

See what your paycheck will look like before and after the fiscal cliff - edawerd
http://www.paycheckcity.com/fiscalcliff/cliff.html

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nostromo
It bothers me that this is being called "the fiscal cliff." Language matters,
and I hope I'm not being a conspiracy theorist when I wonder if this term was
propagated specifically to scare people.

The positive aspect of the fiscal cliff is getting no air time. From
Wikipedia: "The deficit for 2013 is projected to be reduced by roughly half,
with the cumulative deficit over the next ten years to be lowered by as much
as $7.1 trillion or about 70%."

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sarah2079
I like this a lot, it is a really nice way of seeing the data. I would also be
interested to see:

\- A version with the income on a logarithmic scale to make it extend past
$300k in a sensible way. (Not because I need it, I just want to know how the
changes affect taxes in the higher ranges).

\- A plot of % increase in taxes vs. income. There are some poor sods on the
left hand side of the graph who seem to be getting an almost 50% tax increase.
Is that really true?

~~~
curt
Here's a series of charts that show what percentage of income taxes are paid
by each group (top 1%, 5%, 10%, etc) and their overall share of total income.
As you can see the top 1% earn about 20% of total income but pay 40% of all
income taxes.

[http://www.heritage.org/federalbudget/top10-percent-
income-e...](http://www.heritage.org/federalbudget/top10-percent-income-
earners)

~~~
rayiner
Here is a better series of charts that doesn't just look at federal taxes, but
instead the whole tax burden:

See:
[http://ctj.org/ctjreports/2012/04/who_pays_taxes_in_america....](http://ctj.org/ctjreports/2012/04/who_pays_taxes_in_america.php)

The total tax burden is pretty flat in the top 40%, and actually goes down
marginally from top 5% to top 1% (and probably to top 0.1% if that were shown
on the chart). The burden on the middle 20% at 25.2% isn't dramatically lower
than the burden on the top 1% at 29.0%, but the burden on the bottom 20% is
lower at 17.4%.

In all it's pretty fair if you ask me.

~~~
sarah2079
Yeah, this is a much more complete picture. Not including payroll and state
taxes gives very misleading results.

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TomatoTomato
Not taking into account the standard deduction. This is especially evident in
the lowest income totals.

~~~
twoodfin
People have lots of deductions, exemptions and credits (think 401(k), home
mortgage interest, and health plans). It's impossible to make a simple
calculator based purely on top line paycheck income for that reason.

Just estimate your AGI, and it'll be about right.

~~~
ajross
No, as pointed out it's basically never right for anyone[1]. It doesn't cover
huge deductions like mortgage interest, it doesn't include the EITC at all,
which means that it's wildly overestimating tax liability at the bottom of the
chart (where it's routinely _negative_ for families with children).

Tax analysis is hard (and yes, that's a bug not a feature) and not well served
by charts like this, nor by ridiculous labels like "fiscal cliff".

[1] With the exception that probably explains your comment: a single mid-
income individual without dependents living in rental housing is going to pay
pretty much what this chart shows. Obviously that covers a lot of the
demographic _here_ , but it's terrible advice for everyone else.

~~~
twoodfin
You're right. I confused AGI (line 37 on the 1040) with taxable income (line
43). And of course even that doesn't account for a variety of credits
including EITC.

But everyone should have some idea what their taxable income is, and what
credits they're eligible for. If the former is X and the latter is Y, you can
take Chart(X) - Y and it will be fairly accurate for you.

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r00fus
I wish it would break down the added tax based on the following scenarios:

1) Cliff jumped off with a parachute - middle-class cuts preserved 2) Stephan
Feck'd - no agreement = full increase

Also does reflect the cap gains tax increase (15% vs, 25%) which, for
entrepreneurs seems more relevant?

Finally there is a much bigger impact to government spending and jobs as the
budget cuts would cause furloghs or layoffs until the budget is restored (if
at all).

