How Did You Fare in the Final Fiscal Cliff Deal?

Are you expecting to see more or less in your paycheck this year? Do you think Congress blew it? Should there have been more spending cuts?

I don't know about you, but I'm not one of those folks worrying about the "tax increase for the rich" that was conceived in the fiscal cliff deal lawmakers finally approved on Day 2 of the new year.

I'm not making $400,000 a year. Combined, my wife and I are nowhere near $450,000 a year. So, no worries.

But for all the talk about "protecting the middle class," I'm apparently about to see a change in my take-home pay, thanks to the Jan. 2 deal that averted large across-the-board spending cuts and automatic reversal of some tax cuts.

"Technically, income tax rates that were set to go up were actually left alone, except for individuals and couples earning more than $400,000 and $450,000 respectively," according to this Yahoo! Finance article about three landmines in the fiscal cliff deal. One of those landmines: "Especially of note is a 2 percent bump in the payroll tax that will hit every taxpayer — not just the high-income households."

Another article, from Business Insider published on Yahoo! Finance, notes that the 2 percent (actually, it's 2 percentage points) come because Congress and the White House cut the payroll tax from 6.2 percent for all workers to 4.2 percent for all workers effective 2011.

But the fiscal cliff deal didn't renew that, so everyone's taxes are going up. Find out how you'll fare by reading the chart on the Business Insider article.

"According to the Tax Policy Center, the American Taxpayer Relief Act will mean that the average federal effective tax rate will be 21.7 percent and the average increase is $1,257," the article says.

I consider myself middle class. And this doesn't sound like "protection" to me. But both Missouri senators used that word when talking about their vote for the package.

"I'm glad this vote protects middle class families & #smallbiz owners from tax hikes," said Republican Sen. Roy Blunt. And from Democratic Sen. Claire McCaskill: “This deal isn’t perfect, but it achieves what’s most important here by protecting middle class families."

Are you feeling protected? What could have been done better? Should there have been more spending cuts in this package? Do you expect to pay more or less to the federal government under this deal?

