Last week, I wrote an article about the danger of going over the fiscal cliff to everyone, not just the rich.
One commenter said,
“This “fiscal cliff” thing is all . . . BS. Basically, what’s happening is that the tax decreases of the George W. Bush administration are coming to an end and the taxes go back to pretty much the rates that people were paying in the Clinton administration. . . . Yeah, if you are super rich, then the three per cent tax hike is going to be more dollar-wise, but in that case you have so much money, trust me, you are not going to really spend that much less on your personal entertainment stuff.”
Quite a few people agreed with that comment.
Here is why they are wrong, and why being wrong can cost them dearly.
If we go over the “fiscal cliff,” the Office of Management of Budget estimates that:
$120 billion will be raised by the 2% payroll tax cut. That will affect everyone who has employees as well as everyone who receives a paycheck.
$114 billion will be raised by adding 60 million taxpayers to those subject to alternative minimum tax. An example of a typical family affected by this tax is a decidedly non-rich family consisting of a teacher married to a firefighter in high tax states like New York and California.
$95 billion in additional tax for individuals with incomes LESS THAN $200,000 or $250,000 for joint filers.
$66 billion in additional tax for individuals with incomes of $200,000 or more, or $250,000 for joint filers.
$41 billion less in stimulus spending.
$33 billion in additional tax by limiting deductions (like home mortgage interest, medical, charitable contributions, etc) to 28% of income.
$23 billion in tax hikes under the Affordable Care Act.
$14 billion in tax hikes for estates and gifts.
And, worse of all, even with draconian cuts to defense, (but none to Social Security, food stamps and Medicaid) and 2% cut in Medicare, the result is growth of the national debt. Why? Because the cuts are more than offset with entitlement (Social Security, Medicare and Medicaid) spending.
Congress does two things well: Nothing and delay. This “fiscal cliff” issue will likely be delayed, as the rumble of public opinion is not likely to accept the burden of additional taxes to the rich and non-rich alike, once people realize that the rich are actually being taxed less than the rest of us.
But delay doesn’t solve the problem. Slowing entitlement spending AND tax increases are the only reasonable way to address the fiscal future of this country. And most people know it.
If I’ve convinced you, please write your representatives at the handy links provided below, and tell them that you want action now.
Senator Ron Wyden
Senator Jeff Merkley
First District (Clatsop, Columbia, Washington, Yamhill and part of Multnomah) Suzanne Bonamici
Second District (Baker, Crook, Deschutes, Gilliam, Grant, Harney, Hood River, Jackson, Jefferson, Grants Pass area of Josephine, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, Wasco and Wheeler) Greg Walden
Third District (Most of Multnomah and northern part of Clackamas) Earl Blumenauer
Fourth District (Coos, Curry, Douglas, Lane, Linn, most of Benton and Josephine) Peter DeFazio
Fifth District (All of Lincoln, Marion, Polk and Tillamook, parts of northern Benton, most of Clackamas and parts of southwestern Multnomah) Kurt Schrader
Readers outside Oregon can find your representatives here
If I haven’t convinced you of the seriousness of going over the “fiscal cliff,” then I leave you to your fantasies about this, and Santa Claus. But please don’t be surprised if you get a lump of coal in your stocking.