Progressives, liberals and Democrats have been getting their political butts kicked for so long that marginal defeats are starting to feel like victories. Such can certainly be said about Obama’s compromise on tax policy.
The president campaigned on reversing tax breaks on those who make more than $250,000 a year. Instead he settled for increases on those who make more than $450,000 and less than $113,000 (yeah, that’s who pays payroll taxes).
According to the New York Times, those who earn between $450,000 and $1 million will see an average income tax increase of about $6,700. Those who earn less than $50,000 will see an increase of about $1,000 in payroll taxes.
While taxes went up on 77 percent of Americans, the roughly 1 percent who makes between $250,000 and a half million were not asked to sacrifice to help the country avoid the fiscal cliff.
I spoke with someone in the enviable position yesterday. It didn’t really occur to them that the fiscal cliff deal had broken in their financial favor. That’s because it won’t have any impact on their spending; when one clears a cool quarter million every year, financial planning about how large you want to live in retirement compared to how much you want to leave to your kids to spend – not about how much or little you will participate in economic transactions.
I’d be willing to bet that the vast majority of Rhode Islanders who were spared a tax increase this week will not notice it one way or another. They will go on vacation, or out to dinner, or renovate their kitchens, or start a small business with little to no regard for what happened – or didn’t happen – in Washington D.C, just like the person with whom I spoke yesterday. I’d also be willing to bet that the vast majority of Rhode Islanders who earn more than $250,000 don’t objected to paying higher taxes, as is also the case with the person I spoke with yesterday.