David Mulcahy January 06, 2013 at 05:28 PM
Well Carol they said it loud and clear when President Obama presented his jobs act last fall and house failed to even bring it up for a vote. That act included funding for infrastructure which as I recall includes roads and schools. Chris Christie whom I consider a reasonable republican dropped plans to add another bridge from NJ to NYC. Flyoverland, do the research. You're a self proclaimed executive who certainly has the wherewithal to research the budgets from 2008 and 2011. Take a look and tell me exactly which line items increased as a result of President Obama's policies. I happen to also be a CPA and will accept part of the blame as a profession for allowing the reduction of reserves for unfunded liabilities, hence a whopping $ trillion dollar deficit in pension liabilities. Incidentally, pensions were once a key employee benefit which provided competition between employers. What happened? Saint Reagan came along and decided that big business did not need this expense and instead started putting the responsibility on the shoulders of the employees, something unheard of before his time. Yes, employees are responsible for their future but promises made in recruiting employees must be supported. Carol, take a few minutes of your time and watch Al Jazeera, or listen to BBC on the radio at night. You'll quickly discover what the rest of the world thinks of this great country and the BS republicans are bringing. You really believe that holding the debt hostage is productive?
David Mulcahy January 06, 2013 at 05:32 PM
Carol, what about social security and medicare? What should the President do? What about the 1% loaded with medical professionals who get paid whether their solution is right or wrong? Flyoverland, unproductive regulations would have averted the economic collapse of 2008/2009. Unproductive regulations such as Glass Steagall would have done wonders.
flyoverland January 06, 2013 at 06:45 PM
Nice selective parsing of my comment. I said "unnecessary" regulations. Not all regulations are bad. When regulation becomes an industry and entire professions are created to traverse them, they become unproductive (except to those bureaucrats, lawyers and accountants who profit from them). I am not a "self-proclaimed" executive. What does that mean? When you file and sign S1's and 10-K's I think that pretty much gives you the right to claim that mantle, assuming anyone wants to do it in this economy. Moreover, when did Ronald W. Reagan eliminate the private pensions? I fail to remember that law. Pension plans were eliminated by companies because it increased profits for shareholders. If you had ever been a CEO and often threatened by shareholders (often pension funds of liberal unions) for not making the stock as valuable as possible by instituting things like off-shoring jobs, eliminating pensions, etc. you would understand that again, regulation and the threat of litigation is the reason it isn't like it used to be. It is the same reason local corporations, which used to fund a lot of local civic projects, no longer do. Why? The shill shareholder of the 100 shares in New Jersey will be found by the class action lawyers who will sue because what benefit is it to the New Jersey shareholder if the schools in STL get help. Unintended consequences. You have criminalized business decisions and are now living with the results.
flyoverland January 06, 2013 at 06:51 PM
When we sold our company, I was literally screamed at by a then US Senator for not starting another. "You are costing a thousand Missourians a job," he told me. In return, I told him, "Yes, but look at it from my perspective. Assuming I could overcome the increasing hostility of the SEC towards newer, smaller public companies and raise the money, assuming I made a profit, those profits would be taxed at over 40%. Then, assuming I am not arrested for making a bad business decision and there was anything left after the trial lawyers got done suing for their share and if, by chance there was anything left to come my way, it gets taxed again. Then, I can't even bequeath it to my kid without paying taxes on the way to the graveyard. It is just not worth the grief.
David Mulcahy January 06, 2013 at 07:07 PM
Perhaps that's part of the problem flyover (by the way, why the anonymity?). Corporate focus on shareholders and profits is the problem. Who gets hit first? Labor. Are budgets and forecasts truly reflective of what will happen in a future year? Not during most of my days in corporate America. Budgets and forecasts are created to please the BOD, and hence the shareholders, and only one company in my entire career in finance truly dug down to the bottom to create an accurate "forecast". Most are top down and profits are forced more often than not by decreasing labor costs. Corporations are hoarding billions of dollars and at the same time asking labor to forgo pay increases and accept more and more furlough days. How many organizations now consider the days between Christmas and New Years to be unpaid holidays? I know of a few and that's wrong. Executive "leaders" ( and I use that term lightly) insure that their bonus plans are structured to succeed. Non-executive bonus plans become a victim. Please do tell what regulations who consider 'unnecessary". Frankly, I could care less what forms you sign, you still put yourself out as someone who believes capitalism is the only answer. Let me ask you this, during your tenure of signing those important forms, how many of your employees in the trenches truly felt that they were valued and being treated fairly? That their salaries would rise like yours and that they would reap any of the benefits that you did because of their hard work.
flyoverland January 06, 2013 at 07:37 PM
