After several long and stress-filled months of fiscal cliff discussions and budget cuts, the senate and house of representatives finally reached a short-term deal. The short-term deal raised income taxes on the people defined as being “wealthy,” which constituted that they made over $200,000 per year as an individual or over $250,000 as joint filers. Of course, this was just at the federal level, so these people made an additional amount for Social Security, Medicare and state income tax. As a result, some of the wealthiest people in the world will end up paying more than 60 percent in taxes in states where income tax is high.
With all of that beings said, this was just a short-term agreement. Sure, the tax rates for the wealthy will stay this high and they may even continue to climb. However, the thing that was not really addressed in these discussions were budgets. It is no secret that the United States is in a ton of debt with over $16 trillion worth of it. To make matters worse, economists say that if the magical number hits $16.4 trillion, the country will have officially hit the debt ceiling. By doing so, it is virtually inevitable that the United States would likely slip back into recession. This would be horrible news for a country that is still trying to get back on its feet from the recession that began just half of a decade or so ago.
As a result, the congress is trying to reach an agreement on the budget cuts without harming jobs. The democrats would like to see the “Buffet” tax placed on people who earn between $1 and $2 million, which would require them to pay at least a 30 percent tax rate on all sources of income. This would of course be in addition to the already higher rates that were passed earlier this year just before the previous fiscal cliff deadline.
The republicans, on the other hand, do not like the idea of raising taxes on the wealthy, and they have good reasons to feel this way. Keep in mind that the wealthy are the ones creating jobs, so if you raise their expenses or taxes, they will need to make cuts elsewhere, as in jobs, to keep up their own way of life that many of them have earned on their own contrary to popular belief.