If you are a conservative you probably did not like the fiscal cliff deal that just passed, but the mainstream media overlooked a few important things that help many people and the economy.
The housing market will continue to get better because the politicians didn’t touch the mortgage interest rate deduction and the long term tax relief on mortgage debt. Housing is very important to lower and middle income people and the economic collapse in 2008 ruined peoples entire savings and future by sinking their housing value. If these two items weren’t extended many more would go “under water” and there would be a surplus of houses in the market, certainly not a good thing.
The fiscal cliff deal also did something substantial by providing permanent tax relief to 98 percent of Americans. Certainty in this regard, for investors, buyers, sellers, and consumers will certainly help the economy, and it raised the top rate to $400,000. In 2013 $250,000 adjusted for inflation is not even close to the same as it was ten or fifteen years ago with increasing health care costs, college tuitions, food prices, and the general overall standard of living. If you had to pay 39.6 percent in income taxes making $250,000 living in a city, having two kids in college, and owning a home you really wouldn’t be that “well off” and you would consume less in the economy. Part of the reason the economy was so good in the 1990s was that consumer confidence was at an all time high, and more consumerism is going to help get the economy going again. Raising taxes on the vast majority of people and having unfair tax brackets wouldn’t be productive.
The Alternative Minimum Tax has finally been altered so that it won’t hurt middle income families. For years people have assumed this was just a tax on the wealthy but it was never indexed to inflation. In fact, it has been modified or revamped 19 times in the last 42 years. Now it is indexed to inflation, so many families that worked their way into it, or were sitting on the bubble worrying about qualifying for it, now will do neither. For years the tax was set at $45,000 and as median incomes grew it hit more and more people. One economist estimates that almost 28 million families would have to pay $3,400 in extra taxes each year, if this was not indexed to inflation. Tax credits were also extended for low income families, and the “doctor fix” was enacted so that Medicare providers do not get reimbursed drastically less than they would. A farm bill was also extended nine months that would have drastically raised the price of milk, something everyday people depend on.
It was not a deal that solved our nations spending frenzy, but a few things passed that help many lower income people. The mainstream media did its best to frame this as a pure ideological debate over taxes, but they overlooked many important things. This is a disservice to all Americans.