Well, I think you could ask former employees. None had a pension. All had a 401(k) which was matched 50% in company stock. The employee could then dispose of the stock at will. All employees also received stock options. The first receptionist bought a house for cash received for taking options instead of a higher salary. Many became millionaires. I was consistently one of the five lowest paid CEO's in this town. My board told me they wanted me to be on the same page with them. And the reason employees got options was we wanted them on board, too. The goal was to make as much as possible so the stock price would go up. Then we all won. The shareholders also won as did the government which made more as more taxes were paid. If you think games are played by budgeting, you are right. Management usually under estimates. Boards always knows this and adjust, at least good ones do. The real question you are asking is, "who comes first on a corporate food chain?" Shareholders? Management? Board? Employees? Customers? The answer I always received was "yes." Your job as a CEO is impossible because they all think they should come first. It is a juggling act. You can't live without any group. If you ignore customers, shareholders are hurt. If you screw employees, customers are hurt. If you screw any group, performance will suffer. Legally, shareholders must come first. The best way to make this work is to incentivize everyone to make sure shareholders make as much as possible. It works.
JHS63366 January 06, 2013 at 08:06 PM
My point at the end of the day is that we have one party who is tring to split everyday Americans up so we cannot have the necessary discussions to move forward. I can feel for flyoverland...the koolaid is the whole "Shareholder Value" lie Peter Druker esopused and all the plutocrats quickly promulgated. Companies need to go back to taking care of their customers, then their employees. If they do that they will build great companies and shareholders will get fair returns. Boards are supposed to be advisory, not operational.
JHS63366 January 06, 2013 at 08:14 PM
It is hard for me to have conversations like this becaue I feel I have a duty to be accurate and present truthful comments unlike many of our Fox News watching friends. Also, while I may disagree with your views, I don't believe you are the ememy, which if you sit back and look, is exactly who our friends on Fox are trying to assert about folks who do not agree with them. I am not a "lib", I am an American who wants to see things get better for all, not just the 1%.
KCF Resident January 06, 2013 at 09:08 PM
What Social Security benefits? It was called a Payroll Tax Holiday. Wait...you mean they use different terms to confuse the unassuming public? The public that gets its news from the Liberal Left-wing media. The public that is too lazy or ignorant to research and understand what's happening. I've quieted down a lot since Armagedon was moved from 12/21 to 11/6 and when I start reading all this my blood pressure starts jumping again. All I seem to read are comments about how messed up the left is and how they are screwing us...yet Obama got re-elected to do four more years of vacationing, lying and fooling the general public. The taxes that many are unaware of will start showing soon. The only ones not affected are those on extended unemployment and those getting free cell phones AKA the "47%." Bernanke has held interest rates down purposely so the debt payments don't explode. Keeping the rates low has nothing to do with unemployment or inflation. It is to keep debt interest down. When Fed Funds Rates go up so will debt payments. The public is too ignorant to see the U.S. becoming a Greece. The public still thrives on freebees and credit. It can't go on...debt has surpassed tax revenue already, Obama doesn't want the economy to turn around because it will affect his Socialistic agenda and without spending cuts...forget the BS the Democrats use spreading spending cuts over ten years...the rate of debt increase is rising even faster than tax revenue. Can you say Baklava or Gyro?
David Mulcahy January 06, 2013 at 09:20 PM
Flyover, I commend you for your success. Unfortunately, your's is an often forgotten process today when shareholders are the only focus. JSH, I totally agree with you on the customer focus. Anyone can sell anything to anyone once, the objective is repeat customers and today that is often difficult for many organizations. Many employees, and often time customers, are ignored in today's economy. Reduce the employees ability to exist and consume and you exponentially reduce the success of business. If the employee can't even afford to consume that which they are producing something is wrong. Henry Ford once said that he would pay his employees sufficiently to purchase the vehicles they produce. Not so today. WalMart is a perfect example. Average pay of $9 per hour, less than a 40 hour work week to allow reduced benefits and you have many of their employees at poverty level. That can't be good for the economy and society in general. Couple that with the tax subsidies demanded for each and every new WalMart store built and it's no wonder the Walton's and their heirs are the wealthiest in the world. I will never step foot in a WalMart or Sam's, I cannot support their greed. One of the problems is that conservatives always want to get their hand on the money, take their disproportionate share and give pittance to the ones in the trenches. Good for you that you were not one of them flyover.
KCF Resident January 06, 2013 at 09:20 PM
Let's see...what side of the Balance Sheet does the $550 million wasted on Solyndra and Capstone Turbine go to name a couple? What side of the Balance Sheet does the Extended Unemployment that hinders motivation to find a job go? What side of the Balance Sheet does the cost of Food Stamps and Free cell phones go? And tell me...what have any of the above done to further the economy? And you are a CPA?
David January 06, 2013 at 09:43 PM
This is a sad time and as we make history for Amaricas poor credit ratings, health care issues, unemploment...... this is something that the innocent children not yet born yet will have to deal with. This poor excuse of a president is re-elected? All the demoocrats pass the buck and think Obama can walk on water. What fools. Look for things to continue down hill as I see no end in sight. On a brighter note.... In 3 years and 10 months we elect a new leader and it can only improve.
