In a last minute fiscal cliff deal, House Republicans agreed to cut $15 billion in spending and increase taxes by $620 billion. That is a 41:1 ratio. Also known as a horrible ratio. Ronald Reagan and George H.W. Bush agreed to similar deals, but they were more balanced. Reagan agreed to a 1:3 ratio and President H.W. Bush agreed to a 1:2 ratio in tax hikes to spending cuts. These presidents put spending cuts above of tax hikes, where as the deal with President Obama tax hikes are the name of the game.
According to the Tax Policy Center, the deal passed by the Senate raises taxes on 77% of U.S. households, where the average tax increase is $1,635. The Republican leadership couldn’t even come up with a compromise that upheld Obama’s promise to not raise taxes on people making less than $250,000 a year. Instead, this bill raises taxes on 80% of households making between $50,000 and $200,000.
The only consolation prize to this bad deal would be deficit reduction. But the American people don’t even get that. According to the CBO the bill adds $4,000,000,000,000 to the deficit.
This might seem like a bad deal for the American people, but there is an upside. Algae growers will receive a $59,000,000 tax credit, Puerto Rico and the Virgin Islands will receive $222,000,000 in a return of excise tax on rum produced, and Hollywood will receive $430,000,000 on a special expensing rule.
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