Snookered on the Fiscal Cliff

On January 1, the rates for the federal individual income tax are scheduled to go back to their Clinton-era levels.  According to Tax Foundation, the higher tax rates would bring in an extra $156 billion to the federal treasury in 2013.  But because of the anemic economy, no one wants to see income tax rates go up for the middle class. President Obama, however, does want the tax rates on the top 2 percent to revert back to what they were under Clinton.  But Speaker Boehner and the Republicans prefer to get more revenue by putting a cap on "loopholes" in the tax code (that is, exemptions, deductions, write-offs, etc.).  In other words, Democrats want to raise statutory tax rates, while Republicans prefer to zero in on effective tax rates -- the "real" rates taxpayers actually pay. The top statutory rate for individual income taxes under Clinton was 39.6 percent.  But according to the Congressional Budget Office, the highest effective tax rate for the top 1...(Read Full Article)

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