If you are a conservative, you probably did not like the "fiscal cliff" deal that passed last week, but the mainstream media overlooked a few important things about the agreement that will help many people and the economy.
The housing market will continue to get better because the politicians didn't touch the mortgage interest deduction or the long-term tax relief on mortgage debt. Housing is very important to lower- and middle-income people, and the economic collapse in 2008 ruined people's savings and futures by lowering the values of their homes. If these two items weren't extended, many more would go "underwater" and there would be a surplus of houses on the market, certainly not a good thing.
The fiscal cliff deal also did something substantial by providing permanent tax relief for 98 percent of Americans, raising the top rate only for those making more than $400,000. Certainty for investors, buyers, sellers and consumers certainly will help the economy.
In 2013, a household income of $250,000 adjusted for inflation (President Obama's original goal) is not even close to what it was 10 or 15 years ago with increasing health care costs, college tuition, food prices and the general overall standard of living. If you had to pay 39.6 percent in income taxes while making $250,000 living in a city, having two children in college and owning a home, you really wouldn't be that "well off" and you would consume less in the economy. Part of the reason the economy was so good in the 1990s was that consumer confidence was at an all-time high, and more consumerism is going to help get the economy going again. Raising taxes on the vast majority of people and having unfair tax brackets wouldn't be productive.
The alternative minimum tax finally has been altered so that it won't threaten middle-income families. For years, people have assumed the AMT was just a tax on the wealthy, but it was never indexed to inflation. In fact, it has been modified or revamped 19 times in the past 42 years. With last week's deal, the AMT is indexed to inflation, thus many families who worked their way into its reach, or were sitting on the bubble, now need not worry. For years, the tax was set at $45,000 in adjusted income, and as median incomes grew it affected more and more people. One economist estimates that almost 28 million families would have to pay $3,400 in extra taxes each year if the AMT were not indexed to inflation.
Tax credits were extended for low-income families, and the "doctor fix" was enacted so that Medicare providers do not face drastically lower reimbursements. A farm bill also was extended nine months that prevented a sharp, immediate hike in the price of milk, something everyday people depend on.
It was not a deal that solved our nation's spending frenzy, but a few things passed that help many lower-income people. The mainstream media did their best to frame this as a pure ideological debate over taxes, but they overlooked many important things. This is a disservice to all Americans.
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