Thanks, recalcitrant GOP, for your willingness to take the nation hostage for
your idealism!

~~~
twoodfin
_Thanks, recalcitrant GOP, for your willingness to take the nation hostage for
your idealism!_

Isn't that rhetoric a little inflammatory for HN? We're not talking about a
huge dollar value on those high income rates, particularly if we're only
talking about the 2001 cuts. One could equally say that President Obama is
"willing to take the nation hostage" over $50B in a $3.7T budget.

The budget deficit in 2007 was something like $163B with all these tax cuts in
effect and two wars in full swing. Tax rates are not the problem. Spending and
the still faltering economy are.

~~~
r00fus
The GOP shot down a previous bill that avoided the "cliff" months earlier:
[http://bloggingblue.com/2012/08/01/shocker-house-
republicans...](http://bloggingblue.com/2012/08/01/shocker-house-republicans-
vote-against-extension-of-middle-class-tax-cuts/)

It's clear they are seeking this confrontation, damn the consequences to the
majority of the populace... just like their debt-ceiling brinkmanship in 2011.

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scrumper
Doesn't work in stock, patched Safari on Lion (no extensions.) Doesn't work in
Chrome on Lion, AdBlock Plus and Ghostery. Doesn't work in stock, patched IE7
on XP.

 _Does_ work in Chrome on XP. Wish it didn't; I regret seeing the results.

~~~
usea
Doesn't work in Opera, either.

~~~
scrumper
It'd only make you cry. Ignorance is bliss.

~~~
scrumper
muzz, don't be obtuse. This means hundreds of dollars a month gone from your
paychecks. The less you earn the bigger the percentage increase in taxes,
never mind the greater relative value of each $100 to you.

If you can afford to ignore the loss of a few hundred bucks every month then
more power to you. Me and my family can't.

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lutorm
Why are people calling it the "fiscal cliff"? Isn't it supposed to make the
fiscal situation better?

~~~
TomatoTomato
The Congressional Budget Office reported an increased risk of recession during
2013 if the deficit is reduced suddenly.

The Budget Control Act of 2011 was passed under the political environment of a
partisan stalemate, in which Democrats and Republicans could not agree on how
to reduce the deficit. It was thought that the blunt cuts of budget
sequestration and sharp revenue increases would be mutually undesirable to
both parties and provide an impetus and deadline to bring the sides together
to solve the deficit problem [1].

Note that the debt ceiling is about to be hit again, which adds to the cliff
and the US Credit rating will almost assuredly fall again if we go over it
[2].

It's very hard for the CBO to accurately calculate expected revenues with a
looming recession, so good it is not.

[1]: <http://en.wikipedia.org/wiki/United_States_fiscal_cliff>

[2]:
[http://articles.chicagotribune.com/2012-11-14/business/sns-r...](http://articles.chicagotribune.com/2012-11-14/business/sns-
rt-us-usa-fiscal-ratingsbre8ad1s4-20121114_1_downgrade-sovereign-risk-group-
debt-trajectory)

~~~
anonymoushn
> US Credit rating will almost assuredly fall again if we go over the cliff
> [2].

The cited article indicates the opposite -- that simply reducing the deficit
by doing nothing would encourage the ratings agencies not to cut the US credit
rating, while passing "temporary measures" that allow us to keep our high
deficit and are very unlikely to be temporary would give us better odds of a
downgrade.

~~~
TomatoTomato
Quote from article:

"Fitch, meanwhile, said even a deal to avert the cliff might not be enough to
save the country's AAA rating."

~~~
anonymoushn
The preceding sentence:

"Ultimately, if Congress and the president can't reach a deal to stabilize and
eventually reduce the debt, now at $16 trillion, Moody's will probably cut the
United States' current Aaa rating."

Doing nothing is much closer to this sort of deal than any measure that
reduces the amount of tax increases or spending cuts.

The following sentence:

"Temporary measures to stave off the budget shock without a credible strategy
for the years beyond could earn the country a downgrade, said David Riley,
managing director for sovereign ratings at Fitch."

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gxs
Not to get too political on HN, but why increase taxes by nearly 3k on someone
making 70k a year? Given the way the apples and googles of the world hoard
money offshore, and the wealthiest people in the country sitting on billions
of dollars (rightfully earned or not) it seems to me like it would make more
sense to make them bear a little more of the burden.

For example, if you make 300k your taxes are going up only 11%. IF you make
80k, your taxes are going up 16.5%. Just doesn't feel right.

