The Fiscal Cliff Approacheth

[Direckshun]

In an effort to make this thread sticky-worthy, I am going to update this OP to keep casual glancers informed.

This post is the official one-stop shopping of the key points/developments of the fiscal cliff negotiations.

Far as I understand, the fiscal cliff:

1. Gets rid of the Bush tax cuts for the wealthy.
2. Gets rid of the Bush tax cuts for everybody else.
3. Slashes defense spending by something like $500 billion.
4. Slashes domestic programs like the NIH, Head Start, and medicine/drug care for the poor by $500 billion.

The new idea is for Democrats to allow the cliff to hit, then immediately introduce a bill that would bring 2, 4, and some of 3 back. But not 1.

Here is a chart detailing exactly what the fiscal cliff is going to do, financially:

Spoiler!

Originally Posted by Direckshun

New CBO projection: if the fiscal cliff hits, we are in another recession, and lose two million jobs.

http://www.reuters.com/article/2012/...87L0JV20120822

The poor would be hurt by the fiscal cliff:

Originally Posted by Direckshun

Overall, if the tax breaks from the 2009 stimulus are allowed to expire—the EITC and Child Tax Credit expansions, along with American Opportunity Credit for college tuition—the poorest 20 percent of Americans would see their taxes go up by $209 on average, reducing their after-tax income by 1.9 percent, according to the Tax Policy Center.

As would the middle class:

Originally Posted by Direckshun

According to estimates by the Tax Policy Center, more than half of all married couples will owe an additional tax of around $4,000 unless Congress acts. And more than a third of families with children will fall subject to the AMT, with parents of three or more children facing an extra tax of $4,700.

Among married couples with at least two children and adjusted gross income between $75,000 and $100,000, the center estimates that 84 percent will face a significantly higher tax bill this year because of the AMT.

There seems to be some consensus between the parties that substantial revenues want to be raised. Boehner and the GOP hopes that's through limiting tax deductions rather than tax raises.

Obama's opening offer, essentially:

• Allow the Bush tax cuts on high earners to expire. $849 billion
• Limit itemized deductions to 28 percent, close some loopholes and deductions on high earners, eliminate tax breaks for oil and gas companies, eliminate the carried interest loophole, plus a few other items. $584 billion
• Create a special "Buffett Rule" tax rate for millionaires. $47 billion
• Restore the estate tax to 2009 levels. $143 billion
• Limit corporate income shifting to low-tax countries. $148 billion
• Other miscellaneous tax increases and reductions. About -$200 billion
• Total: $1.6 trillion

[Direckshun]

Originally Posted by patteeu

No, you're missing the point. Those may well be, and probably are, on the table. But the issue that we're talking about are top marginal rates.

I love your game.

Raise taxes "a lot" on high incomers, and you're soaking the rich.

Raise taxes a little on high incomers, and it's not enough to make a difference.

One must ask: is there any tax increase on high income earners that you could possibly accept as pragmatic or significant?

[King_Chief_Fan]

Originally Posted by Direckshun

The federal government has ~2.65 million employees.

How many "few million" are you looking to reduce it by?

oh yeah, those state governments don't count.

don't you think some state employees will be reduced as well?

[patteeu]

Originally Posted by Direckshun

I love your game.

Raise taxes "a lot" on high incomers, and you're soaking the rich.

Raise taxes a little on high incomers, and it's not enough to make a difference.

One must ask: is there any tax increase on high income earners that you could possibly accept as pragmatic or significant?

I'm in favor of reducing marginal rates (especially for the top brackets) and for reducing loopholes/targeted tax breaks.

I *am* for increasing rates on the lower income brackets though (especially the 0 bracket) so everyone has skin in the game.

[BucEyedPea]

Originally Posted by patteeu

I *am* for increasing rates on the lower income brackets though (especially the 0 bracket) so everyone has skin in the game.

I think everyone should pay into the system too. If they want all this govt and more services let them see what it costs. It's one real hope for reform.

I noticed CA had a referendum on increasing taxes but to only have the wealthy pay. Gov Brown thinks the tide has changed for more govt and more taxation. They only get away with it by giving a free ride and making freeloaders off the system.

[patteeu]

Originally Posted by BucEyedPea

I think everyone should pay into the system too. If they want all this govt and more services let them see what it costs. It's one real hope for reform.

I noticed CA had a referendum on increasing taxes but to only have the wealthy pay. Gov Brown thinks the tide has changed for more govt and more taxation. They only get away with it by giving a free ride and making freeloaders off the system.

Correct.

[La literatura]

Originally Posted by patteeu

According to this taxpolicycenter.org breakdown from a couple of years ago, reinstating Clinton era rates on upper income taxpayers would be worth approx. $365 billion over 10 years. If we assume that raising the rate halfway toward Clinton era rates would yield about half that amount, we're talking about something like $200 billion over 10 years. That's a measly $20 billion per year in an era of $1 trillion deficits.

So we can safely say that the tax on the rich is pretty measly? What's all this socialism talk then?

[patteeu]

Originally Posted by Literature

So we can safely say that the tax on the rich is pretty measly? What's all this socialism talk then?

What talk are you talking about?

[BucEyedPea]

The socialism talk is those who get subsidized healthcare that others will pay for and we'll go into debt more for.
It's socialism, because Obama does not insist on any contributions for those who are not paying anything for govt because others are who have more. It's not just the amount that makes is socialism....it's who is getting a free or freer ride.

[La literatura]

Originally Posted by patteeu

What talk are you talking about?

The general criticism from the right that increased tax is socialism.

[La literatura]

Originally Posted by BucEyedPea

The socialism talk is those who get subsidized healthcare that others will pay for and we'll go into debt more for.
It's socialism, because Obama does not insist on any contributions for those who are not paying anything for govt because others are who have more. It's not just the amount that makes is socialism....it's who is getting a free or freer ride.

We already have subsidized healthcare. Now Obamacare introduced a market-driven approach to a large segment of the healthcare industry. Why are market-driven approaches socialist?

[patteeu]

Originally Posted by Literature

The general criticism from the right that increased tax is socialism.

It's hard to respond specifically to "general criticism", but in general I'd say that increased wealth transfer is a step toward socialism. So if you want to increase taxes on the people who are already net payers instead of net takers, you're pursuing an increased degree of socialism.

[patteeu]

Originally Posted by Literature

We already have subsidized healthcare. Now Obamacare introduced a market-driven approach to a large segment of the healthcare industry. Why are market-driven approaches socialist?

Because they're less market driven than the market driven approach we already had.

[BucEyedPea]

Market driven? It's fascism.

[La literatura]

Originally Posted by patteeu

Because they're less market driven than the market driven approach we already had.

Okay. That's like milk you buy at a store is less milkier than the milk that comes right out of the cow, then. It's still milk, and it's good for you from the store.

[La literatura]

Originally Posted by BucEyedPea

Market driven? It's fascism.

Okay, some on the right say "socialism," while others say "fascism."