ReverePaul January 07, 2013 at 12:41 AM
Hey David, in the first 45 months that Obama was in office he created 750,000 private sector jobs. Guess how many Bush created in 45 months. Negative 1,168,000 jobs. That looks like uphill to me. Also fyi, based on the last presidential race Republicans aren't going to win any presidential races by just appealing to old white people, they are becoming the minority.
flyoverland January 07, 2013 at 02:24 PM
I once met Sam Walton back when he had only a few stores. While I didn't agree with his part-time employee model, which wouldn't have worked in my business, what he told me laid the foundation for my business, i.e., doing business in smaller markets. He told me, "There's a Target, Kmart and Venture in every big city. They ignore the small markets and I'm happy to fill that vacuum, and someday, when I get some critical mass, I will come after them in the big cities." That's how we did it and we also became the largest provider of services in our industry. So, I owe him that much. By the way, he was driving a pick up truck the day I saw him. That being said, I don't shop there. My beef is they don't sell much that is made in America. You can't blame CEO's for following the rules. These are generally very smart people who always find a way to make whatever rules you make work for them. I am not against rules that protect people. I am against rules that do nothing to protect anyone and are counterproductive costing billions of dollars that could go to hire more people and grow the economy. Unfortunately, the class warfare groups lure folks into believing regulation just "sticks it to the man." The man will always adjust and bill the folks.
E. Witzen January 07, 2013 at 03:51 PM
Carol, the country suffered an economic collapse in 2008, caused by the policies of George Walker Bush and the GOP Party. Or did you miss that? Cutting taxes without cutting spending, launching two wars without adequate revenues, funneling trillions of dollars to Wall Street and the banking industry, and the grotesque housing bubble that burst <b>all happened on George Walker Bush's watch.</b> Were you asleep from 2001-2008, Carol? Was Marc? (BTW, did you miss also that under Republican George Walker Bush we had the worst domestic terror attack in US history?) That's why we have the exploding debt. Bush and the GOP borrowed like there was no tomorrow, which, if we'd continued with his disastrous policies domestically and globally, there wouldn't be!
KCF Resident January 07, 2013 at 04:03 PM
I question the 750,000 jobs created. As for the Republicans, you are on the mark...looks like "The Law of Diminishing Returns" if they don't wake up. It is absolutely nausiating to see a group such as the Liberals so effective in strategy and execution to get someone elected yet can't run a country and the Republicans are just the opposite to a relative degree. They have their heads up their butts. Even what they have said so far to address their problem is so far from being right it's scary. They just don't understand their problem.
KCF Resident January 07, 2013 at 04:15 PM
Hey, E.Witzen...you make no reference that Bush had a Democratic controlled Congress. I lay blame on Bush but not as much as I do on the then Democrat Congress. And it was Congress...the Democrat controlled Congress...that caused the collapse of the housing and financial market because they insisted on making it easy for those with poor credit or who couldn't afford to buy a house to get a mortgage. The financial institutions exacerbated the problem by making all their shady paper deals. The same situation exists today with the government. They have poor credit, can't afford the programs they have...to buy votes...which has us pointed in the same direction as Greece. Now I will add that Bush had the opportunity several times to object to what Congress was doing and he passed. That was dumb.
The Missourian January 07, 2013 at 05:12 PM
From '95 to '08 (14 years) the Dems were in control of both houses of Congress a total of 2 years: '07-'08 - the last two years of Bush's presidency. Since 1995, there have only been 4 years total of Democratic House majorities in 18 years. So it's a little disingenuous to say they were "in charge," doncha think?
Linda Van de Riet January 07, 2013 at 05:23 PM
I lost $20 out of my paycheck and my husband lost the same - Obama stole it. Obama, his minion Dems. and the neutered Republicans (like Mr. Blount) have decided that we are their constant piggy bank for their friends which include, the big companies that get in bed with them, the millions collecting welfare, food stamps, unemployment, social security, disability, illegal aliens, Federal housing recipients, free phones recipients, green companies and unions - in other words, the 47% that Romney spoke of. I am thinking seriously of quitting my job and going on welfare, I would make more money and I wouldn't have to pay taxes. My job would be to convince everyone else that is working to quit as well and where would this 47% be if another 30% quit their jobs? I know where they'd be - starving and on the streets.
The Missourian January 07, 2013 at 05:38 PM
The 2% payroll tax cut was a temporary tax holiday intended to act as a stimulus since Congress was unable or unwilling to pass an additional stimulus package. As long as facts matter.
Mike K January 07, 2013 at 05:39 PM
Keep in mind that a huge portion of that "47%" includes military folks, since they are entirely dependent on 'the gubment' you so despise. Also, there are many things the government provides with your tax dollars that you surely benefit from every day. Like highways, an educated workforce, national power grid, disaster relief - I'm looking at you, Sandy victims. I say that last one as a New Orleans native. As for the education system, I'm not saying it is perfect or without significant issues. I am saying it is better than *nothing* and I see no first-world countries with a completely private educational system., where access to education is solely determined by inherited wealth and class systems based on finances.
