expiring Bush tax cuts will.

Even if President Obama and House Republicans finally agree to avoid the austerity from the sequester, the doc fix, and expiring unemployment insurance, as seems likely, this is still a poor rubric for a deal. Any bargain, grand or otherwise, that doesn't include a payroll tax cut -- or its equivalent, like Making Work Pay -- doesn't do enough to stop 2013 from being a year of too much austerity far too soon.


http://www.theatlantic.com/business/archive/2012/12/higher-taxes-for-all-the-dems-terrible-fallback-plan-for-the-fiscal-cliff/266641/

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Reply Higher Taxes for All: The Dems' Terrible Fallback Plan for the Fiscal Cliff (Original post)
Redfairen Dec 2012 OP
geek tragedy Dec 2012 #1
djean111 Dec 2012 #2
Angry Dragon Dec 2012 #3
Filibuster Harry Dec 2012 #4

Response to Redfairen (Original post)

Thu Dec 27, 2012, 01:05 PM

1. There are no GOOD options, the question is which is least bad.

Obviously, to get the House to agree to more stimulus, Democrats would have to agree to something that the House Republicans want, which would by definition be awful.

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Response to Redfairen (Original post)

Thu Dec 27, 2012, 01:06 PM

2. Austerity is what has been planned for us, all along. (n/t)

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Response to Redfairen (Original post)

Thu Dec 27, 2012, 01:19 PM

3. if there is a fiscal cliff then blame the republicans

the republicans ran on job in 2010 ....... I am still waiting for all those jobs
the republicans are the biggest terrorist group in this country

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Response to Angry Dragon (Reply #3)

Thu Dec 27, 2012, 03:43 PM

4. I also am waiting for those jobs. The Rs are showing they really don't care about us.

Obstructionism. Not good for the country. I just hope the democrats remember this and repay the favor to the next R president.

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