How much the fiscal cliff will cost you

To descend from the theoretical to the tangible, here is how much your taxes will increase once the Bush tax cuts expire on Tuesday, unless Congress cuts a deal to extend them:

Annual income of $20,000 to $30,000: $1,064 average tax increase

Annual income of $40,000 to $50,000: $1,729 average tax increase. . . .

Annual income of $50,000 to $75,000: $2,399 average tax increase

Annual income of $75,000 to $100,000: $3,688 average tax increase

Annual income of $100,000 to $200,000: $6,662 average tax increase. . . .

Annual income of $200,000 to $500,000: $14,643 average tax increase

Annual income of $500,000 to $1 million: $38,969 average tax increase

Annual income of more than $1 million: $254,637 average tax increase

via What falling off the “fiscal cliff” means for you – CBS News.

If these expire, the much-reviled George W. Bush will surge in popularity once people realize how much money he kept in their pockets.  But the popularity of the president and especially Republicans will plummet.

Obama goes after Independents

On the President’s concessions on the Bush tax cuts:

Although his liberal supporters are furious about the decision, President Obama’s willingness to extend all of the George W. Bush-era tax cuts is part of what White House officials say is a deliberate strategy: to demonstrate his ability to compromise with Republicans and portray the president as the last reasonable man in a sharply partisan Washington.

The move is based on a political calculation, drawn from his party’s midterm defeat, that places a premium on winning back independent voters.

The strategy emerged from hours of post-election meetings among senior administration officials who, after poring over returns, exit polls and midterm history, have determined that the loss of independent voters who supported Democrats in 2008 cost the party dozens of races this year. That conclusion places Obama at odds with many liberal Democrats, who say the midterm losses were the result in part of a political base dispirited by the president’s penchant for compromise.

Faced with unified GOP opposition, Obama didn’t get what he really wanted: the end of Bush tax cuts on household income of more than $250,000 and continuation of the rest.

Instead, he went along with emboldened Republicans to extend even the top-tier cuts for two years in exchange for unemployment insurance and other measures intended to boost the economy.

In doing so, Obama is trying to make the best of a bad situation. Administration officials now say that restoring the president’s image as a post-partisan leader is more important for the next two years of his term and for his reelection effort.

via The president extends an olive branch to GOP.

Liberals, though, are absolutely furious. Democrats in Congress are trying to repudiate the agreement.

I give President Obama credit, though.  If he governs to the center, I’ll support that!

Obama accepts Bush tax cuts

President Obama has agreed with Congressional Republicans to extend all of the  Bush-era tax cuts in exchange for extending unemployment benefits.  The package includes some other interesting details:

President Obama and congressional Republicans have reached a tentative accord on a far-reaching economic package that would preserve George W. Bush administration tax breaks for families at all income levels for two years, extend emergency jobless benefits through 2011 and cut payroll taxes by 2 percent for every American worker through the end of next year.

The scope of the agreement, announced by the White House late Monday, was far broader than lawmakers in either party had been expecting. The deal would extend a college tuition tax credit and other breaks for middle-class families that were due to expire New Year’s Eve. And it would revive the inheritance tax after a year-long lapse, imposing a 35 percent rate on estates worth more than $5 million for individuals and $10 million for couples.

The package would add more than $700 billion to the rising national debt, said congressional sources who were briefed on the deal. But with the unemployment rate at 9.8 percent, the White House was focused on winning a compromise that could boost the fragile recovery while preventing the economic damage that could result from letting the expiring tax breaks affect paychecks next month.

The payroll tax holiday, in particular, is striking for its universal application. Unlike most tax breaks, it would be available to taxpayers at every income level, letting consumers keep an extra $120 billion in their pockets next year. For a couple making $70,000 a year, the holiday would provide a tax savings of $1,400.

via Obama and GOP strike tax accord.

This description of the payroll tax, which goes for Social Security, is unclear.  It doesn’t cut them by a measly 2%, which would hardly mean anything.  Rather, it cuts the tax rate from 6% of the paycheck to 4%, so that all workers will get to keep a third of what they used to pay.  That’s a pretty significant raise.

Now all the President has to do is persuade the Democrats, many of whom are reportedly livid at the deal, which keeps the tax cuts even for those who make $250,000 and up.


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