Wednesday, November 14, 2012

Fiscal Cliff Means More Taxes on All of Us

Click on Zero Hedge Graphic for larger view.

While the Democrats and their media enablers spin the consequences of the fiscal cliff deal as tax increases for "the rich", a look at the actual data shows that they will getting the money from all of us.   This blather about Republicans "protecting the rich" conceals the fact that most of the tax increases under this deal will come from all of us.

A look at the chart shows that only $40 billion in new government revenue would come from eliminating the tax cuts for those earning over $250,000 (and I would not consider a couple earning $260,000 as "rich.")   Compare that to $174 billion the elimination of tax cuts under the deal would take from those earning less than $250,000.  Add to it the cut in Social Security tax will end under the deal, and that effective tax increase  will apply to all wage earners.  That will cost us $100 billion.     Another $59 billion will be obtained by no longer adjusting the "Alternative Minimum Tax" to inflation.   That could affect couples whose household income is as little as $75,000.  And remember when inflation kicks up more and more families will fall under that umbrella.    Fifteen years from now $40,000 could be the new $75,000 due to inflation.

So all told, only $40 billion of the coming tax increases will be from cuts solely to "the rich" making over $250,000 a year.   At least $233 billion in tax increases will be applicable to all or very many more of us.

By the way, there "across the board cuts" amount to a mere $105 billion, unless you want to count things like ending extended unemployment benefits (good for another $58 billion).  In other words, the cuts don't seriously hurt anyone connected in Washington, and are dwarfed by the increased revenues they would ring out of the American people.

This talk about taxing the rich is mostly misdirection so you won't notice the government hand reaching in your own pocket.  Even if it wasn't, I find the idea that just because someone has more than you means that its OK to use the government to take it from them appallingly immoral.   It never goes down like that anyway.   The very rich can find ways to protect themselves, if need be by leaving the country whose government demo-gouges think the rich exist only to fund their ambitious programs.   The gun that the demo-gouge holds is invariably turned on the middle class and the upper middle class because those groups are much more numerous and easy to loot than are the very rich.  So it is here.

The American middle and upper middle class have no party to advocate for them in Washington D.C.     This deal is a stinker for them.    The tax increases are far greater than the spending "cuts" (reduction in planned increases) and the tax increases will fall on them as a class much harder than the truly wealthy, whose wealth is mostly earned by capital gains rather than taxable income.

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