Fiscal Cliff Tax Deal Details A.K.A Governmental “Tough Love”

Well, with this new deal we averted the cliff or did we? Maybe we had a parachute that kept us safe for a while, gave us a nice feeling that we’d land softly and smoothly, but then, half the way down we noticed large hole in the chute.

The Good-

• The deal restores the top 39.6 percent rate for high-income households in effect during the 1990s. That rate would apply to single taxpayers with incomes above $400,000 and married couples with incomes above $450,000, up from 35 percent.
• The deal provides a permanent and retroactive patch for the alternative minimum tax to prevent it from ensnaring middle-class taxpayers.
• Capital gains rates return to 20% (but remains at 15% for lower than 400K income earners)
• The agreement also avoids a 27 percent cut to reimbursements for doctors seeing Medicare patients for 2013 by fixing the sustainable growth rate formula through the end of next year (the “doc fix”).
• The deal blocks a pay increase for Congress. (Hooray!)
• The deal extends the Child Tax Credit, Earned Income Tax Credit, and the American Opportunity Tax Credit. (The agreement would extend the tax breaks for five years.)
• The deal renews a price support program for the dairy industry to prevent a sharp increase in milk prices.

The Bad-

• The agreement will prevent 2 million people from losing unemployment insurance benefits in January by extending emergency unemployment insurance benefits for one year. (Extending extensions)

The Ugly-

• The deal did not include an extension of the 2011 and 2012 payroll tax cut on Social Security tax withholding from paychecks, so most workers will see their Social Security taxes rise from 4.2 to 6.2 percent.

So, in the end, we’ll be paying more taxes, we’ll be spending the same on milk, and we’ll be watching the democrats and republicans fight over this or that for two more months.

I called it a bloodbath once before, but now, I’m thinking it’s more like the Jim Jones incident. We aren’t being plowed down; we voluntarily drank the kool-aid. Now, it’s time to pay up, literally. And for God’s sake, stop acting like you’re entitled to comfortable living. We are entitled to the pursuit of happiness, not entitled to be happy and comfortable no matter the costs.