The bi-partisan “deal” struck today in Washington on taxes is a fiscal abomination and Republicans, Democrats and the President should be ashamed. Does no one in Washington know basic math or have any interest in managing our deficit?
As I high income earner one might think I would be dancing in the streets as I will personally save money. That would be true if I expected to die within the next 2 years and had no children or could care less about our country’s future. We have a $13 trillion debt, annual deficits at record levels and an actuarially broke social security program. So what do our leaders do? They cut taxes, increase subsidies and most shocking of all is a social security payroll tax reduction of 32% for all workers, including high income workers.
A quick summary of the provisions in the agreement include:
- No change in tax rates for 2 years which locks in the Bush era lower tax rates on high income people. Thus, millionaires get the same tax rate as a single person earning $150,000
- A reduction in the social security payroll tax from 6.2% to 4.2% for all workers, regardless of income (a 32% reduction in the tax) for 2011. This alone is estimated to cost $120 billion
- Modification of the estate tax and lowering the top rate from 55% to 35% on estates over $5 million but only for the next two years so this does nothing for anyone attempting to do long-term estate planning
- Expansion of unemployment benefits and child care tax credits
- Ability of businesses to deduct 100% of most expenditures for capital equipment and an expansion of the research and development tax credits
I have not seen an analysis of the total impact to the annual budget but surely this will add many billions to the red ink Washington likes to print leaving our children with a huge debt burden and unfunded mandates.
If the government was a corporation the board of directors would all be justifiably fired – today.