Today's Wall Street Journal has several fascinating data elements regarding the fiscal cliff deal just signed by Congress.
For the record I am in the 'Happy Camp' regarding the deal, but this diary isn't about that.
This is about how the deal breaks down, and who pays the bill for the $600-$640 Billion in 2013 tax increases.
The article is titled: High Earners Facing First Major Tax Increase in Years and it includes a chart I encourage everyone to see. The chart shows that there have been measurable tax increases in only 9 years since 1970.
This deal is expected to raise taxes by 0.38% of GDP in 2013, which based on my eyeball view is the 3rd highest tax increase as a measure of GDP in any single year since 1970. The other higher two are 0.42% in 1982 and 0.40% in 1980. We raised taxes more than this as a % of GDP in the 50's and 60's, but since the 1970's there have not been any large single year tax increases.
The chart also shows who is paying for this deal by income bracket. To summarize, here is the expected tax increase by income bracket per the WSJ:
- For people making $50-75,000, taxes rise by an average of $822.
- For $100-200,000 the increase is $1,784.
- For $200-500,000 the increase is $2,711.
- For $500,000 - $1M the increase is $14,812.
- For those earning $1M or more, the average increase is $170,341.
$170,341 on average per insanely rich dude.
The key paragraph from the article:
But most of the changes in the bill affect high earners. All told, more than 90% of the tax increases in the bill would fall on households with income of $1 million or more, said economist Roberton Williams of the Tax Policy Center, a nonpartisan group in Washington.The tax increase passed yesterday affects the fattest of the fat cats most.
To quote from the editorial:
...the tax rate on capital gains will rise to 23.8% (including the 3.8% ObamaCare surtax), the highest rate since 1996, and at a time when business investment is mediocre. This contrasts with countries like Singapore and the Netherlands that compete with the U.S. for capital and have a capital-gains tax rate of zero.Poor babies...and later...
But we hope the GOP has learned, after two failed attempts, that Mr. Obama is not someone with whom it can do a "grand bargain." Even as the Senate deal was taking shape, Mr. Obama gave a speech literally taunting Republicans for agreeing to raise tax rates. He also made clear that the price of any future spending cuts or entitlement reform will be another tax increase. He doesn't want to reform government. He wants to expand it and destroy GOP opposition to his agenda in the bargain.Today's WSJ articles and editorials reinforce that the rich are paying for the vast majority of the deal, they don't like it, and they are not confident in their ability to change it going forward.