Carol Size January 07, 2013 at 05:47 PM
Witzen, Please enlighten yourself and read the book 'Reckless Endangerment' by Morgenson and learn the truth about the 2008 financial collapse which is NOT on MSNBC. Okay, so here ya go: Everything is President George W. Bush's fault. There, are you happy? Now, please tell me when PResident Obama presidency starts and when he starts to take responsibility for anything at all.
KCF Resident January 07, 2013 at 07:42 PM
No...Missourian...all I'm saying is if you want to blame Bush...blame the Congress as well and they happen to be Democrats for the most part. That's why they were removed in 2010. It was Barney Frank and his idiot friends at Fannie and Freddie...well barnet was the idiot, the Fannie and Freddie guys were filling their pockets.
KCF Resident January 07, 2013 at 07:48 PM
Hey Missourian...we understand the Tax Holiday. But it was simply more shady action by your friends because while they were reducing the Payroll Tax by 2% they were stealing it from Social Security part that comes out of a paycheck. Why didn't they take it from normal withholding? Hell, Social Security is already in the dumper...let's reduce the amount feeding it even more.
KCF Resident January 07, 2013 at 07:53 PM
Mike, you're 100% right. I know and when I type the 47% I wince because I know our military and other good folks are in there. Romney's reference to 47% was wrong. I truly believe he meant the 47% that Obama had locked and couldn't be swayed. It was the media that determined the defintion IMHO and Romney never corrected them because his idiot advisors told him to let it go. Even applies to Food Stamps because there are those who deserve them...not the Free-loaders. I think I'll refrain from using that reference in the future. Thank.
The Missourian January 07, 2013 at 08:21 PM
So if you also understand it was a tax holiday, what is the argument? It was a tax holiday. What is shady about using that to create a stimulus? I can't help it if there were a bunch of ignorant TP'ers standing in the way of additional stimulus. The whole idea of a stimulus is that you increase gov spending without increasing revenue to offset inactivity in the private sector during a downturn. The ability of the feds to print money is the key reason the right's microeconomic view of federal spending is irrelevant to any productive tax/spending discussion. At any rate, the fact that my taxes are returning to the level they were at a couple years ago is pretty inconsequential as far as I'm concerned. It was described to me as a temporary action at the time, and that is how I have viewed it since. So there is no issue.
The Missourian January 07, 2013 at 08:31 PM
And if you all really want to solve the Social Security problem, there is a pretty straightforward solution: tax all income, not just the first $113k or so. Keep the retirement age at 65 or lower it if unemployment stays high to encourage older workers to leave and make room for the young, increase benefits somewhat so households above $113k get a better deal, and bam! Problem solved. Some rich folks may call it unfair, but let me put it this way: Today you might be making $300k a year, but tomorrow you may be making $60k a year. As they say in investment prospecti, "past performance is not a guarantee of future returns." Life can change in an instant, your income can change. That one simple act would solve many problems.
Larry Lazar January 07, 2013 at 08:53 PM
I am continually amazed at how "certain" some people are about who to blame for today's fiscal and societal problems. Perhaps our problems are just a little more complicated than we want to think and that the best path out is to stop calling each other names and to work together? Naive thinking perhaps, but maybe we could tone down our certainty just a tad and focus on solving the problems instead of pointing fingers. "If I am fool, it is, at least, a doubting one; and I envy no one the certainty of his self-approved wisdom. " George Byron
David Mulcahy January 07, 2013 at 09:54 PM
Linda you'd be well served to do a bit of research before you comment on the American economy and taxation. The tax holiday was a 2% reduction in the FICA taxes withheld to pay for your social security benefits if and when you reach retirement. Yes, they increased your pay by $20 each paycheck but in reality they also reduced your future social security calculations by the same amount. None of it went to big companies or the infamous Mr. Blount (sic). When you speak of welfare, food stamps, unemployment and disability to speak as if everyone enrolled in those programs is scamming the system. What, dare say, do you say to the 50 year olds who had well paying positions with respected companies prior to the economic collapse under the last republican administration? The labor force that through no fault of their own is unable to secure employment, primarily because of their age, has college age children and other expenses they incurred when that same administration was telling them to "go buy something" as they did after 9/11? You tell them too bad, you don't deserve the benefits because you are an able bodied human? The last thing many of these folks want is to be on food stamps or other government benefits, but frankly it's the only way they can now survive. You're lumping social security with these is totally off base. Without knowing much about you it sounds like your boss and co-workers may be very pleased if you did quit your job based on you ill-founded comments.
The Missourian January 07, 2013 at 10:50 PM
KCF: "From '95 to '08 (14 years) the Dems were in control of both houses of Congress a total of 2 years: '07-'08 - the last two years of Bush's presidency. Since 1995, there have only been 4 years total of Democratic House majorities in 18 years."


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