— Current tax rates would be permanently extended for singles making $400,000 or below, and permanently extended for couples making $450,000 or below;
— For singles, capital gains and dividends of $400,000 or below would be permanently taxed at 15 percent; capital gains and dividends above $400,000 would be permanently taxed at 20 percent;
— For couples, capital gains and dividends of $450,000 or below would be permanently taxed at 15 percent; capital gains and dividends above $450,000 would be taxed at 20 percent;
— The Alternative Minimum Tax would be permanently patched;
— Estates over $5 million would be taxed at 40 percent, and that tax rate would be permanently extended
—The payroll tax cut is allowed to lapse, so the employee portion of the Social Security tax will return to 6.2% from 4.2%.
—The Act also extends some farm support schemes for a year to avert the "dairy cliff" that many feared would double the price of milk.By making the Bush/Obama tax cuts permanent, the "deal" actually adds about $4 trillion to the deficit over the next decade.
The hope is to raise $600B in new revenue over 10 years. All in all, overall taxes will increase for over 75% of households in 2013, says the Tax Policy Center.
The "fiscal cliff" deal passed by 89 to 8 in the Senate then passed by 257 to 167 in the House of Representatives.
President Obama thanked lawmakers from both parties for their votes, saying it allows him to "sign a law that raises taxes on the wealthiest 2 percent of Americans while preventing tax hikes that could have sent the economy back into recession."
Of course, taxes will probably go up in the future if Democrats were to control the white house, the Senate and the House of Representatives. Likewise, if the GOP can make some huge changes to control both the house and senate plus the white house, then taxes on the wealthy could go down again.
What we really need is fundamental changes that cap deductions at some "reasonable amount." By reasonable, I suggest not letting Mitt Romney buy his way into heaven with a taxpayer funded donation to his Mormon Church. Why should we fund that with a tax deduction? Likewise, I don't see why people living in low cost housing areas should subsidize my mortgage or the super high taxes we pay in Taxifornia or New York with deductions for these on federal taxes. I'd love to see the top rate lowered but then limit total deductions to some "reasonable" number like $50K a year which is high enough for most but it captures the excessive deductions of the very wealthy.