Fiscal Cliff Deal Inequity

Over the cliff and onto catastropheYesterday, Matt Yglesias posted the very ugly graph below from the Tax Policy Center. What it shows is the increase in taxes at different income levels. The main point is that taxes have gone up on everyone because payroll taxes have gone back up to their regular levels. I’m fine with that. However, this certainly goes against all the reporting on this issue by major media, even though many of us have been talking about it.

What’s even more notable here is that the group that got the best deal were those poor people making between $200,000 and $500,000. You know: the people that all the wrangling was over. We couldn’t raise taxes on these “middle class” people. The only group who will see their taxes go up less than this group is people making between $10,000 and $20,000. Without this “compromise” that was so important to the Republicans, this tax increase might have been marginally progressive.

Of course, what this chart really shows is the gross inequity of payroll taxes: this is why this lucky group sees its taxes go up so little. They are being taxed on at most 50% of their income for the payroll tax. It seems to me that if Democrats feel they can only officially raise taxes on the wealthy, then perhaps in the coming years, we could raise the payroll tax cap up a few hundred thousand dollars. Until then, the United States will continue with its long running policies to make sure the rich get even richer.

After Tax Income Change from Fiscal Cliff Deal
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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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