~~~
gyardley
Not to get too political on HN, but the top 10% of earners in the United
States already pay ~45% of the taxes, which is a greater share of the burden
than anywhere else in the industrialized world. In Germany, for example, the
top 10% of earners pay 31% of taxes. In France, they pay 28%, and in
Switzerland, only 21%.

If the United States wants to have a European level of both social services
and spending (a legitimate choice, although not one I'd make), the wealthy
can't possibly carry the tax burden alone - it needs to be spread around more
equitably, over all tax brackets.

~~~
kip_
The top 10% of earners pay that much in taxes because they already make more
income than the bottom 90% combined.

If having a national defense and an infrastructure that has enabled a person
to build that kind of income, don't you think that person should be paying
more than a 1/(population of the United States) share of the taxes?

~~~
crusso
_If having a national defense and an infrastructure that has enabled a person
to build that kind of income_

I don't understand this argument. The infrastructure benefits everyone. The
opportunity to succeed from that infrastructure is available to everyone. The
road that leads to the grocery store benefits the grocer and the countless
consumers who use it. Who gets the better side of the bargain and how do you
determine the magnitude of that inequality?

If anything, public infrastructure tends to help the little guy. Historically,
when public services weren't provided, the rich paid for their own needed
infrastructure, protective services, etc. Those services were geared
exclusively to help the wealthy land owners. If you got protection from the
watch patrolling the nearby keep, you were lucky because they weren't really
there for you.

------
rayiner
Looking forward to this. Would rather have a small tax increase than be
dealing with 100% Debt-to-GDP in 10 years.

~~~
anonymoushn
This already happened a couple years ago. Perhaps you mean 200% Debt-to-GDP in
10 years?

~~~
rayiner
So the 100% figure includes US government debt owed to the Social Security
trust fund (and other intra-governmental debt). Excluding that amount it's
about 70%. Now it's a matter of choice in how you portray it, but you have to
be consistent. You can either say we have 100% debt-to-GDP as well as $4.8
trillion sitting in the social security trust, or you can say we have 70%
debt-to-GDP and nothing in the bank. You cannot say we have 100% debt-to-GDP
and nothing in the bank--that's just incorrect.

I think the social security trust fund accounting gimmick is silly, so I
consider us as having a 70% debt-to-GDP ($10.9 trillion in real debt). This is
the same view the CBO takes. That's set to rise to 100% of GDP by 2022 under
current policies, but fall to under 60% of GDP by 2022 if the fiscal cliff is
allowed to happen.

~~~
TomatoTomato
If you consider unfunded liabilities (which obviously can be adjusted and is
hard to calculate) you can add anywhere from 50-200 Trillion.

[http://usatoday30.usatoday.com/news/washington/2011-06-06-us...](http://usatoday30.usatoday.com/news/washington/2011-06-06-us-
owes-62-trillion-in-debt_n.htm)

<http://www.usdebtclock.org/>

~~~
rayiner
The USA Today article is a bunch of scare-mongering for the innumerate. It's
easy to make numbers look big and scary when you add them up over a 75 year
time horizon without accounting for GDP and population growth. It's also a
load of crock to call medicare/social security "unfunded liabilities" and add
them to the debt, because they are not binding obligations. The government can
cancel medicare tomorrow and there would be no recourse. Medicare/Social
Security liability over 75 years is not like the federal debt--it's simply a
projected expenditure on some particular entitlement program.

The sensible comparison is the cost of these programs relative to GDP. That's
the only relevant way to present the data. Social Security is projected to
rise in cost from 4.8% of GDP to 6.2% of GDP by 2035. That's the impact of
your "$63 trillion unfunded liability" on the budget over that time frame.

Medicare is a bigger problem, but too much of the debate revolves around
scare-mongering projecting rising healthcare costs out to infinity. See:
<http://xkcd.com/605/>

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ridiculous_fish
The AMT patch is part of the "fiscal cliff." Without the patch, 35% of all
taxpayers will owe AMT.

