With about 6 hours to go, I am reading a report saying a deal is close on avoiding the fiscal cliff, with just a few sticking points to be ironed out. I don’t know the details yet, but I doubt that it matters too much. I don’t think anyone ever expected rates to increase on most of us, regardless of whether the deal was done a few weeks back or even six months from now. Here’s what you need to know…while Republicans and Democrats have been engaged in an epic battle over whether to raise taxes on the “wealthy” by $25B per year or $50B per year….your taxes were raised $125B for 2013 due to the expiration of the payroll tax cut.
Now honestly, this probably needed to be done…especially if you are in the camp that believes the social security trust fund isn’t make believe. But the truth is, FICA is an income tax no different than any other, and while they distracted the country over the last month arguing over whether “wealthy” was defined as $250k per year or $1M per year….both parties quietly raised everybody elses taxes 2%. I’m waiting for the outrage that won’t come because let’s be honest…as a nation, math really isn’t our thing.