Who won in the fiscal cliff deal? The lawyers won.
Well, not just the lawyers. The lawyers, the doctors, the dentists, the middle managers, the advertising executives, the whole MBA crowd.
Who won in the fiscal cliff deal were all those individuals making between $113,700 and $400,000 per year. For couples the numbers will be slightly higher, but still in the lower six figures. They’re the ones who will pay the least in new taxes.
The headline outcome of the fiscal cliff deal was that taxes will go up only on individuals who make more than $400,000 per year (and couples that make more than $450,000). For those top earners the marginal tax rate on that part of their incomes that is over $400,000 ($450,000 for couples) will revert to the 1990s level of 39.6%.
For the past decade it’s been just 35%.
To read more articles by Salvatore Babones and other authors in the Public Intellectual Project, click here.
But a fuller analysis of the fiscal cliff deal reveals that Social Security taxes are going up for all workers on their first $113,700 of income. For the vast majority of workers, this is all of their income. For most American workers, the FICA Social Security tax they pay will rise from 4.2% to 6.2%.
The sweet spot of the fiscal cliff deal is the lower six figure income range. People with incomes in this range don’t usually think of themselves as rich. In fact, politicians consistently pander to them, since these are the vocal, educated, politically-engaged professionals who can make or break their careers.
Nonetheless, these six figure professionals are in the top 20% of America’s income distribution. They’re not rich, but they’re comfortable. They’re not the people who need a tax break. They’re the people who want a tax break.
The fiscal cliff deal is not a bad deal. But it’s not a progressive deal. It’s a deal for the comfortable, not a deal for the struggling and the poor. Those of us with good jobs and advanced degrees can be satisfied. For the 80% of Americans who don’t, it’s just more bad news.
Help us Prepare for Trump’s Day One
Trump is busy getting ready for Day One of his presidency – but so is Truthout.
Trump has made it no secret that he is planning a demolition-style attack on both specific communities and democracy as a whole, beginning on his first day in office. With over 25 executive orders and directives queued up for January 20, he’s promised to “launch the largest deportation program in American history,” roll back anti-discrimination protections for transgender students, and implement a “drill, drill, drill” approach to ramp up oil and gas extraction.
Organizations like Truthout are also being threatened by legislation like HR 9495, the “nonprofit killer bill” that would allow the Treasury Secretary to declare any nonprofit a “terrorist-supporting organization” and strip its tax-exempt status without due process. Progressive media like Truthout that has courageously focused on reporting on Israel’s genocide in Gaza are in the bill’s crosshairs.
As journalists, we have a responsibility to look at hard realities and communicate them to you. We hope that you, like us, can use this information to prepare for what’s to come.
And if you feel uncertain about what to do in the face of a second Trump administration, we invite you to be an indispensable part of Truthout’s preparations.
In addition to covering the widespread onslaught of draconian policy, we’re shoring up our resources for what might come next for progressive media: bad-faith lawsuits from far-right ghouls, legislation that seeks to strip us of our ability to receive tax-deductible donations, and further throttling of our reach on social media platforms owned by Trump’s sycophants.
We’re preparing right now for Trump’s Day One: building a brave coalition of movement media; reaching out to the activists, academics, and thinkers we trust to shine a light on the inner workings of authoritarianism; and planning to use journalism as a tool to equip movements to protect the people, lands, and principles most vulnerable to Trump’s destruction.
We urgently need your help to prepare. As you know, our December fundraiser is our most important of the year and will determine the scale of work we’ll be able to do in 2025. We’ve set two goals: to raise $81,000 in one-time donations and to add 1250 new monthly donors by midnight on December 31.
Today, we’re asking all of our readers to start a monthly donation or make a one-time donation – as a commitment to stand with us on day one of Trump’s presidency, and every day after that, as we produce journalism that combats authoritarianism, censorship, injustice, and misinformation. You’re an essential part of our future – please join the movement by making a tax-deductible donation today.
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