I hope the president is enjoying his vacation. Unlike other presidents I could name, he’s not spending his family time grandstanding for photo ops. I’m sure he’s working on his second term agenda, studying up on situations that deserve his attention, and making decisions on cabinet posts and other appointments. And recharging his batteries, enjoying the sun and surf, and having fun with Michelle, Sasha and Malia.
And if he’s smiling (disclosure: this White House photo is a year old), it may be that in negotiating and signing the fiscal cliff deal, he has accomplished something significant. According to economists who have studied it, the deal makes the income tax more progressive than it has been since 1979.
The New York Times explains:
The Tax Policy Center estimates that the average family in the top 1 percent will pay a federal tax rate of more than 36 percent this year, up from 28 percent in 2008. That is the highest rate since 1979, at least.
By some measures, the tax code might now be the most progressive in a generation, tax economists said, while noting that every American is paying a lower burden currently than they did then. In fact, the total federal tax rate is still vastly lower for the very rich than it was at any point in the 1940s through 1970s. It has risen from historical lows, but is still closer to those lows than where it was in the postwar decades.
As a result of the taxes added in both the deal and the 2010 health care law, which came into effect this year, taxpayers with $1 million in income and up will pay on average $168,000 more in taxes. Millionaires’ share of the overall federal tax burden will climb to 23 percent from 20 percent.
The result is a tax code that squeezes hundreds of billions of dollars more from the very well off — about $600 billion more over 10 years — while leaving the tax burden on everyone else mostly as it was.