We’re fresh off the latest installment of political theater that is our national government and should all feel warm and cozy now that the nation has averted financial catastrophe.
Or so our political leaders would have us believe.
The deal to avert the so-called fiscal cliff was supposed to help the middle class. That’s me, and a great many of you. I don’t know about you, but as details of the congressional deal emerge, I don’t feel particularly “helped.”
First off, everyone who works in the private sector just took a pay cut of 2 percent as the employee’s share of the Social Security tax jumped 2 percent. Yes, we all saw a 2 percent net increase in pay a couple of years ago, when Congress and President Barack Obama cut the employee contribution to spur the economy. The theory at the time was that if we all had more money, we would spend more money.
Congress and the president extended the tax break for a second year – which got everyone through the November congressional and presidential elections – and quickly cut the cord through the fiscal cliff compromise.
I have written here about the what I believe was the foolhardy nature of the temporary Social Security tax break. My thinking is that our nation’s beleaguered Social Security trust fund needs all the money it can get to stave off insolvency as long as possible. I just turned 50 and hope to receive Social Security payments later in life.
If Congress and the president thought a 2 percent break in taxes was such a good idea, they should have amended the tax code, rather than strip the money from the Social Security trust fund. That’s where real tax policy should present itself, not in shortsighted, short-term maneuvers.
What does that 2 percent represent?
The median household income in Fairfield is $68,000 according to the 2010 U.S. Census. That’s the middle point where half of the households make more money, and half make less.
Using that as a base, members of the average household in Fairfield will pay $1,360 more in Social Security taxes this year than they did in 2011 and 2012. That’s real money to most of us.
The fiscal cliff deal wouldn’t seem so bad to me were it not for the requisite pork that’s contained in the compromise.
I grew up in the South and am a fan of NASCAR. But I’m not so much of a fan that I’m OK with a provision of the tax legislation that allows race track owners to write off the cost of their facilities over seven years rather than a period that’s several times that long.
The deal saves race track owners an estimated $46 million, according to the San Francisco Chronicle. That means it costs you and me an estimated $46 million.
Does this mean that support for race track owners was a necessary component to keep the nation’s fiscal ship lurching forward? I think not.
California’s alternative industry also gets a boost through extension of a construction-based tax credit. You can read more about that on the business page in a report by Barry Eberling.
This slice of fiscal pork may pay dividends for Solano County, but again, it’s money that’s essentially coming out of all of our collective pockets: the poor, the middle class and the wealthy.
Granted, this is just the latest act in a long-running fiscal comedy in our nation’s capital. We’ll all have to wait and see what the next acts have in store for us.
I, for one, expect to pay more, in spite of the rhetoric from both parties about the need to protect the middle class.
Reach Managing Editor Glen Faison at 427-6925 or email@example.com. Follow him on Twitter at www.twitter.com/GlenFaison.