In an action that already feels like ancient history, Congress voted earlier this month to avoid the “fiscal cliff.” While much remains to be settled, the revenue side of the issue got resolved because 84 House Republicans joined 172 Democrats to support the solution negotiated between the President and the Senate. In some ways, such bipartisanship was a moment of déjà vu from a time, nearly 50 years ago, when two pivotal civil rights bills were being considered. Then, Lyndon Johnson was President and both houses of Congress were in the hands of Democrats. Martin Luther King was in the streets. The Student Nonviolent Coordinating Committee was registering voters. The 1964 Civil Rights Act and the 1965 Voting Rights Act were passed by Republicans joining Democrats to move the President’s legislation into law.
In both circumstances – today, as then – it was one party’s Southern flank that refused to go along with its leadership.
How much do the newly enacted tax hikes on the wealthiest Americans actually affect them? Hardly at all.
Almost all of the debate that convulsed Capitol Hill in December concerned the reinstatement of the highest marginal tax rate on earned income — that is, on wages and salaries. But as Fitzgerald said, the rich are different from you and me, and one of the primary ways they’re different is that they don’t get their income from wages and salaries.
In 2006, the bottom four-fifths of U.S. tax filers got 82 percent of their income from wages and salaries, a Congressional Research Office study found. The richest 1 percent, however, got just 26 percent of their income that way; for the richest one-tenth of 1 percent, the figure is just 18.6 percent.
The study also looked at dividends and capital gains. The bottom four-fifths got just 0.7 percent of their income from those sources.
The agreement passed last night is a breakthrough in beginning to restore tax fairness and achieves some key goals of working families. It does not cut Social Security, Medicare or Medicaid benefits. It raises more than $700 billion over 10 years, including interest savings, by ending the Bush income tax cuts for families making more than $450,000 a year. And in recognition of the continuing jobs crisis, it extends unemployment benefits for a year. A strong message from voters and a relentless echo from grassroots activists over the last six weeks helped get us this far.
But lawmakers should have listened even better. The deal extends the Bush tax cuts for families earning between $250,000 and $450,000 a year and makes permanent Bush estate tax cuts exempting estates valued up to $5 million from any tax. These concessions amount to over $200 billion in additional tax cuts for the 2 percent.
We begin 2013 awaiting the House of Representatives vote on tax legislation passed by the Senate early this morning. So we’re technically off the fiscal cliff but not really about to hit the ground – yet. Below are some initial perceptions of what the legislation means, beginning with the conservative American Spectator.