There is a law already on the books, signed by no less that the Current Occupant himself, that came out of the deal to raise the debt limit back in 2011. The tax rates revert to the level of those which were in place BEFORE the so-called “Bush tax cuts” were enacted, which effectively cut the tax rate on ALL taxpayers, in capital gains, in dividend income, and in steps, even the death taxes on inheritances. The Alternative Minimum Tax was also put on ice, for those who had such sources of income that were not normally subject to taxation.
In addition, the sequestration of federal spending was also written into the rules, the biggest meat axe to be taken to the military, but commensurate cuts also to the “social network” spending, i.e., Social Security, Medicare, Medicaid, food stamps, Section 8 rent subsidies, and various food and service distribution plans targeted at inner cities and pockets of poverty across the US.
The effective rate paid by the employee on FICA payroll taxes reverts to 7.65% from its (supposed to be temporary) current 5.65% of the wage earner’s gross pay.
The tax increases on the lower brackets will bring in something like FOUR TIMES as much revenue as the proposed tax hikes on only the top two tax rate brackets.
I just don’t see a downside, if revenue enhancement is the objective. Of course, every bit of revenue that is so enhanced, comes at the expense of productivity and take-home pay, but, you can’t make an omelet with breaking a few eggs, now can you?
Even if they are the nest eggs.
That was my understanding: the cliff is simply sequestration come due. All or nothing. We shall see that Bush’s cuts weren’t just for the evil rich.