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Tax Foundation President Scott Hodge on the impact of the fiscal cliff deal and the increase in federal taxes.
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Hello everybody I'm Gerri Willis the fiscal cliff averted for now when investors staging a party.
The Dow soaring 2% NASDAQ on fire small cap stocks setting a new all time high and why.
Because the fiscal club deal which will be signed by the president probably moments from now.
-- shrink big government -- no spending rises by four trillion.
Well many investors were excited about lower deficits.
Now would get deficits continue to climb to eight trillion over the decade.
The estimated deficit reduction.
Just 650 billion.
And oh by the way contrary to what you've heard the middle class gets socked with a tax hike.
You weren't 50000 get raided pay an additional thousand to Uncle Sam here with details Scott Hodge president of the Tax Foundation Scott thanks for coming and let's get into the huge bill.
Starting -- the average tax increases that people are gonna face here -- making 50000 to 75000.
As I said.
822.
Will be -- increase tax.
What you will go.
And it just keeps going right.
Plus exactly right Jerry -- that the tax increases on the middle class we'll come from the expiration of the temporary reduction in the payroll tax.
Which -- was reduced as you know by 2%.
That goes away and so -- payroll taxes will go up the average.
Tara -- -- see an increase of a thousand dollars.
-- -- -- You know it's it's circles within circles we talk about the bush income -- expiring you're now talking about the payroll taxes Social Security income tax we put that in place.
It was stimulus.
Now it's expiring going away this is the thing that's really gonna catch the middle class.
Here's the number that really drove all this town though 77%.
Of Americans will now face higher federal taxes in 2013.
Still what happened to that promise that we were only get it hit the -- the high at the upper class the really wealthy people.
Well though the wealthy will see a permanent tax increase thanks -- the increase in the top rate from 35% to 39 point 6%.
And for millionaires that's going to be an average tax increase of well over -- 150000 dollars a year -- certainly -- bulk of this tax increase will go to upper income people.
And actually starts at a lower level around 20250000.
Dollars a year in income will see some of their deductions and exemptions begin to phase out.
But the real tax increase will hit those earning over 400 to 450000.
Dollars a year we'll hit that get hit with those higher tax rate.
And it's -- layers upon layers of taxes it's not just the income tax is not just payroll it's also Obama care taxes the list goes on -- on.
Ultimately -- -- you say and I quote you because you're so knowledgeable about this.
You -- is a bad deal for the economy why.
Well it really is a bad deal for the coming -- because while we were spared from that going over the fiscal -- Our economic moral model shows that -- reduce economic growth by one and a half percentage.
Or percent over the next ten years which leave -- means that that the tax bill actually raise less than what is actually being predicted.
By the treasury about 13 less actual off and so what we see is that tougher every new dollar tax revenues that it raises it actually reduces economic growth.
By about eight dollars and fifty cents and that's a real bad deal for the economy.
Unbelievable yes that is a bad deal if you're any good news anywhere -- -- -- easy.
Only you lot.
Well I think that there are some good things in that we can quit talking about the temporary bush tax cuts.
And this means that we -- talking about the Obama tax.
Code.
Altman -- Obama owns this tax code right now this is all he is and so from now on good or bad he lives with the results of this.
Well Scott you are so knowledgeable -- thanks so much for helping us out tonight.
It's it's a huge bill and of course presence going to be signing -- in thank you so much for your time you read your.
