Facts and figures are useful when you try to get through the smokescreen of political spin. Here are facts about the tax deal — a bad one, in my view.
The figures come courtesy of Citizens for Tax Justice:
The tax deal negotiated between Vice President Joe Biden and Senate Minority Leader Mitch McConnell and approved by the Senate early on January 1 would save less than half as much revenue as President’s Obama’s original proposal.
President Obama began negotiations with the aim of saving $1.6 trillion in revenue, compared to what would happen if Congress extended the Bush tax cuts and made no other significant changes to the tax code. Based on the last several budget proposals he had submitted to Congress, it was understood that $1.4 trillion of this would come from his two major proposals for the personal income tax. The first would extend the Bush income tax cuts for income up to $250,000 for married couples and up to $200,000 for singles. The second would limit the tax savings of each dollar of deductions (and certain exclusions) to 28 cents. (Otherwise someone in the 39.6 percent bracket would save nearly 40 cents for each dollar of deductions and exclusions.)
The main personal income tax proposals in this Biden-McConnell deal would save about $640 billion over a decade, just 45 percent as much as the President’s original proposals, as illustrated in the table below.
You can see the table in the full document. But, the bottom line is that by putting the higher tax bracket of 39.6 — as I’ve argued for a long time, still way too low — on $450,000 for married couples and up to $400,000 for singles, we lose a lot of needed revenue. And you can bet where that money is going to get cut from — Medicare and other social safety net programs.