According to the Congressional Budget Office, the “fiscal cliff” deal passed by the US Senate late last night has $15 billion in spending growth reductions (it’s not cuts as we’ll still be spending more in 2013 than we’re spending in 2012) and $620 billion in tax hikes, both over the course of a decade.
After months of demanding a “balanced” approach to deficit reduction, what we got was $42 in tax hikes for every $1 in spending reform.
What’s more, keep in mind that both figures are decade-long totals. If we take both numbers at face value, ignoring the fact that tax hikes are probably going to slow the economy and thus tax revenues and that the spending cuts (with the history of these sort of deals as our guide) probably won’t ever materialize), we’re talking about an average of $1.5 billion in lower spending and $62 billion in additional revenue.
For a budget that is projected to run a $1 trillion deficit for the fifth consecutive year.
Via TaxProf Blog, here are the specifics of the deal passed last night:
Raise the marginal tax rate to 39.6% on income over $450,000 (joint) and $400,000 (single).
Raise the tax rate on dividends and long term capital gains to 20% on taxpayers with income over $450,000 (joint) and $400,000 (single). The top rate would remain 15% for taxpayers with lower incomes.
Estate and gift tax: $5 million exemption (inflation-adjusted) and 40% rate.
Permanent and retroactive patch for the AMT.
Return of the exemption and itemized deduction phase-outs on taxpayers with income over $300,000 (joint) and $250,000 (single).
One-year extension of 50% bonus depreciation.
Extension of various tax extenders.
Notice that under the deal married couples only get $50,000 in additional income above the $400,000 income threshold for single people. That’s a pretty substantial marriage penalty.
Here’s the vote roll call. Both of North Dakota’s Senators voted for the deal.
Senator Rand Paul called this a “spending bill.”